Sheridan v. Convergent Outsourcing, Inc.

Filing 39

REPORT AND RECOMMENDATION: Pending before the Court is Defendant Convergent Outsourcing, Inc.'s Motion for Summary Judgment. (Docket Entry 30). For the reasons explained below, the Magistrate Judge RECOMMENDS that: 1) Defendant's Motion for Summary Judgment be GRANTED; 2) Defendant's request for attorney's fees be DENIED; 3) this case be DISMISSED WITH PREJUDICE; 4) acceptance and adoption of this Report and Recommendation constitute the FINAL JUDGMENT in this action; and 5) any appeal NOT BE CERTIFIED as taken in good faith under 28 U.S.C. § 1915(a)(3). Signed by Magistrate Judge Joe Brown on 7/25/16. (xc:Pro se party by regular and certified mail.)(DOCKET TEXT SUMMARY ONLY-ATTORNEYS MUST OPEN THE PDF AND READ THE ORDER.)(af)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF TENNESSEE
NASHVILLE DIVISION
TERRY SHERIDAN,

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Plaintiff,
v.
CONVERGENT
OUTSOURCING, INC.,
Defendant.

No. 3:16-cv-00212
Judge Aleta A. Trauger
Magistrate Judge Brown

To: The Honorable Aleta A. Trauger, United States District Judge
REPORT AND RECOMMENDATION
Pending before the Court is Defendant Convergent Outsourcing, Inc.’s Motion for
Summary Judgment. (Docket Entry 30). For the reasons explained below, the Magistrate Judge
RECOMMENDS that: 1) Defendant’s Motion for Summary Judgment be GRANTED;
2) Defendant’s request for attorney’s fees be DENIED; 3) this case be DISMISSED WITH
PREJUDICE; 4) acceptance and adoption of this Report and Recommendation constitute the
FINAL JUDGMENT in this action; and 5) any appeal NOT BE CERTIFIED as taken in good
faith under 28 U.S.C. § 1915(a)(3).
I. PROCEDURAL BACKGROUND AND UNDISPUTED FACTS
A. Procedural Background
Plaintiff, proceeding pro se and in forma pauperis, filed his Complaint on February 12,
2016 under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681 et seq. (Docket Entry 1).
Plaintiff asserts that on or about February 27, 2015, after obtaining his credit reports, he
“discovered an inquiry by [D]efendant . . . to obtain Plaintiff’s consumer credit report on
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September 6, 2013; September 27, 2013 and December 27, 2013.” (Docket Entry 1, ¶ 5, p. 2).
Plaintiff argues that Defendant obtained the report without a “permissible purpose” in violation
of 15 U.S.C. § 1681b. (Docket Entry 1, ¶ 14, p. 3). Plaintiff seeks recovery pursuant to 15 U.S.C.
§ 1681n in the form of $3,000 in statutory damages, plus costs, attorney’s fees, and punitive
damages. (Docket Entry 1, p. 4).
The District Judge referred this case to the Magistrate Judge to dispose or recommend
disposition of any pretrial motions under 28 U.S.C. §§ 636(b)(1)(A) and (B) on February 19,
2016. (Docket Entry 3). On May 19, 2016, Defendant filed the instant Motion. (Docket Entries
29, 30, 31). Plaintiff filed an opposition brief and on June 9, 2016 (Docket Entry 34), to which
Defendant replied on June 21, 2016 (Docket Entry 37). Defendant’s Motion for Summary
Judgment is now properly before the Court.
B. Undisputed Facts1
This case concerns three credit inquiries made by Defendant. Defendant is and was at all
times relevant to this case an authorized debt collector in the State of Tennessee. (Docket Entry
31-1, ¶ 3, p. 1). On September 4, 2013, T-Mobile USA, Inc. (“T-Mobile”) placed an account (the
“T-Mobile Account”) with Defendant for collection, and represented to Defendant that the
balance was valid, due and owing by Plaintiff. (Docket Entry 31-1, ¶ 5, p. 2). The same day, in
connection with its efforts to collect on the T-Mobile Account, Defendant requested Plaintiff’s
“Collection Advantage Score” from Experian. (Docket Entry 31-1, ¶ 6, p. 2).

