Jones et al v. Equifax, Inc. in its own name and t/a Equifax Workforce Solutions et al
Filing
54
MEMORANDUM OPINION. Signed by District Judge M. Hannah Lauck on 8/27/2015. (jsmi, )
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division
CHAUNAJONESYWaCHAUNACRAWLEY
and
TYRONE HENDERSON, on behalf of themselves
and all other similarly situated individuals,
Plaintiffs,
v.
Civil Action No. 3:14cv678
EQUIFAX, INC., in its own name and t/a
EQUIFAX WORKFORCE SOLUTIONS
a/k/a TALX CORPORATION and
EQUIFAX INFORMATION SERVICES, LLC,
Defendants.
MEMORANDUM OPINION
This matter comes before the Court on Defendants Equifax, Inc., in its own name
("Equifax") and t/a Equifax Workforce Solutions a/k/a Talx Corporation ("TALX"), and Equifax
Information Services LLC's ("EIS") (collectively, "Defendants") Motion to Dismiss the matter
against them pursuant to Federal Rule of Civil Procedure 12(b)(6). 1 (ECF No. 17.) Plaintiffs
Chauna Jones and Tyrone Henderson ("Plaintiffs") filed a response to the motion, and
Defendants replied. (ECF Nos. 31, 32.) The matter is ripe for disposition. The Court dispenses
with oral argument because the materials before the Court adequately present the facts and legal
contentions, and argument would not aid the decisional process. The Court exercises jurisdiction
1
Fed. R. Civ. P. 12(b)(6) allows a party to seek dismissal for "failure to state a claim
upon which relief can be granted."
pursuant to 28 U.S.C. §§ 1331. 2 For the reasons that follow, the Court will deny the Motion to
Dismiss.
I. Standard of Review
"A motion to dismiss under Rule 12(b)(6) tests the sufficiency of a complaint;
importantly, it does not resolve contests surrounding the facts, the merits of a claim, or the
applicability of defenses." Republican Party ofN.C. v. Martin, 980 F.2d 943, 952 (4th Cir.
1992) (citing SA Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure§ 1356
(1990)). In considering a motion to dismiss for failure to state a claim, a plaintiffs well-pleaded
allegations are taken as true and the complaint is viewed in the light most favorable to the
plaintiff. Mylan Labs., Inc. v. Matkari, 7 F.3d 1130, 1134 (4th Cir. 1993); see also Martin,
980 F .2d at 952. This principle applies only to factual allegations, however, and "a court
considering a motion to dismiss can choose to begin by identifying pleadings that, because they
are no more than conclusions, are not entitled to the assumption of truth." Ashcroft v. Iqbal, 556
U.S. 662, 679 (2009).
The Federal Rules of Civil Procedure "require[] only 'a short and plain statement of the
claim showing that the pleader is entitled to relief,' in order to 'give the defendant fair notice of
what the ... claim is and the grounds upon which it rests."' Bell Atl. Corp. v. Twombly, 550
U.S. 544, 555 (2007) (omission in original) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).
Plaintiffs cannot satisfy this standard with complaints containing only "labels and conclusions"
or a "formulaic recitation of the elements of a cause of action." Id (citations omitted). Instead, a
plaintiff must assert facts that rise above speculation and conceivability to those that "show" a
2
"The district courts shall have original jurisdiction of all civil actions arising under the
Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Plaintiff brings this
action under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681, et seq, including 15
U.S.C. § 1681 p, which governs jurisdiction.
2
claim that is "plausible on its face." Iqbal, 556 U.S. at 678-79 (citing Twombly, 550 U.S. at 570;
Fed. R. Civ. P. 8(a)(2)). "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." Id. at 678 (citing Twombly, 550 U.S. at 556).
II. Procedural and Factual Background
A.
Summary of Allegations in Plaintiffs' Complaint3
In early 2013, Plaintiff Jones requested a full copy of her file from Defendants. On
February 13, 2013, Defendants responded to her request with a "conventional credit report."
(Compl. ~ 38.) Defendants represented that this report constituted Jones's "full file." (Id.) The
report provided to Jones on February 13 contained no information concerning Jones's entry in
Defendants' Work Number Database, in which they maintain employment, tax, and other
information for sale to third parties.
