GROSSMAN v. TRANS UNION, LLC et al

Filing 56

MEMORANDUM AND/OR OPINION. SIGNED BY HONORABLE EDUARDO C. ROBRENO ON 1/17/2014. 1/17/2014 ENTERED AND COPIES E-MAILED.(kp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CHARLES R. GROSSMAN,
Plaintiff,
v.
TRANS UNION, LLC, ET AL.,
Defendants.

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CIVIL ACTION
NO. 13-01703

M E M O R A N D U M
EDUARDO C. ROBRENO, J.

January 17, 2014

Currently pending in the aforementioned matter is Defendant
Ocwen Loan Servicing, LLC’s (“Ocwen”) motion to dismiss Counts
VI, IX, XI, and XIII of Plaintiff Charles Grossman’s
(“Plaintiff”) Amended Complaint (ECF No. 30). Ocwen asserts that
all four claims are preempted by the federal Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. §§ 1681, et. seq. For the
reasons that follow, the Court grants Ocwen’s motion.
I.

BACKGROUND
This action arises from Plaintiff’s disputes with Ocwen

regarding a notation on Plaintiff’s credit reports that shows
Plaintiff as paying under a partial payment agreement (“PPA”)
for one of his Ocwen mortgage loan accounts. Pl.’s Mem. L. Supp.
Resp. Opp’n Def.’s Mot. Dismiss 1, ECF No. 37-2 (“Resp. Opp’n”);

Am. Compl. ¶ 19. Plaintiff asserts that the PPA notation is
inaccurate and should have been deleted because of his
forbearance agreement was terminated and he is current on his
monthly loan payments. Resp. Opp’n 1.
Plaintiff specifically asserts that Ocwen furnished
inaccurate information regarding Plaintiff’s loan account to the
defendant credit reporting agencies Trans Union, LLC, Experian
Information Solutions, Inc., and Equifax Information Services,
LLC (collectively, “CRAs”). Id. He alleges that the PPA notation
was repeatedly removed from and then reinserted into his credit
reports since 2005. Id.; Am. Compl. ¶¶ 23, 24, 27, 29, 34, 35.
According to Plaintiff, Ocwen oscillated between acknowledging
that the PPA notation was a mistake and claiming that it was
correct. Id. ¶¶ 26, 30, 32, 34.
Plaintiff claims that while Ocwen made the representation
to him that his loan was to be placed in a “fresh start program”
in 1996, to help reestablish his credit following his three-year
forbearance period (1993-1996), this representation was false.
Id. ¶ 48. Plaintiff alleges that Ocwen kept Plaintiff’s loan
account in perpetual contractual delinquency by not capitalizing
the $11,000 in principal and interest accrued during Plaintiff’s
three year forbearance period. Id. ¶ 49. Instead, Ocwen
categorized the accrued principal and interest as “interest
arrearage,” keeping it in a separate suspended column on
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Plaintiff’s repayment log and applying only a small amount of
Plaintiff’s monthly payments towards the interest arrearage,
such that the arrearage would not be satisfied for several
years. Id.
Plaintiff claims to have been disputing the aforementioned
inaccurate information with Ocwen and the CRAs since 2005.
Def.’s Mot. Dismiss 4, ECF No. 35. Plaintiff avers that Ocwen
failed to conduct timely and reasonable investigations of his
disputes. Id. at 5. He alleges that he has applied for and been
denied various loans and extensions of consumer credit on many
different occasions based on the allegedly inaccurate
information in his credit report. Id. Lastly, Plaintiff alleges
that his credit reports still indicate that he is paying under a
PPA. Id.
Plaintiff’s amended complaint consists of thirteen counts
against Ocwen and CRAs.1 Ocwen moves to dismiss from Plaintiff’s
Amended Complaint only Counts VI (Defamation); IX (Violation of
the Pennsylvania Unfair Trade Practices and Consumer Protection
Law, 73 P.S. § 201.1 et. seq. (“CPL”));2 XI (Negligence); and
XIII (Invasion of Privacy/False Light), on the basis that these
1

The defendant CRAs have since been dismissed from this case pursuant to
Local Rule of Civil Procedure 41.1(b) with prejudice and without costs. See
Order Dismissing Experian Information Solutions, Inc., ECF No. 55; Order
Dismissing Equifax Information Services, LLC, ECF No. 53; Order Dismissing
Trans Union, LLC, ECF No. 49.
2

Plaintiff concedes that his claim under the CPL is preempted by the
FCRA, and voluntarily withdraws Count IX. Pl.’s Resp. 9.

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four state causes of action are preempted by federal law.
II.

