Mestayer v. Experian Information Solutions, Inc.

          ORDER GRANTING DEFENDANT’S MOTION TO DISMISS DOCKET NO. 65, C-15-3645, DOCKET NO. 69, C-15-3650

          EDWARD M. CHEN UNITED STATES DISTRICT JUDGE.

         The two above-referenced cases are related. In each, Plaintiff Gloria A. Mestayer has sued Defendant Capital One Bank (USA), N.A. (“CapOne”), asserting violations of the federal Fair Credit Reporting Act (“FCRA”) and the state analog, the California Consumer Credit Reporting Agencies Act (“CCRAA”). Previously, the Court dismissed these claims by Ms. Mestayer, as alleged in a first amended complaint (“FAC”), but gave her leave to amend based on her representation (made at a hearing) that she did not include an allegation in her complaint that would substantiate a FCRA and/or CCRAA claim. Ms. Mestayer has now filed her second amended complaint (“SAC”) in each case, and CapOne, in turn, has filed a motion to dismiss in each case. The substance of the motions are basically the same, so the Court is issuing only one order.

         For the reasons stated below, the Court GRANTS CapOne's motion to dismiss but gives Ms. Mestayer leave to amend, more specifically, with respect to her Metro 2 theory only.

         I. FACTUAL & PROCEDURAL BACKGROUND

         As alleged in each SAC, Ms. Mestayer filed for bankruptcy on or about November 25, 2013. On or about April 8, 2014, she received a bankruptcy discharge.

         While the bankruptcy proceedings were ongoing, Ms. Mestayer identified an obligation to CapOne as one of her debts. See, e.g., No. C-15-3645 EMC (Docket No. 57) (SAC ¶ 25) (alleging that the debt to CapOne “was included in the Bankruptcy”). CapOne received notice of Ms. Mestayer's bankruptcy proceedings while they were ongoing but never claimed that the debt was nondischargeable. Accordingly, when Ms. Mestayer received her bankruptcy discharge on or about April 8, 2014, the CapOne debt was discharged.

         Although not entirely clear from the SAC (this same problem infected her FAC), it appears that Ms. Mestayer is still asserting a claim against CapOne because, while the bankruptcy proceedings were still ongoing (i.e., pre-discharge) CapOne reported to a consumer reporting agency that Ms. Mestayer owed it a debt. See Mestayer, No. C-15-3645 (Docket No. 54) (Order at 2 n.1) (stating that, “[a]t the hearing, Ms. Mestayer clarified that she was not making a claim for relief based on any reporting done by CapOne after the bankruptcy discharge”) (emphasis added).

         II. DISCUSSION

         The Court agrees with CapOne that, for the most part, Ms. Mestayer's SAC simply rehashes issues that the Court already addressed (and decided in CapOne's favor) when it ruled on the viability of Ms. Mestayer's FAC. Ms. Mestayer admits as much in her opposition, with one exception. See Opp'n at 1 (asking the Court “to reconsider the positions it has taken”).

         A. Metro 2 Theory

         With respect to issues already addressed by this Court in its first order granting Defendant's motion to dismiss, the only issue that warrants new analysis is Ms. Mestayer's Metro 2 theory. Ms. Mestayer has presented a recent decision from another California district court, which held that a plaintiff had adequately stated a claim for relief based on a Metro 2 theory. See Nissou-Rabban v. Capital One Bank (USA), N.A., No. 15cv1675 JLS (DHB) (S.D. Cal.) (Docket No. 61) (order denying motion to dismiss). The district court recognized this Court's ruling in the cases at hand that

the plaintiff “failed to point to any authority indicating that a failure to comply with an industry standard is a failure to comply with the law.” The Court does not understand that to be Plaintiffs burden to survive this MTD. She has not moved for judgment as a matter of law based on the undisputed fact Synchrony failed to follow the industry standard, and her claim does not depend on the premise that failure to follow these standards is an FCRA violation per se. Rather, Plaintiff’s argument is that Synchrony’s failure to adhere to the Metro 2 format may prompt those making credit decisions to draw a more negative inference from Synchrony’s reporting a charge off than if it reported “no data, ” as Plaintiff alleges the industry standard required Of course, to prove her case, Plaintiff will likely need to establish through admissible evidence that this is in fact the industry standard, that Synchrony deviated from it, and that this particular deviation might adversely affect credit decisions -in other words, that “entit[ies] would have expected Defendant to report in compliance with the CDIA guidelines.”

Nissou-Rabban (Docket No. 61) (Order at 9-10) (emphasis added).

         The district court's analysis in Nissou-Rabban may have merit. However, the allegations that Ms. Mestayer made in her amended complaint did not present the theory that CapOne's “failure to adhere to the Metro 2 format may prompt those making credit decisions to draw a more negative inference from Synchrony's reporting a charge off than if it reported 'no data.'”^[1]Nissou-Rabban (Docket No. 61) (Order at 10). The Court acknowledges that the Nissou-Rabban complaint makes the same Metro 2 allegations as the SAC in the instant case. (Counsel for Ms. Mestayer also represented the plaintiff in Ni ...