Opinion
CIVIL ACTION NO: 03-2691, SECTION: "J"
March 3, 2004
ORDER AND REASONS
Before the Court is the Motion to Dismiss filed by defendant, Experian Information Solutions, Inc. ("Experian"). Rec. Doc. 5. Plaintiff opposes the motion, which was set for hearing on briefs on Wednesday, January 21, 2004. Upon consideration of the briefs, the record, and the applicable law, the Court finds that Experian's Motion to Dismiss the complaint of plaintiffs Richard D. and Sally S. Kennedy should be GRANTED.
FACTUAL BACKGROUND
Plaintiff Sally Kennedy ("Plaintiff") purchased an item in a Victoria's Secret ("VS") store in August, 2002. Complaint, 2. Plaintiff maintains that while at the sales counter she presented her American Express card for the sole purpose of purchasing her selected item. Id. Plaintiff alleges that during the process of purchasing her selected item, the VS store clerk surreptitiously and without her permission, opened a VS credit card account in her name. Id. at 2-3. At the time of purchase, Plaintiff believed the item had been charged to her American Express card. Plaintiff maintains that she was not aware that the VS account had been opened or that her purchased item had been charged to the VS account until she received a VS credit card and a statement for her purchase in the mail.Id. at 3.
Thereafter, Plaintiff returned the "cut up" VS card to VS with instructions to close the account. Id. Plaintiff allegedly disputed the charge for the purchase with VS and World Financial Network National Bank ("WFNNB"), the source of the bill, and refused to pay on the account. Id. Plaintiff alleges that WFNNB subsequently reported the account as delinquent and as a charge off to the national reporting agencies. Id. Plaintiff later contacted Experian and obtained a copy of her credit report. Soon thereafter, Plaintiff notified Experian by letter that she disputed the item because she did not have an account with WFNNB/VS. Complaint, Exh. 5. Plaintiff contends that Experian failed to properly investigate the disputed item and continues to report the item as a debt after being informed otherwise. Complaint, 3-4.
On September 26, 2003 plaintiffs Sally and Richard Kennedy, proceedingpro se, filed this complaint seeking damages for alleged violations of the Fair Credit Reporting Act, ("FCRA") 15 U.S.C. § 1681, the Truth In Lending Act, 15 U.S.C. § 1631, the National Bank Act, 12 U.S.C. § 86 and the Louisiana Credit Consumer Credit Law, R.S. 9:3510. Named as defendants were VS Stores, WFNNB, Demetrius Leftwich (an employee of WFNNB) and Experian Information Solutions. Defendant Experian has now moved for dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6).
In the complaint, Plaintiffs allege that Experian violated the provisions of the Fair Credit Reporting Act by: (1) issuing a credit report on Sally Kennedy for other than a permissible purpose, in violation of 15 U.S.C. § 1681(b); (2) failing to maintain reasonable procedures to avoid issuing credit reports for other than permissible purposes, in violation of § 1681(e)(a); and (3) not properly investigating a disputed item, in violation of § 1681(i). Complaint, 3-5. In response, Experian asserts that Plaintiffs' claims against it should be dismissed because, inter alia, she has failed to allege facts that would entitle her to recover from Experian. Experian contends that the information it reported was accurate for purposes of FCRA liability. For the reasons set forth below, the Court agrees that dismissal of the claims against Experian is proper.
STANDARD OF REVIEW
A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is viewed with disfavor and is rarely granted. Beanal v. Freeport-McMoran, Inc., 197 F.3d 161, 164 (5th Cir. 1999). The District Court is required to liberally construe the complaint in favor of the plaintiff, and all facts pleaded in the complaint must be taken as true. Id. Moreover, a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief. Conley v. Gibson, 355 U.S. 41, 45-46 (1957). However, "the complaint must contain either direct allegations on every material point necessary to sustain a recovery . . . or contain allegations from which an inference fairly may be drawn that evidence on these material points will be introduced at trial." 5 Charles Alan Wright Arthur R. Miller, Federal Practice Procedure § 1216, 156-159 (2d ed. 1990) (footnote omitted). "In order to avoid dismissal for failure to state a claim a plaintiff must plead specific facts, not mere conclusory allegations." Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000).
