Rodriguez v. Experian Information Solutions Inc et al

Filing 48

ORDER granting in part and denying in part Defendant AllianceOne Receivables Management Inc's 35 Motion for Summary Judgment, signed by Judge Richard A Jones. (SWT)

THE HONORABLE RICHARD A. JONES

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UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

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JESSE RODRIGUEZ,
on behalf of himself and all others
similarly situated,
Plaintiff,

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Case No. C15-01224-RAJ
ORDER ON DEFENDANT
ALLIANCEONE’S MOTION FOR
SUMMARY JUDGMENT

v.
EXPERIAN INFORMATION
SOLUTIONS, INC. and
ALLIANCEONE RECEIVABLES
MANAGEMENT, INC.,

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Defendants.

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This matter comes before the Court on Defendant AllianceOne Receivables

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Management, Inc.’s (“AllianceOne”) Motion for Summary Judgment. Dkt. # 35.

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Plaintiff Jesse Rodriguez opposes the motion. Dkt. # 38. For the reasons that follow,

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the Court GRANTS in part and DENIES in part Defendant’s Motion. Dkt. # 35.

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I.

BACKGROUND

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Plaintiff Jesse Rodriguez, on behalf of himself and others similarly situated,

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filed suit against Defendants Experian Information Solutions, Inc. (“Experian”) and

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AllianceOne, claiming that Defendants violated the Fair Credit Report Act (“FCRA”).

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Dkt. # 1. AllianceOne is a debt collecting agency that contracted with the City of
Seattle to collect on unpaid parking ticket judgments. Dkt. # 37. When collecting a
ORDER - 1

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judgment, AllianceOne would typically attempt to work with the judgment debtor to
pay off the unpaid debt. If the debtor did not cooperate or was unresponsive,
AllianceOne would request the debtor’s credit report to obtain updated contact
information or attachable assets. Dkt. # 39 Ex. B.

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The City of Seattle referred several of Plaintiff’s parking tickets to AllianceOne
for collection. Dkt. # 37. These unpaid parking tickets were eventually reduced to
judgment 1. Dkt. # 9. On December 14, 2013 and April 3, 2014, AllianceOne
requested and received Plaintiff’s credit report from Experian in order to obtain more
information to aid them in collecting payment of Plaintiff’s parking ticket judgments.
Dkt. # 37. AllianceOne then attempted to garnish one of Plaintiff’s bank accounts.
The garnishment was unsuccessful because Plaintiff had no money in that account.
Dkt. # 36.

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On May 1, 2015, Plaintiff applied for and was denied a credit card from Bank
of America. Id. At that time, Plaintiff learned that he had collection accounts
reporting on his credit report. Id. Plaintiff then paid off these debts. Dkt. # 37. On
August 4, 2015, Plaintiff filed this suit, alleging, among other things, that AllianceOne
violated the FCRA when it requested Plaintiff’s credit report for an alleged
impermissible purpose. Dkt. # 1.

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II.

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LEGAL STANDARD

Summary judgment is appropriate if there is no genuine dispute as to any
material fact and the moving party is entitled to judgment as a matter of law. Fed. R.
Civ. P. 56(a). The moving party bears the initial burden of demonstrating the absence
of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
Where the moving party will have the burden of proof at trial, it must affirmatively
demonstrate that no reasonable trier of fact could find other than for the moving party.

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1

The parties dispute the exact date on which these debts became judgments.

ORDER - 2

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Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). On an issue
where the nonmoving party will bear the burden of proof at trial, the moving party can
prevail merely by pointing out to the district court that there is an absence of evidence
to support the non-moving party’s case. Celotex Corp., 477 U.S. at 325. If the
moving party meets the initial burden, the opposing party must set forth specific facts
showing that there is a genuine issue of fact for trial in order to defeat the motion.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The court must view the
evidence in the light most favorable to the nonmoving party and draw all reasonable
inferences in that party’s favor. Reeves v. Sanderson Plumbing Prods., 530 U.S. 133,
150-51 (2000).
However, the court need not, and will not, “scour the record in search of a
genuine issue of triable fact.” Keenan v. Allan, 91 F.3d 1275, 1279 (9th Cir. 1996);
see also, White v. McDonnel-Douglas Corp., 904 F.2d 456, 458 (8th Cir. 1990) (the
court need not “speculate on which portion of the record the nonmoving party relies,
nor is it obliged to wade through and search the entire record for some specific facts
that might support the nonmoving party’s claim”). The opposing party must present
significant and probative evidence to support its claim or defense. Intel Corp. v.
Hartford Accident & Indem. Co., 952 F.2d 1551, 1558 (9th Cir. 1991).
Uncorroborated allegations and “self-serving testimony” will not create a genuine
issue of material fact. Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th
Cir. 2002); T.W. Elec. Serv. V. Pac Elec. Contractors Ass’n, 809 F. 2d 626, 630 (9th
Cir. 1987).
III.

