Opinion
6:20-cv-02139-MK
07-26-2021
BRANDY MAE CASSITY, Plaintiff, v. TRANSUNION, LLC; EQUIFAX INFORMATION SERVICES, LLC; FEDLOAN SERVICING; and DOES 1 through 100, inclusive, Defendants.
FINDINGS AND RECOMMENDATION
KASUBHAI, United States Magistrate Judge:
Plaintiff Brandy Mae Cassity brings this Fair Credit Reporting Act (“FCRA”) action against Defendant FedLoan Servicing. Plaintiff argues Defendant violated the FCRA by inaccurately reporting her debt and failing to reasonably investigate Plaintiff's dispute of that debt. Defendant moves for judgement on the pleadings (ECF No. 19), arguing the pleadings demonstrate Defendant accurately reported the debt. For the reasons discussed below, Defendant's motion should be GRANTED and Plaintiff should be granted leave to file an amended complaint.
Plaintiff voluntarily dismissed her claims against Defendants TransUnion, LLC and Equifax Information Services, LLC. ECF Nos. 18, 27.
BACKGROUND
Defendant, a loan servicer, serviced Plaintiff's debt. Compl. ⁋ 2. In September 2020, Plaintiff ordered a credit report “to ensure proper reporting by” her creditors. Compl. ⁋ 49. In those reports, Plaintiff noticed “inaccurate, misleading, or incomplete information that did not comply with credit reporting industry standards.” Compl. ⁋ 50. In October 2020, Plaintiff disputed the inaccuracies regarding her accounts serviced by Defendant. Compl. ⁋ 51. “Plaintiff's Dispute Letters specifically put [Defendant] on notice that Plaintiff's credit report was inaccurately reporting as past due and that Plaintiff's account should be updated.” Compl. ⁋ 52. Defendant continued to report Plaintiff's accounts “with a current payment status of ‘120 days past due', even though the account is closed, has a zero balance, and was transferred in October of 2017.” Compl. ⁋⁋ 56-59. “By continuing to report Plaintiff's account [in this manner], it incorrectly appears to third parties viewing Plaintiff's credit report that Plaintiff is currently behind on her payments, which is inaccurate.” Compl. ⁋ 63.
As noted, Plaintiff alleges Defendant's inaccurate reporting and subsequent unreasonable investigation of the disputed debt violated the FCRA. Defendant moves for judgment on the pleadings, arguing the pleadings confirm it accurately reported, and reasonably investigated, Plaintiff's debt. ECF No. 19.
STANDARD OF REVIEW
“After the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Because a motion for judgment on the pleadings is “functionally identical” to a motion to dismiss for failure to state a claim, the same standard of review applies to both motions. Dworkin v. Hustler Magazine Inc., 867 F.2s 1188, 1192 (9th Cir. 1989).
“Judgment on the pleadings is properly granted when there is no issue of material fact, and the moving party is entitled to judgment as a matter of law.” Fleming v. Pickard, 581 F.3d 922, 925 (9th Cir. 2009) (quoting Heliotrope Gen., Inc. v. Ford Motor Co., 189 F.3d 971, 979). The court must accept the complaint's factual allegations as true and construe those facts in the light most favorable to the non-movant, id., but the court is “not bound to accept as true a legal conclusion couched as a factual allegation, ” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion for judgment on the pleadings, a complaint must contain sufficient factual matter that “state[s] a claim to relief that is plausible on its face.” Id. at 570. A claim is plausible on its face when the factual allegations allow the court to infer the defendant's liability based on the alleged conduct. Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009). The factual allegations must present more than “the mere possibility of misconduct.” Id. at 678.
Although Twombly dealt with a motion to dismiss under rule 12(b)(6), as noted above, the same standard of review applies to a motion for judgment on the pleadings. Dworkin, 867 F.2d at 1192.
DISCUSSION
“Congress enacted 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, 53 (2007). The FCRA imposes obligations on credit reporting agencies and on “furnishers” who provide credit information to the reporting agencies. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153-54 (9th Cir. 2009). Specifically, the FCRA prohibits furnishers of credit information, such as Defendant here, from providing “any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.” 15 U.S.C. § 1681s-2(a)(1)(A). Additionally, when informed by a reporting agency of a dispute regarding a reported debt, the furnisher must conduct a reasonable investigation of the dispute and report those results to the credit reporting agencies. Gorman, 584 F.3d at 1157.
