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Mensah v. Experian Information Solutions, Inc.

United States District Court, N.D. California

April 5, 2017

REBECCA MENSAH, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants. REGGIE SATO, Plaintiff,
v.
EQUIFAX, INC., et al., Defendants. PAUL COLLINS, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants. MELVIN CRAVEN, Plaintiff,
v.
EQUIFAX, INC., et al., Defendants. MARIA CHAVEZ, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants. CAROL CONE, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants.

          ORDER GRANTING MOTIONS TO DISMISS RE: DKT. NOS.17, 23, 10, 19, 25, 21, 20, 14, 28,

          WILLIAM H. ORRICK United States District Judge.

         INTRODUCTION

         Plaintiffs in the six above captioned cases bring these actions for alleged violations of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681i, 1681s-2(b), and the California Consumer Credit Reporting Agencies Act (“CCRAA”), California Civil Code § 1785.25(a), against several credit reporting agencies (“CRAs”) and data furnishers because of reporting related to their bankruptcies and the confirmation of their plans under Chapter 13. Defendants have moved to dismiss the complaints. My colleagues in this District have many similar cases pending before them, so I have the benefit of their thoughtful analyses of the various pleadings issues raised in these motions. And because of the high degree of similarity between the complaints and the common legal issues raised by defendants, it is appropriate to resolve all the motions to dismiss in a single order. For the reasons discussed below, the motions to dismiss are GRANTED with leave to amend.

         BACKGROUND[1]

         I. FACTUAL BACKGROUND

         All of the plaintiffs filed for Chapter 13 bankruptcy: Rebecca Mensah on June 27, 2011; Reggie Sato on August 31, 2011; Paul Collins on November 25, 2015; Melvin Craven on March 20, 2012; Maria Chavez on February 7, 2013; and Carol Cone on December 31, 2012.[2] Chapter 13 “affords individuals receiving regular income an opportunity to obtain some relief from their debts while retaining their property. To proceed under Chapter 13, a debtor must propose a plan to use future income to repay a portion (or in the rare case all) of his debts over the next three to five years.” Bullard v. Blue Hills Bank, 135 S.Ct. 1686, 1690, 191 L.Ed.2d 621 (2015).

         Each plaintiff's plan was confirmed and allowed for unsecured creditors to receive a specified percentage of disbursement of their filed claims: Mensah's plan allowed 0% and was confirmed on September 1, 2011; Sato's plan allowed 100%, confirmed May 10, 2012; Collins' plan allowed 100%, confirmed March 8, 2016; Craven's plan allowed 3.06%, confirmed November 13, 2012; Chavez's plan allowed 100%, confirmed February 7, 2013; and Cone's plan allowed 100%, confirmed December 13, 2013.[3]

         After plan confirmation, each plaintiff ordered a “three bureau credit report” from Experian.[4] On these reports, plaintiffs noticed a varying number of trade lines “reporting inaccurate, misleading, or incomplete information that did not comport with credit reporting industry standards.[5] Plaintiffs allege that these trade lines continued to report plaintiffs accounts with past due balances, inaccurate balances, monthly payments, in collections, charged off, and/or open.[6] Some also failed to note that the plaintiff were making payments on the accounts through their Chapter 13 plans.[7] Plaintiffs do not specify in their complaints which trade lines contained this allegedly inaccurate information.

         Plaintiffs disputed these allegedly inaccurate trade lines by mail to three credit reporting agencies (CRAs): Experian, Equifax, and TransUnion, LLC.[8] Their letters stated that plaintiffs had filed for bankruptcy and that the creditors “were not reporting the bankruptcy accurately or worse not at all;” requested that the creditors investigate “the proper way to report” the bankruptcies; and asserted that there should not be any notations of a past due balance, charge off, monthly payments, transferred or sold, or in collections.[9] Each CRA allegedly received the dispute letters and sent the disputes to each data furnisher via an automated credit dispute verification (ACDV).[10] Plaintiffs also allege, however, that [t]he most basic investigation required each CRA to send all relevant information via an ACDV to the furnishers which they did not do."[11]

         Later, each plaintiff ordered a second three bureau report from either Experian or Equifax, or credit reports from Experian, Equifax, and TransUnion.[12] Plaintiffs identify specific data furnishers in these reports that allegedly reported inaccurate information, including balances, past due balances, charge off notations, or negative payment history, or failed to note that the account was disputed.[13] Plaintiffs allege that such reporting does not comport with credit reporting industry standards under the “Metro 2 format.” They also allege that these accounts failed to list the correct Consumer Information Indicator (“CII”) under Metro 2, which “indicates a special condition that applies to a specific consumer.”[14] According to plaintiffs, the furnishers should have listed CII Code “D, ” which indicates that a Chapter 13 bankruptcy petition has been filed but no discharge has been entered, and “alerts any potential lender that the account is no longer in a collectable status but is being handled by a Chapter 13 trustee.”[15] Plaintiffs do not allege that they received a discharge order from the bankruptcy court.

