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Wheeler v. Trans Union LLC

United States District Court, D. Arizona

May 29, 2018

Michael Wheeler, Plaintiff,
v.
Trans Union LLC, Equifax Information Services LLC, and Healthcare Collections-I LLC, Defendants.

          ORDER

          James A. Teilborg, Senior United States District Judge.

         Pending before the Court is Defendant Trans Union, LLC's (“Trans Union”) motion to dismiss. (Doc. 21.) Plaintiff Michael Wheeler (“Wheeler”) has responded, (Doc. 24), and Trans Union has replied, (Doc. 25.)

         I. Background

         Wheeler filed this suit in September of 2017, alleging that Trans Union, Equifax, and Healthcare Collections-I, L.L.C. (“Healthcare Collections”) violated the Fair Credit Reporting Act (“FCRA”). (Doc. 1.) Trans Union and Equifax are consumer reporting agencies (“CRAs”) who “receive data about consumers from a wide variety of sources” known as furnishers. (Doc. 21 at 1.) Healthcare Collections is a furnisher. (Id. at 1-2.)

         Specifically, Wheeler claims that Healthcare Collections reported its trade line (“Errant Trade Line”) on “Wheeler's Trans Union and Equifax credit files with dispute language.” (Doc. 1 at 3.) Because Wheeler no longer disputed the Errant Trade Line, he desired to have the dispute language removed. (Id.) Accordingly, on July 14, 2017, Wheeler transmitted letters to Trans Union and Equifax requesting that they delete the dispute language from the Errant Trade Line. (Id. at 4.) Wheeler claims that Trans Union and Equifax forwarded this information to Healthcare Collections. (Id.) On September 6, Wheeler obtained a credit report from Trans Union that still contained the dispute language. (Id.) As a result, Wheeler claims that he has: (1) “been forced to refrain from applying for new credit or more favorable terms on existing credit lines”; and (2) “experienced undue stress and anxiety due to [Trans Union's] failure to correct errors in his credit file or improve his financial situation by obtaining new or more favorable credit terms as a result of [Trans Union's] violations of the FCRA.” (Id.) As relevant to this Order, Wheeler brought claims against Trans Union for allegedly engaging in negligent and willful violation of the FCRA. (Id. at 7-9.) Trans Union moved to dismiss the Complaint, arguing that: (1) Wheeler lacked standing to bring his FCRA claims, divesting this Court of subject-matter jurisdiction; and (2) Wheeler failed to state claim upon which relief can be granted. (Doc. 21.)

         II. Analysis

         Trans Union moves to dismiss Wheeler's claims under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction and 12(b)(6) for failure to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(1), (6). Because subject-matter jurisdiction is a condition precedent to this Court's exercise of binding adjudicatory power, the Court must be satisfied as to its presence before the 12(b)(6) argument can be considered. United States v. Jacobo Castillo, 496 F.3d 947, 951 (9th Cir. 2007) (en banc); see U.S. Const. art. III; Restatement (Second) of Judgements § 1 (Am. Law. Inst. 1982).

         A. Subject-Matter Jurisdiction

         Article III provides that federal courts may only exercise judicial power in the context of “cases” and “controversies.” U.S. Const. art. III, § 2, cl. 1. For there to be a case or controversy, the plaintiff must have standing to sue. Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016) (“Spokeo II”).

         For a plaintiff to have standing, said plaintiff must have: “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Id. Trans Union's only challenge is to whether Wheeler has suffered an injury in fact, implicitly conceding the traceability and redressability elements of standing. (Doc. 21 at 10-11.) Accordingly, Wheeler bears the burden of “clearly . . . alleg[ing] facts demonstrating” that he has suffered such an injury. Spokeo II, 136 S.Ct. at 1547 (quoting Warth v. Seldin, 422 U.S. 490, 518 (1975)).

         An injury in fact is “an invasion of a legally protected interest which is (a) concrete and particularized and (b) ‘actual or imminent, not “conjectural” or “hypothetical.”'” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992) (citations omitted) (quoting Whitmore v. Arkansas, 495 U.S. 149, 155 (1990)). The Supreme Court has recently emphasized that the concreteness and particularization requirements are distinct concepts that must each be established for standing to exist. See Spokeo II, 136 S.Ct. at 1548. A particularized injury is one that “affect[s] the plaintiff in a personal and individual way.” Lujan, 504 U.S. at 560 n.1.

         A concrete injury “must be ‘de facto'; that is, it must actually exist.” Spokeo II, 136 S.Ct. at 1548 (quoting Black's Law Dictionary 479 (9th ed. 2009)). Both tangible and intangible harms can be concrete. Id. Congress may identify and elevate an intangible harm to the level of a de facto injury; however, allegations of a “bare procedural violation, divorced from any concrete harm” do not satisfy the injury-in-fact requirement of Article III. Id. at 1549. In determining whether violating a statutory provision satisfies the injury-in-fact requirement, a court asks: “(1) whether the statutory provisions at issue were established to protect [a plaintiff's] concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.” Robins v. Spokeo, Inc., 867 F.3d 1108, 1113 (9th Cir. 2017) (“Spokeo III”).

         By not removing the dispute language from the Errant Trade Line, Wheeler alleges that Trans Union violated the FCRA by negligently and willfully failing to: (1) “maintain and/or follow reasonable procedures to assure maximum possible accuracy of the information” Trans Union “reported to one or more third parties pertaining to” Wheeler; and (2) “conduct a reasonable reinvestigation” after receiving Wheeler's “consumer dispute to the Errant Trade Line.” (Doc. 1 at 7-9.) Wheeler claims that these procedural violations caused “actual damages, mental anguish and suffering, humiliation, . . . embarrassment” and forced him “to refrain from applying for new credit or more favorable terms on existing credit lines.” (Id. at 4, 7-9.)

         Initially, Wheeler's alleged harm is particularized, because Wheeler alleges that Trans Union violated “his statutory rights” and that this violation upset Wheeler's “personal interests in the handling of his credit information.” See Robins v. Spokeo, Inc., 742 F.3d 409, 413 (9th Cir. 2014) (“Spokeo I”), vacated, Spokeo II, ...


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