DISCUSSION

A. Permissible Purpose
As noted in the Court’s previous Order denying AllianceOne’s Motion to
Dismiss, under the FCRA, third parties may request a consumer’s credit report from a
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credit reporting agency for “certain statutorily enumerated purposes.” Pintos v. Pac.
Creditors Ass’n, 605 F.3d 665, 674 (9th Cir. 2009)(“Pintos II”). Consumer credit
reports may be used for debt collection purposes, as long as debt collection agencies
demonstrate that the outstanding debt, in addition to “involving” consumers, stems
from a “credit” transaction. Dkt. # 21. In order for the credit transaction to “involve”
a consumer, that consumer must “initiate” the transaction. Pintos II, 605 F.3d at 675.
Instead of making an argument about the application of the law to the facts of
this case, AllianceOne now advocates for an alternative reading of the statute, which it
believes provides an alternative basis for finding that AllianceOne had a “permissible
purpose” to request Plaintiff’s credit report. AllianceOne argues that when 15 U.S.C.
§§ 1681b(a)(3)(A), 1681b(c) and 1681a(m) are read together, the ensuing
interpretation allows credit reports to be used in credit transactions that are not
initiated by the consumer. 15 U.S.C. § 1681b(a)(3)(A) allows a consumer report to be
obtained for “review of collection of an account.” 15 U.S.C. § 1681b(c) sets forth
conditions in which a consumer credit report may be provided in connection with a
“credit or insurance transaction that is not initiated by the consumer.” 15 U.S.C. §
1681a(m) defines what is not included under the umbrella of the term “credit or
insurance transaction that is not initiated by the consumer.” One of the actions not
included within that term is the use of a credit report by a “person with which the
consumer has an account or insurance policy for purposes of . . . collecting the
account.” 15 U.S.C. § 1681a(m). AllianceOne argues that because section 1681a(m)
specifically excludes “collecting an account” from the definition of the term “credit or
insurance transaction that is not initiated by the consumer”, the inverse of that
proposition must be true. Thus, by AllianceOne’s reasoning, the collection of an
account is a credit transaction that is initiated by the consumer.

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ORDER - 4

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While the Ninth Circuit specifically states that it did not “opine on the meaning
or scope of 15 U.S.C. §§ 1681a(m) and 1681b(c),” its statements regarding the
purpose of those provisions are illuminating. Per the decision in Pintos III, sections
1681a(m) and 1681b(c) were added to the FCRA “to permit lenders and insurance
companies to solicit for business by purchasing lists and limited information about
customers who match certain criteria (such as zip code and credit score) from credit
reporting agencies,” or to allow these companies to send “pre-approved” offers of
credit to certain customers. Thus, these sections were drafted to accommodate a
different situation than the situation at issue here. Pintos v. Pac. Creditors Ass'n, 605
F.3d 665, 676 n.2 (9th Cir. 2010) (“Pintos III”)
AllianceOne relies on language from Chief Judge Kozinski’s dissent in Pintos
III to support its argument. However, a dissent is a dissent for a reason. The current
state of the law is that under section 1681b(a)(3)(A), debt collection agencies can only
request a consumer’s credit report if that consumer initiates the transaction, not that all
debt collection is wholesale “initiated by the consumer”. AllianceOne is not asking
the Court to look at these statutes to determine whether there was an alternative
permissible purpose under which its actions may have been lawful; AllianceOne is
asking the Court to overrule Ninth Circuit case law and interpretation of the FCRA.
The Court declines to do so. AllianceOne’s motion for summary judgment of
Plaintiff’s claim that it violated the CFRA is DENIED.
B. Willful or Negligent Violation of the FCRA
The FCRA provides a private right of action against businesses that use
consumer reports but fail to comply. An affected consumer is entitled to actual
damages for negligent violations, and actual or statutory and punitive damages for
willful violations. 15 U.S.C. §§ 1681o(a), 1681n(a). A “reckless disregard of a
requirement of FCRA would qualify as a willful violation within the meaning of §
ORDER - 5