         II. PROCEDURAL BACKGROUND

         A. Mensah (Case No. 16-cv-5689)

         Mensah asserts two claims against Specialized Loan Servicing, LLC (“SLS”) for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA. She also brings one claim against Experian and Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i, and has since filed a notice of settlement with Equifax. Dkt. No. 31. SLS now moves to dismiss both of Mensah's claims, Dkt. No. 17, as does Experian. Dkt. No. 23.

         B. Sato (Case No. 16-cv-5702)

         Sato asserts two claims against SLS for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA. He also brought one claim against Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i, which by agreement has now been dismissed with prejudice. Dkt. No. 35. SLS moves to dismiss the complaint. Dkt. No. 10.

         C. Collins (Case No. 16-cv-5715)

         Collins brings one claim against Experian and Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i. Experian and Equifax move to dismiss his FCRA claim. Dkt. Nos. 19, 25. He also asserted two claims against Lending Club, First Premier Bank, and First National Credit Card for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA. He then voluntarily dismissed First National Credit Card (Dkt. No. 15) and Lending Club (Dkt. No. 47) and I granted First Premier Bank's motion to compel arbitration. Dkt. No. 41.

         D. Craven (Case No. 16-cv-6318)

         Craven also brings one claim against Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i. Equifax moves to dismiss Craven's FCRA claim. Dkt. No. 21. Craven also asserted two claims against WebBank for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA that, pursuant to a stipulation, I dismissed with prejudice. Dkt. No. 29.

         E. Chavez (Case No. 16-cv-6358)

         Chavez brings one claim against Experian and Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i. Equifax moves to dismiss the complaint. Dkt. No. 20. She also initially asserted but has now dismissed two claims against Tyco and Verizon for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA. Dkt. Nos. 21, 34.

         F. Cone (Case No. 16-cv-6359)

         Cone asserts two claims against TD Bank for failure to reinvestigate and re-reporting inaccurate information in violation of 15 U.S.C. § 1681s-2(b) and the CCRAA. She also brings one claim against Experian and Equifax for failure to reinvestigate in violation of 15 U.S.C. § 1681i. TD Bank moves to dismiss both the FCRA and CCRAA claims. Dkt. No. 14. Equifax also moves to dismiss the FCRA claim. Dkt. No. 28.

         LEGAL STANDARD

         Under Federal Rule of Civil Procedure 12(b)(6), a district court must dismiss a complaint if it fails to state a claim upon which relief can be granted. To survive a Rule 12(b)(6) motion to dismiss, the plaintiff must allege “enough facts to state a claim to relief that is plausible on its face.” See Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is facially plausible when the plaintiff pleads facts that “allow the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citation omitted). There must be “more than a sheer possibility that a defendant has acted unlawfully.” Id. While courts do not require “heightened fact pleading of specifics, ” a plaintiff must allege facts sufficient to “raise a right to relief above the speculative level.” See Twombly, 550 U.S. at 555, 570. In deciding whether the plaintiff has stated a claim upon which relief can be granted, the Court accepts the plaintiff's allegations as true and draws all reasonable inferences in favor of the plaintiff. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir. 1987). However, the court is not required to accept as true “allegations that are merely conclusory, unwarranted deductions of fact, or unreasonable inferences.” See In re Gilead Scis. Sec. Litig., 536 F.3d 1049, 1055 (9th Cir. 2008).

         If the court dismisses a complaint, it “should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.” See Lopez v. Smith, 203 F.3d 1122, 1127 (9th Cir. 2000). In making this determination, the court should consider factors such as “the presence or absence of undue delay, bad faith, dilatory motive, repeated failure to cure deficiencies by previous amendments, undue prejudice to the opposing party and futility of the proposed amendment.” See Moore v. Kayport Package Express, 885 F.2d 531, 538 (9th Cir. 1989).

         DISCUSSION

         Experian and Equifax (the “CRA defendants”)[16] move to dismiss plaintiffs' FCRA claim. Data furnishers SLS and TD Bank also move to dismiss both the FCRA and the CCRAA claims against them.

         I. FCRA CLAIMS-MENSAH, SATO, COLLINS, CRAVEN, CHAVEZ, & CONE

         Congress enacted the FCRA “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). “As an important means to this end, the Act sought to make ‘consumer reporting agencies exercise their grave responsibilities [in assembling and evaluating consumers' credit, and disseminating information about consumers' credit] with fairness, impartiality, and a respect for the consumer's right to privacy.'” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (citing 15 U.S.C. § 1681(a)(4); alterations in original).

         Under the FCRA, when a consumer disputes reported credit 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 from the file.” 15 U.S.C. § 1681i(a)(1)(A). A CRA must also “provide notification of the dispute to any person who provided any item of information in dispute.” 15 U.S.C. § 1681i(a)(2)(A).

         Upon receiving notice of a dispute from a CRA, a data furnisher must:

(A) conduct an investigation with respect to the disputed ...

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