United States District Court, N.D. California, San Jose Division
ORDER GRANTING MOTIONS TO DISMISS SECOND AMENDED
COMPLAINT WITH LEAVE TO AMEND [RE: ECF 70, 71]
LABSON FREEMAN United States District Judge.
Arthur Harris sues Defendants Experian Information Solutions,
Inc. (“Experian”) and TD Bank USA, N.A.
(“TD Bank”) 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). Both defendants move to dismiss
Plaintiff's second amended complaint (“SAC”)
pursuant to Federal Rule of Civil Procedure 12(b)(6). For
reasons discussed below, the motions are GRANTED WITH LEAVE
filed for Chapter 13 bankruptcy protection on January 1,
2014, and his plan was confirmed on April 8, 2014. SAC
¶¶ 93, 100, ECF 66. On October 5, 2015, Plaintiff
“ordered a three bureau report from Experian
Information Solutions, Inc. to ensure proper reporting by
Plaintiff's Creditors.” Id. ¶ 114. He
alleges that this report (“October 2015 Credit
Report”) included seven different tradelines containing
inaccurate, misleading, or incomplete information.
Id. ¶ 115. Plaintiff neither attaches a copy of
the October 2015 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, 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.
disputed the inaccurate trade lines via certified mail sent
to three different credit reporting agencies
(“CRAs”), Experian, Equifax, Inc., and
TransUnion, LLC on January 21, 2016. Id. ¶ 116.
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. ¶ 118.
ordered a second three bureau report from Experian
Information Solutions, Inc. on February 26, 2016
(“February 2016 Credit Report”). Id.
¶ 119. Plaintiff alleges that TD Bank inaccurately
reported the account as current and in collections during the
same period. Id. ¶ 122. Plaintiff also alleges
that TD Bank “failed to update the CII to reflect that
a bankruptcy case had been filed.” Id. ¶
123. Plaintiff does not allege whether this reporting was
found in the October 2015 Credit Report or the February 2016
Credit Report. Since the allegations follow directly after
Plaintiff's description of how he obtained the February
2016 Credit Report, the Court presumes that the specifics
regarding TD Banks reporting appeared in the February 2016
Credit Report. SAC ¶¶ 119-123. Plaintiff does not
allege that he disputed the February 2016 Credit Report.
filed this action on April 22, 2016, asserting violations of
the FCRA and CCRAA against multiple CRAs and furnishers.
Compl., ECF 1. All Defendants except Experian and TD Bank
have been dismissed. Experian and TD Bank now move to dismiss
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.
EXPERIAN'S MOTION TO DISMISS
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 SAC that the CCRAA claim is not asserted against
Experian. Accordingly, only the FCRA claim is asserted
against Experian. Experian moves to dismiss for failure to
state a claim upon which relief may be granted.
enacted [the] FCRA in 1970 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). To that end, the FCRA
imposes specific obligations on CRAs, furnishers, and other
categories of persons not at issue here. See
generally 15 U.S.C. § 1681 et seq. Many of
the obligations of CRAs are described in 15 U.S.C. §
1681i. That section provides that if a consumer disputes
“the completeness or accuracy of any item of
information, ” the 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). Such notification by the CRA triggers the
furnisher's obligation to conduct its own investigation.
15 U.S.C. § 1681s-2(b). The FCRA expressly creates a
private right of action for willful or negligent
noncompliance with these requirements. 15 U.S.C. § 1681n
FCRA claim against Experian is subheaded “Failure to
Reinvestigate Disputed Information.” SAC ¶¶
135-36. Plaintiff alleges that after he “disputed the
accounts mentioned above” - which the Court takes to
mean the seven trade lines in the October 2015 Credit Report
referenced earlier in the SAC - Experian was required to
conduct a reasonable investigation and to delete any
information that was not accurate under 15 U.S.C. §
1681i-(a)(1). Id. ¶ 137. Plaintiff claims 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.” Id. ¶ 138.
Plaintiff alleges that because it did not send all relevant
information “to the furnishers, ” Experian
“failed to conduct a reasonable investigation and
failed to correct the misleading and or inaccurate
statements.” Id. ¶ 139.
alternative, Plaintiff alleges that Experian “has its
own independent duty to conduct a reasonable investigation
under 15 U.S.C. § 1681i(a)1.” SAC ¶ 140.
