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Roth v. Equifax Information Services, LLC

United States District Court, D. Arizona

May 17, 2017





         At docket 29, Defendant RSI Enterprises, Inc. (“RSI”) filed a motion to dismiss Counts I, II, and III pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim for which relief can be granted. Plaintiff Stephanie Roth (“Plaintiff”) filed a response at docket 30. RSI filed a reply at docket 31. Oral argument was not requested and would not be of assistance to the court.


         Plaintiff brings three claims against RSI based on information contained in her May 2016 Equifax credit report regarding a trade line reported by RSI (“RSI Trade Line”). The RSI Trade Line was reported with “dispute” language, which indicates that Plaintiff disputed the debt. Plaintiff alleges that in November of 2016 she “no longer disputed” the trade line and, therefore, submitted a letter to Equifax explaining her position and requesting that it remove the dispute language associated with the RSI Trade Line.[1] Plaintiff alleges that Equifax then forwarded that information to RSI; that is, she alleges that Equifax let RSI know that Plaintiff raised a dispute about the disputed status of her RSI Trade Line. Plaintiff alleges that on November 26, 2016, she received the results of Equifax's inquiry into the dispute status of the RSI Trade Line, and the results showed that RSI retained the dispute language despite the fact that she no longer wanted to dispute it.

         Plaintiff filed a complaint based on this set of facts. She alleges in Count I that RSI violated the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692e(2)(A), by misrepresenting the legal status of her debt when it failed to remove the “disputed status” from her credit file regarding the RSI Trade Line. In Counts II and III Plaintiff alleges that RSI both negligently and willfully violated the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681s-2(b), by failing to conduct an investigation into the matter after learning from Equifax about the now-inaccurate debt status of her RSI Trade Line. RSI asserts that these allegations do not support a claim under the FDCPA or FCRA, and therefore Plaintiff's claims against it should be dismissed. Plaintiff asks for leave to amend in the event the court concludes her complaint contains deficiencies.


         Rule 12(b)(6) tests the legal sufficiency of a plaintiff's claims. In reviewing such a motion, “[a]ll allegations of material fact in the complaint are taken as true and construed in the light most favorable to the nonmoving party.”[2] To be assumed true, the allegations may not simply recite the elements of a cause of action, but must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively.”[3] Dismissal for failure to state a claim can be based on either “the lack of a cognizable legal theory or the absence of sufficient facts alleged under a cognizable legal theory.”[4] “Conclusory allegations of law . . . are insufficient to defeat a motion to dismiss.”[5]

         To avoid dismissal, a plaintiff must plead facts sufficient to “‘state a claim to relief that is plausible on its face.'”[6] “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.”[7] “The plausibility standard is not akin to a ‘probability requirement, ' but it asks for more than a sheer possibility that a defendant has acted unlawfully.”[8] “Where a complaint pleads facts that are ‘merely consistent with' a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.'”[9] “In sum, for a complaint to survive a motion to dismiss, the non-conclusory ‘factual content, ' and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.”[10]

         Leave to amend must be granted "[u]nless it is absolutely clear that no amendment can cure the defects."[11]


         A. FDCPA claim

         Plaintiff claims that RSI violated 15 U.S.C. § 1692e-which prohibits a debt collector from using any “false, deceptive, or misleading representation or means in connection with the collection of any debt”-by retaining the disputed status of her RSI Trade Line account. RSI argues that it had no affirmative duty under the FDCPA to update any credit reporting agency as to the dispute status of an account. RSI cites an Eighth Circuit case, Wilhelm v. Credico, Inc.[12] Wilhelm involved the application of 15 U.S.C. § 1692e(8), which is one of only two sections in the FDCPA dealing with credit reporting.[13] Section 1692e(8) states that a debt collector may not “communicat[e] . . . credit information which is known or which should be known to be false, including the failure to communicate that a disputed debt is disputed.”[14] The Eighth Circuit stated that § 1692e(8) stands for the proposition that “if a debt collector elects to communicate ‘credit information' about a consumer, it must not omit a piece of information that is always material, namely, that the consumer has disputed a particular debt, ” but it does not impose a duty on a debt collector to update the credit reporting agency about a dispute that is raised by a consumer after the fact.[15] That is, § 1692e(8) applies to reports made by debt collectors to credit reporting agencies after a debt has been disputed; it does not impose a duty on debt collectors to update the dispute status of each debt it has reported. Based on the reasoning in Wilhelm, § 1692e(8) would not impose a duty on RSI to update Equifax as to the status of the Plaintiff's RSI Trade Line from disputed, which is how RSI originally reported the debt, to undisputed.

         Plaintiff acknowledges that her claim does not fit within § 1692e(8), but asserts that she brings her claim under § 1692e(2)(A), which prohibits a debt collector from making a false representation about “the character, amount, or legal status of any debt.” She argues that RSI falsely reported back to Equifax that her debt is disputed, and therefore she claims that RSI made an inaccurate representation about the debt's legal status since she no longer disputes the debt. RSI argues that the complaint does not actually contain an allegation that RSI made a representation or communicated with Equifax and, therefore, does not adequately state a claim under § 1692e(2)(A). Indeed, the complaint only alleges that (1) Plaintiff informed Equifax that she no longer disputed the validity of the RSI Trade Line debt; (2) Equifax reported her complaint about the dispute language to RSI; and (3) she then received the results of the Equifax investigation which “showed that RSI retained the dispute language on its [RSI] Trade Line.” There is no allegation regarding any communication between RSI and Equifax or the substance of any ...

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