Freeman v. Equifax Inc et al
Filing
31
ORDER denying 7 Steve White Motors' Motion to Dismiss for Failure to State a Claim; granting 12 Trans Union's Motion to Dismiss injunctive relief claims Signed by Honorable Henry M Herlong, Jr on 6/28/12.(awil)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
Jason H. Freeman,
Plaintiff,
vs.
Equifax, Inc.; Experian Information
Services, Inc.; TransUnion, LLC; Audi
Financial Services, Inc., a/k/a VW Credit
Inc.; Steve White Audi of Greenville,
South Carolina,
Defendants.
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C.A. No. 6:12-845-HMH
OPINION & ORDER
This matter is before the court on Defendant Steve White Audi’s (“Steve White Motors”)
and Defendant Trans Union, LLC’s (“Trans Union”)1 motions to dismiss pursuant to Federal
Rule of Civil Procedure 12(b)(6). Steve White Motors maintains that it is entitled to dismissal
as a party because the complaint fails to allege a plausible claim of relief against it. Trans Union
seeks dismissal of Plaintiff’s claims for injunctive relief. For the reasons that follow, Steve
White Motors’ motion is denied and Trans Union’s motion is granted.
I. FACTUAL AND PROCEDURAL BACKGROUND
Jason H. Freeman (“Freeman”) purchased an Audi A4 2.0T Cabriolet automobile from
Steve White Motors on March 30, 2007. (Compl. ¶ 11.) He alleges that in the six months
following his purchase of the automobile, it had to be returned on five occasions for mechanical
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The complaint incorrectly names Defendant Steve White Motors of South Carolina, LLC as
“Steve White Audi of Greenville, South Carolina” and Defendant Trans Union, LLC as
“TransUnion, LLC.” The court refers to the parties’ proper names throughout this order.
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repairs. (Id. ¶ 12.) Despite Steve White Motors’ attempt to repair the automobile, Freeman
contends that it remained “both unsafe and unfit to drive,” and he returned it to Steve White
Motors on August 30, 2009.
According to the complaint, after Freeman returned the vehicle, he “learned that Steve
White and VW Credit had maliciously and wrongfully submitted inaccurate credit information
against Mr. Freeman to the consumer reporting agencies.” (Id. ¶ 19.) The complaint further
alleges that despite Freeman’s request that the false and inaccurate credit information be
corrected, “Defendants have refused to provide and uphold their ethical and legal obligations by
failing to act and investigate Mr. Freeman’s allegations of the disputed credit information.” (Id.
¶ 20.) On January 13, 2012, Freeman commenced this civil action, alleging that Defendants
violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. Steve White Motors
subsequently filed a motion to dismiss, arguing that the allegations in the complaint fail to state
a plausible claim for relief against it under the FCRA. Trans Union also filed a Rule 12(b)(6)
motion, contending that the FCRA does not authorize Freeman’s claims for injunctive relief.
The parties have fully briefed the issues, and these matters are ripe for review.
II. DISCUSSION OF THE LAW
A. Standard of Review
When presented with a Rule 12(b)(6) motion to dismiss, the court must restrict its
inquiry to the sufficiency of the complaint rather than “resolve contests surrounding the facts,
the merits of a claim, or the applicability of defenses.” Republican Party of North Carolina v.
Martin, 980 F.2d 943, 952 (4th Cir. 1992). To withstand a motion to dismiss, a complaint must
“contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on
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its face.” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (internal quotation marks omitted).
Under this plausibility standard, the court must “assume th[e] veracity” of well-pled factual
allegations “and then determine whether they plausibly give rise to an entitlement to relief.” Id.
at 1950. While a complaint “does not need detailed factual allegations” to survive a Rule
12(b)(6) motion to dismiss, pleadings that contain mere “labels and conclusions” or “a formulaic
recitation of the elements of a cause of action will not do.” Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007). Although the court must consider all well-pled factual allegations in a
complaint as true, the court need not “accept as true a legal conclusion couched as a factual
allegation.” Id.
B. Steve White Motors’ Motion
The FCRA imposes distinct duties on three types of entities: consumer reporting
agencies (“CRA”), users of consumer credit reports, and furnishers of debt information to
CRAs. Wenner v. Bank of Am., N.A., 637 F. Supp. 2d 944, 951 (D. Kan. 2009). Furnishers
have two duties under the FCRA. Saunders v. Branch Banking & Trust Co., 526 F.3d 142, 149
(4th Cir. 2008). First, they have a general obligation to report only accurate information to
CRAs. 15 U.S.C. § 1681s-2(a). Second, they have a duty to verify the sufficiency and accuracy
of reported information upon receipt of notice of a dispute from a CRA. § 1681s-2(b).
The complaint broadly alleges that Steve White Motors has “failed to comply” with the
FCRA by furnishing inaccurate information to CRAs. (Compl. ¶ 24.) Also included in the
complaint are allegations that Freeman informed the Defendant CRAs that Steve White Motors
furnished false information but that Steve White Motors has failed to act upon and investigate
Freeman’s complaint of the allegedly false credit information, thereby violating its duty under
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§ 1681s-2(b). (Id. ¶¶ 20, 22.) Steve White Motors maintains that these factual allegations are
insufficient to state a plausible claim of relief under the FCRA.