Section 1681i(a)(1) does not impose a freestanding duty to
investigate; a CRA's duties under that provision are
triggered only “if the completeness or accuracy of any
item of information . . . is disputed by the consumer
and the consumer notifies the agency . . . of such
dispute.” 15 U.S.C. § 1681i(a)(1) (emphasis
added). Thus it is unclear what Plaintiff means by “own
independent duty” to investigate. Plaintiff alleges
that Experian “is not a passive entity” and that
it “can and does suppress inaccurate information from
being reported when DFs provide inaccurate
information.” SAC ¶¶ 141, 144. Plaintiff also
alleges that Experian “would have known” that
certain DFs were not following industry standards in their
reporting. Id. ¶¶ 147-50. The Court
understands these allegations to claim that regardless of
what information was provided to Experian by furnishers,
Experian had an independent duty to “suppress”
that information if it did not comply with industry
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 regarding the
October 2015 Credit Report was improper.
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). “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).
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
argues that the SAC does not satisfy this pleading standard.
The Court agrees for the reasons discussed below.
Three Bureau Report
the most obvious deficiency in Plaintiff's allegations
against Experian is his failure to allege that the
inaccuracies in the “three bureau” October 2015
Credit Report upon which his claim is based are attributable
to Experian rather than one of the other CRAs. SAC
¶ 115. Plaintiff alleges that he obtained the October
2015 Credit Report after confirmation of his Chapter 13 plan,
and that “multiple trade lines continued to report
Plaintiff's accounts with past due balances, inaccurate
balances, in collections, 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. ¶¶ 114-15. These allegations neither
identify Experian as the reporting entity nor identify any
particular past due balances or other trade lines in the
October 2015 Credit Report that were inaccurate.
does provide more specificity in later paragraphs of the SAC
discussing TD Bank's simultaneous reporting of
Plaintiff's account as current and in collections and
failure to note Plaintiff's bankruptcy. SAC ¶¶
122-23. However, Plaintiff does not allege that those
allegations appeared in the October 2015 Credit Report upon
which his claim is based, and in fact the referenced
allegations follow directly after Plaintiff's description
of how he obtained the February 2016 Credit Report. SAC
¶¶ 119-123. Plaintiff does not allege that he
disputed the February 2016 Credit Report; he obtained the
February 2016 Credit Report “to ensure Plaintiff's
accounts had been updated.” Id. 119. Therefore
inaccuracies in the February 2016 Credit Report cannot form
the basis of his claim.
courts in this district have dismissed FCRA claims based upon
alleged inaccuracies in three bureau reports where no
specificity is provided as to which CRA reported the
inaccuracies in question. See, e.g., Doster, 2017 WL
264401, at *6 (“Plaintiff's FAC makes only general
and unspecified allegations that his credit report, which was
a three-bureau credit report, contained inaccuracies and that
the CRAs reported misleading and inaccurate information, but
the FAC does not allege any conduct that is specific to
Experian.”). Because Plaintiff does not specify any
particular inaccuracies that were reported in the October
2015 Credit Report, and does not identify Experian as the
reporting entity, the SAC fails to state a claim of
inaccurate reporting by Experian.
Reporting After Confirmation of Chapter 13 Plan
fundamentally, to the extent that Plaintiff claims that it
was inaccurate for Experian to report delinquencies or past
due balances after plan confirmation, that theory of
liability has been rejected by courts in this district and
other districts within the Ninth Circuit. See, e.g.,
Artus v. Experian Info. Sols., Inc., No.
5:16-CV-03322-EJD, 2017 WL 346022, at *5 (N.D. Cal. Jan. 24,
2017) (collecting cases); Doster, 2017 WL 264401, at
*6 (“[A]s a matter of law it is not misleading or
inaccurate to report a delinquent debt during the pendency of
a bankruptcy.”); Polvorosa v. Allied Collection
Serv., Inc., No. Case No. 2:16-CV-1508 JCM (CWH), 2017
WL 29331, at *3 (D. Nev. Jan. 3, 2017) (“[R]eporting
delinquencies during the pendency of a bankruptcy or during a
bankruptcy's automatic stay is not itself a violation of
argues that these decisions fail to recognize that a
bankruptcy court's order confirming a Chapter 13 plan
constitutes a binding final judgment regarding the rights and
liabilities of the debtor and his or his creditors. According
to Plaintiff, because a confirmed plan modifies the original
debts, any post-confirmation reporting of pre-confirmation
delinquencies or balances is inaccurate. Plaintiff appears to
be arguing that CRAs cannot report information provided to