In April 2013, Plaintiff Henderson requested a full copy of his file from Defendants. On
May 24, 2013, Defendants responded to his request with a "conventional credit report." (Compl.
if 42.)
Defendants represented that this report constituted Henderson's "full file." (Id.) The
report provided to Henderson on May 24 contained no information concerning Henderson's
entry in the Work Number Database. Additionally, Henderson's credit report contained
inaccurate information, including "name variation" and an erroneous address. (Compl. if~ 4546.) As a result of the inaccurate credit reporting, Henderson has suffered actual damages.
4
Plaintiffs aver that Defendants' 2012 10-K report indicates that FCRA applies to
"nationwide consumer credit reporting agencies, such as us." (Compl., 50.) Plaintiffs state that
3
For purposes of the Motion, the Court will assume the well-pleaded factual allegations
in the Complaint to be true and will view them in the light most favorable to Plaintiffs. Matkari,
7 F.3d at 1134.
3
Defendants "are well aware" of FCRA obligations imposed upon them, and that the conduct
alleged "was not a mere mistake or accident ... [but instead] the intended result of their standard
operating procedures." (Compl. ifil 48, 52.) Plaintiffs contend that Defendants acted in a willful
manner, creating liability for punitive damages.
B.
Procedural History
Plaintiffs bring this purported class action against Defendants 5 alleging two FRCA
violations. In Count I, a class claim, Plaintiffs allege that Defendants, operating collectively and
jointly as a national "consumer reporting agency" ("CRA") as defined in 15 U.S.C. § 168la(f), 6
4
The United States Securities and Exchange Commission requires public companies to
disclose information in an annual 10-K report, which "provides a comprehensive overview of the
company's business and financial condition and includes audited financial statements." Form
10-K, U.S. Secs. and Exch. Comm'n, http://www.sec.gov/answers/formlOk.htm (last visited
August 27, 2015).
5
Plaintiffs' Complaint defines all Defendants collectively as "Defendants" or "Equifax."
(Compl. iJ 9.) For clarity, the Court will use only "Defendants" in this Memorandum Opinion.
(See, e.g., Compl. if~ 37-40 (using Equifax and Defendants interchangeably).)
6
That statute defines a "consumer reporting agency" as:
[A]ny person which, for monetary fees, dues, or on a cooperative nonprofit basis,
regularly engages in whole or in part in the practice of assembling or evaluating
consumer credit information or other information on consumers for the purpose of
furnishing consumer reports to third parties, and which uses any means or facility
of interstate commerce for the purpose of preparing or furnishing consumer
reports.
15 U.S.C. § 1681a(f).
4
violated 15 U.S.C. § 1681g(a)7 by not providing Plaintiffs with their full file at the time of their
requests. Specifically, Plaintiffs aver that Defendants were required to include the information
held about Plaintiffs in the Work Number Database upon Plaintiffs' request for their files.
In Count II, Plaintiff Henderson individually alleges that EIS 8 violated 15 U.S.C.
§ 168le(b)9 by not following "reasonable procedures to assure maximum possible accuracy of
7
That statute, governing disclosures to consumers, states in pertinent part:
Every consumer reporting agency shall, upon request, and subject to section
168lh(a)(l) of this title, clearly and accurately disclose to the consumer:
(1) All information in the consumer's file at the time of the request, except that-
(A) if the consumer to whom the file relates requests that the first 5 digits
of the social security number (or similar identification number) of the
consumer not be included in the disclosure and the consumer reporting
agency has received appropriate proof of the identity of the requester, the
consumer reporting agency shall so truncate such number in such
disclosure; and
(8) nothing in this paragraph shall be construed to require a consumer
reporting agency to disclose to a consumer any information concerning
credit scores or any other risk scores or predictors relating to the
consumer.
(2) The sources of the information; except that the sources of information
acquired solely for use in preparing an investigative consumer report and actually
used for no other purpose need not be disclosed: Provided, That in the event an
action is brought under this subchapter, such sources shall be available to the
plaintiff under appropriate discovery procedures in the court in which the action is
brought.
15 U.S.C. § 168lg(a).
8
Defendants challenge the entirety of Count I, the class claim, but they challenge only
the willfulness pleaded in Plaintiff Henderson's second count against EIS. Therefore, the Court
confines its analysis of Count II to an evaluation of willfulness.
