Strohmeyer v. Chase Bank USA, N.A. et al (TWP2)
Filing
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MEMORANDUM OPINION - Signed by District Judge Thomas W Phillips on 8/05/2019. (Copy mailed to: Kamala Shardul Strohmeyer, 3539 Bryan Road, Kodak, TN 37764 )(KMK)
IN THE UNITED STATES DISTRICT COURT FOR
THE EASTERN DISTRICT OF TENNESSEE
KNOXVILLE DIVISION
KAMALA SHARDUL STROHMEYER,
Plaintiff,
v.
CHASE BANK USA, N.A., EQUIFAX, INC.,
a/k/a EQUIFAX INFORMATINOSERVICES,
LLC, and DOES 1-10,
Defendants.
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No. 3:17-CV-443
MEMORANDUM OPINION
This civil action is before the court for consideration of Defendant Equifax’s motion
for summary judgment. [Doc. 18]. Plaintiff has filed a response, and Defendant has
submitted a reply. [Docs. 19, 21]. For the reasons that follow, the motion will be granted
and this case will be dismissed.
I.
Background
In her complaint, Plaintiff alleges that Equifax is a consumer reporting agency
(“CRA”). [Doc. 1 at 8]. She alleges that, on June 16, 2017, she sent Equifax a notice of
dispute demanding validation of an alleged account with Chase Bank (“Chase”). [Id. at
10]. On August 2, 2017, she sent Equifax a follow-up notice of dispute, again demanding
validation of an alleged account with Chase. However, Plaintiff alleges that Equifax failed
to note the dispute and continued to report the inaccurate information. [Id.]. She contends
that Equifax did not respond to her letters of dispute, and refused to amend its reports to
reflect the dispute, in violation of the Fair Credit Reporting Act (“FCRA”). [Id. at 11].
Plaintiff alleges that, not only did Equifax fail to respond to her written request, it failed to
delete information found to be inaccurate, reinserted the information without following the
requirements of the FCRA, and failed to properly investigate her disputes. [Id. at 13].
Moreover, Plaintiff alleges that Equifax failed to maintain and follow reasonable
procedures to assure maximum possible accuracy of her credit reports. Plaintiff alleges
that Equifax’s actions were malicious and willful. [Id.]. Plaintiff also alleges state law
claims against Equifax for: (1) invasion of privacy; (2) negligent, wanton and/or intentional
hiring and supervision of incompetent employees or agents; and (3) unspecified state law
claims. [Id. at 13-17].
Plaintiff attaches to her complaint a letter sent to Chase, and copied to Equifax,
dated July 23, 2016. [Doc. 1-1 at 1-6]. In this letter, Plaintiff stated that she was disputing
Chase’s claim for payment, and had concluded that Chase was in breach of the alleged
credit card agreement. [Id.]. A second letter to Chase, and copied to Equifax, dated August
17, 2016, repeated the same information as the July 23 letter, but noted that Chase had
responded to her prior letter, although not to her satisfaction. [Id. at 7-12]. A third letter
to Chase, and copied to Equifax, dated June 16, 2017, indicates that Plaintiff disputed an
inaccuracy on her credit reports, namely, a report regarding a Chase Account which stated
in Equifax’s report: “Charge Off, Charged off account 05/2016, Charge Off Amount
$13,284.00.” [Id. at 13-15]. Plaintiff contended that this item was “entirely inaccurate and
incomplete.” [Id.]. An August 2, 2017 letter to Equifax, Experian, and TransUnion stated
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that it was a follow-up to the June 16 letter, and no changes had been made to her credit
reports referencing her dispute with Chase. [Id. at 19-20]. Finally, Plaintiff attaches a copy
of a letter she received from Equifax on July 10, 2017, which stated that Equifax had
reviewed her dispute and had verified that the disputed account belonged to Plaintiff. [Id.
at 24-27].
