Tatro v. Equifax Information Services, LLC et al

Filing 33

MEMORANDUM AND ORDER granting 20 Motion to Dismiss for Failure to State a Claim - So Ordered by District Judge John J. McConnell, Jr. on 12/12/2018. (Urizandi, Nisshy)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
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MICHAEL P. TATRO,
Plaintiff,

v.
EQUIFA..'{ INFORMAT ION
SERVICES~LLC, ENCORE CAPITAL
GROUP, INC., MIDLAND FUNDING
LLC, MIDLAND CREDIT
MANAGEMENT, INC.,
CONVERGENT OUTSOURCING,
INC., FRONTLIN E ASSET
STRATEGIES LLC, and ESC/CRED IT
BASICS,
Defendants.
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C.A. No. 18-341-JJl',tl-PAS

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MEMORANDUM AND ORDER
JOHN J. MCCONNELL, JR., United States District Judge.
Defendants Encore Capital Group, Inc., Midland Funding LLC, and Midland
Credit Managemen t, Inc. move to dismiss Plaintiff Michael P. Tatro's Complaint for
failure to state a claim on which relief can be granted under Fed. R. Civ. P. 12(b)(6).
ECF No. 20. For reasons set forth below, the Court GRANTS Defendants' Motion.
I.

BACKGROUND
Defendants Encore Capital Group, Inc., Midland Funding LLC, and Midland

Credit Managemen t, Inc. (collectively "the Midland Defendants" ) are a "consortium
of entities whose primary purpose is the collection of third-party debt."! ECF No. 1-

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The Court takes the facts from the Complaint. ECF No. 1-1.

1 at 6. On September 18, 2016, the Midland Defendants transferred Mr. Tatro's
means of identificatio n, including, but not limited to his name, elate of birth, and
portions of social security number to Trans Union, a consumer reporting agency, to
obtain a credit report. In doing so, the Midland Defendants certified the permissible
purpose of the request as collection. Mr. Tatro denies that he is a customer or
judgment debtor of Midland Credit Managemen t, Inc. ("MCM"), and asserts that he
did not grant permission to the Midland Defendants to obtain his credit report. Upon
discovering that MCM requested and received his credit report, Mr. Tatro contacted
MCM to identify the debt it was trying to collect, providing his date of birth and the
last six digits of his social security number. MCM was unable to locate an account in
Mr. Tatro's name based on the information he had provided and requested further
identifying information , including his social security number in full, or previous
address, and full name. Mr. Tatro did not provide this additional information .
Mr. Tatro brought this action alleging Defendants violated his privacy rights
as well as his rights under state and federal statutes relating to credit reporting and
debt collection. As to the moving Midland Defendants, Mr. Tatro claims that they
improperly accessed his credit report without a permissible purpose.

Mr. Tatro

asserts that by this conduct, the Midland Defendants violated the federal Fair Credit
Reporting Act ("FCRA"), committed identity fraud as defined under state law,
invaded his privacy, negligently disclosed his personal information , and converted his
personal identity.

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II.

STANDARD OF REVIEW
In reviewing a motion to dismiss for failure to state a claim, the Court accepts

a plaintiffs allegations as true and draws all reasonable inferences in his favor.

Gaz-gano v. Liberty Int'l Underwiitel's, Inc., 572 F.3d 45, 48 (1st Cir. 2009).

To

withstand "a motion to dismiss, a complaint must allege 'a plausible entitlement to
relief."' ACA Fin. Guar. C01p. v. Advest, Inc., 512 F.3d 46, 58 (1st Cir. 2008) (quoting

Bell Atl. C01p. v. Twombly, 550 U.S. 544 (2007)); see also Ashcwft v. Iqbal, 556 U.S.
662 (2009). That said, conclusory allegations, recitations of the elements, and legal
conclusions cannot meet the standard. Twombly, 550 U.S. at 555; see also Gooley v.

Mobil Oil C01p., 851 F.2d 513, 515 (1st Cir. 1998) ("[A) plaintiff... is ... required to set
forth factual allegations, either direct or inferential, respecting each material element
necessary to sustain recovery under some actionable legal theory.").
III.

DISCUSSION
Mr. Tatro's primary theory ofliability is that the Midland Defendants obtained

his credit report without a permissible purpose. He asserts that by doing so, the
Midland Defendants violated the FORA, committed identity fraud, invaded his
privacy, negligently disclosed his personal information, and converted his personal
identity. 2 The Midland Defendants move to dismiss alleging that Mr. Tatro has not
alleged the necessary elements of the claimed violations. The Court agrees.