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Local Rule 56.01(c) requires a party opposing a motion for summary judgment to respond to each fact set forth by
the movant, and to support each disputed fact with a specific citation to the record. Local Rule 56.01(g) states that
failure to respond to the moving party’s statement of material facts shall indicate that the asserted facts are not
disputed for purposes of summary judgment. Plaintiff did not respond to Defendant’s Statement of Material Facts
Not in Dispute (Docket Entry 31) in accordance with Local Rule 56.01(c); therefore, Defendant’s Statement of
Material Facts is deemed undisputed.

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On September 26, 2013, Resurgent Capital Services, L.P. (“Resurgent”) placed an
account with Defendant for collection (“Resurgent Account 1”). (Docket Entry 31-1, ¶ 7, p. 2).
At the time of placement, Resurgent represented to Defendant that Resurgent Account 1 was in
default and the balance was valid, due and owing by Plaintiff to Resurgent’s client, LVNV
Funding LLC (“LVNV”). (Docket Entry 31-1, ¶ 7, p. 2). In connection with its efforts to collect
on Resurgent Account 1, Defendant requested Plaintiff’s “Priority Score” from Experian on
September 27, 2013. (Docket Entry 31-1, ¶ 8, p. 3).
On April 22, 2015, Resurgent placed a second account with Defendant for collection
(“Resurgent Account 2”). (Docket Entry 31-1, ¶ 9, p. 3). At the time of placement, Resurgent
represented to Defendant that Resurgent Account 2 was in default and the balance was valid, due
and owing by Plaintiff to LVNV. (Docket Entry 31-1, ¶ 9, p. 3). In connection with its efforts to
collect on Resurgent Account 2, Defendant requested an updated “Priority Score” for Plaintiff
from Experian on April 23, 2015. (Docket Entry 31-1, ¶ 10, p. 3).
In each instance T-Mobile or Resurgent, as applicable, provided Defendant with
Plaintiff’s full name, mailing address, Social Security number, account number, and balance due.
(Docket Entry 31-1, ¶ 5, p. 2; ¶ 7, pp. 2-3; ¶ 9, p. 3). Defendant requested Plaintiff’s credit
reports solely to assist in its collection of the three accounts and not for any other purpose, and so
certified to Experian. (Docket Entry 31-1, ¶ 11, p. 4).
II. ANALYSIS
A. Summary Judgment Standard
Summary judgment is appropriate where there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). In
considering a motion for summary judgment, the court must determine whether there is a
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genuine issue for trial, that is, whether there is “sufficient evidence favoring the nonmoving party
for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986). Where, as here, the moving party seeks summary judgment on an issue for which it does
not bear the burden of proof at trial, the moving party may meet its burden by showing that there
is an absence of record evidence to support the nonmoving party’s case. Celotex Corp. v. Catrett,
477 U.S. 317, 322-23, 325 (1986). Once the moving party meets that burden, the non-moving
party must set forth specific facts showing that there is a genuine issue for trial. Matsushita Elec.
Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (emphasis added).
“In evaluating the evidence, the court must draw all inferences in the light most favorable
to the nonmoving party.” Moldowan v. City of Warren, 578 F.3d 351, 374 (6th Cir. 2009) (citing
Matsushita, 475 U.S. at 587). However, the nonmoving party “must do more than simply show
that there is some metaphysical doubt as to the material facts.” Matushita, 475 U.S. at 586. “A
mere scintilla of evidence is insufficient.” Skousen v. Brighton High School, 305 F.3d 520, 526
(6th Cir. 2002) (citing Anderson, 477 U.S. at 252). In order to withstand summary judgment, the
nonmoving party must demonstrate that the record contains enough probative evidence in
support of its position that a jury could reasonably find in its favor. Anderson, 477 U.S. at 24950, 252.
B. Claims under the FCRA
Congress enacted the FCRA to bolster the efficiency and credibility of the banking
system and protect consumers’ right to privacy by ensuring that consumer credit reporting
agencies provide fair and accurate reports. See 15 U.S.C. § 1681(a); TRW Inc. v. Andrews, 534
U.S. 19, 23 (2001). Accordingly, the FCRA regulates the circumstances under which reporting
agencies may provide consumer credit information to third parties. See generally 15 U.S.C. §
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1681b. The FCRA creates a private right of action that allows consumers to recover any actual
damages they sustain as a result of willful noncompliance, or statutory damages up to $1,000 per
violation. See 15 U.S.C. § 1681n(a)(1)(A).
In order to make out a prima facie case under § 1681n, the plaintiff must show: (i) that
the defendant acted willfully; (ii) that there was a “consumer report” within the meaning of the