In support of the instant motion for summary judgment, Equifax submitted a sworn
declaration from Shetonjela Barber, a legal support associate at Equifax, detailing the
following facts, with supporting documentation. [Doc. 18-2 at 2-3]. Equifax is a CRA as
defined by the FCRA. [Id. at 3]. Equifax maintains detailed procedures to assure
maximum possible accuracy of the information it reports, and corrects errors that are
brought to its attention. [Id. at 4]. Specifically, Equifax only accepts credit information
from those sources that it has deemed reasonably reliable based on Equifax’s own
investigation, the source’s reputation in the community, and/or Equifax’s longstanding
business relationships with it. Equifax conducts an extensive investigation to ensure that
a company is reliable. [Id.]. Once Equifax receives data from an approved source, Equifax
conducts a series of computerized quality checks before adding the data to its consumer
database, to determine whether the date is in the proper format and whether the data, as a
whole, deviates from the expected norms. [Id. at 4-5].
Equifax also maintains detailed policies and procedures for conducting reasonable
reinvestigations of information disputed by consumers. [Id. at 5]. Specifically, upon
receipt of a dispute, Equifax locates the consumer’s credit file and then opens an
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Automated Consumer Interview Systems (“ACIS”) case, which tracks the process of the
reinvestigation. Equifax then reviews and considers all relevant information, including any
documentation provided by the consumer. [Id.]. If further investigation is required,
Equifax notifies the source of the account information of the dispute, identifies the nature
of the dispute, and includes the consumer’s account information as then appears in
Equifax’s credit file. [Id. at 5-6]. Generally, Equifax transmits this through a form on an
Automated Consumer Dispute Verifications (“ACDV”) system. [Id. at 6]. The ACDV
electronic mail process allows CRAs to communicate with data furnishers through the use
of an array of pre-defined codes and narrative phrases, and the standardized process
enhances consistently and reduces misunderstandings. Once the data furnisher receives
the dispute from Equifax, it is generally required, both by its contract with Equifax and the
FCRA, to conduct its own investigation and report the results to Equifax. If the data
furnisher advises Equifax to delete or update the account information, Equifax takes the
necessary action and notifies the consumer. Once the reinvestigation is complete, Equifax
sends the consumer the results along with a summary of the consumer’s rights under the
FCRA, additional steps the consumer may take, and a description of the procedures used
to reinvestigate the dispute. [Id.].
Equifax has determined that Chase is a reliable source of information based on the
history of their relationship and Chase’s agreement to the terms of a subscriber agreement.
[Id. at 6]. Chase reported to Equifax a credit card account ending in 4733 (“Account”)
belonging to Plaintiff. [Id. at 7]. On July 28, 2016, Equifax received a letter dated July
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23, 2016, from Plaintiff, in which Plaintiff contended that the Account was not delinquent,
because there was not a “legal and legitimate loan.” [Doc. 18-2 at 7; Doc. 18-3 at 2].
Plaintiff requested that Equifax “enter this account as being suspended[.]” [Doc. 18-3 at
2]. Plaintiff also attached to this letter a copy of her July 23, 2016, letter to Chase, which
she attached to the instant complaint. [Id. at 3-8]. In response to this dispute, Equifax
followed its normal reinvestigation procedures, and, on August 1, 2016, Equifax sent an
ACDV to Chase to request verification of the Account. [Doc. 18-2 at 7; Doc. 18-4 at 1].
Chase’s employee, Stephan Boddie, prepared Chase’s response to the ACDV. [Id.]. On
August 9, 2016, Equifax received Chase’s response to the ACDV, confirming that the
Account belonged to Plaintiff, and confirming the account information, but modifying
some payment history. [Doc. 18-2 at 8; Doc. 18-4]. On or about August 9, 2016, Equifax
provided the results of the reinvestigation to Plaintiff. [Doc. 18-2 at 8].
On July 29, 2016, Equifax received another letter dated July 23, 2016, from
Plaintiff, which contained the same language as the letter received on July 28, 2016. [Doc.
