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Kragen v. Experian Information Solutions, Inc.

United States District Court, N.D. California, San Jose Division

March 23, 2017



          BETH LABSON FREEMAN United States District Judge

         Plaintiff Robert Kragen sues Defendants Experian Information Solutions, Inc. (“Experian”) and Citigroup, Inc. (“Citigroup”) for violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., and the California Consumer Credit Reporting Agencies Act (“CCRAA”), California Civil Code § 1785.25(a). Experian moves to dismiss Plaintiff's first amended complaint (“FAC”) pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief may be granted. For reasons discussed below, the motion is GRANTED WITH LEAVE TO AMEND.

         I. BACKGROUND[1]

         Plaintiff filed for Chapter 13 bankruptcy protection on October 22, 2011 and his plan was confirmed on December 9, 2015. FAC ¶¶ 93, 97, ECF 17. On February 10, 2016, Plaintiff “ordered a three bureau report from Experian, Inc. to ensure proper reporting by Plaintiff's creditors.” Id. ¶ 98. He alleges that this report (“February 2016 Credit Report”) included twelve different tradelines containing inaccurate, misleading, or incomplete information. Id. ¶ 99. Plaintiff neither attaches a copy of the February 2016 Credit Report nor provides specifics regarding the alleged inaccuracies contained therein. Id. He asserts only that “multiple trade lines continued to report Plaintiff's accounts with past due balances, inaccurate balances, in collections, with late payments and/or charged off. Some accounts even failed to register that Plaintiff was making payments on the account through Plaintiff's Chapter 13 plan.” Id.

         Plaintiff disputed the inaccurate tradelines via certified mail sent to three different credit reporting agencies (“CRAs”), Experian, Equifax, Inc., and TransUnion, LLC on June 1, 2016. Id. ¶ 100. Each CRA received Plaintiff's dispute letter and in turn notified the entities that had furnished the disputed information (“furnishers”) by means of automated credit dispute verifications (“ACDVs”). Id. ¶ 102.

         Plaintiff ordered a second three bureau report from Experian on August 4, 2016 (“August 2016 Credit Report”). Id. ¶ 103. Plaintiff alleges that “the inaccuracies had not been updated or removed.” Id. ¶ 104. Plaintiff also alleges that “Plaintiff's Experian score dropped by 88 points, ” which “was well below what accurate credit reporting industry standards would project.” Id. ¶ 104, 105. Plaintiff further alleges that Citigroup's report of past due balance did not comport with industry standards, and that as of August 4, 2016, he owed only $568.22 while Citigroup reported the account with a balance of $42, 751. Id. ¶ 106.

         Plaintiff filed this action on August 12, 2016, asserting violations of the FCRA and CCRAA against Experian, Citigroup and JP Morgan Chase Bank, N.A. Compl., ECF 1. Experian moved to dismiss Plaintiff's complaint on September 13, 2016. Instead of opposing Experian's motion, Plaintiff filed the operative FAC against the same defendants. Plaintiff subsequently dismissed JP Morgan Chase Bank, N.A. Experian now moves to dismiss the FAC.


         “A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief can be granted ‘tests the legal sufficiency of a claim.'” Conservation Force v. Salazar, 646 F.3d 1240, 1241-42 (9th Cir. 2011) (quoting Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001)). When determining whether a claim has been stated, the Court accepts as true all well-pled factual allegations and construes them in the light most favorable to the plaintiff. Reese v. BP Exploration (Alaska) Inc., 643 F.3d 681, 690 (9th Cir. 2011). However, the Court need not “accept as true allegations that contradict matters properly subject to judicial notice” or “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008) (internal quotation marks and citations omitted). While a complaint need not contain detailed factual allegations, it “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible when it “allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id.


         The FAC contains two claims, one for violation of the FCRA (Claim 1) and the other for violation of the CCRAA (Claim 2). Although the label of the CCRAA claim indicates that it is asserted against “Defendants, ” it is clear from the body of the FAC that the CCRAA claim is not asserted against Experian. FAC ¶¶ 135-144. Accordingly, this order addresses only the FCRA claim.