With respect to its duties arising under § 1681s-2(a), Steve White Motors correctly
argues that no private right of action exists for a violation of this provision of the FCRA, and
that these duties instead can be enforced only by government officials. See Barberan v.
Nationpoint, 706 F. Supp. 2d 408, 427 (S.D.N.Y. 2010). Freeman, therefore, is unable to base
an FRCA claim against Steve White Motors on § 1681s-2(a). Huertas v. Galaxy Asset Mgmt.,
641 F.3d 28, 34 (3d Cir. 2011).
Steve White Motors next argues that it should be dismissed as a party because the
complaint lacks any allegation that it ever received notice of a dispute from a CRA, a
prerequisite to trigger its duties under § 1681s-2(b). See Gorman v. Wolpoff & Abramson, LLP,
584 F.3d 1147, 1154 (9th Cir. 2009) (explaining that a furnisher’s duties under § 1681s-2(b)
“arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute
received directly from the consumer does not trigger furnishers’ duties under subsection (b)”).
The United States Court of Appeals for the Seventh Circuit has explicitly rejected the
proposition that a complaint must allege a triggering CRA notice to survive a Rule 12(b)(6)
motion. Lang v. TCF Nat’l Bank, No. 07-1415, 2007 WL 2752360, at *2 (7th Cir. Sept. 21,
2007) (unpublished). The Seventh Circuit reasoned that the “FCRA does not require a CRA to
tell a consumer when it notifies a furnisher of information about the consumer’s dispute,” and
consequently, a plaintiff “may not, at the time of filing a complaint, be in a position to allege
that notification.” Id. Instead, the court held that a plaintiff states a plausible claim for relief
under § 1681s-2(b) by alleging (1) that the plaintiff notified a CRA that the defendant furnished
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false information; (2) that the defendant-furnisher refused to investigate or correct the false
report after learning of the alleged error; and (3) that it thereby violated the FCRA. Id.
Applying Lang to the allegations in Freeman’s complaint, the court concludes that he has
stated a plausible claim for relief. Freeman alleges that he notified the Defendant CRAs that
Steve White Motors furnished false and inaccurate credit information. (Compl. ¶ 22.)
Notwithstanding this notification, he further alleges that Steve White Motors violated the FCRA
by “failing to act on and investigate [his] allegations of the disputed credit information.” (Id.
¶ 20.) Although Freeman ultimately must show that a CRA provided Steve White Motors
notification of a dispute, these factual allegations suffice to state a plausible claim for relief
under § 1681s-2(b). Based on the foregoing, Steve White Motors’ motion to dismiss is denied.
C. Trans Union’s Motion
Trans Union contends that Freeman’s claims for injunctive relief should be dismissed
because the FCRA does not permit individual plaintiffs to obtain injunctive relief. Although the
Fourth Circuit has not addressed this issue, the clear weight of authority holds that injunctive
relief is available under the FCRA only in suits brought by the Federal Trade Commission
(“FTC”). Clark v. Saxon Mortgage Co., Civil Action No. 11-0065-JJB-SCR, 2011 WL
2682435, at *2 (M.D. La. July 8, 2011) (unpublished) (recognizing that this conclusion has been
embraced by “the vast majority of federal courts”). The Fifth Circuit is the only appellate court
to address this issue, concluding that the statute’s explicit conferral to the FTC of the power to
obtain injunctive relief and its lack of a comparable provision permitting individual plaintiffs
from seeking such relief when they are expressly granted the right to obtain damages, manifests
a clear negative inference that injunctive relief is not available for private plaintiffs under the
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FCRA. Washington v. CSC Credit Servs., Inc., 199 F.3d 263, 268 (5th Cir. 2000); see also
Amoco Prod. Co. v. Vill. of Gambell, 480 U.S. 531, 542 (1987) (explaining that a district court
lacks authority to award injunctive relief when Congress “by a necessary and inescapable
inference” forecloses such relief). District courts within the Fourth Circuit have followed the
approach of the Fifth Circuit, see, e.g., Domonoske v. Bank of America, N.A., 705 F. Supp. 2d
515, 518 (W.D. Va. 2010), explaining that “[w]hile the FCRA does not expressly prohibit
injunctive relief, Congress’s failure to include injunctive relief as a potential remedy, combined
with Congress’s express delegation of enforcement of the FCRA to the FTC, clearly indicates
that Congress did not intend injunctive relief as a remedy” for individual plaintiffs. Bumgardner
v. Lite Cellular, Inc., 996 F. Supp. 525, 527 (E.D. Va. 1998). The court finds these authorities
persuasive and concludes that Freeman’s claim for injunctive relief must be dismissed.
Based on the foregoing, the court denies Steve White Motors’ motion to dismiss and
grants Trans Union’s motion to dismiss.
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It is therefore
ORDERED that Steve White Motors’ motion to dismiss, docket number 7, is denied. It
is further
ORDERED that Trans Union’s motion to dismiss injunctive relief claims, docket
number 12, is granted.
IT IS SO ORDERED.
s/Henry M. Herlong, Jr.
Senior United States District Judge
Greenville, South Carolina
June 28, 2012
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