statute; (iii) that the defendant used or obtained it; and (iv) that the defendant did so without a
“permissible purpose” within the meaning of the statute. See Bickley v. Dish Network, LLC, 751
F.3d 724, 728 (6th Cir. 2014). The FCRA enumerates the “permissible purposes” for which a
reporting agency may release a report, including “[t]o a person which it has reason to believe
intends to use the information in connection with a credit transaction involving the consumer on
whom the information is to be furnished and involving the extension of credit to, or review or
collection of an account of, the consumer[.]”15 U.S.C. § 1681b(a)(3)(A) (emphasis added).
Whether a permissible purpose existed in a given case is a question of law. Daniel v. DTE
Energy, No. 11-13141, 2013 WL 4502151, at *3 (E.D. Mich. 2013), aff’d sub nom. Daniel v.
DTE Energy Co., 592 F. App’x 489 (6th Cir. 2015) (affirming denial of motion to vacate Daniel
v. DTE Energy, 2013 WL 4502151); Pinson v. Monarch Recovery Management, Inc., No. 1280480-CIV, 2013 WL 961308, at *2 (S.D. Fla. Mar. 12, 2013); Edge v. Professional Claims
Bureau, Inc., 64 F. Supp. 2d 115, 117 (E.D.N.Y. 1999), aff’d, 234 F.3d 1261 (2d Cir. 2000).
C. Defendant’s Motion for Summary Judgment
Defendant argues that it is entitled to summary judgment because Plaintiff cannot prove
that Defendant used his consumer report without a permissible purpose, and therefore cannot
prove an essential element of his case. (Docket Entry 30, pp. 4-9). Defendant argues that because
debt collection is a permissible purpose under § 1681b(a)(3)(A), and because Defendant
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reasonably believed Plaintiff owned the accounts referred to it for collection, there was no FCRA
violation. (Docket Entry 30, pp. 4-9). Defendant also requests costs and attorney’s fees pursuant
to § 1681n(c). (Docket Entry 29, p. 1; Docket Entry 30, p. 9).
In opposition, Plaintiff asserts in his Declaration that he had no “account” subject to
collection and does not recall the accounts in question. (Docket Entry 34, pp. 2, 5-6). Plaintiff
argues that because Defendant failed to verify that he owned the accounts before making credit
inquiries on him, Defendant had no permissible purpose for making the credit inquiries. (Docket
Entry 34, p. 2). Plaintiff also contests Defendant’s reliance on a Declaration from its employee in
support of its Motion. (Docket Entry 34, p. 2).
As a threshold matter, Defendant is entitled to rely on the Declaration of its employee in
support of its Motion for Summary Judgment. Plaintiff objects to the Declaration “pursuant to
Fed. R. Civ. P. 56(c)(2),” and it appears that Plaintiff believes the facts asserted therein would be
inadmissible because the Declaration is “based upon [the employee’s] personal knowledge and
review of Defendant’s records.” (Docket Entry 34, p. 2). However, Rule 56(c)(1) clearly states
that a party may use “affidavits or declarations” in support of its Motion for Summary Judgment.
Fed. R. Civ. P. 56(c)(1). Rule 56(c)(4) explains that such a declaration must be made on
personal knowledge, set out facts that would be admissible in evidence, and show that the
declarant is competent to testify. Fed. R. Civ. P. 56(c)(4). The Magistrate Judge therefore sees no
reason why the Declaration of an employee of Defendant, which is made on personal knowledge,
states the basis on which the declarant has such knowledge, and attests to the declarant’s
competence, should not be considered in connection with Defendant’s Motion. See Lloyd v.
Midland Funding, LLC, 639 F. App’x 301, 304-305 (6th Cir. 2016) (explaining that the district
court properly considered, as part of the summary judgment record, affidavits of the defendant
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company’s authorized representative with personal knowledge based on his review of the
company’s business records).
Next, Defendant is correct that debt collection is a permissible purpose for obtaining a
consumer’s credit report. See Etefia v. Russell Collection Agency, Inc., 20 F. App’x 485, 486 (6th
Cir. 2001) (stating that § 1681b(a)(3)(A) authorizes a collection agency to request a consumer’s
credit report); Carlisle v. Portfolio Recovery Assocs. Inc., No. 1:13-CV-209, 2014 WL 4829023,
at *2 (E.D. Tenn. Sept. 29, 2014) (“Because debt collection is a permissible purpose, plaintiff
has not alleged facts sufficient to establish an FCRA violation.”); see also Huertas v. Galaxy
Asset Management, 641 F.3d 28, 34 (3d Cir. 2011); Miller v. Wolpoff & Abramson, LLP, 309 F.
App’x 40, 43 (7th Cir. 2009).
Contrary to Plaintiff’s argument, the FCRA does not require debt collectors to verify the
accounts they are retained to collect. “As long as the debt collector has reason to believe that the
consumer owes the debt, the debt collector may permissibly obtain the consumer’s credit report
