Walters v. Certegy Check Services, Inc.
ORDER GRANTING IN PART AND DENYING IN PART Defendant's 17 Motion to Dismiss. ORDER that Plaintiff's claims under 15 U.S.C. § 1681 e(b) and § 1681 i(a)(1 )(A); claims under Texas Business and Commerce Code § 20.06 and § 20.07 and their counterparts under Texas Business and Commerce Code § 20.12; and claims for negligence, defamation, and fraud are DISMISSED. Signed by Judge Sam Sparks. (lt)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF TEXAS
PH 2 35
CERTEGY CHECK SERVICES, INC.,
BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause,
and specifically Defendant Certegy Check Services, Inc. (Certegy)'s Motion to Dismiss [#17],
Plaintiff Mark Walter's Response [#20] in opposition, and Certegy's Reply [#2 1] thereto. Having
reviewed the documents, the relevant law, and the file as a whole, the Court now enters the
following opinion and orders.
Plaintiff, a citizen of Texas, brings this suit against Certegy, a national specialty
consumer reporting agency incorporated in Delaware and operating its principal place of
business in Florida. Am. Compl. [#13] ¶J 1, 6.
This dispute centers on the rejection of a personal check Plaintiff attempted to cash at a
grocery store in Austin, Texas. Id. ¶J 5-6. The grocery store provides a check cashing service to
customers for a fee. Id. In determining whether to accept or reject a check offered by a customer,
the grocery store relies on information provided by Certegy. Id. Based on information provided
by Certegy, the grocery store denied Plaintiff access to its check cashing services. Id. ¶ 7.
Following the denial, the grocery store provided Plaintiff with Certegy's contact
information. Id. ¶ 8. Plaintiff called Certegy to learn why he was denied access to the grocery
store's check cashing service. Id. During the call, Plaintiff requested a copy of Certegy' s
consumer file on him, which Certegy delivered via mail. Id. ¶J 9-10.
The consumer file included four events associated with Plaintiff over the past twenty-four
months: (1) On July 18, 2017, Plaintiff attempted to cash a $4,000 check at a Wal-Mart, but
Certegy did not recommend accepting the check because the "transaction fell outside of the
guidelines Certegy has established for authorization." (2) On August 19, 2017, Plaintiff
attempted to cash a $202 check at a different grocery store, and Certegy did not recommend
cashing the check because the "transaction fell outside the guidelines
. . .
based on factors such
as transaction frequency and patterns that reflect potential identity theft or unauthorized
transactions associated with the ID presented." (3) On August 20, 2017, Plaintiff tried to cash a
check for $200 at the grocery store, and Certegy did not recommend accepting the check because
the transaction fell outside of Certegy's guidelines; and (4) On August 20, 2017, Plaintiff
attempted to cash a second
checklisted as having the same check number
Plaintiff tendered on August
as the other check
$200 at the grocery store, and Certegy did not
recommend accepting the check because "records indicated that the same check or payment had
been submitted to us before, and authorization had been declined." Resp. [#20-1] Ex. A
(Consumer File Disclosure Report).'
After reviewing his consumer file, Plaintiff again telephoned Certegy and spoke with
Certegy's customer service representative. Am. Compi. [#13] ¶J 35-36. The representative was
unable to explain why Plaintiff had been denied access to the check cashing service, but outlined
the process by which Plaintiff could request a reinvestigation. Id. ¶J 36-39. According to
The Court concludes the "Consumer File Disclosure Report" offered by Plaintiff is incorporated by
reference into Plaintiff's amended complaint because Plaintiff alleges Certegy mailed him a copy of his consumer
by file sometime before August 28, 2017. See Am. Compl. [#13] ¶f 9-12.
Plaintiff, the representative "informed Plaintiff a reinvestigation would be conducted, and that
Plaintiff would receive a written response to his request for reinvestigation." Id. ¶ 40.
