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Hughes v. Experian Information Solutions, Inc.

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

July 11, 2016

DAZZA HUGHES, Plaintiff,



         Defendant IQ Data International, Inc. (“IQ Data”) moves to dismiss Plaintiff’s first amended complaint (“FAC”) for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6).[1] The Court granted IQ Data’s prior motion to dismiss Plaintiff’s complaint on the ground that the complaint was so devoid of factual specificity that it failed to meet even the most basic pleading requirements. See Order Granting Defendant IQ Data International’s Motion to Dismiss the Complaint with Leave to Amend, ECF 31. For the reasons stated on the record at the hearing on July 7, 2016, and discussed below, the Court concludes that Plaintiff has fared little better with respect to her FAC. Defendant IQ Data’s motion is GRANTED WITH LEAVE TO AMEND.

         I. BACKGROUND

         Plaintiff asserts claims under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681s-2(b), and the California Consumer Credit Reporting Agencies Act (“CCRA”), Cal. Civ. Code § 1785.25(a), based upon alleged inaccuracies in her credit reports. Plaintiff alleges that she filed for Chapter 7 bankruptcy protection in January 2015; her Chapter 7 bankruptcy was discharged in May 2015; and following discharge she “noticed several tradelines reporting a misleading and or inaccurate account status or listing of the account as in collections and or charged off rather than discharged in Bankruptcy.” FAC ¶¶ 5-7. Plaintiff alleges that the inaccurate tradelines were reported by Defendants HSBC Bank, USA (“HSBC Bank”) and IQ Data. FAC ¶¶ 8-9. With respect to IQ Data, Plaintiff alleges only that IQ Data reported Plaintiff’s account as being “open” and did not reference Plaintiff’s Chapter 7 discharge. FAC ¶ 9.

         Plaintiff alleges that she disputed the inaccurate tradelines via certified mail to consumer reporting agencies Experian Information Solutions, Inc., Equifax, Inc., and TransUnion, LLC, and that each of those agencies “sent each Defendant notification that plaintiff was disputing the accuracy of what it was reporting to them.” FAC ¶¶ 10-11. Plaintiff claims that “Defendants” failed to conduct a reasonable investigation and reported misleading and inaccurate information to Experian, Equifax, and TransUnion, and that Experian failed to perform its own reasonable investigation or to correct inaccuracies. FAC ¶¶ 12-13. Based on those allegations, Plaintiff sues Experian, IQ Data, and HSBC Bank for violations of the FCRA and CCRA. The present motion to dismiss is brought only by IQ Data.


         “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.


         As noted above, Plaintiff asserts claims under the FCRA and the CCRA. The Court addresses those claims in turn.

         A.Claim 1 - FCRA

         Congress enacted the FCRA “‘to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.’” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (quoting Safeco Ins. Co. of Am. v. Burr, 127 S.Ct. 2201, 2205 (2007). To ensure that credit reports are accurate, the FCRA imposes two categories of duties upon “furnishers” of credit information to consumer reporting agencies, often referred to as “CRAs” in the case law. Id. Section 1681s-2(a) “details the duty ‘to provide accurate information, ’” while Section 1681s-2(b) sets forth other obligations that “are triggered ‘upon notice of dispute.’” Id. at 1154 (quoting 15 U.S.C. § 1681s-2). The “notice of dispute” referenced by the statute occurs when a person who furnished information to a consumer reporting agency receives notice from the consumer reporting agency that the consumer disputes the information. Id. Upon receiving a notice of dispute, the furnisher “‘has four duties: to conduct an investigation with respect to the disputed information; to review all relevant information provided by the CRA; to report the results of its investigation to the CRA; and if the investigation finds the information is incomplete or inaccurate to report those results to all [nationwide] consumer reporting agencies to which the person furnished the information.” Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1059 (9th Cir. 2002) (internal quotation marks and citation omitted) (alteration in original).

         “The FCRA expressly creates a private right of action for willful or negligent noncompliance with its requirements.” Gorman, 584 F.3d at 1154. “However, § 1681s-2 limits this private right of action to claims arising under subsection (b), the duties triggered upon notice of a dispute” from a consumer reporting agency. Id. “Duties imposed on furnishers under subsection (a) are enforceable only by federal or state agencies.” Id.

         A plaintiff suing under § 1681s-2(b) “is required to plead the following four elements to state a claim against a credit furnisher: (1) a credit reporting inaccuracy existed on plaintiff’s credit report; (2) plaintiff notified the consumer reporting agency that plaintiff disputed the reporting as inaccurate; (3) the consumer reporting agency notified the furnisher of the alleged inaccurate information of the dispute; and (4) the furnisher failed to investigate the inaccuracies or further failed to comply with the requirements in 15 U.S.C. 1681s-2(b)(1)(A)-(E).” Denison v. Citifinancial Servicing LLC, No. C 16-00432 WHA, 2016 WL 1718220, at *2 (N.D. Cal. April 29, 2016).

         IQ Data contends that the FAC does not allege facts showing a credit reporting inaccuracy. The Court agrees. Plaintiff alleges that IQ Data reported Plaintiff’s account as being “open” and did not reference Plaintiff’s Chapter 7 discharge. FAC ¶ 9. However, she does not allege facts showing why that report was misleading or inaccurate. In her opposition brief, Plaintiff argues that her allegations that IQ Data “reported Plaintiffs [sic] account open and in collections while also failing to report that Plaintiff had filed a chapter 7 bankruptcy” are adequate to state a claim. Pl.’s Opp. at 5, ECF 40. Plaintiff misstates her FAC. The FAC does not allege that IQ Data reported that her account was ...

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