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Toni Russell v. Collection Company of America

November 27, 2012


The opinion of the court was delivered by: Honorable Larry Alan Burns United States District Judge


On November 15, 2012, Plaintiff Toni Russell filed her complaint for an alleged violation of the Fair Credit Reporting Act (FCRA). Along with her complaint, she filed a motion to proceed in forma pauperis (IFP).

The Court has reviewed the IFP motion, finds Russell is without funds to pay the filing fee, and GRANTS the motion.

The Court is required to screen the complaint of a plaintiff proceeding IFP, and to dismiss it to the extent it is frivolous or malicious, fails to state a claim, or seeks monetary relief from an immune defendant. See § 1915(e)(2)(B); Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000) (en banc).

Russell alleges Defendant Collection Company of America ("CCA") obtained her credit report on April 22, 2009 with no legitimate purpose. She seeks $1000 in statutory damages for what she alleges was a willful violation of the FCRA.*fn1 The numerous legitimate purposes for obtaining credit reports are set forth in 15 U.S.C. § 1681b.

Although the complaint states some elements of a claim, several defects require that it be dismissed. First, it contains an important factual contradiction. In an effort to show her claim was within the statute of limitations, Russell alleged that she first discovered the violation in November of 2012. (Compl., ¶ 9.) She also, however, alleged that she sent notices to CCA of their violation on October 20, 2012 and again on October 31, 2012. Obviously, it cannot be that Russell sent CCA notices of a violation she herself had not yet discovered.

Secondly, Russell's allegations are insufficient to state a claim, under the standard set forth in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) and Ashcroft v. Iqbal, 556 U.S. 662 (2009). Under this standard, she must ""plead[ ] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal at 678 (quoting Twombly at 570.) The Complaint refers to CCA's reasons for obtaining the report, by stating that CCA has never "provided any valid justification they may have had" for obtaining her report, and also that CCA "had a duty to properly ascertain if there was any legitimate permissible purpose" before obtaining her report. (Compl., ¶ 21, emphasis in original.) While the complaint does not say so directly, it implies that CCA provided some kind of reason for obtaining her report, but that Russell does not think it was a legitimate one. Russell's opinions about whether a reason was legally valid or legitimate, however, are merely legal conclusions, not factual allegations.*fn2

While Russell has attempted to show CCA had no permissible reasons for obtaining her report, such as by alleging she never had any business dealings with CCA or gave CCA permission to obtain her credit report (Compl., ¶ 16), the Complaint's allegations do not address all reasonably possible purposes CCA may plausibly have had in obtaining the report. For example, even accepting all the allegations as true, the distinct possibility remains that CCA was acting as an agent for a person or company who was entitled to obtain a copy of the report, such as an insurer, someone Russell had authorized to obtain her report, or a creditor attempting to collect a debt based on a transaction Russell had initiated with some other company. See Thao Pham v. Solace Financial, LLC, 2012 WL 5471160, slip op. at *2 (N.D.Cal., Nov. 9, 2012) (holding that FCRA claimant bore the burden of showing that defendant was not acting as agent for a bank the claimant authorized to obtain a credit report, and was not acting to collect a debt arising from a transaction the plaintiff had initiated).*fn3

In short, the Complaint leaves open too many plausible reasons CCA might have legitimately obtained Russell's credit report. There are enough omissions in the allegations that, even accepting them all as true, it is less than plausible Russell is entitled to relief. The Complaint does not meet the Twombly-Iqbal standard, and is therefore DISMISSED WITHOUT PREJUDICE.

If Russell believes she can amend the Complaint to cure these defects, she may do so. The amended complaint should resolve the contradictions in the timeline, as identified in this order. It should also allege whether CCA responded to her inquiries. If CCA did so, the amended complaint should allege what reasons CCA gave for obtaining her report, and whether those reasons were true. The amended complaint should not merely allege CCA didn't request the report for a few of the more common reasons-it must allege that none of the permissible reasons applied. For example, it must allege that CCA was not acting on behalf of some other person or entity that was entitled to obtain the report, and was not attempting to collect a debt initiated by Russell. The amended complaint should show this by factual allegations, rather than legal conclusions. The amended complaint should comply with the pleading standard given in Fed. R. Civ. P. 8.

An amended complaint must be filed no later than January 7, 2013. If an amended complaint is not filed within the time permitted, this action will be dismissed without prejudice but without leave to amend.

IT IS SO ...

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