Plaintiff mailed a letter to Certegy on August 28, 2017. Id. ¶ 11. The August 28th letter
included the following:
The transactions dated 08/18/17, 08/19/17 was not a transaction to be flagged as a
the "same check" submitted before, and again, access to your guidelines are not
available prior to cashing a check. The transactions dated 08/20/17 was the same
check, with the second attempt made due to an error, and an unjustified denial of
the first attempted transaction.
of the denied transactions, and that all negative
Certegy, and reported to any other credit reporting
information contained by
agency be corrected, and removed from any credit report generated by either
Certegy or any other credit reporting agency.
I request a reinvestigation
Mot. Dismiss [#17-4] Ex. B (Aug. 28th
Three days later, Certegy responded via letter. Am. Compl. [#17] ¶ 13. Certegy's letter
stated, "Regarding the decline you experienced, although there were no returned checks on file,
the check fell outside of approval guidelines." Mot. Dismiss [#17-5] Ex. Cl (Sept. 1, 2017
Certegy's letter refused to "disclose those confidential, proprietary guidelines" because
to do so "would seriously diminish [Certegy's] ability to prevent any type of fraudulent activity."
On October 25, 2017, Plaintiff filed suit in state court, and Certegy removed the case to
this Court, asserting both federal question jurisdiction and diversity jurisdiction. Removal
Although the August 28th letter was first provided by Certegy as an exhibit to its motion to dismiss, the
Court finds Plaintiff's amended complaint incorporated the August 28th letter by reference as the amended
complaint stated Plaintiff mailed his reinvestigation letter on August 28, 2017. Am. Compi. [#13] ¶ 11-12.
The Court also finds Certegy's September 1st letterattached as part of exhibit C to Certegy's motion to
be incorporated into the amended complaint by reference as
dismiss and identified by this Court as exhibit
Plaintiff asserted Certegy responded to his letter three days following the August 28th letter. Am. Compi. [#13] ¶ 13.
However, the Court does not find the second portion of Certegy's exhibit C to be incorporated by reference. The
second part of exhibit C contains a "consumer file disclosure report" prepared on October 21, 2017. See Mot.
Dismiss [#17-5] Ex. C2. Plaintiff's amended complaint contains no reference to such a report prepared or received
in the fall of 2017. See Am. Compl. [#13].
Notice [#1] ¶ 1. Plaintiff subsequently filed an amended complaint, alleging Certegy violated the
federal Fair Credit Reporting Act (FCRA), the Texas Consumer Credit Reporting Act (TCCRA),
and the Texas Deceptive Trade Practices Act (DPTA). Am. Compi. [#13]
Plaintiff also asserts Certegy is liable for negligence, defamation, and fraud under Texas law. Id.
Certegy moves to dismiss Plaintiffs amended complaint under Rule 12(b)(6) of the
Federal Rules of Civil Procedure. Certegy's motion has been fully briefed and is ripe for a
Federal Rule of Civil Procedure 8(a)(2) requires a complaint to contain "a short and plain
statement of the claim showing that the pleader is entitled to relief." FED. R. Civ. P. 8(a)(2). A
motion under Federal Rule of Civil Procedure 12(b)(6) asks a court to dismiss a complaint for
"failure to state a claim upon which relief can be granted."
12(b)(6). To survive a
motion to dismiss, the plaintiff must plead sufficient facts to state a claim for relief that is
facially plausible. Ashcroft
556 U.S. 662, 678 (2009);
U.s. 544, 570 (2007). "A claim has facial 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." Iqbal, 566 U.S. at 678. Although a plaintiff's factual allegations need not
establish the defendant is probably liable, they must establish more than a "sheer possibility" a
defendant has acted unlawfully. Id. Determining plausibility is a "context-specific task," and
must be performed in light of a court's "judicial experience and common sense." Id. at 679.
In deciding a motion to dismiss under Rule 1 2(b)(6), a court generally accepts as true all
factual allegations contained within the complaint. Leatherman
Tarrant Narcotics Intelligence
& Coordination Unit, 507 U.S. 163, 164 (1993). However, a court is not bound to accept legal
conclusions couched as factual allegations. Papasan
Al/am, 478 U.S. 265, 286 (1986).
Although all reasonable inferences will be resolved in favor of the plaintiff, the plaintiff must
plead "specific facts, not mere conclusory allegations." Tuchman
DSC Commc 'ns Corp., 14
F.3d 1061, 1067 (5th Cir. 1994). In deciding a motion to dismiss, courts "must consider" the
complaint, as well as other sources such as documents incorporated into the complaint by
reference and matters of which a court may take judicial notice. Tellabs, Inc.
