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Baron v. Mark A Kirkorsky, P.C.

United States District Court, D. Arizona

October 13, 2017

Robert J. Baron, Plaintiff,
Mark A. Kirkorsky, P.C., Defendant.


          David G. Campbell, United States District Judge.

         Plaintiff Robert Baron brought this action against Defendant Mark Kirkorsky, P.C., alleging violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. Doc. 12. Defendant now moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6). Doc. 12. The motion is fully briefed, and the parties have not requested oral argument. Docs. 15, 18. For the reasons set forth below, the Court will deny Defendant's motion.

         I. Background.

         In August 2011, Plaintiff enrolled in a medical technician training program at the Arizona Medical Training Institute (“ATMI”). Doc. 11 ¶ 1. Plaintiff executed a written enrollment agreement (the “Enrollment Agreement”) in which he agreed to a deferred-tuition payment plan. Id. ¶¶ 2-3. A subsequent dispute caused Plaintiff to leave the program before graduation. Id. ¶ 5.

         Plaintiff then filed a state-court action against ATMI and its owner, James Dillard (“Dillard”), alleging fraud, negligence, and intentional infliction of emotional distress. Doc. 1 ¶¶ 9-12. The Maricopa County Superior Court dismissed the action with prejudice due to Plaintiff's failure to comply with discovery rules. Doc. 1 ¶ 13; Doc. 11 ¶ 8. The court entered a judgment in favor of Dillard and ATMI for court costs (the “Judgment”). Doc. 1 ¶¶ 13-14; Doc. 18 at 4.

         Defendant is the debt collection law firm to which ATMI and Dillard subsequently assigned their interest in the Judgment. Doc. 1 ¶ 15. In its effort to collect the Judgment, Defendant requested and obtained copies of Plaintiff's consumer report from Experian on four separate occasions over an 18-month period. Id. ¶¶ 18-24. Plaintiff commenced this action in April 2017, alleging Defendant willfully, or, in the alternative, negligently violated the FCRA by obtaining Plaintiff's consumer credit reports without a permissible purpose. See id.

         II. Discussion.

         The FCRA requires that a person have a “permissible purpose” for obtaining or using a consumer report, commonly known as a “credit report.” 15 U.S.C. § 1681b (2012); TRW, Inc. v. Andrews, 534 U.S. 19, 23 (2001). Section 1681b provides an exhaustive list of the permissible purposes. See Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1545 (2016). The permissible purpose at issue here involves a recipient's intention “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.” § 1681b(a)(3)(A). The parties dispute whether Defendant's conduct falls within the scope of this permissible purpose.

         A. Early Interpretations of § 1681b(a)(3)(A).

         Defendant relies on Pintos v. Pacific Creditors Association (Pintos II), 565 F.3d 1106, 1110 (9th Cir. 2009), to argue that any judgment creditor has a permissible purpose for requesting a credit report.[1] Doc. 12 at 2-3. In Pintos II, the Ninth Circuit considered whether § 1681b(a)(3)(A) permitted a collection agency to obtain a credit report in connection with a 2002 vehicle towing debt. 565 F.3d at 1110-11. The Ninth Circuit identified two requirements for the permissible purpose in § 1681b(a)(3)(A): (1) a credit transaction involving the consumer; and (2) the collection of an account of the consumer. Id. at 1112. Because the plaintiff had not requested that her illegally parked vehicle be towed, she was not “involved” in the transaction and § 1681b(a)(3)(A) did not provide a permissible purpose. Id. at 1112-13.

         Pintos II distinguished its seemingly contradictory decision in Hasbun v. County of Los Angeles, 323 F.3d 801 (9th Cir. 2003), which held that § 1681b(a)(3)(A) extended to the collection of a child support judgments. See id at 1113-14. Court judgments, like towing debts, do not necessarily “involve” a consumer, but the Ninth Circuit explained that an exception applies for court judgments: “[i]f a debt has been judicially established, there is a ‘credit transaction involving the consumer' no matter how it arose.” Id. Defendant relies on this exception to contend that its assigned interest in the state-court judgment granted it a per se permissible purpose for obtaining Plaintiff's credit report. Doc. 12 at 3-5.

         Plaintiff counters that the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), which did not apply to the 2002 debt at issue in Pintos II and therefore was not considered when the Ninth Circuit distinguished Hasbun, defeats Defendant's argument. Doc. 5 at 7-8. Plaintiff asserts that FACTA's definition of “credit” now limits the scope of transactions for which third parties can seek credit reports and clarifies that a judgment debt is no longer a per se permissible purpose. Id. at 8.

         Ninth Circuit decisions like Pintos II and Hasbun may be reassessed in light statutory amendments. See United States v. McNeil, 362 F.3d 570, 574 (9th Cir. 2004) (“[W]hen Congress amends statutes, our decisions that rely on the older versions of the statutes must be reevaluated in light of the amended statute.”); see also Zazueta-Carrillo v. Ashcroft, 322 F.3d 1166, 1172 (9th Cir. 2003) (“[W]e are not bound by decisions of prior panels if subsequent legislation has undermined those decisions.”). Therefore, the Court must assess the impact on these cases of FACTA's definition of “credit.”

         B. Post-FACTA Interpretations of ...

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