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1681n(a).” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 71 (2007). “Thus, a company
subject to the FCRA does not act in reckless disregard of it unless the action is not
only a violation under a reasonable reading of the statute's terms, but shows that the
company ran a risk of violating the law substantially greater than the risk associated
with a reading that was merely careless.” Id. at 69.
AllianceOne argues that it did not willfully violate the FCRA because its
interpretation of the statute and its interpretation of the applicable case law is
reasonable. Plaintiff argues that the terms of the statute unambiguously bar
AllianceOne’s interpretation, thus, whether or not it believed its interpretation was
correct is immaterial. Where the statute at issue is “not subject to a range of plausible
interpretations”, the Court “need not consider [the defendant’s] subjective
interpretation of the FCRA in determining whether it acted in reckless disregard of the
statutory language, and therefore willfully.” Syed v. M-I, LLC, 853 F.3d 492, 505 (9th
Cir. 2017). However, as evident by clear precedent and even the parties’ arguments in
this case, the statute at issue has been subject to interpretation and cannot be
characterized as unambiguous. As such, the Court must consider whether
AllianceOne’s interpretation of the FCRA’s terms was reasonable.
Previously, AllianceOne had a practice of obtaining debtors’ credit reports to
obtain relevant information about the debtor. Dkt # 39 Ex. B. In 2007, the Ninth
Circuit held that, under 15 U.S.C. § 1681b(a)(3)(A), debt collectors may request a
consumer’s credit report “only in connection with a credit transaction in which a
consumer has participated directly and voluntarily.” Pintos v. Pacific Creditors Ass’n,
504 F.3d 792, 796 (9th Cir. 2007)(“Pintos I”). In reaching this decision, the Ninth
Circuit relied on the definition of “credit” provided by the Fair and Accurate Credit
Transactions Act of 2003 (“FACTA”), which amended the FCRA.

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ORDER - 6

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Following the decision in Pintos I, AllianceOne ceased pulling credit reports for
the collection of parking tickets, presumably because they no longer believed that
ticket judgments qualified as a “permissible purpose” under 15 U.S.C. §
1681b(a)(3)(A). Dkt. # 37; Dkt. # 39 Ex. I. After Pintos I was issued, the decision
was withdrawn and superseded by Pintos II 2. The decision in Pintos II no longer
referenced the FACTA amendments, but reached the same end result. After Pintos II
was issued, AllianceOne believed that collecting on judicially adjudicated parking
tickets was a permissible purpose for obtaining consumer credit reports and resumed
requesting credit reports for judicially adjudicated government debts. Dkt. # 37. In
reaching this conclusion, AllianceOne relied on the new language in Pintos II and an
“FCRA Permissible Purpose Certification Form” sent to AllianceOne by Experian,
which led it to believe that Experian shared the same interpretation of the law. Dkt. ##
36 Ex. C; Dkt. # 37.

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In arguing that its interpretation was objectively reasonable, AllianceOne points
to certain language in the decision in Pintos II. “If a debt has been judicially
established, there is a ‘credit transaction involving the consumer’ no matter how it
arose. The obligation is established as a matter of law, and the statute is satisfied.”
Pintos II, 565 at 1113-1114. AllianceOne notes that the term “judgment” is used
repeatedly in the decision, arguing that the use of this term indicated an intention to
reinforce the holding that “a judgment creditor is authorized under the statute to obtain
a credit report in connection with collection efforts.” Hasbun v. County of Los
Angeles, 323 F.3d 801 (9th Cir. 2003). However, this language does not address the
issue of whether parking ticket judgments are “credit” transactions or whether that
type of debt is the “judicially established debt” contemplated by the Ninth Circuit.

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The defendants in Pintos I and II then filed a petition for re-hearing en banc of Pintos II.
The Ninth Circuit denied the petition and issued Pintos III, with opinions from Chief Judge
Kozinski and Circuit Judge Gould dissenting from the denial of rehearing en banc.