Makor Issues &
Rights, Ltd., 551 U.S. 308, 322 (2007).
The Court first examines whether Plaintiff has stated claims under the FCRA, before
analyzing whether Plaintiff has alleged claims under the TCCRA and the DTPA. Finally, the
Court evaluates Plaintiffs state common law claims.
Under the FCRA, a consumer reporting agency such as Certegy is tasked with following
"reasonable procedures to assure maximum possible accuracy of the information concerning the
individual about who the report related." 15 U.S.C.
If a consumer disputes the
completeness or accuracy of any item of information contained within a report, "the agency
shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed
information is inaccurate and record the current status of the disputed information, or delete the
item from the file.
1681i(a)(1)(A). Plaintiff claims Certegy violated
1681e by failing
The parties do not address whether Certegy's consumer file is a report under the FCRA. For purposes of
evaluating the pending motion to dismiss, the Court assumes the consumer file is a report to which the FCRA
to follow reasonable procedures in reporting information and violated
§ 1681 i
by failing to
conduct a reasonable investigation of his dispute.
In moving for dismissal of these claims, Certegy argues Plaintiff failed to allege any facts
indicating Certegy reported or maintained inaccurate information.5
Although the context was not identical to the facts of this case, the Fifth Circuit
1681 e in a case where consumers alleged a reporting agency failed to
"maintain reasonable procedures" before providing their credit reports to insurance companies.
CSC Credit Servs. Inc., 199 F.3d 263, 267 (5th Cir. 2000). Reasoning the FCRA
protects against "improper disclosure, not the mere risk of improper disclosure that arises when
'reasonable procedures' are not followed," the Fifth Circuit concluded a plaintiff bringing a
claim for violation of the reasonable procedures requirement of § 1681 e "must first show that the
reporting agency released the report in violation of § 168 lb." Id. The Fifth Circuit also observed
168 le(b) uniformly limit recovery to cases where procedures causes actual
harm (i.e., release of an inaccurate report) to the consumer." Id. at 267 n.3. Applying the Fifth
Circuit's analysis to claims under § § 1681 e(b) and 1681 i suggests a plaintiff must allege a failure
to follow reasonable procedures caused an inaccuracy in the credit report produced.
Several district courts have cited Washington in concluding just that. See, e.g., Toliver v.
Experian Info. Sols., Inc., 973 F. Supp. 2d 707, 715 (S.D. Tex. 2013) ("In order to establish a
prima facie case under
1681 e(b), a consumer must produce some evidence
her credit report."); Norman
of an inaccuracy in
Experian Info. Sols., Inc., No. 3:12-CV-128-B, 2013 WL
Certegy also offers two other reasons Plaintiff's FCRA claims should be dismissed: (1) Plamtiff did not
dispute a particular item in his consumer file and therefore Certegy had no duty to reinvestigate under the FCRA;
and (2) Plaintiff cannot bring a claim for failure to explain why Plaintiff's check fell outside of approval guidelines.
Because the Court agrees with Certegy's first ground for dismissal of Plaintiffs FCRA claims, the Court need not
evaluate Certegy's other arguments.
1774625, at *4 (N.D. Tex. Apr. 25, 2013). This Court holds likewise. To adequately establish a
prima facie case that a credit reporting agency failed to follow reasonable procedures in violation
of § 1681 e(b), a plaintiff must first allege an inaccuracy in the consumer report.
Similarly, this Court joins other courts in concluding a plaintiff must first contend a
consumer report contained inaccurate information to establish a claim under
to conduct a reasonable investigation. See, e.g., Fillmore
1681 i for failure
Equfax Info. Servs., LLC, No. 1:16-
CV-1042-RP, 2017 WL 4276542, at *2 (W.D. Tex. Sept. 26, 2017) (citing DeAndrade
Union LLC, 523 F.3d 61, 67 (1st Cir. 2008) ("[T]he weight of authority in other circuits indicates
that without a showing that the reported information was in fact inaccurate, a claim brought
1681i must fail.")); Morris v. Trans Union LLC, 420 F. Supp. 2d 733, 751 (S.D. Tex.
