United States District Court, D. Arizona
ORDER
Hon.
Steven P. Logan, United States District Judge
Plaintiff
Malarie Scroggins (the “Plaintiff”) filed suit
against Trans Union LLC (the “Defendant”)
alleging multiple causes of action related to alleged
violations of the Fair Credit Reporting Act. (Doc. 37 at
11-13) The Defendant moves to dismiss the Plaintiff's
claims against it (the “Motion”). (Doc. 43) The
Motion was fully briefed on June 27, 2019. (Docs. 47, 53) The
Court's ruling is as follows.
I.
Background
On
October 14, 2014, the Plaintiff filed for Chapter 7
bankruptcy protection. (Doc. 37 at 3) The Plaintiff's
bankruptcy case was discharged on March 6, 2015. (Doc. 37 at
3) On August 23, 2018, the Plaintiff alleges that the
consumer credit report generated by the Defendant contained
inaccurate information. (Doc. 37 at 4) In September 2018, the
Plaintiff notified the Defendant of the inaccurate
information, stating that one of the accounts present on the
consumer report (the “Chase Account”) was
discharged in the Plaintiff's bankruptcy case and closed.
(Doc. 37 at 4) Specifically, the Plaintiff argues that her
consumer report should include a notation stating that the
Chase Account was discharged in the Plaintiff's
bankruptcy. (Doc. 37 at 3) After revisiting her consumer
report in November 2018, the Plaintiff alleges that the
Defendant did not correct the inaccurate information on her
consumer report pertaining to the Chase Account. (Doc. 37 at
4) The Plaintiff initiated this action and filed an amended
complaint (the “FAC”) seeking damages against the
Defendant for its negligent and willful violations of the
Fair Credit Reporting Act (“FCRA”). (Doc. 37)
II.
Legal Standard
To
survive a motion to dismiss, a complaint must contain
“a short and plain statement of the claim showing that
the pleader is entitled to relief” such that the
defendant is given “fair notice of what the . . . claim
is and the grounds upon which it rests.” Bell Atl.
Corp. v. Twombly, 550 U.S. 554, 555 (2007) (quoting
Fed.R.Civ.P. 8(a)(2); Conley v. Gibson, 355 U.S. 41,
47 (1957)). The Court may dismiss a complaint for failure to
state a claim under Federal Rule 12(b)(6) for two reasons:
(1) lack of a cognizable legal theory, and (2) insufficient
facts alleged under a cognizable legal theory. Balistreri
v. Pacificia Police Dep't, 901 F.2d 696, 699 (9th
Cir. 1990).
In
deciding a motion to dismiss, the Court must “accept as
true all well-pleaded allegations of material fact, and
construe them in the light most favorable to the non-moving
party.” Daniels-Hall v. Nat'l Educ.
Ass'n, 629 F.3d 992, 998 (9th Cir. 2010). In
comparison, “allegations that are merely conclusory,
unwarranted deductions of fact, or unreasonable
inferences” are not entitled to the assumption of
truth, and “are insufficient to defeat a motion to
dismiss for failure to state a claim.” Id.;
In re Cutera Sec. Litig., 610 F.3d 1103, 1108 (9th
Cir. 2010). A plaintiff need not prove the case on the
pleadings to survive a motion to dismiss. OSU Student
All. v. Ray, 699 F.3d 1053, 1078 (9th Cir. 2012).
A court
ordinarily may not consider evidence outside the pleadings in
ruling on a Rule 12(b)(6) motion to dismiss. Zemelka v.
Trans Union LLC, 2019 WL 2327813, at 1 (D. Ariz. May 31,
2019) (citing United States v. Ritchie, 342 F.3d
903, 907 (9th Cir. 2003)). “A court may, however,
consider materials-documents attached to the complaint,
documents incorporated by reference in the complaint, or
matters of judicial notice- without converting the motion to
dismiss into a motion for summary judgment.”
Id. Additionally, “[e]ven if a document is not
attached to a complaint, it may be incorporated by reference
into a complaint if the plaintiff refers extensively to the
document or the document forms the basis of the
plaintiff's claim.” Lovelace v. Equifax Info.
Servs. LLC, 2019 WL 2410800, at 1 (D. Ariz. June 7,
2019) (citing Ritchie, 342 F.3d at 908). A plaintiff
need “not explicitly allege the contents of that
document in the complaint” for the court to consider
it, as long as the “plaintiff's claim depends on
the contents of [the] document, the defendant attaches the
document to its motion to dismiss, and the parties do not
dispute the authenticity of the document.” Knievel
v. ESPN, 393 F.3d 1068, 1076 (9th Cir. 2005).
“[T]he district court may treat such a document as part
of the complaint, and thus may assume that its contents are
true for purposes of a motion to dismiss under Rule
12(b)(6).” Ritchie, 342 F.3d at 908.
III.
Analysis
The
Plaintiff's claims arise under 15 U.S.C. §1681o and
15 U.S.C. §1681n for negligent and willful violations of
the FCRA. (Doc. 37 at 11-13) Count 5 of the FAC alleges that
the Defendant negligently produced a consumer report that was
inaccurate in violation of FCRA section 15 U.S.C.
§1681e(b), and Count 6 of the FAC alleges that the
Defendant willfully produced a consumer report that was
inaccurate in violation of FCRA section 15 U.S.C.