DISCUSSION
The Fair Credit Reporting Act
Congress enacted the FCRA to protect individuals from inaccurate or arbitrary information in a consumer report and to establish credit reporting practices that use "accurate, relevant and current information in a confidential and responsible manner."St. Paul Guardian Ins. Co. v. Johnson, 884 F.2d 881, 883 (5th Cir. 1989) (citations omitted). To accomplish this goal, the FCRA requires that a credit reporting agency ("CRA"): (1) furnish a consumer report for permissible purposes only, 15 U.S.C. § 1681(b); (2) follow reasonable procedures to avoid furnishing consumer reports for impermissible purposes, 15 U.S.C. § 1681(e)(a); and (3) make reasonable efforts to reinvestigate any information contained in a credit report after it receives notification from the consumer that the information is inaccurate. 15 U.S.C. § 1681(i)a.
Dismissal of Plaintiff Richard Kennedy's claim
Experian argues that plaintiff Richard Kennedy's claim against Experian should be dismissed. Experian accurately points to the fact that the complaint, in most instances, refers only to accounts and credit reports belonging to "Mrs. Kennedy," and contains no allegations as to any conduct by Experian toward plaintiff Richard that provides grounds on which Experian could be found liable to Plaintiff Richard. Memo is Supp. of Motion to Dismiss, 4.
Plaintiffs argue that it would be premature to dismiss Plaintiff Richard at this time. Memo in Opposition, 2. However, Plaintiffs fail to allege any damages suffered by Plaintiff Richard as a result of Experian's actions.
In Washington v. CSC Credit Services, 194 F.R.D. 244, 252 (E.D. La. 2000), the court held that a wife lacked standing to challenge the release of her husband's credit report if the information in the husband's report did not negatively impact the wife's creditworthiness. Likewise, in the present case, Plaintiff Richard has failed to set forth any allegations that would state a claim upon which relief may be granted him against Experian, because he has failed to assert any damages he suffered as a result of Experian's actions relating to his wife's credit report. Accordingly, Experian's Motion to Dismiss Plaintiff Richard Kennedy's claim should be granted.
Whether Experian issued credit report for an impermissible purpose
Plaintiff Sally asserts that Experian violated 15 U.S.C. § 1681 (b) by issuing her credit report to VS for other than permissible purposes. Plaintiff argues that she never gave written consent to VS to obtain her credit report, and thus Experian released her credit report for impermissible purposes. Section 1681(b)(a)(3)(A) provides in pertinent part:
[A]ny consumer reporting agency may furnish a consumer report under the following circumstances and no other: . . .
(3) to a person which it has reason to believe . . .
(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; . . .15 U.S.C. § 1681(b)(a)(3)(A) (emphasis added). Moreover, the FCRA authorizes consumer reports to be furnished to a third party without the consumer's authorization if the transaction consists of a firm offer of credit. 15 U.S.C. § 1681(b)(c)(1)(B) (i). Thus, Experian's potential liability has no relationship to whether VS fraudulently extended credit to plaintiff, but rather, hinges on whether Experian had reason to believe that VS intended to use the information in connection with a firm offer of credit. In the present case, the allegations reflect that Experian released Plaintiff Sally's credit history to VS precisely because Experian had reason to believe VS would use the information in connection with a credit transaction involving a firm offer of credit. Moreover, VS did in fact extend credit to Plaintiff on the day in question, although allegedly not at Plaintiff's request. Thus, Plaintiff cannot state a claim that Experian released her credit report to VS for impermissible purposes. Accordingly, Plaintiff's claim that Experian violated § 1681(b) of the FCRA is dismissed.
