Opinion
Civil Action File No. 1:04-CV-1283-BBM.
November 8, 2004
ORDER
This matter is before the court on the Motion to Dismiss filed by defendant Experian Information Solutions, Inc. ("Experian") [Doc. No. 8] and the Motion to Dismiss filed by defendants World Financial Network National Bank ("WFNNB") and Structure, Inc. ("Structure") (collectively, the "World Financial defendants") [Doc. No. 9]. Also pending before the court are Experian's Motion to Submit Additional Authority and Supplemental Reply in Further Support of its Motion to Dismiss ("Experian's Motion to Submit Additional Authority") and Experian's Motion for Attorneys' Fees [Doc. No. 22]; Experian's Motion to Stay Discovery [Doc. No. 7]; plaintiff Stephen G. Levine's ("Levine's") Motion for Leave to File his Belated Brief in Opposition to Experian's Motion to Stay Discovery ("Motion for Leave") [Doc. No. 12]; and Levine's Motion to Submit Additional Authority and Supplemental Response in Further Support of Plaintiff's Opposition to Defendants' Motion to Dismiss ("Levine's Motion to Submit Additional Authority"), filed November 5, 2004.
In its Order of September 29, 2004, the court ruled that discovery would begin ten (10) days after the court resolved the pending Motions to Dismiss; accordingly, to the extent that Experian's Motion to Stay Discovery is still ripe for decision by the court, such Motion is GRANTED in accordance with the terms of the court's September 29 Order. To the extent that Levine's Motion for Leave is still ripe for decision by the court, such Motion is DENIED AS MOOT.
I. Factual and Procedural Background
The court makes no factual findings at this stage of the proceedings, and instead accepts Levine's version of the facts as true.
The facts giving rise to this Fair Credit Reporting Act ("FCRA") case are relatively simple. Levine had a store credit card account with Structure, a retailer. The account was operated through a financial intermediary, WFNNB. Levine alleges that he voluntarily closed his Structure account sometime in 1998 and that his account was paid in full at the time it was closed. The fact that Levine's Structure account was closed was reflected on his credit report as it was maintained by Experian, a consumer reporting agency. Indeed, the FCRA requires that a credit card company that regularly provides information to a consumer reporting agency about a consumer must notify the consumer reporting agency when the consumer voluntarily closes his credit account, and the FCRA further requires that when a consumer reporting agency is notified of such an account closure, that fact must be indicated in "any consumer report that includes information related to the account." See 15 U.S.C. § 1681s-2(a)(4); 15 U.S.C. § 1681c(e) ("§ 1681c(e)"). Apparently, the World Financial defendants contacted Experian as required and informed them when Levine closed his Structure account, because Levine's Experian credit report stated that his Structure account was "closed at consumer's request" and the account status was "Closed/Never late."
The court hereinafter refers to Levine's Structure/WFNNB credit card account as the "Structure account."
"The term `consumer report' means any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness. . . ." 15 U.S.C. § 1681a(d)(1).
In May 2002 and August 2002, despite the fact that Levine's Structure account was long-since closed, Experian sold Levine's consumer report to the World Financial defendants after the World Financial defendants told Experian that they needed such information in connection with a review of Levine's Structure account. Levine alleges that because his Structure account was closed at the time the World Financial defendants requested his consumer reports, the consumer reports could not have been sought for any purpose permissible under § 1681b of the FCRA. See 15 U.S.C. § 1681b ("§ 1681b"). Levine further alleges that the World Financial defendants obtained the consumer reports under false pretenses in violation of the FCRA by claiming that they required the reports for "account review" when there was, in fact, no account to review. Finally, Levine alleges that Experian failed to "maintain reasonable procedures" to ensure that consumer reports would be furnished only for the permissible purposes listed in § 1681b. See 15 U.S.C. § 1681e(a) ("§ 1681e(a)"). Levine alleges that he has suffered "mental anguish" over the wrongful dissemination and use of his credit report. He seeks compensatory damages for his "emotional suffering and distress" as well as "any other compensatory damages to be proven at trial," along with punitive damages, costs, and attorney's fees.
Experian and the World Financial defendants have each filed Motions to Dismiss pursuant to Fed.R.Civ.P. 12(b)(6). They argue that even accepting Levine's allegations as true (which the court, as a matter of law, must do at this stage), Levine has failed to state a claim upon which relief can be granted. Specifically, the Defendants argue that the FCRA expressly authorizes the World Financial defendants to obtain, and Experian to furnish, consumer reports for the purpose of "account review." The Defendants further argue that the fact that Levine closed his Structure account well in advance of the World Financial defendants' first request for Levine's consumer report is of no consequence, because the only courts to have addressed this question have correctly held that an "account review" remains "permissible" under § 1681b even after that account has been closed.