2006), aff'd, 224 F. App'x 415 (5th Cir. 2007) (finding a consumer may only bring a FCRA
claim for noncompliance when an inaccuracy has been included in his credit report).
Thus, to adequately allege Certegy violated
must allege an inaccuracy in the report Certegy furnished. But Plaintiff fails to allege an
inaccuracy or provide any evidence Certegy' s consumer file report contained any errors. Plaintiff
does not assert any of the four events contained in the report did not occur or were incorrectly
reported. At most, Plaintiff complains the report "contained adverse information" and "[t]his
information is detrimental, embarrassing, and harming.
." Am. Compi. [#13]
7, 11. Where
there is no showing such information is inaccurate, allegations that information is merely
detrimental are not enough to state a claim under
therefore grants Certegy' s motion to dismiss Plaintiff's FCRA claims.
1681i(a)(1)(A). The Court
Plaintiff also claims Certegy violated three sections of the TCCRA, codified as Texas
Business and Commerce Code
20.021, 20.06, and 20.07. Certegy argues Plaintiffs TCCRA
claims should be dismissed because they are preempted by the FCRA and Plaintiff failed to
plead sufficient facts to state a claim for relief. The Court first examines whether Plaintiff
adequately pled claims under Texas Business and Commerce Code
20.02 1, 20.06, and 20.07
before reaching the issue of preemption under the FCRA.
Failure to State a Claim Analysis
Plaintiff claims Certegy violated
20.02 1 by failing to disclose "the criteria used by the
check verifier to reject a check from the consumer" or "instructions describing how information
is presented on the check verifier's written disclosure of the consumer file." Am. Compl. [#13]
¶ 27. A check verifier is required to disclose such information upon "request and proper
identification provided by a consumer." TEx. Bus. & COM. CODE
20.021 (a). Plaintiff
sufficiently alleges he requested Certegy's criteria for rejecting his check and provided Certegy
with the proper tracking number.
Am. Compi. [#13]
also Aug. 28th Letter.
Plaintiff also alleges Certegy's response did not disclose its evaluation criteria or instructions on
how such information is presented to merchants. id. ¶ 31-32. Thus, Plaintiff stated a plausible
claim Certegy violated § 20.02 1 that, if not preempted, survives Certegy's motion to dismiss.
Plaintiff also alleges Certegy failed to follow the dispute procedure required by
Id. ¶ 30. The duty to follow the dispute procedure required under
20.06 is triggered when the
consumer disputes "the completeness or accuracy of information contained in [the] consumer's
file" and notifies the consumer reporting agency.
Bus. & COM. CODE
20.06(a). But, as
discussed above, Plaintiff does not allege he informed Certegy he was disputing the
completeness or accuracy of the information contained in his file. Instead, Plaintiff's August
28th letter shows he sought a reinvestigation of the denied transactions and disclosure of
Certegy's evaluation criteria.
claim Certegy violated
Aug. 28th Letter. Thus, Plaintiff has not stated a plausible
20.06 because Plaintiff's August 28th letter did not trigger Certegy's
duty to follow the dispute procedure.
Although Plaintiff does not explain how Certegy violated
examines this claim.
Am. Compi. [#13]
20.07, the Court nevertheless
25-33. Section 20.07 addresses the duty to
correct inaccurate information. As Plaintiff has not identified any inaccurate information
contained in his consumer file, he has failed to adequately allege Certegy violated
2. Preemption Analysis
As Plaintiff only adequately alleged Certegy violated
examine if the FCRA preempts Plaintiff's
20.021, the Court need only
20.02 1 claim. Certegy claims the duties imposed
under Texas Business and Commerce Code
20.02 1 are preempted by the FCRA, specifically
15 U.S.C. § 1681t(b)(1)(B) and § 1681g(a)(1)(B). Section 1681t provides that "[n]o requirement
or prohibition may be imposed under the laws of any state.