18-2 at 8; Doc. 18-5 at 1]. This letter to Equifax also attached Plaintiff’s July 23, 2016,
letter to Chase, which Plaintiff attached to the instant complaint. [Doc. 18-5 at 3-8]. On
July 29, 2016, as part of its reinvestigation, Equifax sent an ACDV to Chase to request
verification of the Account. [Doc. 18-2 at 8; Doc. 18-6 at 2]. Chase’s employee Stephan
Boddie prepared Chase’s response to the ACDV. [Id.]. On August 9, 2016, Equifax
received Chase’s response to the ACDV, confirming that the Account belonged to Plaintiff
and confirming all account information, but modifying some payment history. [Doc. 18-2
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at 8; Doc. 18-6]. On or about August 10, 2016, Equifax provided Plaintiff with its
reinvestigation results. [Doc. 18-2 at 8].
On August 20, 2016, Equifax received a letter, dated August 17, 2016, from
Plaintiff, which again contained the same language as Plaintiff’s prior two letters to
Equifax. [Doc. 18-2 at 9; Doc. 18-8 at 2]. Plaintiff attached a copy of her August 17, 2016,
letter to Chase, which she also attached to the instant complaint. [Doc. 18-8 at 3-8]. On
August 21, 2016, Equifax again received the exact same letter, dated August 17, 2016.
[Doc. 18-2 at 9; Doc. 18-9]. On August 23, 2016, Equifax sent an ACDV to Chase as part
of its reinvestigation response to these two letters. [Doc. 18-2 at 9; Doc. 18-10 at 2].
Chase’s employee, Nivedha Nadar prepared Chase’s response to the ACDV. [Id.]. On
September 1, 2016, Equifax received Chase’s response to the ACDV, which confirmed
that the Account belonged to Plaintiff, but modified some account information and
payment history. [Doc. 18-2 at 9; Doc. 18-10]. On September 2, 2016, Equifax provided
Plaintiff with its reinvestigation results. [Doc. 18-2 at 9].
On June 20, 2017, Equifax received a letter dated June 16, 2017, from Plaintiff,
which was addressed to Chase, and disputed the Account. [Doc. 18-2 at 10; Doc. 18-11].
Plaintiff contested the information Equifax’s report contained about the Account,
specifically, that the account was a “Charge Off, Charged off account 05/2016, Charge Off
Amount $13,284.00.” [Doc. 18-11 at 2]. On June 29, 2017, Equifax sent an ACDV to
Chase to request verification of the Account. [Doc. 18-2 at 10; Doc. 18-12 at 2]. Chase’s
employee, Meenaz Ibrahim prepared Chase’s response. [Id.]. On July 7, 2017, Equifax
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received Chase’s response to the ACDV, confirming that the Account belonged to Plaintiff,
but modifying some account information and payment history. [Doc. 18-2 at 10; Doc. 1812]. On or about July 10, 2017, Equifax provided Plaintiff with its reinvestigation results.
[Doc. 18-2 at 10].
II.
Standard of Review
Summary judgment is appropriate when the moving party shows that the record—
the admissions, affidavits, answers to interrogatories, declarations, depositions, or other
materials—is without a genuine issue of material fact and that the moving party is entitled
to judgment as a matter of law. Fed. R. Civ. P. 56(a), (c); Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986). The moving party has the initial burden of identifying the basis for
summary judgment and the portions of the record that lack genuine issues of material fact.
Celotex, 477 U.S. at 323. The moving party discharges that burden by showing “an absence
of evidence to support the nonmoving party’s case,” at which point the non-moving party,
to withstand summary judgment, must identify facts in the record that create a genuine
issue of material fact. Id. at 324-25.
Not just any factual dispute will defeat a motion for summary judgment—the
requirement is “that there be no genuine issue of material fact.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (emphasis in original). A fact is “material” if it may
affect the outcome of the case under the applicable substantive law, and an issue is
“genuine” if the evidence is “such that a reasonable jury could return a verdict for the
nonmoving party.” Id. at 248. In short, the inquiry is whether the record contains evidence
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that “presents a sufficient disagreement to require submission to a jury or whether it is so
one-sided that one party must prevail as a matter of law.” Id. at 251-52. When ruling on
a motion for summary judgment, a court must view the facts and draw all reasonable
inferences in the light most favorable to the non-moving party. Scott v. Harris, 550 U.S.