without violating the FCRA.” Robinson v. Greystone Alliance, LLC, No. BPG-10-3658, 2011
WL 2601573, at *3 (D. Md. June 29, 2011) (citation omitted) (emphasis added); see Korotki v.
Attorney Services Corp. Inc., 931 F. Supp. 1269, 1276 (D. Md. 1996), aff’d sub nom. Korotki v.
Thomas, Ronald & Cooper, P.A., 131 F.3d 135 (4th Cir. 1997). Ruling on a summary judgment
motion with similar evidence to the case at bar, one court held that a debt collector had reason to
believe that a permissible purpose existed when its client referred a debt for collection and
provided the consumer’s account number, name, social security number, and balance due. See
Pinson, 2013 WL 961308, at *2.
Here, there is no factual dispute that T-Mobile and Resurgent represented to Defendant
that Plaintiff owed the debts in question, and provided Defendant with Plaintiff’s full name,
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mailing address, Social Security number, account numbers, and balances due. (Docket Entry 311, ¶ 5, p. 2; ¶ 7, pp. 2-3; ¶ 9, p. 3). Accordingly, the Magistrate Judge finds as a matter of law
that Defendant had a reasonable belief that the accounts in question were valid. Plaintiff’s
Declaration that he does not recall the accounts does not create a genuine dispute concerning the
reasonability of Defendant’s belief. See Pinson, 2013 WL 961308, at *3 (explaining that a
plaintiff who submitted his own affidavit contesting a debt, but did not produce record evidence
challenging the defendant’s evidence, had no basis for undermining the reasonability of the
defendant’s belief).
Plaintiff’s dispute that “any accounts [exists] or [existed] pursuant to 15 U.S.C. [§]
1681a(r)(4)” (Docket Entry 34, p. 2) does not amount to a genuine dispute of material fact
sufficient to preclude summary judgment. Plaintiff seems to be arguing that no permissible
purpose under § 1681b(a)(3)(A) could exist, because the accounts in question are not “accounts”
as defined in the FCRA. See 15 U.S.C. § 1681a(r)(4). Section 1681a(r)(4) incorporates by
reference the definition of “account” in the Electronic Fund Transfer Act, 15 U.S.C. §§ 1693a et
seq., which states that “the term ‘account’ means a demand deposit, savings deposit, or other
asset account (other than an occasional or incidental credit balance in an open end credit plan as
defined in section 1602(i) of this title) . . . established primarily for personal, family, or
household purposes[.]” 15 U.S.C. § 1693a(2).
However, the definition urged by Plaintiff appears in the FCRA under a sub-heading of
“Credit and debit related terms” in the context of the electronic fund transfer initiated by a debit
card transaction. 15 U.S.C. § 1681a(r). That is a very different transaction from the debt
collection relationship at issue here. Moreover, the definition urged by plaintiff excludes credit
accounts. It would make little sense for § 1681b(a)(3)(A) to contemplate credit transactions and
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the “review or collection of an account” while simultaneously adopting a definition of “account”
that excludes credit balances. See Demaestri v. Asset Acceptance Capital Corp., Nos. 11-cv01671-WJM-MJW, 11-cv-01672-WJM-MJW, 2012 WL 1229907, at *4 (D. Colo. Mar. 14,
2012) (rejecting the plaintiff’s argument that the definition of “account” in § 1681a(r)(4) should
apply to § 1681b(a)(3)(A)). The Magistrate Judge therefore finds no genuine dispute that the
accounts in question are accounts subject to collection under § 1681b(a)(3)(A).
Because the Magistrate Judge finds as a matter of law that Defendant had a permissible
purpose for accessing Plaintiff’s consumer credit reports, the Magistrate Judge recommends that
Defendant’s Motion for Summary Judgment (Docket Entry 30) be GRANTED.
Finally, the Magistrate Judge notes that Defendant has requested reasonable costs and
attorney’s fees pursuant to § 1681n(c). (Docket Entry 29, p. 1; Docket Entry 30, p. 9). Section
1681n(c) provides that reasonable costs and attorney’s fees shall be awarded to the prevailing
party “upon a finding by the court that an unsuccessful pleading, motion, or other paper filed in
connection with an action under this section was filed in bad faith or for purposes of
harassment[.]” 15 U.S.C. § 1681n(c). “‘It is the burden of the party moving for fees under
§ 1681n(c) to demonstrate that they are warranted.’” O’Connor v. Trans Union, LLC, No. 05-cv74498, 2008 WL 4910670, at *21 (E.D. Mich. Nov. 13, 2008) (quoting DeBusk v. Wachovia
Bank, No. CV 06-0324-PHX-NVW, 2006 WL 3735963, at *4 (D. Ariz. Nov. 17, 2006), aff’d,
291 F. App’x 55 (9th Cir. 2008)). “Fees are not awarded simply because a party prevails in
litigation. Instead, it must be shown that the party who did not prevail commenced and continued
the litigation in bad faith or for purposes of harassment.” Edge, 64 F. Supp. 2d at 119. Defendant
has requested fees without making any showing or argument that it is entitled to them.