§1681e(b). (Doc. 37 at 11-13) Both of the
Plaintiff's claims against the Defendant allege that the
Defendant failed to maintain procedures to assure the
accuracy of the information produced in the Defendant's
consumer reports in violation of FCRA section 15 U.S.C.
§1681i. (Doc. 37 at 11-12) The Defendant argues that
there is no violation of the FCRA because it did not report
anything factually inaccurate in the Plaintiff's consumer
report. (Doc. 43 at 5-9)
Section
1681e(b) requires a “consumer reporting agency
prepar[ing] a consumer report” 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). Under
§ 1681i, a credit reporting agency “must conduct a
free and reasonable reinvestigation within thirty days of a
consumer informing the [credit reporting agency] of disputed
information.” Shaw v. Experian Info. Sols.,
Inc., 891 F.3d 749, 756 (9th Cir. 2018). To bring claims
under both § 1681e(b) and § 1681i, a plaintiff must
plead inaccuracy. Lovelace, 2019 WL 2410800 at 3;
Guimond v. Trans Union Credit Info. Co., 45 F.3d
1329, 1333 (9th Cir. 1995) (“In order to make out a
prima facie violation under § 1681e(b), a consumer must
present evidence tending to show that a credit reporting
agency prepared a report containing inaccurate
information.”); Carvalho v. Equifax Info. Servs.,
LLC, 629 F.3d 876, 890 (9th Cir. 2010) (“Although
the FCRA's reinvestigation provision, 15 U.S.C. §
1681i, does not on its face require that an actual inaccuracy
exist for a plaintiff to state a claim, many courts,
including our own, have imposed such a requirement.”).
Information is “‘incomplete or inaccurate'
within the meaning of the FCRA” where it is either
“patently incorrect” or “misleading in such
a way and to such an extent that it can be expected to
adversely affect credit decisions.” Lovelace,
2019 WL 2410800 at 3; Gorman v. Wolpoff & Abramson,
LLP, 584 F.3d 1147, 1163 (9th Cir. 2009).
The
Plaintiff does not attach a copy of the consumer report
disputed in the FAC to the pleading; however, the Defendant
attached an exhibit to the Motion containing edited excerpts
of the Plaintiff's consumer report in the Declaration of
Donald Wagner (the “Wagner Declaration”). (Doc.
43-1) The Defendant also attached the Plaintiff's
bankruptcy petition (Doc. 43-2) and bankruptcy discharge
order (Doc. 43-3) as exhibits to the Motion. The Plaintiff
disputes the Defendant's inclusion of the undated
excerpts of the Plaintiff's consumer report because the
Plaintiff argues that the excerpts set forth in the Wagner
Declaration are not the excerpts referenced by the Plaintiff
in the FAC. (Doc. 47 at 5) The Plaintiff's entire
complaint is based on the information in the consumer report
maintained by the Defendant, yet she did not attach the
report to the FAC. The Wagner Declaration seeks to
authenticate and provide the language that was used by the
Defendant to report the status of Plaintiff's Chase
Account. (Doc. 43-1 at 2) The Plaintiff did not directly
challenge the authenticity of the consumer report excerpts.
Instead, the Plaintiff argues that the consumer report
excerpts set forth in the Wagner Declaration are undated and,
as a result, should not be considered. (Doc. 47 at 4-5) The
Court finds that the Wagner Declaration appropriately
authenticates the consumer report excerpts as representative
of those appearing in the Plaintiff's consumer report
during the relevant time period. Accordingly, the Court will
consider the Wagner Declaration exhibit to the Motion. (Doc.
43-1)
A
review of the excerpts of the Plaintiff's consumer report
shows that (i) the “Pay Status” identified for
the Chase Account is listed as “>Account Included in
Bankruptcy<”; (ii) beneath “Pay Status,
” the report states “Date Closed:
08/19/2012”; and (iii) the “Remarks”
section for the Chase Account states “>Chapter 7
Bankruptcy<; Closed By Credit Grantor”. (Doc. 43-1
at 2) The Defendant also directs the Court to the public
records section of the Plaintiff's consumer report, which
includes a notation stating that the Plaintiff's chapter
7 bankruptcy was discharged. (Doc. 43-1 at 2) In the FAC, the
Plaintiff does not identify the inaccurate or misleading
information present in the consumer report. Instead, the
Plaintiff argues that a notation should be included for the
Chase Account stating that the account was discharged in
bankruptcy. (Doc. 47 at 7) The Plaintiff argues that the
consumer report is materially misleading without any such
notation of discharge because a lender reading the report
would not understand that the account was discharged.
Under
the FCRA, an account can be inaccurate on its face or
misleading in such a way and to such an extent that it can be
expected to have an adverse effect on the consumer.
Zemelka, 2019 WL 2327813 at 2; Dalton v. Capital
Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir.
2001). However, courts have recognized that the alleged
misleading information should be read in the context of the
whole report in order to determine whether the disputed
information is significant enough to form the basis for a
claim. Zemelka, 2019 WL 2327813 at 2; See Torian
v. JP Morgan Chase Bank, N.A., 2017 WL 2986250, at 6
(N.D. Cal. July 13, 2017). In this case, the consumer report
clearly demonstrates that the Chase Account at issue was
included in the Plaintiff's bankruptcy, the bankruptcy
was discharged, and the Chase Account is closed. In the
absence of a finding that the Defendant reported information
in the Plaintiffs consumer report inaccurately, the Plaintiff
fails to ...