. . .
section 1681i of this title
. . .
with respect to any subject matter
." 15 U.S.C. § 1681t(b)(1)(B). Section 1681i
governs the procedures with which a consumer reporting agency is required to comply when a
consumer disputes the completeness or accuracy of information in the consumer's file. Certegy
claims this provision preempts any reinvestigation duties imposed under state law and thus
preempts any duties imposed on Certegy under Texas Business and Commerce Code § 20.021.
The Court disagrees. Certegy's duties under Texas Business and Commerce Code
20.02 1 concern disclosure of certain information surrounding the check verification process,
not reinvestigation duties when a consumer disputes the accuracy of a credit report. Thus,
because Texas Business and Commerce Code
20.02 1 does not impose a requirement or
prohibition concerning subject matter regulated by 15 U.S.C.
1681i, Plaintiffs claim under
20.021 is not preempted by 15 U.S.C.
Certegy also claims 15 U.S.C. § 1681g(a)(1)(B) preempts Plaintiff's
20.021 claim. 15
Texas Business and Commerce Code
1681g(a)(1)(B) states a consumer reporting agency is not required "to disclose to a
consumer any information concerning credit scores or any other risk scores or predictors relating
to the consumer." Put another way, 15 U.S.C.
1681g(a)(1)(B) recognizes the FCRA does not
require a consumer reporting agency to share its assessment of a consumer's riskiness. But the
recognition that a federal law imposes no duty on a consumer reporting agency does not preempt
a state from imposing such a duty. See Florida Lime & Avocado Growers, Inc.
Paul, 373 U.S.
132, 142 (1963) ("The test of whether both federal and state regulations may operate, or the state
regulation must give way, is whether both regulations can be enforced without impairing the
federal superintendence of the field, not whether they are aimed at similar or different
objectives."). Certegy offers no binding authority indicating the FCRA prevents a state from
requiring a check verifier to disclose the criteria it used to reject a check. Consequently, the
Court finds Plaintiffs claim under Texas Business and Commerce Code
20.02 1 is not
In conclusion, Plaintiff fails to state plausible claims Certegy violated Texas Business
and Commerce Code
20.06 or § 20.07, and these claims must be dismissed. On the other hand,
Plaintiff adequately pleads Certegy violated Texas Business and Commerce Code
Plaintiffs remaining TCCRA claim is not preempted by the FCRA, Plaintiffs claim under Texas
Business and Commerce Code § 20.02 1 survives.
Plaintiff alleges Certegy is liable under the DTPA via a tie-in provision recognizing any
violation of the TCCRA as "a false, misleading, or deceptive act or practice" for purposes of the
DTPA. See Tex. Bus. & Corn. Code
20.12. Like Plaintiff's claims under the TCCRA, Certegy
argues Plaintiff's DTPA claims should be dismissed for failure to state a claim and federal
preemption. Plaintiff's DTPA claims rest upon his TCCRA claims. Thus, just as two TCCRA
claims were dismissed, so too must their corresponding DTPA claims be dismissed. However,
because Plaintiff adequately alleges Certegy violated Texas Business and Commerce Code
20.021 and that claim is not preempted, a single DTPA claim also survives.
State Common Law Claims
Certegy argues Plaintiff's state common law claims for negligence, defamation, and fraud
are preempted by the FCRA. Alternatively, Certegy argues Plaintiff failed to adequately plead
his negligence, defamation, and fraud claims.
The FCRA preempts state law negligent reporting and defamation claims unless the
plaintiff consumer proves "malice or willful intent to injure" him.
Sen's., Inc., 294 F.3d 631, 638 (5th Cir. 2002) (citing 15 U.S.C.
Equfax Credit Info.
1681h(e)). Thus, to state a
claim for negligence or defamation not preempted by the FCRA, Plaintiff must allege facts
"supporting an inference [Certegy] reported information with malice or willful intent toward
him." See id.
Plaintiff alleges no facts indicating Certegy acted with malice or willful intent. See Meisel
Shade & Fabric Structures
795 F. Supp. 2d 481, 488 (N.D. Tex. 2011) (holding
plaintiff alleged malice where he alleged defendants published false statements about him and
knew that information to be false). Specifically, as discussed above, Plaintiff fails to allege
Certegy reported any false information, let alone that Certegy knowingly did so. Because
Plaintiff does not allege malice on the face of his complaint, his negligence and defamation
claims are preempted.