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Accordingly, the Magistrate Judge recommends that Defendant’s request for attorney’s fees be
DENIED.2
III. RECOMMENDATION
For the reasons explained above, the Magistrate Judge RECOMMENDS that:
1) Defendant’s Motion for Summary Judgment be GRANTED; 2) Defendant’s request for
attorney’s fees be DENIED; 3) this case be DISMISSED WITH PREJUDICE; 4) acceptance
and adoption of this Report and Recommendation constitute the FINAL JUDGMENT in this
action; and 5) any appeal NOT BE CERTIFIED as taken in good faith under 28 U.S.C.
§ 1915(a)(3).
The parties may file and serve written objections to the findings and recommendations
made herein within fourteen (14) days of receipt of this Report and Recommendation. Fed. R.
Civ. P. 72(b). Parties opposed to such objections must respond within fourteen (14) days of
service of those objections. Fed. R. Civ. P. 72(b). Failure to file specific objections within
fourteen (14) days of receipt of this Report and Recommendation may constitute a waiver of
further appeal. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140 (1985); Cowherd v. Million,
380 F.3d 909, 912 (6th Cir. 2004).
ENTERED this 25th day of July, 2016.

/s/ Joe B. Brown
Joe B. Brown
United States Magistrate Judge

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The Magistrate Judge notes that Plaintiff has filed numerous cases similar to the case at bar in this Court since
2014. Plaintiff is cautioned that if he continues to pursue such claims without proof that the defendant lacked a
permissible purpose, attorney’s fees may be awarded in the future.

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