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Gadomski v. Equifax Information Services, LLC

United States District Court, E.D. California

May 7, 2018

KELLIE GADOMSKI, individually and on behalf of all others similarly situated, Plaintiff,


          Troy L. Nuhley, United States District Judge

         This matter is before the Court pursuant to Defendant Equifax Information Services, LLC's (“Defendant”) Partial Motion to Dismiss and Strike Plaintiff's Class Allegations. (ECF No. 17.) Plaintiff Kellie Gadomski (“Plaintiff”) opposes the motion. (ECF No. 20.) After carefully considering the parties' briefing, the Court hereby GRANTS IN PART AND DENIES IN PART Defendant's Partial Motion to Dismiss and Strike Plaintiff's Class Allegations. (ECF No. 17.)


         Plaintiff is a natural person who resides in Tracy, California. (Compl., ECF No. 1 ¶ 15.) She is a “consumer” as that term is defined by Cal. Civ. Code § 1785.3(b) and 15 U.S.C. § 1681a(c). (ECF No. 1 ¶ 15.)

         Defendant is a corporation authorized to do business in the State of California, with a primary corporate address in Atlanta, Georgia. (ECF No. 1 ¶ 16.) Defendant is a “consumer reporting agency” (“CRA”) within the meaning of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681a(f), because it uses means and facilities of interstate commerce for the purpose of furnishing credit reports. (ECF No. 1 ¶ 17.)

         Plaintiff alleges that around September 2009, she opened an account with Wells Fargo for a consumer credit card. (ECF No. 1 ¶ 117.) On or about 2012, Plaintiff fell behind on her payments leading Wells Fargo to “charge off” her account around August 2012. (ECF No. 1 ¶ 118.) On April 24, 2013, Plaintiff filed a “no asset” Chapter 7 bankruptcy in the U.S. Bankruptcy Court for this district. (ECF No. 1 ¶ 96.)[2] As a result of the filing, the bankruptcy court allegedly discharged the Wells Fargo account. (ECF No. 1 ¶¶ 101, 120.)

         According to Plaintiff, Wells Fargo informed Defendant that Plaintiff's account was “charged off” or otherwise past due/unpaid, rather than “Discharged in Bankruptcy.” (ECF No. 1 ¶¶ 104, 119.) Plaintiff alleges that Defendant failed to realize Plaintiff's debt was subject to bankruptcy and therefore, Defendant erroneously listed Plaintiff's discharged debt as due and owing in the “Public Records” section of Plaintiff's credit report. (ECF No. 1 ¶¶ 125, 127.) Plaintiff alleges that in a consumer report dated November 13, 2016, Defendant reported, based on information it received from Wells Fargo, that, as of December 2012, the “current (pay) status” on Plaintiff's account was “charged off.” (ECF No. 1 ¶ 119.)

         Later in November 2016, Plaintiff sent a letter to Defendant requesting that it remove the reported Wells Fargo information. (ECF No. 1 ¶¶ 133-134.) Defendant timely forwarded the dispute to Wells Fargo, and Wells Fargo reaffirmed the reported information. (ECF No. 1 ¶ 135.)

         Around December 15, 2016, Defendant notified Plaintiff of the results of the reinvestigation. (ECF No. 1 ¶ 138.) After Defendant's reinvestigation of Plaintiff's dispute, it continued to list Plaintiff's current pay status as “charged off, ” as opposed to discharged in Plaintiff's Bankruptcy. (ECF No. 1 ¶ 141.) Plaintiff alleges that in her case and those similarly situated, Defendant failed to list bankruptcy in the public records section of their credit reports even though Defendant utilizes the computerized court reporting service known as PACER to regularly obtain access to every discharge order issued by a U.S. Bankruptcy Court in Chapter 7 proceedings. (ECF No. 1 ¶ 125.) Plaintiff alleges that “were [Defendant] to employ procedures of which it is fully aware, [Defendant] could achieve close to 100 percent accuracy in the reporting of the status of pre-bankruptcy debts.” (ECF No. 1 ¶ 126.)

         Plaintiff alleges that Defendant willfully and negligently failed to follow reasonable procedures to assure maximum possible accuracy of credit information in violation of 15 U.S.C. 1681e(b) and Defendant willfully and negligently failed to conduct a reasonable reinvestigation to assure maximum possible accuracy of credit reports in violation of 15 U.S.C. § 1681i(a). (ECF No. 1 ¶¶ 172-196.) Consequently, Plaintiff alleges Defendant violated both her and Class Members' statutory rights to be able to apply for credit based on accurate information. (ECF No. 1 ¶¶ 178, 183, 194.) Specifically, Plaintiff alleges that as a result of Defendant's inaccurate reporting and unreasonable reinvestigation procedures, she and Class Members are at increased risk of not being able to obtain valuable credit and their creditworthiness has been adversely affected. (ECF No. 1 ¶¶ 178, 183, 189, 196.)

         Plaintiff seeks to represent a purported nationwide class of consumers and two purported nationwide subclasses. (ECF No. 1 ¶¶ 153, 160, 166.) The purported class includes all Chapter 7 and Chapter 13 debtors whose Defendant's consumer reports included “one or more…tradeline accounts or debts [which were] not reported as discharged.” (ECF No. 1 ¶ 153.) The alleged “Dispute Subclass” includes the same debtors whose allegedly discharged debts “continued to be erroneously reported by [Defendant]” after they disputed those debts. (ECF No. 1 ¶ 160.) Finally, the alleged “Public Record Subclass” includes debtors “whose record of Chapter 7 and Chapter 13 Bankruptcies fail to report in the ‘Public Records' section of [Defendant's] credit reports any time.” (ECF No. 1 ¶ 166.)


         A. Motion to Dismiss Pursuant to 12(b)(6)

         A motion to dismiss for failure to state a claim under Rule 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Federal Rule of Civil Procedure 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v. Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice of what the claim . . . is and the grounds upon which it rests.” Bell Atlantic v. Twombly, 550 U.S. 544, 555 (2007) (internal quotation omitted). “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

         On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S. 319, 322 (1972). A court is bound to give plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege “ ‘specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief.” Twombly, 550 U.S. at 570. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. 544, 556 (2007)).

         Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of factual allegations.” United States ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986). While Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to assume that the plaintiff “can prove facts that it ...

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