However, unlike Plaintiff's negligence and defamation claims, Plaintiff's fraud claim is
not preempted. Certegy offers no authority indicating Plaintiff's fraud claim is incompatible with
the FCRA. See 15 U.S.C.
1681h(e) Q,rohibiting only "defamation, invasion of privacy, or
negligence" claims). Therefore, the Court turns to Certegy's alternative basis for dismissing
Plaintiff's fraud claim.
2. Failure to State a Claim Analysis
In order to state a claim for fraud under Texas law, a plaintiff must allege (1) a material
representation was made; (2) the representation was false; (3) when the representation was made,
the speaker knew it was false or made it recklessly without any knowledge of the truth and as a
positive assertion; (4) the speaker intended to induce another party to act upon the representation;
(5) the party acted in reliance upon the representation; and (6) the party thereby suffered injury.
Allstate Ins. Co.
Receivable Fin. Co., 501 F.3d 398, 406 (5th Cir. 2007) (quoting In re
FirstMerit Bank, NA., 52 S.W.3d 749, 758 (Tex. 2001)). To survive a motion to dismiss, fraud
allegations bear a heightened pleading standard: a party must state with particularity the
circumstances constituting fraud. Webb
FED. R. CIV. P.
Everhome Mortg., 704 F. App'x 327, 329 (5th Cir.
9(b)). At a minimum, the party alleging fraud must specify the
statements contended to be fraudulent, identify the speaker, state when and where the statements
were made, and explain why the statements were fraudulent. Id.
Plaintiff alleges Certegy committed fraud when its customer service representative
explained Certegy's reinvestigation procedures and "misled, misrepresented, and fraudulently
led Plaintiff to believe that an accurate and thorough investigation of Plaintiff's consumer report
would be conducted as directed by the FCRA if Plaintiff submitted a written request for
reinvestigation." Am. Compi. [#13] ¶ 48.
Plaintiff's fraud claim fails because Plaintiff failed to plead sufficient facts. Most
problematic, Plaintiff identifies no injury allegedly resulting from his reliance on Certegy' s
statement. Plaintiff only claims he was injured when the grocery store refused to cash his check,
an event that occurred before Certegy's allegedly false statement. See Am. Compi. [#13]
Furthermore, Plaintiff does not provide any facts indicating Certegy's representative knowingly
or recklessly made a false representation. At most, assuming Certegy did not conduct a
reinvestigation, Plaintiff's fraud allegation amounts to a claim based on a broken promise.
Without facts indicating the promise was made with the intention not to perform, a broken
promise is insufficient to support a fraud claim. See Williams
Ecivres Corp., No. CIV. A. H-
94-4011, 1995 WL 127182, at *3 (S.D. Tex. Mar. 23, 1995);New YorkLfe Ins. Co.
Tex. Civ. App. 536, 537 (1895, no writ).
Because Plaintiff's defamation and negligence claims are preempted and Plaintiff failed
to allege facts to establish a fraud claim, the Court grants Certegy's motion to dismiss Plaintiff's
common law claims.
In sum, the Court DISMISSES Plaintiff's FCRA claims, two of his TCCRA claims and
the corresponding DTPA claims, as well as his claims for negligence, defamation, and fraud.
Only Plaintiff's claims Certegy violated Texas Business and Commerce Code
20.021 and thus
also violated the DTPA remain.
IT IS THEREFORE ORDERED that Defendant Certegy Check Services, Inc.'s
Motion to Dismiss [#17] is GRANTED IN PART and DENIED
N PART as described in
this opinion; and
IT IS FINALLY ORDERED that Plaintiff Mark Walter's claims under 15 U.S.C.
1681 e(b) and § 1681 i(a)(1 )(A); claims under Texas Business and Commerce Code
20.06 and § 20.07 and their counterparts under Texas Business and Commerce Code
20.12; and claims for negligence, defamation, and fraud are DISMISSED.
SIGNED this the
lay of March 2018.
SENIOR UNITED SWTES DISTRICT JUDGE
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