As relevant here, the FCRA grants a consumer like Plaintiff the right to bring a private right of action against a furnisher like Defendant who, after receiving notice of the dispute from the reporting agency, either: (1) fails to conduct a reasonable investigation; or (2) provides inaccurate or misleading information following the investigation. Id. (citing 15 U.S.C. § 1681s-2(b)). “Congress clearly intended furnishers to review reports not only for inaccuracies in the information reported but also for omissions that render the reported information misleading.” Id. at 1163 (quoting Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 148 (4th Cir. 2008) and noting “[t]his reasoning is persuasive.”). The Ninth Circuit adopted the holdings of other courts who “have held that a credit entry can be ‘incomplete or inaccurate' within the meaning of the FCRA ‘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.'” Id. (quoting Sepulvado v. CSC Credit Serv., Inc., 158 F.3d 890, 895 (5th Cir. 1998)).
Here, Plaintiff argues Defendant's reporting of her debt was both patently incorrect and misleading. The Court finds numerous cases from district courts throughout the nation provide persuasive reasoning when analyzing cases with similar allegations. For example, in Gross v. Priv. Nat'l Mortg. Acceptance Co., LLC, 20-cv-4192-BMC, 2021 WL 81465 (E.D. NY, Jan. 9, 2021), the Plaintiff alleged Defendant violated the FCRA by reporting “a ‘Pay Status' of ‘30 Days Past Due.' Plaintiff argues that this entry is inaccurate because it suggests that the account is currently past due, even though the account has been transferred to another lender and he is no longer obligated to make payments to [Defendant].” Id. at *1 (emphasis in original). The court noted:
Plaintiff zeroes in on the “Pay Status” of “30 Days Past Due Date.” He argues that this entry suggests that the account is currently 30 days past due, but the account is not, in fact, past due because the account has been transferred to another lender and he is no longer obligated to make payments to [Defendant]. In short, says plaintiff, the “Pay Status” entry “is false and misleading because [he] is not currently late on any obligations to [Defendant].”Id. (emphasis in original) (second alteration in original).
In other words, Plaintiff's allegations in Gross mirror those of Plaintiff in this action. Plaintiff here argues the “Payment Rating” of “180 or more days past due date” is both patently inaccurate and materially misleading. Plaintiff argues “it is patently inaccurate to report the loan as ‘120 days or more than four payments past due,' because there is nothing owed to Defendant.” Resp. Mot. Dismiss 7; ECF No. 25. Additionally, Plaintiff argues “[t]he Court can examine the weight of the information and determine that reporting a payment status as past due when the balance is $0, and therefore there is no payment due, is misleading and therefore inaccurate under the FCRA, but the proper determination of that issue is for the trier-of-fact.” Resp. 9. In rejecting that Plaintiff's argument that the “Pay Status” of “30 Days Past Due Date” was materially misleading, the Gross court noted:
Plaintiff has failed to satisfy this standard. If a creditor read the “Pay Status” entry in isolation, the creditor might conclude that the account was currently past due. But when the creditor read the rest of the entries, the creditor would surely forego that conclusion. The credit report contains several other entries that show that the “30 Days Past Due” refers to the period when the payments were due to [Defendant]. For instance, the report shows that the account is closed and has a $0 balance. An account with a $0 balance cannot currently be past due-what would the debtor have to pay to bring the account current?
The report also shows that the last payment made was in September 2018; that the account was last updated in October 2018; and that the account was transferred to another lender. Reading these entries together, the only logical inference is that
the account was previously 30 days past due. It is simply not plausible to think that a creditor would conclude otherwise.Gross, 2021 WL 81465 at *3 (emphasis in original) (internal citations omitted).
So too here. Defendant furnished a report with the tradeline “Payment Rating: 6-180 or more days past the due date.” Answer Ex. 1 at 2; ECF No. 14. Similar to the Plaintiff in Gross, Plaintiff here alleges that by reporting the debt in the above fashion, “it incorrectly appears to third parties viewing Plaintiff's credit report that Plaintiff is currently behind on her payments, which is inaccurate.” Compl. ⁋ 63. But as in Gross, Plaintiff's interpretation of the “Payment Rating” is only possible if one views that tradeline in isolation, ignoring any reading of the report as-a-whole. After all, that same report notes that the “Date of Account Information” is “10/20/2017” and provides that date as the date Defendant closed Plaintiff's account. Answer Ex. 1 at 2. Importantly, the report accurately reports the “Current Balance” as $0.00 with a “Scheduled Monthly Payment Amount” of $0.00 and an “Amount Past Due” of $0.00. Id. Further, the report states the “Status” as “05-Account transferred” and contains a “Special Comment” of “AT-Account closed due to transfer.” Id. As in Gross, “[r]eading these entries together, the only logical inference is that the account was previously [180 or more days past the due date]. It is simply not plausible to think that a creditor would conclude otherwise.” 2021 WL 81465 at *3 (emphasis in original).