9
Section 1681 e, governing compliance procedures, states, in pertinent part: "(b)
Accuracy of report: Whenever a consumer reporting agency prepares a consumer report it shall
5
the credit reports and credit files it published and maintained concerning" Henderson. (Compl.
~
16.) Henderson cites a number of cases in which EIS has been sued for FCRA violations.
Henderson argues that despite such suits, and the receipt of written materials advising it to
comply with FCRA, EIS has not modified its procedures to comply with FCRA.
On October 3, 2014, Plaintiffs filed their Complaint. (ECF No. I.) On December 8,
2014, Defendants filed their Motion to Dismiss. (ECF No. 17.) After two extensions ohime
(ECF Nos. 21, 30), Plaintiffs filed their response to the Motion to Dismiss. (ECF No. 31.)
Defendants have filed their reply in support of the Motion to Dismiss. (ECF No. 32.)
Accordingly, this matter is ripe for disposition.
III. Analysis
A.
Applicable Law: FCRA
1.
Standard to Establish Liability for Negligence and
Willfulness Under FCRA
"Congress enacted FCRA in 1970 to ensure fair and accurate credit reporting, promote
efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. ofAm. v. Burr,
551U.S.47, 52 (2007). FCRA provides a private right of action for consumers against entities
or persons that violate the statute. Id. at 53. If a FCRA violation occurs through negligence, "the
affected consumer is entitled to actual damages." Id. (citing 15 U.S.C. § 168lo(a)). For willful
FCRA violations, the consumer may recover actual, statutory, and punitive damages. Id. (citing
15 U.S.C. § 168ln(a)). The Supreme Court of the United States has interpreted willfulness to
include reckless violations. Safeco Ins. Co., 551 U.S. at 57-58. Reckless actions entail "an
follow reasonable procedures to assure maximum possible accuracy of the information
concerning the individual about whom the report relates." 15 U.S.C. § 168le(b).
6
unjustifiably high risk of harm that is either known or so obvious that it should be known." Id. at
68 (quoting Farmer v. Brennan, 511 U.S. 825, 836 (1994)).
For the purposes of a Rule 12(b)(6) motion to dismiss, courts have found a plaintiff
sufficiently pleads willfulness or recklessness when he or she asserts that a defendant has
repeatedly violated FCRA or was aware ofFCRA's requirements but failed to comply. See
Freckleton v. Target Corp., No. WDQ-14-0807, at 17 n.13 (D. Md. Jan. 12, 2015) (denying
motion to dismiss); Singleton v. Domino's Pizza, LLC, No. DKC 11-1823, 2012 WL 245965, at
*4 (D. Md. Jan. 25, 2012) (citing cases); Zaun v. Tuttle, Inc., No. 10-2191 (DWF/JJK), 2011 WL
1741912, at *2 (D. Minn. May 4, 2012) (analyzing an amendment to the FCRA, the Fair and
Accurate Transactions Act ("FACTA"), 15 U.S.C. § 1681c(g)); Cappetta v. GC Servs. Ltd
P'ship, 654 F. Supp. 2d 453, 461-62 (E.D. Va. 2009); In re TJX Cos., Inc., No. md-1853-KHV,
2008 WL 2020375, at *2 (D. Kan. May 9, 2008) (citing cases) (FACTA claim). "[W]hether an
act was done with knowing or reckless disregard for another's rights remains a fact-intensive
question." Dennis v. Trans Union, LLC, No. 14-2865, 2014 WL 5325231, at *8 (E.D. Pa. Oct.
20, 2014) (citation omitted); accord Edwards v. Toys "R" Us, 527 F. Supp. 2d 1197, 1210 (C.D.
Cal. 2007) ("Willfulness under the FCRA is generally a question of fact for the jury." (citations
omitted)) (FCRA and FACTA claims).
2.
FCRA's Requirement to Disclose All Information in a
Consumer's File
FCRA requires, among other obligations, that CRAs "clearly and accurately disclose" to
a requesting consumer "[a]ll information in the consumer's file at the time of the request." 15
U.S.C. § 168lg(a)(l). FCRA defines "file" as "all of the information on that consumer recorded
and retained by a consumer reporting agency regardless of how the information is stored." Id.