         Plaintiff's FCRA claim against Experian is subheaded “Failure to Reinvestigate Disputed Information.” Id. ¶¶ 119-120. Plaintiff alleges that after he “disputed the accounts mentioned above” - which the Court takes to mean the twelve unspecified tradelines in the February 2016 Credit Report referenced earlier in the FAC - Experian was required to conduct a reasonable investigation and to delete any information that was not accurate. Id. ¶ 121. Plaintiff claims that each CRA was required to “send all relevant information via an ACDV to the furnishers which they did not do.” Id. ¶ 122. Plaintiff alleges generally that Experian “failed to conduct a reasonable investigation and failed to correct the misleading and or inaccurate statements.” Id. ¶ 123. Plaintiff asserts that “any basic investigation would have uncovered that certain DFs [data furnishers] were not following credit reporting industry standards.” Id. ¶129.

         Experian moves to dismiss the FCRA claim on three grounds. First, Experian asserts that Plaintiff has not alleged facts showing that Experian's credit reporting was inaccurate. Second, Experian argues that Plaintiff has not alleged facts showing an entitlement to damages under the FCRA. And third, Experian asserts that Plaintiff has not alleged any facts showing that Experian's response to his dispute letter was improper.

         A. Inaccuracy

         Experian argues that Plaintiff's claim fails because he has not alleged facts showing that Experian's credit reporting was inaccurate. If a consumer disputes “the completeness or accuracy of any item of information, ” a CRA must “conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item.” 15 U.S.C. § 1681i(a)(1). In addition, the CRA must provide notification of the dispute to the furnisher of the information. 15 U.S.C. § 1681i(a)(2).

         The Ninth Circuit has observed that “[a]lthough 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.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010).[2] “Thus, even if a . . . CRA fails to conduct a reasonable investigation or otherwise fails to fulfill its obligations under the FCRA, if a plaintiff cannot establish that a credit report contained an actual inaccuracy, then the plaintiff's claims fail as a matter of law.” Doster v. Experian Info. Sols., Inc., No. 16-CV-04629-LHK, 2017 WL 264401, at *3 (N.D. Cal. Jan. 20, 2017) (internal quotation marks and citation omitted).

         In Carvalho, the Ninth Circuit noted that it previously had “explained that an item on a credit report can be ‘incomplete or inaccurate' within the meaning of the FCRA's furnisher investigation provision, 15 U.S.C. § 1681s-2(b)(1)(D), ‘because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.'” Carvalho, 629 F.3d at 890 (quoting Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1163 (2009)). The Ninth Circuit went on to affirm “‘the maxim of statutory construction that similar terms appearing in different sections of a statute should receive the same interpretation, '” id. (quoting United States v. Nordbrock, 38 F.3d 440, 444 (9th Cir. 1994)), and to cite with approval a First Circuit case, Chiang, which the Ninth Circuit summarized as “deeming the term ‘inaccurate' in section 1681i(a) to be ‘essentially the same' as the term ‘incomplete or inaccurate' in section 1681s-2(b), ” id. (citing Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 37 (1st Cir. 2010)). Relying on Carvalho, district courts have “applied this ‘patently incorrect or materially misleading' standard to claims arising under various provisions of the FCRA that involve the accuracy of information.” Prianto v. Experian Info. Sols., Inc., No. 13-CV-03461-TEH, 2014 WL 3381578, at *3 (N.D. Cal. July 10, 2014). In particular, courts in this district have applied the “patently incorrect or materially misleading” standard to the inaccuracy requirement under § 1681i. See, e.g., Banneck v. HSBC Bank USA, N.A., No. 15-cv-02250-HSG, 2016 WL 3383960, at *6 (N.D. Cal. June 20, 2016); Prianto, 2014 WL 3381578, at *3.

         Plaintiff argues that he has alleged inaccuracies in his credit reports under the above standards. The Court disagrees based ...

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