In it's Answer, Defendant included two pages of Credit Reporting of Plaintiff's account and one page of an Equifax credit report of Plaintiff's account. Answer Ex. 1. Defendant notes that when ruling on a motion for judgment on the pleadings, a Court may view extrinsic evidence that is authentic and integral to Plaintiff's claims without turning the motion into one for summary judgment. Motion 3-4 (citing Dent v. Cox Communs. Las Vegas, Inc., 502 F.3d 1141, 1143 (9th Cir. 2007). Plaintiff does not dispute that the Court may look to the exhibit when ruling on the pending motion.
Plaintiff argues “[t]he correct was to report the payment status is to state the account is transferred. It would also be correct to report it as ‘transferred, was 120 days or more than four payments past due.'” Resp. 7. As noted, however, Plaintiff's report specifically notes that Plaintiff's account wa s “closed due to transfer” and lists the status as “Account transferred.” Answer Ex. 1 at 2. That this specific information regarding the transfer and closing of Plaintiff's account is not relayed on the “Payment Rating” line does not somehow render the entire report, when read as-a-whole, incorrect or materially misleading.
In fact, the vast majority of cases analyzing reports like the one at issue here conclude that including a past due payment rating when an account was previously transferred with zero balance remaining is neither patently inaccurate nor materially misleading. For example, in Settles v. TransUnion, LLC, No. 3:20-cv-00084, 2020 WL 6900302 at *1 (M.D. Tenn. Nov. 24, 2020), “Plaintiff contested the listing of the account status as ‘120 days past due' and argued that if the balance is $0, it is ‘impossible for their current status to be listed as late.'” As Plaintiff argues here, the Plaintiff in Settles argued “the ‘pay status' refers to the ‘current status' of the account and is therefore inaccurate because the loan payments are not currently past due as evidenced by the zero-dollar balance, and he has no further obligations.” Id. at *4. Recognizing it had to review the entire report as-a-whole, the court rejected that argument:
The Court finds that the reported information, taken as a whole, is neither inaccurate nor materially misleading. The report provides payment history showing that Plaintiff was at least 120 days late each month from May 2013 to January 2014, states that the account was closed in February 2014, and does not provide any account payment information past that date. Plaintiff admits that [he] never brought the account current-instead, he defaulted, and the account was closed while it was more than 120 days past due. Reporting a ‘pay status' as ‘120 days past due date' in these circumstances would not reasonably mislead a creditor to believe Plaintiff is currently past due on this loan.Id.
Similarly, in Bibbs v. TransUnion LLC, No. 20-4514, 2021 WL 695112 (E.D. Penn. Feb. 23, 2021), the Plaintiff alleged TransUnion violated the FCRA by “inaccurately reporting her Pay Status with creditor Navient as 120 days past due even though Navient closed and transferred her account resulting in zero-dollar balance owed to Navient upon transfer.” Id. At *2. The court noted that, as Plaintiff here urges, the Plaintiff there “asks us to limit our review to the Pay Status, which reads ‘>Account 120 Days Past Due<', ignore all other tradelines, and determine a reasonable creditor would mistakenly believe she currently owes past due payments on these accounts.” Id. at *7. But the court noted the “Pay Status field does not contain a present tense verb.” The court concluded the report, when viewed as-a-whole, was accurate:
[Plaintiff] is essentially asking us to read in non-existing present tense language into the “Pay Status” field and ignore the Date Updated field, the Date Closed field, the Balance field, the remark “ACCT CLOSED DUE TO TRANSFER, ” and the lack of ratings information beyond March 2018 to conclude TransUnion reported inaccurate or misleading information. This we cannot do. As the judges in Hernandez [v. TransUnion, LLC, No. 19-1987, 2020 WL 8368221 (S.D. Fla. Dec. 10, 2020)], Settles, and Gross explained, we must view the account information given to the creditor in its entirety, and doing so, the reported information is accurate as a matter of law.Id. (internal footnote omitted).
In fact, Judge Karney in Bibbs provided an exhaustive review of other courts analyzing analogous claims. Id. at *4-5. Judge Karney also thoroughly reviewed courts who came to the opposite conclusion and pointed out why each of those fact patterns differed in at least one critical aspect. Id. at *5-6. Judge Karney's analysis is as persuasive as it is thorough. As in Bibbs, “[a]ll parties concede [Defendant] transferred her overdue debt on the date reported, closed her obligation, and reported her as paying 1[8]0 days past due. This is patently accurate. It is not misleading.” Id. at *1. As in the above cases, when viewing the entire report as-a-whole rather than-as Plaintiff urges-viewing the Payment Rating in isolation from the rest of the entries, no reasonable creditor would come away with the impression that Plaintiff currently owed a past due amount (or any amount at all) on the account.