§ 1681a(g). The United States Court of Appeals for the Seventh Circuit has found that "[t]he
7
term 'file' denotes all information on the consumer that is recorded and retained by a consumer
reporting agency that might be furnished, or has been furnished, in a consumer report on that
consumer." Gillespie v. Trans Union Corp., 482 F.3d 907, 909 (7th Cir. 2007) (emphasis in
original) (citing 16 C.F.R. pt. 600, app. § 603). The Seventh Circuit has held that, although a
consumer's "entire file" need not be disclosed upon request, "complete copies of their consumer
reports" must be disclosed upon request. Id. The United States Court of Appeals for the Third
Circuit has ruled that a CRA may not evade disclosure requirements by, for example,
"contracting with a third party to store and maintain information that would otherwise clearly be
part of the consumer's file and is included in a credit report," Cortez v. Trans Union, LLC, 617
F.3d 688, 711 (3d Cir. 2010), or by using "[c]orporate organization, reorganization, structure, or
restructuring." to circumvent reporting requirements. 12 C.F.R. § 1022.140(a).
3.
FCRA's Requirement to Follow Reasonable Procedures to
Assure Maximum Possible Accuracy
FCRA also mandates that when CRAs prepare consumer reports, they "follow reasonable
procedures to assure maximum possible accuracy of the information concerning the individual
about whom the report relates." 15 U.S.C. § 168le(b). The determination regarding the
"reasonableness of a credit reporting agency's procedure is 'normally a question for trial unless
the reasonableness or unreasonableness of the procedure is beyond question."' Cortez, 617 F.3d
at 709 (quoting Sarver v. Experian Info. Solutions, 390 F.3d 969, 971 (7th Cir. 2004)). A
complaint alleging a violation of§ 1681e(b) must sufficiently plead that: "(1) the consumer
report contains inaccurate information and (2) the reporting agency did not follow reasonable
procedures to assure maximum possible accuracy." Dalton v. Cap. Assoc. Indus., Inc., 257 F.3d
409, 415 (4th Cir. 2001).
8
B.
Plaintiffs Adequately State a Claim for Violations of FCRA Because They
Plausibly Allege that Defend ants Operate Collectively as a CRA
Plaintiffs sufficiently state a claim for liability under FCRA because they plausibly allege
that all Defendants operate collectively as a CRA. A consumer reporting agency is "any person
which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole
or in part in the practice of assembling or evaluating consumer credit information or other
information on consumers for the purpose of furnishing consumer reports to third parties." 15
U.S.C. § 168la(f). Plaintiffs adequately assert that Defendants assemble and evaluate
information on consumers, by pointing to Defendants' own website that states that "Equifax
organizes and assimilates data on more than 500 million consumers ... worldwide." (Press
Release, Equifax, Inc., LPS Partners with Equifax to Offer Lenders Employment Verifications
through the Loan Quality Gateway (October 23, 2012); 10 see Compl. ~ 26.) Plaintiffs
sufficiently contend that Defendants do so for monetary fees or on a cooperative nonprofit basis.
(Comp!. if 14 ("[T]he fees we charge for these services are generally on a per transaction basis.");
id. if 30 ("(T]he Work Number provides these services at a reduced cost, or no cost at all, so long
as the organizations agree to provide their payroll information ... to the Work Number
Database.").) Plaintiffs aver that Defendants engage in such activities for the purpose of
furnishing consumer reports to specific third parties, such as employers, consumer finance
providers, and mortgage companies. Finally, Plaintiffs plausibly allege that the Defendants do so
10
The Court may consider this document because the website is sufficiently referred to in
the Complaint and Defendants do not challenge its authenticity. Witthohn v. Fed Ins. Co., 164
F. App'x 395, 396-97 (4th Cir. 2006) (citing Alt. Energy, Inc. v. St. Paul Fire & Marine Ins. Co.,
267 F.3d 30, 33 (1st Cir. 2001)).
9
collectively. 11 Accordingly, Plaintiffs have sufficiently pied, for the purposes of a motion to
dismiss, that Defendants operate as a credit reporting agency.
C.
12
Plaintiffs Plausibly State Claims for Willful Violations of FCRA
For the following reasons, Plaintiffs sufficiently state a claim for willful violations of 15
U.S.C. §§ 168lg(a)(l) and 168le(b). First, in Count I, Plaintiffs sufficiently state a claim for a
willful violation of 15 U.S.C. § 1681g(a)(l) for Defendants' failure to "clearly and accurately
disclose" to the requesting consumer Plaintiffs "[a]ll information in the [Plaintiffs'] file[s] at the
time of the request[s]." 15 U.S.C. § 168lg(a)(l).