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Nor does the decision in Pintos II specifically address the post-FACTA meaning of
section 1681b(a)(3)(A). As a self-described “reasonably prudent company in the
business of collecting judgment debts” it is not objectively reasonable that
AllianceOne did not consider these issues when using Pintos II to interpret the FCRA.
Dkt. # 35.
AllianceOne’s argument that its interpretation of the statute was reasonable
because it relied on its understanding of Experian’s interpretation of the statute is
similarly unpersuasive. AllianceOne cites to no statutory authority or case law that
indicates that a party may excuse its allegedly violative behavior because it relied on a
third party’s interpretation of the law. AllianceOne is in the business of collecting
judgment debts and its understanding of Experian’s interpretation of the decision in
Pintos II does not persuade the Court that its interpretation was reasonable. In this
case, AllianceOne’s duty to exercise due diligence cannot be fulfilled by relying on the
experiences or actions of others.
The Court must now determine whether AllianceOne’s interpretation of section
1681b(a)(3)(A) rises to the level of reckless disregard. At issue is whether
AllianceOne “ran a risk of violating the law substantially greater than the risk
associated with a reading that was merely careless.” Safeco, 551 U.S. at 69. While
AllianceOne’s reading of the FCRA is objectively unreasonable, there is a question of
fact as to whether it ran an “unjustifiably high risk of violating the statute. Id. at 70.
The parties provide declarations and depositions that provide some of the impetus for
AllianceOne’s decision to resume pulling credit reports for parking ticket judgments,
but there is little evidence as to how this decision was made. AllianceOne has not
asserted that it consulted with counsel about its interpretation of Ninth Circuit law nor
is there any evidence regarding AllianceOne’s interpretation of the Experian “FCRA
Permissible Purpose Certification Form” that it claims it relied on. Simply put, there is
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a genuine issue of material fact as to whether AllianceOne’s interpretation of the
FCRA was “merely careless” or whether it was reckless. Therefore, AllianceOne’s
Motion for Summary Judgment as to its liability under 15 U.S.C. § 1681n(a) is
DENIED.
C. Negligent Violation of the FCRA
“[N]egligent actions are those which do not meet the standard of objective
reasonableness.” Syed v. M-I, LLC, 853 F.3d 492, 504 (9th Cir. 2017). However,
negligence should not be conflated with recklessness. It is possible for a company’s
interpretation of a statute be “objectively unreasonable without rising to the level of
recklessness.” Id. at 505. Any person who is negligent in failing to comply with any
requirement imposed by the FCRA with respect to any consumer is liable to that
consumer for actual damages. 15 U.S.C. § 1681o(a). Because this is the only relief
available for a claim for negligent violations of the FCRA, summary judgment in favor
of the defendant would be appropriate if the plaintiff fails to raise a triable dispute as
to whether defendant’s conduct resulted in actual damages. Weinberg v. Whatcom
Cnty., 241 F.3d 746, 751–752 (9th Cir. 2001) (affirming summary judgment where
plaintiff “failed to offer competent evidence of damages” for a claim in which plaintiff
“bore the burden of establishing the amount of actual harm”); see Banga v. Experian
Info. Sols., Inc., 473 F. App'x 699, 700 (9th Cir. 2012) (“The district court properly
granted summary judgment on Banga's claims for negligent violations under § 1681o
of the Act because she failed to raise a triable dispute as to whether defendants'
conduct resulted in actual damages.”).
Plaintiff makes no argument and provides no evidence that he suffered actual
damages. As Plaintiff fails to raise a triable dispute as to whether AllianceOne’s

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ORDER - 9

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conduct resulted in actual damages, to the extent that Plaintiff makes a claim for
negligent violations under 15 U.S.C. § 1681o, summary judgment is GRANTED 3.

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D. Request for Further Discovery Under Federal Rule of Civil Procedure 56(d)

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Plaintiff argues in his Response that summary judgment is premature under
Federal Rule of Civil Procedure 56(d). Federal Rule of Civil Procedure 56(d) allows
the Court to defer consideration of, or deny, a summary judgment motion if the
opposing party cannot present facts essential to justify its opposition. Fed. R. Civ. P.
56(d). AllianceOne’s Motion was only granted as to Plaintiff’s claim for negligent
violations of the FCRA under 15 U.S.C. § 1681o. Plaintiff makes no argument that
further discovery would help them contradict AllianceOne’s claim that Plaintiff cannot
show actual damages, but contends that it is entitled to discovery on matters that
would go towards the issue of whether AllianceOne was reckless or negligent. These
matters were decided in Plaintiff’s favor and are still active, thus Plaintiff’s request to
deny AllianceOne’s Motion under Rule 56(d) is DENIED.

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IV.

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CONCLUSION

For all the foregoing reasons, the Court DENIES in part and GRANTS in
part Defendant’s motion for summary judgment. Dkt. # 35.

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Dated this 3rd day of October, 2017.

A

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The Honorable Richard A. Jones
United States District Judge

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Plaintiff argues that he also intends to seek injunctive relief for the proposed class under the
FCRA. To date, the Fifth Circuit is the only Appellate Court to rule definitely on whether
such relief is available under the FCRA. The Ninth Circuit has yet to weigh in on this matter.
This is a matter more appropriately addressed in Plaintiff’s motion for class certification and
will be not discussed at this time. Plaintiff also argues, for the first time, that it intends to
pursue claims under state law analogues to the FCRA which do provide for injunctive relief.
Plaintiff cannot seek to amend his Complaint at this late stage in the proceedings and does not
cite to any legal authority that would allow him to do so.
ORDER - 10