Whether Experian failed to maintain reasonable procedures to avoid issuing credit reports for Impermissible purposes
Section 1681e(a) requires reporting agencies to "maintain reasonable procedures designed to . . . limit the furnishing of consumer reports to the purposes listed under section 1681b." 15 U.S.C. § 1681e(a). Plaintiff contends that Experian violated 15 U.S.C. § 1681e(a) by failing to maintain reasonable procedures to avoid issuing credit reports for other than a permissible purpose. In Washington v. CSC Credit Services Inc., 199 F.3d 263, 267 (5th Cir. 2000), the court held that "a plaintiff bringing a claim that a reporting agency violated the `reasonable procedures' requirement of § 1681e must first show that the reporting agency released the report in violation of § 1681b." Thus, this court need not reach the issue of wether Experian maintained "reasonable procedures" if it initially finds that Experian released Plaintiff's credit report for "permissible purposes." Since the court has determined that Experian did not violate § 1681b, Plaintiff's claims that Experian failed to maintain reasonable procedures to avoid issuing credit reports for other than a permissible purpose must be dismissed.
Whether Experian failed to properly investigate a disputed item
Finally, Plaintiff contends that Experian violated § 1681! by failing to properly reinvestigate the disputed item on her credit report. When a CRA receives a complaint from a consumer, the agency must reinvestigate the disputed item "within a 30-day period" from the date the agency receives the notice of dispute. 15 U.S.C. § 1681i(a)1. If, after reinvestigation, the disputed item is found to be "inaccurate or incomplete or cannot be verified," the CRA must "promptly delete" that information from the consumer's file. 15 U.S.C. § 1681i(a)5(A). Upon the creditor's certification that the questioned information is accurate, the CRA can reinsert or modify the information in the consumer's file. 15 U.S.C. § 1681i(a)5(B).
After Plaintiff refused to pay the VS account, Plaintiff alleges that WFNNB reported the item as delinquent and as a charge off to the national reporting agencies. Thereafter, Plaintiff received a copy of her credit report from Experian. Plaintiff subsequently notified Experian by letter that she did not have an account with VS/WFNNB and that the account had been opened without her permission, consent or knowledge. Complaint, Exh. 5. Plaintiff contends that Experian failed to reinvestigate the disputed item and remove the item from her credit report after receiving notice of her dispute. In making this claim, the entirety of Plaintiff's allegations against Experian on this point are as follows: "Experian failed to properly investigate the disputed item and continues to report this item as a debt to Plaintiff after being informed otherwise." Complaint, 3. "Experian violated the [FCRA] . . . by not properly investigating a disputed item." Id. at 5. And finally, "VS, WFNNB, and Experian reinserted the disputed item after an agreement to remove it with out [sic] notifying the plaintiff of their actions."Id. at 6.
A document that is attached to the complaint as an exhibit is considered part of the complaint and may be considered in a Rule 12(b) (6) dismissal. Fed.R.Civ.P. 10(c); U.S. ex rel Willard v. Humana Health Plan of Texas, Inc., 336 F.3d 375, 379 (5th Cir. 2003).
In order to avoid dismissal for failure to state a claim a plaintiff must plead facts, not mere conclusory allegations.Collins, 224 F.3d at 498. The conclusory allegations recited above do not contain any facts suggesting that Experian failed to properly reinvestigate the disputed item or that the reinvestigation was done in an unreasonable amount of time. On this basis alone, Plaintiff's 1681(i) claim is subject to dismissal. In addition, contrary to Plaintiff's allegations, exhibits attached to the complaint show that in fact, Experian inserted a note on her credit report identifying the account as one in dispute. Id., Exh. 5.
Moreover, Plaintiff has failed to allege any damages suffered as a result of Experian's actions. Plaintiff only vaguely mentions that she was denied credit as a result of the derogatory information of her credit report. Complaint, 6. It appears to the Court that rather suffering damages, Plaintiff seems to have received a benefit. By Plaintiff's own admission, she received merchandise from the transaction at VS that apparently she has neither returned nor paid for. Accordingly, Plaintiff is not entitled to recover from Experian for any failure to re-investigate on the minimal allegations she has made. Therefore,
Moreover, this lawsuit appears to be in keeping with plaintiffs' similar filings. See, Richard Sally Kennedy v. Nationscredit Financil Servs. Corp., Civ. Action 96-686, TILA action dismissed for failure to prosecute, Oct. 17, 1986; Richard Sally Kennedy v. Chase Manhattan Bank, Civ. Action 03-50, FCRA action dismissed with prejudice, July 30, 2003.
IT IS ORDERED that Experian's Motion to Dismiss (Rec. Doc, 5) should be and is hereby GRANTED.