372, 378 (2007). “[T]he judge’s function is not himself to weigh the evidence and
determine the truth of the matter but to determine whether there is a genuine issue for trial.”
Anderson, 477 U.S. at 249.
III.
Analysis
1. FCRA Claims
Plaintiff has raised claims against Equifax under §§ 1681e(b) and 1681i(a) of the
FCRA. [Doc. 1 at 11-13]. Equifax contends that Plaintiff’s §§ 1681e(b) and 1681i(a)
claims fail because she has no evidence that the information in her consumer report or
credit file was inaccurate. [Doc. 18-1 at 14-15]. Equifax also asserts that Plaintiff’s
§ 1681e(b) claim fails because Plaintiff has adduced no evidence that: (1) Equifax failed
to follow reasonable procedures in preparing her consumer report; (2) Equifax issued a
consumer report containing inaccurate information about her; or (3) an Equifax consumer
report caused her harm. [Id. at 16-18]. Finally, Equifax asserts that Plaintiff’s § 1681i(a)
claim fails because: (1) Plaintiff’s disputes were impermissible collateral attacks on the
Chase account; and (2) Equifax reasonably reinvestigated Plaintiff’s dispute of the Chase
account. [Id. at 18-22].
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Plaintiff responds that Equifax did not properly respond to her dispute, because it
did not report that the information was disputed. [Doc. 19 at 6]. Plaintiff contends that it
“is not reasonable to assume that Equifax conducted a proper reinvestigation due to the fact
that it failed to modify its files.” [Id. at 8]. Equifax replies, reiterating its position. [Doc.
21].
“The FCRA was enacted to regulate credit reports, provide guidelines for credit
reporting agencies and entities that furnish consumer information to credit reporting
agencies, and provide protection to consumers.” Lufkin v. Capital One Bank (USA), N.A.,
No. 3:10-CV-18, 2010 WL 2813437, at *2 (E.D. Tenn. July 16, 2010). The FCRA imposes
obligations on three entities: (1) CRAs; (2) users of consumer reports; and (3) furnishers
of information to consumer reporting agencies. Id.
Section 1681e(b)
Section 1681e(b) provides “[w]henever a consumer reporting agency prepares a
consumer report it shall follow reasonable procedures to assure maximum possible
accuracy of the information concerning the individual about whom the report relates.” 15
U.S.C. § 1681e(b). In order to assert a claim under § 1681e(b), a plaintiff must prove:
(1) the defendant reported inaccurate information about the plaintiff; (2) the defendant
either negligently or willfully failed to follow reasonable procedures to assure maximum
possible accuracy of the information about the plaintiff; (3) the plaintiff was injured; and
(4) the defendant’s conduct was the proximate cause of the plaintiff’s injury. Nelski v.
Trans Union, LLC, 86 F. App’x 840, 844 (6th Cir. 2004). A showing of inaccuracy is an
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essential element of a claim under the FCRA. Spence v. TRW, Inc., 92 F.3d 380, 382 (6th
Cir. 1996).
The Court finds that there is no genuine issue of material fact as to whether Equifax
violated § 1681e(b).
First, Plaintiff has not shown that Equifax reported inaccurate
information about her, which is an essential element of a claim under § 1681e(b). See id.
Plaintiff does not allege, and apparently never alleged to Equifax or Chase, that she was
not the owner of the credit card account, or that the amount charged or payment history
was incorrect. Plaintiff’s allegations appear to be part of a debt-avoidance scheme referred
to as a “vapor money” theory or “no money lent” theory, which has been explained as
follows:
Debtors employing this debt-avoidance scheme contend that when they sign
notes, they fund the loan with their own signatures, creating new money for
their own account so that when money is advanced, it is the debtor’s own
money that is used.
Adams v. Bank of Am., N.A., No. 1:06-cv-228, 2007 WL 2746871, at *2 (M.D.N.C. Sept.