Mr. Tatro requested leave of the Court to dismiss his Negligent
Dissemination of Plaintiffs "Means of Identification" and Conversion of Intangible
Property claims. ECF No. 31·1 at 53. Counts 11 and 13 against the Midland
Defendants are therefore dismissed.
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A.

The Fair Credit Reporting Act Claim Fails Because Mr. Tatro Has Not
Plausibly Alleged the Elements of a Violation

To get beyond the pleading stage of a FCRA claim, "Plaintifffir st must set forth
facts sufficient to plausibly allege that: (1) Defendant obtained the credit reports for
an impermissib le purpose; and (2) that Defendant's conduct was either willful or
negligent." Lecaj v. Green Tree Servicing, LLC, 130 F. Supp. 3d 469, 470 (D. Mass.
2015) (citing Perez v. Portfolio Recovery Assocs., LLC, No. CIV. 12·1603 JAG, 2012
WL 5373448, at *2 (D.P.R. Oct. 30, 2012)). Mr. Tatro's allegations fall short.
Mr. Tatro alleges no facts sufficient to plausibly allege that the Midland
Defendants had an "impermissi ble" purpose. Mr. Tatro claims that the purported
lack of a permissible purpose is alleged because MCM could not locate any account in
his name. ECF No. 1·1 at ,[123. However, courts have found that a credit report
may be permissibly obtained simply to review an account.

See Perez, 2012 WL

5373448, at *8 ("no part of the FCRApreve nts third·partie s from searching a person's
credit report, even ones with no previous relationship to the third person, provided
that the inquiry is done for permissible purposes."); see also Daniel v. Midland

Funding; LLC, No. 15·CV·10956, 2016 WL 4253886, at *4 (E.D. Mich. Aug. 12, 2016)
("actual ownership or authority to collect on a debt is not necessary for a debt collected
to permissibly obtain a credit report; for example, it is permissible for potential debt
buyers to obtain a credit report to determine whether it will purchase the debt").
Moreover, contrary to Mr. Tatro's argument, the FCRA does not require debt
collectors to verify the accounts they look to collect.

See Robinson v. Greystone

Alliance, LLC, No. BPG·10·365 8, 2011 WL 2601573, at *3 (D. Mel. June 29, 2011) ("As

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long as the debt collector has reason to believe that the consumer owes the debt, the
debt collector may permissib ly obtain the consumer 's credit report without violating
the FCRA").
15 U.S.C. § 1681b provides, in relevant part:
a) In general
Subject to subsectio n (c), any consumer reporting agency may furnish a
consumer report under the following circumsta nces and no other:
(3) To a person which it has reason to believe··
(A) intends to use the informati on in connectio n with a credit
transactio n involving the consumer on whom the informati on is to be
furnished and involving the extension of credit to, or review or
collection of an account of, the consumer ; or
(E) intends to use the informatio n, as a potential investor or servicer,
or current insurer, in connectio n with a valuation of, or an assessme nt
of the credit or prepayme nt risks associated with, an existing credit
obligation ; or
Thus, an entity may obtain a credit report about a consumer even if it does not
ultimately enter into a transactio n with the consumer and it is not the original
creditor. Plaintiff character izes the Midland Defendan ts as entities who purchase
delinquen t debts and then collect or attempt to collect them. ECF No. 1·1 at

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30.

Section 1681b(a)(3)(A) provides that a business may request a credit report when the
business is contempl ating entering into a transactio n that would result in the
requestor collecting an account of that consumer . Section 1681b(1)(3)(E) provides
that a business may request a consumer report to evaluate the value of a credit
obligation as a potential investmen t.

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Mr. Tatro never argues that the Midland Defendants accessed his credit report
for a purpose other than collection.

Without particulariz ed allegations that the

Midland Defendants obtained his credit report for an impermissib le purpose, Mr.
Tatro fails to state a claim under the FCRA. See Perez, 2012 WL 5373448, at *2
(holding that to survive a Motion to Dismiss on an FCRA claim, the complaint must
allege sufficient facts to establish to a plausible degree that Defendant obtained the
credit reports for an impermissib le purpose).
B.