Judge Karney recently reached the same conclusion in another case analogous to the present action. See Samoura v. TransUnion LLC, No. 20-5178, 2021 WL 915723 at * 7 (E.D. Penn. March 10, 2021) (noting Plaintiff “is essentially asking us to read in non-existing present tense language into the “Pay Status” field and ignore the Date Updated field, the Date Closed field, the Remarks field, and the Ratings field to conclude TransUnion reported inaccurate or misleading information. This we cannot do. . . . [W]e must view the account information given to the creditor in its entirety, and in doing so, conclude the reported information is accurate as a matter of law.”).
Plaintiff argues that one of the cases Judge Karney distinguished, Soler v. TransUnion LLC, No. 20-8459, 2020 WL 7237256 (C.D. Cal. Dec. 1, 2020), is on point and should drive this Court's analysis. Resp. 9. Plaintiff argues that “[t]he facts of the Soler case are nearly identical to the case at hand.” Id. The Court disagrees because, as to one critical allegation, Soler is distinguishable. As is the case here, the account in Soler contained a “Pay Status” of “120 Days Past Due Date.” Id. at *1. Nearly three years earlier, however, Plaintiff in Soler “fully satisfied” her accounts, which at that time had a $0 balance. Id. Despite the fact that Plaintiff “fully satisfied” her account, her credit report continued to list the debt, which Plaintiff had satisfied three years earlier, as 120 days past due. The court concluded that based on that record, a jury could find the credit report was misleading and agree with Plaintiff that “the ‘120 Days Past Due' pay status . . . misleads credit grantors because it looks like there is an outstanding balance and the Accounts' current status is 120 days late.” Id. at *3.
Here, Plaintiff does not allege she “fully satisfied” the debt. Instead, the parties here appear to agree that Plaintiff's account was closed and transferred after Plaintiff failed to make a payment for at least 180 days. Therefore, the allegations here are more analogous to those in Bibbs, where Plaintiff “does not allege she paid or satisfied her accounts as of the transfer and close of her [] account. She concedes owing [the creditor] payments for over 120 days when [the creditor] transferred her debt and closed her account with a zero balance.” 2021 WL 695112 at *8. In short, this case is distinguishable from Soler because here, Plaintiff includes no allegation which would lead a jury to come to any conclusion other than the fact that Defendant ultimately closed and transferred Plaintiff's account after the account's status was past due by at least 180 days.
The Court was unsuccessful in finding any analogous case-i.e., where Plaintiff failed to allege either paying off the debt or the existence of a misleading current monthly amount owed-where any court found the reporting of a past due amount along with a balance of $0.00 and a comment that the account was previously closed due to transfer qualified as a false or materially misleading statement under the FCRA. In Macik v. JPMorgan Chase Bank, N.A., No. G-14-044, 2015 WL 12999728 at *4 (S.D. Tex. May 28, 2015), the Plaintiff alleged paying off the debt which, along with the furnisher's policy of not re-reporting fully paid accounts for more than three months, led to a reasonable inference that reporting the account as past due wa s materially misleading. Barrow v. TransUnion, LLC, (E.D. Penn. April 13, 2021) reached a simila r conclusion where Plaintiff alleged “full satisfaction” of the transferred debt. See also Smith v. TransUnion, LLC, 2021 WL 1061213 (E.D. Penn. March 19, 2021) (denying motion for judgment on the pleadings when Plaintiff a lleged credit reports continued to report the “Pay Status” as “Account 60 Da ys Past Due Date” despite an a llegation that “the debt was paid in full to the penny at the time it wa s closed[.]”). And in Mund v. TransUnion, No. 18-cv-676, 2019 WL 955033 (E.D. N.Y. Feb. 27, 2019) and Friedman v. CitiMortgage, Inc., No. 18-cv-11173, 2019 WL 4194350 (S.D. N.Y. Sept. 3, 2019), both Plaintiffs alleged the credit reports inaccurately contained reports of current monthly payments owed on closed accounts. Gross, 2021 WL 81465 at *3. The pleadings here do not allow for a similar inference.
RECOMMENDATION
For the reasons stated above, Defendant's motion for judgment on the pleadings (ECF No. 19) should be GRANTED and Plaintiff's claims should be DISMISSED without prejudice. Plaintiff should be allowed 30 days to file an amended complaint. See Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995) (if the complaint is dismissed, leave to amend should be granted unless the court “determines that the pleading could not possibly be cured by the allegation of other facts.”). Out of an abundance of caution, the Court will allow Plaintiff another opportunity to demonstrate she “fully satisfied” her account and was no longer 180 days past due.
This recommendation is not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any notice of appeal pursuant to Federal Rule of Appellate Procedure 4(a)(1) should not be filed until entry of the district court's judgment or appealable order.
The Findings and Recommendation will be referred to a district judge. Objections to this Findings and Recommendation, if any, are due fourteen (14) days from today's date. See Fed. R. Civ. P. 72. Failure to file objections within the specified time may waive the right to appeal the District Court's order. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).
It is so ordered.