LEGAL STANDARD

In considering a motion to dismiss for failure to state a
claim upon which relief can be granted under Federal Rule of
Civil Procedure 12(b)(6), the court must “accept as true all
allegations in the complaint and all reasonable inferences that
can be drawn therefrom, and view them in the light most
favorable to the non-moving party.” DeBenedictis v. Merrill
Lynch & Co., Inc., 492 F.3d 209, 215 (3d Cir. 2007) (internal
citations omitted). In order to withstand a motion to dismiss, a
complaint’s “[f]actual allegations must be enough to raise a
right to relief above the speculative level.” Bell Atl. Corp. v.
Twombly, 550 U.S. 544, 555 & n.3 (2007). This “requires more
than labels and conclusions, and a formulaic recitation of the
elements of a cause of action will not do.” Id. at 555 (internal
citation omitted). Although a plaintiff is entitled to all
reasonable inferences from the facts alleged, a plaintiff’s
legal conclusions are not entitled to deference and the court is
“not bound to accept as true a legal conclusion couched as a
factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986)
(cited with approval in Twombly, 550 U.S. at 555).
The pleadings must contain sufficient factual allegations
so as to state a facially plausible claim for relief. See, e.g.,
Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 (3d
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Cir. 2009). A claim possesses such plausibility “‘when the
plaintiff pleads factual content that allows the court to draw
the reasonable inference that the defendant is liable for the
misconduct alleged.’” Id. (quoting Ashcroft v. Iqbal, 129 S. Ct.
1937, 1949 (2009)). In deciding a Rule 12(b)(6) motion, the
court is to limit its inquiry to the facts alleged in the
complaint and its attachments, matters of public record, as well
as undisputedly authentic documents if the complainant’s claims
are based upon these documents. See Jordan v. Fox, Rothschild,
O’Brien & Frankel, 20 F.3d 1250, 1261 (3d Cir. 1994); Pension
Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d
1192, 1196 (3d Cir. 1993). A contention that a state law claim
is preempted by federal law is properly attacked under the Rule
12(b)(6) standard. See, e.g, Van Veen v. AT&T Corp., No. 10-cv1625, 2011 WL 4001004, at *2 (E.D. Pa., May 25, 2011) (granting
in party a Rule 12(b)(6) motion to dismiss

on the grounds that

the plaintiff’s state law claim was preempted by federal law);
Burrell v. DFS Servs., LLC, 753 F. Supp. 2d 438, 440 (D.N.J.
2010).
III. DISCUSSION
Plaintiff agrees that his state statutory claim against
Ocwen is preempted under § 1681t(b)(1)(F). See Resp. Opp’n 9.
Therefore, the Court now must determine whether the FCRA’s
preemptory effect likewise bans Plaintiff’s common law claims
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against Ocwen. For Ocwen to prevail in this motion to dismiss,
the Court must find that § 1681t(b)(1)(F) carries a blanket
preemption of both state statutory and common law claims.
Plaintiff’s position is that § 1681t(b)(1)(F) is properly
understood as a statutory preemption only and that it does not
affect Plaintiff’s common law claims.
A. FCRA Preemptory Provisions
In the motion to dismiss, Ocwen points to § 1681t(b)(1)(F),
a preemptory provision in the FCRA which states in relevant part
that:
[n]o requirement or prohibition may be imposed under
the laws of any State . . . with respect to any
subject matter regulated under . . . section 1681s–2
of this title, relating to the responsibilities of
persons who furnish information to consumer
reporting agencies . . . .
15 U.S.C. 1681t(b)(1)(F). According to Ocwen, this
provision preempts state law claims that relate to the
subject matter of § 1681s-2, which requires furnishers of
consumer information to credit reporting agencies to take
particular measures to ensure accuracy.3

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Section 1681s–2 provides:
[A] person shall not furnish any information relating to a
consumer to any consumer reporting agency if the person knows or
has reasonable cause to believe that the information is
inaccurate.

15 U.S.C. 1681s–2(a)(1)(A). A private right of action for knowing and
negligent violations of the FCRA, including § 1681s-2, is provided under 15
U.S.C. §§ 1681n (knowing) and 1681o (negligent).

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As stated infra, Plaintiff disputes the breadth of §
1681t(b)(1)(F)’s preemptory power by noting the existence of an
older preemptory provision, § 1681h(e), which provides that:
[n]o consumer may bring any action or proceeding in
the nature of defamation, invasion of privacy, or
negligence with respect to the reporting of
information against any consumer reporting agency, any
user of information, or any person who furnishes
information to a consumer reporting agency, based on
information disclosed pursuant to section 1681g,
1681h, or 1681m of this title, or based on information
disclosed by a user of a consumer report to or for a
consumer against whom the user has taken an adverse
action, based in whole or in part on the report except
as to false information furnished with malice or
willful intent to injure such consumer.
15 U.S.C. § 1681h(e).4 Plaintiff asserts that this older
provision, which Plaintiff construes to preempt common law
actions against Ocwen where malice or willful intent is not
present, supports Plaintiff’s statutory approach to §
1681t(b)(1)(F). Ocwen’s motion to dismiss Plaintiff’s common law
claims thus turns on the relationship between these two
preemptory provisions.
B. Blanket Preemption Approach to § 1681t(b)(1)(F)
A robust body of case law interpreting preemption
provisions in other statutes supports reading § 1681t(b)(1)(F)’s
ban on “requirement[s] [and] prohibition[s]” as a blanket
preemption provision. See, e.g., Riegel v. Medtronic, Inc., 552
4