The Identity Theft Claim Fails Because There Are No Allegations of
Intent to Defraud or Unlawful Activity by The Midland Defendants

Mr. Tatro also seeks to recover under a state criminal statute that permits him
to seek damages for violating criminal statutes. ECF No. 1·1 at,[,[ 130-133. R.I.G.L.

§ 9-1-2 provides, "Whenever any person shall suffer any injury to his or her person,
reputation, or estate by reason of the commission of any crime or offense, he or she
may recover his or her damages for the injury in a civil action against the offender."
Mr. Tatro alleges that the Midland Defendants engaged in identity theft by using his
"means of identificatio n" to obtain a credit report and points to R.I.G.L. § 11·49.1-3
as the violated statute:
(a) Any person who shall: (1) knowingly and without lawful authority
produce an identificatio n document or a false identificatio n document;
(2) knowingly transfer an identificatio n document or a false
identificatio n document knowing that the document was stolen or
produced without lawful authority; (3) knowingly possess with intent to
use unlawfully or transfer unlawfully five (5) or more identificatio n
documents (other than those issued lawfully for the use of the possessor)
or false identificatio n documents: (4) knowingly possess an identificatio n
document (other than one issued lawfully for the use of the possessor) or
a false identificatio n document, or financial information with the intent
that the document or financial information be used to defraud the

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United States, the State of Rhode Island, any political subdivision of it
or any public or private entity; (5) knowingly transfer, or possess a
document-m aking implement with the intent that the document-m aking
implement will be used in the production of a false identificatio n
document or another document-m aking implement which will be so
used; (6) knowingly possess a false identificatio n document that is or
appears to be a genuine identificatio n document of the United States,
the State of Rhode Island or any political subdivision of it or any public
or private entity which is stolen or produced without lawful authority
knowing that the document was stolen or produced without such
authority; or (7) knowingly transfer or use with intent to defraud,
without lawful authority, a means of identificatio n or financial
information of another person living or dead, with the intent to commit,
or to aid or abet, any unlawful activity that constitutes a violation of
federal, state or local law; shall be guilty of a felony and shall be subject
to the penalties set forth in § ll-49.1-4.
The relevant portion of the statute, subsection 7, prohibits the knowing transfer or
use with intent to defraud, without lawful authority, a means of identificatio n of
another person with the intent to commit another crime. Mr. Tatro's Complaint
alleges no facts relating to any intended or actual unlawful authority by the Midland
Defendants. Moreover, Mr. Tatro fails to allege any harm, a necessary element to
establish a right of recovery under R.I.G.L. § 9-1-2, because of the Midland
Defendants obtaining his credit report.
C.

The Invasion of Privacy Claim Fails Because Plaintiff Does Not Allege
an Invasion

Mr. Tatro's third cause of action asserts that his statutory right to privacy was
violated when the Midland Defendants obtained his credit report.

ECF No.

paragraph 137. Under the statute, a plaintiff must plead and prove: (1) an invasion
of something that is entitled to be private or would be expected to be private; and (2)
the invasion was or is offensive or objectionabl e to a reasonable person. See R.I.G.L.

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§ 9-1-28.1(a)(1). If private information is not obtained through unlawful or improper
means, there is no invasion of privacy under the statute. See Pontbn'and v. Sundlun,
699 A.2d 856, 863-64 (R.I. 1997) ("Since there are no allegations in the complaint that
the information ... was acquired through any wrongful or improper means, the
depositors have not stated a cause of action for intrusion under§ 9-1-28.1(a)(1)."); see
also Han-is by Han-is v. Easton Publishing Co., 335 Pa. Super. 141, 483 A.2d 1377

(1984) (finding no tort of invasion of privacy was shown where facts published were
not obtained by intentional intrusion).
Here, the allegations fall short for several reasons. First, Mr. Tatro does not
specify what private information was disclosed or any facts supporting the claim that
any information was in fact private, only alleging that identifying information was
disclosed to obtain his credit report.

He also does not claim that the Midland

Defendants obtained any information improperly. Without alleging that the Midland
Defendants obtained private information through improper means, the invasion of
privacy claim under R.I.G.L. 9-1-28.1(a)(1) must fail.

IV.

CONCLUSION
Mr. Tatro has failed to allege plausibly any cause of action against the Midland

Defendants. The Court thus GRANTS the Midland Defendants' Motion to Dismiss.
ECF No. 20.

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John J. McConnell, Jr.
United States District Judge
December 12, 2018

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