19, 2007). “Claims based on this and similar debt elimination schemes have been
universally rejected by courts.” Id. at *3; see Demmler v. Bank One NA, No. 2:05-cv-322,
2006 WL 640499, at *4 (S.D. Ohio Mar. 9, 2006) (collecting cases). Plaintiff’s only
response to Equifax’s argument that it did not report inaccurate information is that Equifax
failed to report the ongoing dispute over the account. [Doc. 19 at 4]. However, Equifax
was not required to report Plaintiff’s meritless dispute after it investigated and confirmed
the information it had received from Chase about the Account. Because there is no genuine
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issue of material fact as to whether Equifax reported inaccurate information about Plaintiff,
Equifax is entitled to summary judgment on the § 1681e(b) claim.
Moreover, Plaintiff has not shown that Equifax either negligently or willfully failed
to follow reasonable procedures to assure maximum possible accuracy of the information
about Plaintiff. In support of its motion for summary judgment, Equifax submitted
evidence of its procedures for assuring the accuracy of the information it reports, including
investigating and signing subscriber agreements with sources of information, and quality
assurance checks performed on specific data. [Doc. 18-2 at 4-5]. In her response, Plaintiff
conflates the issue under § 1681e(b) with that under § 1681i(a), and centers her argument
on Equifax’s alleged negligent reinvestigation. [Doc. 19 at 5-6]. Plaintiff does, however,
state that she disagrees that Equifax maintained detailed procedures and disagreed that
Chase is a reliable source of information.
[Id. at 2-3].
Plaintiff’s statements of
disagreements, without further evidence, are insufficient to withstand summary judgment.
See Celotex, 477 U.S. at 324-25 (stating that to withstand summary judgment, a
non-moving party must identify facts in the record that create a genuine issue of material
fact). Given that Equifax has presented evidence that it maintained reasonable procedures
for assuring the accuracy of information in Plaintiff’s credit report, and Plaintiff has
submitted no more than her own bald assertions that Equifax did not maintain reasonable
procedures, Equifax is entitled to summary judgment on the § 1681e(b) claim.
Accordingly, the Court will grant Equifax’s motion for summary judgment as to the
§ 1681e(b) claim.
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Section 1681i(a)
Section 1681i(a) requires a CRA to reinvestigate disputed information:
If the completeness or accuracy of any item of information contained in a
consumer’s file at a consumer reporting agency is disputed by the consumer
and the consumer notifies the agency directly of such dispute, the agency
shall reinvestigate free of charge and record the current status of the disputed
information, or delete the item from the file . . . before the end of the 30-day
period beginning on the date on which the agency receives the notice of the
dispute from the consumer.
15 U.S.C. § 1681i(a)(1)(A).
The Sixth Circuit has not yet decided whether
§ 1681i(a)(1)(A) has an inaccuracy element, but has stated that “damages would be almost
impossible to prove without it.” Turner v. Experian Info. Solutions, Inc., No. 17-3795,
2018 WL 3648282, at *2 (6th Cir. Mar. 1, 2018) (citing Salei v. Am. Express Travel Related
Servs. Co., No. 96-1799, 1997 WL 809956, at *3 (6th Cir. Dec. 19, 1997)).
The Court concludes that there is no genuine issue of material fact as to whether
Equifax properly reinvestigated Plaintiff’s Chase Account after receiving her dispute. In
support of its summary judgment motion, Equifax submitted evidence explaining its
reinvestigation procedures, and how it followed those procedures on four different
occasions in response to disputes filed by Plaintiff. [Doc. 18-2 at 5-10]. In response,
Plaintiff merely states that it is “not reasonable to assume that Equifax conducted a proper
reinvestigation due to the fact that it failed to modify its files” and “[w]hen a consumer
repeatedly disputes an alleged debt, the credit reporting agency must conduct a manual
reinvestigation.” [Doc. 19 at 8]. Again, Plaintiff has pointed to no evidence in the record
supporting her bald assertions. Moreover, the Court need not “assume that Equifax
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conducted a proper reinvestigation,” as Equifax has submitted evidence that, indeed, it
conducted a proper reinvestigation. Plaintiff’s main contention appears to be that Equifax
should have noted on her credit report that the information about the Account was disputed.