These sections of the FCRA lay out requirements for the disclosure of
information by consumer reporting agencies to consumers, see 15 U.S.C. §§
1681g, h, and for users of information contained in consumer reports, see 15
U.S.C. § 1681m.

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U.S. 312, 324 (2008) (stating that “absent other indication,
reference to a State’s ‘requirements’ includes its common-law
duties”); Roth v. Norfalco LLC, 651 F.3d 367, 376 (3d Cir. 2011)
(finding that a Hazardous Material Transportation Act (“HMTA”)
provision on “non-federal requirements” preempted Plaintiff’s
state common law negligence and strict liability claims). But
see Bates v. Dow Agrosciences LLC, 544 U.S. 431, 443 (2005)
(stating that “while the use of “requirements” in a preemption
clause could affect both statutory and common law claims, this
was not “invariably” the case).
The Third Circuit has never directly held that §
1681t(b)(1)(F) preempts both statutory and common law claims,
though it has cited with approval to other Circuit opinions that
adopt the blanket approach to other sections of § 1681t(b). See
Roth (citing Premium Mortg. Corp. v. Equifax Info Servs., LLC,
583 F.3d 103, 106 (2d Cir. 2009) (interpreting “no requirement
or prohibition” in § 1681t(b)(1)(A) to mean both statutory and
common law actions)). More specifically, district courts within
the Third Circuit have adopted the blanket approach in applying
§ 1681t(b)(1)(F) in recent years. See, e.g., Burrell, 753 F.
Supp. 2d at 448-51 (holding that this section preempts both
state statutory and common law claims). But see Manno v. Am.
Gen. Fin. Co., 439 F. Supp. 2d 418, 424, 430 (E.D. Pa. 2006)

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(holding that 1681t(b)(1)(F) preempts only state statutory
claims).
C. Statutory Preemption Approach to § 1681t(b)(1)(F)
Plaintiff disputes Ocwen’s preemption argument, pointing to
more recent district court opinions holding that §
1681t(b)(1)(F) applies to only statutory claims, not state
common law claims. To justify this argument, some courts note
that the FCRA contained a separate preemptory provision, §
1681h(e), prior to the 1996 implementation of § 1681t(b)(1)(F).
Under this approach, several courts in the Eastern and
Middle Districts of Pennsylvania, in attempting to reconcile the
apparent tension between § 1681h(e) and § 1681t(b)(1)(F), have
held that the emphasis of § 1681h(e), the earlier statute, on
common law claims, indicates that the later enacted §
1681t(b)(1)(F) was only intended to preempt state statutory
claims not previously preempted by § 1681h(e). See Manno, 439 F.
Supp. 2d at 430; Van Veen, 2011 WL 4001004, at *5; Shannon v.
Equifax Info. Servs., 764 F. Supp. 2d 714, 728-29 (E.D. Pa.
2011). In other words, as a matter of statutory construction,
these courts concluded that Congress would not have enacted a
specific statute preempting state common law claims, e.g., §
1681t(b)(1)(F), if these claims were already preempted by an
earlier statute, e.g., § 1681h(e). Under Plaintiff’s
interpretation of FCRA’s preemption provisions, Plaintiff’s
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statutory claim would be preempted under § 1681t(b)(1)(F) and
its defamation, negligence, and invasion of privacy/false light
claims would be preempted under § 1681h(e) unless, as provided
by that statute, Plaintiff shows that Ocwen acted maliciously or
with willful intent to cause Plaintiff harm.5
At first glance, this argument makes sense. However, upon a
closer look at the language of § 1681h(e), it is clear that this
earlier provision does not apply a furnisher of information who
did not transfer information pursuant to §§ 1681g, h, or m, such
as Ocwen in this case.
On point is Burrell, a New Jersey district court case which
noted the distinction between § 1681t(b)(1)(F), applying to
furnishers of information about consumer behavior regulated
under § 1681s-2, and § 1681h(e), applying to consumer reporting
agencies and users of consumer reports regulated under §§ 1681g,
h, and m. See 753 F. Supp. 2d at 450-51. Under this
interpretation, § 1681h(e) does not apply to Ocwen because Ocwen

5

There is also case law suggesting that Plaintiff’s negligence claim
would, by definition, be preempted, since as a general presumption negligence
does not allow an actor to behave maliciously or knowingly. See Shannon, 764
F. Supp. 2d at 728-29 (finding that a negligence claim falls within the
preemption clause of § 1681h(e) because “unless a plaintiff alleges
willfulness in pursuing its common law claims, the FCRA provides the
exclusive remedy [and] by definition, a plaintiff cannot alleged willful
negligence”). The counter-argument to Shannon would be that Congress, by
including negligence among the listed exemptions in § 1681h(e), clearly
envisioned for some sort of willful negligence cause of action to survive
preemption. However, because the Court finds that § 1681h(e) does not apply
to Ocwen, see infra, the Court need not address the merits of this argument.