In Count I, Plaintiffs allege that they made requests for their file from Defendants in
2013, but the information they received did not include the information held in the Work
Number Database. The Complaint states the Work Number Database information constitutes
11
Defendant Equifax, Inc. disputes this claim by citing to a number of cases in which
district courts held that Equifax, Inc. did not operate as a CRA. These Courts have generally
found Equifax, Inc. to be a holding company that does not exercise control over consumer credit
information. However, every decision cited by Equifax, Inc. was rendered at the summary
judgment stage. Greear v. Equifax, Inc., No. 13-11896, 2014 WL 1378777 (E.D. Mich. Apr. 8,
2014); Channing v. Equifax, Inc., No. 5:11-CV-293-F:, 2013 WL 593942 (E.D.N.C. Feb. 15,
2013); Ransom v. Equifax, Inc., No. 09-80280-CIV, 2010 WL 1258084 (S.D. Fla. Mar. 30,
2010); Slice v. Choicedata Consumer Srvs., Inc., No. 3:04-CV-428, 2005 WL 2030690 (E.D.
Tenn. Aug. 23, 2005); Persson v. Equifax, Inc., No. 7:02CV00511 (W.D. Va. Oct. 28, 2002);
Weiler v. Transunion, Inc., No. 99-936 (W.D. Pa. Nov. 16, 2000). Further, in each of the cases
cited above, the plaintiff either proceeded pro se or failed to oppose the motion. Such rulings
cannot provide persuasive support for the Defendants' position at the Motion to Dismiss stage.
Defendants also contend, using the Declaration of John W. Montgomery, Jr. and
Equifax's 10-K form, that differences among Equifax, Inc. (a holding company), TALX (a
specialty consumer reporting agency), and EIS (a consumer reporting agency) necessitate
dismissal of this claim. That Defendants placed these additional documents on the record further
demonstrates the propriety of deciding this issue at summary judgment, or trial.
12
Plaintiffs also argue that the Court may pierce the corporate veil in this instance.
Piercing the corporate veil is "an attempt to impose a preexisting liability upon an entity not
otherwise liable." Thomas v. Peacock, 39 F.3d 493, 499 (4th Cir. 1994), rev 'don other grounds,
516 U.S. 349 (1996) (citing Sandlin v. Corp. Interiors Inc., 972 F.2d 1212, 1217 (10th Cir.
1992)). Because the Court finds Plaintiffs have sufficiently pleaded Defendants' liability, the
Court need not reach this argument at this juncture.
10
part of the consumer files in the form that would be sold to a third party. Plaintiffs assert that
Defendants use a common FCRA-govemed database that includes the Work Number Database
information.
A lack of clarity as to what constitutes a file exists, including how or where information
is stored. However, such arguments, which require evidence not appropriate on a motion to
dismiss, are more suitably determined on summary judgment or at trial. Accordingly, at the
motion to dismiss stage, such statements sufficiently demonstrate the plausible claim that the
Work Number Database is part of the Plaintiffs' "file," and§ 168lg(a)(l) required Defendants to
disclose such information upon Plaintiffs' requests.
In Count II, Plaintiff Henderson sufficiently states a claim for a willful violation 13 of15
U.S.C. § 1681e(b) for EIS's failure to "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). Henderson alleges that his credit report from EIS contained inaccurate
information, including "name variation" and an erroneous address.
(Campi.~
45-46.) As a
result of the inaccurate credit reporting, Henderson alleges that he has suffered actual damages.
He sufficiently pleads willfulness because he alleges that EIS has repeatedly violated § 1681 e(b)
in the past and failed to correct its procedures. See, e.g., Cappetta, 654 F. Supp. 2d at 461--62.
Accordingly, Plaintiffs have plausibly pied willfulness in Counts I and II.
13
As discussed in note 8, supra, the Court need not address whether Henderson
sufficiently alleged a merely negligent violation of§ 1681 e(b ).
11
V. Conclusion
For the foregoing reasons, the Court denies the Motion to Dismiss. (ECF No. 17.)
An appropriate Order shall issue.
'2
Z.
Date: 8 7 - 0 lS
Richmond, Virginia
12
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