However, nothing in § 1681i(a) requires Equifax to note a dispute after it has confirmed
information with the source, in this case, Chase. Because the evidence clearly shows that
Equifax conducted reasonable reinvestigation of the Account on four separate occasions,
the Court finds that there is no genuine issue of material fact as to Plaintiff’s § 1681i(a)
claim, and Equifax’s motion for summary judgment will be granted as to this claim.
2. State Law Claims
Plaintiff alleges state law claims of: (1) invasion of privacy [Doc. 1 at ¶¶ 39-47];
(2) “negligent, wanton, and/or intensional [sic] hiring and supervision of incompetent
employees or agents” [Id. at ¶¶ 49-51]; and (3) unspecified “state law claims” [Id. at
¶¶ 53-60]. The Court construes Plaintiff’s unspecified “state law claims” as a claim of
negligence. Equifax argues that Plaintiff’s state law claims are preempted by § 1681h(e)
because Plaintiff has offered no evidence that Equifax acted with malice or willfulness.
[Doc. 18-1 at 26].
Plaintiff’s response to the preemption arguments appears to be that the Court has
supplemental jurisdiction over her state law claims and therefore they are not preempted
[Doc. 19 at 9-11]. However, as Equifax points out in reply [Doc. 21 at 8], supplemental
jurisdiction does not save state law claims that are preempted by federal law. Under 28
U.S.C. § 1367(a), federal courts have supplemental jurisdiction, or authority to hear a case,
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over state law claims that are so related to federal question claims brought in the same
action as to “form part of the same case or controversy under Article III of the United States
Constitution.” The state law claims must first survive preemption. See Phillips v. Audio
Active Ltd., 494 F.3d 378, 392 (2d Cir. 2007) (“[t]he district court may … properly exercise
supplemental jurisdiction over any state law claim surviving preemption”).
As the Court previously explained, in granting Chase’s motion to dismiss, the FCRA
contains two preemption provisions, each of which limit a plaintiff’s ability to assert state
law claims based on the defendant’s furnishing of information to a credit reporting agency.
Lufkin, 2010 WL 2813437, at *2. The first, contained in § 1681h(e), provides:
Except as provided in sections 1681n and 1691o of this title, no 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 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). Section 1681h(e) does not define “malice” or “willful intent to
injure,” but most courts have adopted the meaning of the term in the defamation context.
Shafer v. Karric Square Properties, LLC, No. 2:17-cv-1098, 2019 WL 1300217, at *6 (S.D.
Ohio, Mar. 21, 2019) (citing Saint Torrance v. Firstar, 529 F. Supp. 2d 836, 844 (S.D.
Ohio 2007)). Thus, a defendant acts with “malice” when it furnishes the information
knowing that the information is false or in reckless disregard of its truth of falsity. Wolfe
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v. MBNA Am. Bank, 485 F. Supp. 2d 874, 883 (W.D. Tenn. Apr. 25, 2007). Additionally,
“willful intent to injure” requires a showing that defendant “knowingly and intentionally
committed an act in conscious disregard for the rights of others.” Id.
The Court agrees that Plaintiff’s claim of negligent hiring and supervision is
preempted by the plain language of § 1681h(e), because Plaintiff does not even allege
malice or willfulness as to that claim. Additionally, the Court finds that Plaintiff’s claims
of invasion of privacy and negligence are preempted by § 1681h(e), because Plaintiff has
presented no evidence that Equifax acted with malice or willful intent to injure. Instead,
Plaintiff’s invasion of privacy and negligence claims are based on the same actions as her
FCRA claims against Equifax. As discussed previously, there is no genuine issue of
material fact as to whether Equifax violated the alleged sections of the FCRA. Plaintiff
has presented absolutely no evidence of wrongdoing on the part of Equifax, much less
shown that Equifax acted with malice or willful intent to injure. Accordingly, Plaintiff’s
state law claims are preempted by the FCRA, and the Court will grant summary judgment
as to each of Plaintiff’s state law claims.
IV.
Conclusion
Accordingly, for the reasons stated herein, the Defendant’s motion for summary
judgment [doc. 18] will be granted and this case dismissed. An order consistent with this
opinion will be entered.
s/ Thomas W. Phillips
SENIOR UNITED STATES DISTRICT JUDGE
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