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is a furnisher of information, and not a consumer reporting
agency or user of consumer reports.6
For this reason, since § 1681h(e) does not apply to
furnishers of information reporting information under § 1681s—2,
Plaintiff’s basis for rejecting a blanket approach to §
1681t(b)(1)(F)—that to do so would render the earlier preemption
provision, § 1682h(e), without independent meaning—fails, as
that section does not apply to furnishers of information at all.
Accordingly, the blanket approach to § 1681t(b)(1)(F), the
preemption provision relating to Ocwen, is proper and all state
statutory and common law claims against Ocwen are preempted.7

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Another district court in New Jersey has similarly distinguished the
two provisions of the FCRA, finding 1681t(b)(1)(F) to be a true preemption
provision and 1681h(e) to be merely a limitation of liability provision. See
Cosmas v. American Exp. Centurion Bank, 757 F. Supp. 2d 489, 497 (D.N.J.
2010).
7

While the Court adopts the reasoning as seen in Burrell, that §
1681h(e) does not address entities such as Ocwen and thus should not impact
whether or not § 1681t(b)(1)(F) is a blanket preemption for such entities,
the Court also notes that other Circuits have simply applied a blanked
approach to § 1681t(b)(1)(F) without addressing any overlapping meaning in §
1681h(e). In 2011, the Seventh Circuit adopted the Second Circuit’s reasoning
in Premium Mortgage, applying a blanket approach to § 1681t(b)(1)(A), and
applied it to its interpretation of § 1681t(b)(1)(F). See Purcell v. Bank of
America, 659 F.3d 622, 624 (7th Cir. 2011). In Purcell, the Seventh Circuit
held that the provision preempted both state statutory and common law claims.
See id. The court specifically explained why it disagreed with Manno, noting
that there was in fact no tension between § 1681t(b)(1)(F) and § 1681h(e):
[W]e do not perceive any inconsistency between the two statutes.
Section 1681h(e) preempts some state claims that could arise out of
reports to credit agencies; § 1681t(b)(1)(F) preempts more of these
claims. Section 1681h(e) does not create a right to recover for
wilfully false reports; it just says that a particular paragraph does
not preempt claims of that stripe. Section 1681h(e) was enacted in
1970. Twenty-six years later, in 1996, Congress added § 1681t(b)(1)(F)
to the United States Code. The same legislation also added § 1681s–2.
The extra federal remedy in § 1681s–2 was accompanied by extra
preemption in § 1681t(b)(1)(F), in order to implement the new plan

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IV.

CONCLUSION

The Court finds that § 1681t(b)(1)(F) of the FCRA preempts
all state law claims with respect to all subject matter
regulated under § 1681s–2 asserted against furnishers of
information to credit reporting agencies. Given that Ocwen is a
furnisher of information, the Court will grant Ocwen’s Motion to
Dismiss as to Counts VI (Defamation), IX (Violation of the
Pennsylvania CPL), XI (Negligence), and XIII (Invasion of
Privacy/False Light).
An appropriate order follows.

under which reporting to credit agencies would be supervised by state
and federal administrative agencies rather than judges. Reading the
earlier statute, § 1681h(e), to defeat the later-enacted system in §
1681s–2 and § 1681t(b)(1)(F), would contradict fundamental norms of
statutory interpretation.
659 F.3d at 625 (emphasis in the original). For this reason, the court held
that the FCRA preempted state law claims for defamation, invasion of privacy,
and negligence in reporting of information to consumer reporting agencies.
Id. at 626.
Perhaps less persuasive, but still notable, two recent unreported
opinions from the Courts of Appeal in the Ninth and Tenth Circuits reached
the same conclusion. See Marshall v. Swift River Academy, LLC, 327 Fed. App’x
13, 15 (9th Cir. 2009) (affirming that a defamation claim was preempted by
1681(b)(1)(F)); Pinson v. Equifax Credit Information Services, Inc., 316 Fed.
Appx. 744, 751 (10th Cir. 2009) (affirming that state law libel and invasion
of privacy/false light claims were preempted under § 1681t(b)(1)(F)).

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