Experian's Motion to Submit Additional Authority seeks to direct the court's attention to two lawsuits that Levine (through his current counsel) filed in this court in 1999, against Equifax Credit Information Services, Inc. ("Equifax"). Equifax is also a consumer reporting agency and a chief competitor of Experian's. Levine's two 1999 lawsuits were both filed against Equifax, as well as two different companies that had each issued Levine store credit cards. In both lawsuits Levine made allegations essentially identical to those in this case, and both suits were ultimately dismissed for failure to state a claim, one by The Honorable Willis B. Hunt, Jr. and the other by The Honorable Marvin H. Shoob. These cases are addressed in greater detailinfra. At this time, however, the court GRANTS Experian's Motion to Submit Additional Authority [Doc. No. 22] as unopposed and without further discussion. See LR 7.1(B), N.D. Ga. (failure to file response indicates no opposition to a motion);Coleman v. Georgia Power Co., 81 F. Supp. 2d 1365, 1366 (N.D. Ga. 2000) (Evans, C.J.) (granting motion to file leave to supplement reply brief with new case law without discussion).
II. Legal Standard
In considering a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the court takes "the facts alleged in the complaint as true and constru[es] them in the light most favorable to the plaintiff." Jackson v. Birmingham Bd. of Educ., 309 F.3d 1333, 1335 (11th Cir. 2002). In order to prevail on a motion to dismiss, the movant must demonstrate "`beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief.'" Harper v. Blockbuster Entm't Corp., 139 F.3d 1385, 1387 (11th Cir. 1998) (citation omitted). The court now applies this standard to the Defendants' Motions to Dismiss.
III. Analysis
Section 1681b of the FCRA provides that a consumer reporting agency (such as Experian) may only "furnish a consumer report" under certain specific circumstances. 15 U.S.C. § 1681b(a). The statute provides that one of the acceptable circumstances under which a consumer reporting agency may furnish a consumer report is when the consumer reporting agency issues a consumer report "[t]o a person which [the consumer reporting agency] has reason to believe . . . intends to use the information in connection with . . . review or collection of an account" of the consumer. 15 U.S.C. § 1681b(a)(3)(A) (emphasis added). Put another way, § 1681b authorizes Experian to release a credit report when it reasonably believes that the requesting party will use the report to review an account. Additionally, § 1681b permits the World Financial defendants to request a credit report if they will use the report to review an account. See also Dumas v. City of Chicago, No. 99-C-5436, 2000 WL 91921, at *1 (N.D. Ill. Jan 19, 2000).
Levine does not dispute the facial validity of these provisions. However, Levine argues that § 1681b does not apply in the case of an account that has been closed and no longer exists. In other words, Levine argues that when Experian furnished his credit reports to the World Financial defendants on the basis of the World Financial defendants' claim that they needed those reports to perform "account review" on an account that Experian knew to be closed, Experian violated § 1681b and is accordingly liable under the FCRA for willfully violating the Act. See 15 U.S.C. § 1681n ("§ 1681n") (liability for willful violation of the FCRA). Levine further alleges that Experian is liable under § 1681n for failure to implement reasonable procedures to prevent consumer reports from being distributed improperly, a requirement found in § 1681e(a); however, the court notes that in order to show a violation of § 1681e(a), a plaintiff must first show that a credit reporting agency violated § 1681b. See, e.g., Washington v. CSC Credit Servs., Inc., 199 F.3d 263, 266 (5th Cir. 2000); Middlebrooks v. Retail Credit Co., 416 F. Supp. 1013, 1016 (N.D. Ga. 1976) (Freeman, J.). Levine alleges that the World Financial defendants are also liable to him under § 1681n for procuring his consumer reports for no permissible purpose and under false pretenses (in violation of § 1681b) by requesting those reports for purposes of "account review" when they knew that his Structure account was closed.
In response, both Experian and the World Financial defendants direct the court's attention to Wilting v. Progressive County Mutual Ins. Co., 227 F.3d 474 (5th Cir. 2000). In Wilting, the U.S. Court of Appeals for the Fifth Circuit ("Fifth Circuit") addressed the question of whether Wilting's former telephone service provider violated the FCRA. After the disconnection of his phone service, Wilting and his former phone company became embroiled in a dispute as to the amount of Wilting's final bill. Pursuant to the parties' settlement of that dispute, the phone company promised that no information about Wilting's telephone account would be reported to any credit reporting agency. At some point after the parties entered their settlement — and certainly after Wilting's account was closed — Wilting's phone company obtained a copy of Wilting's credit report to make sure that no adverse notations pertaining to Wilting's telephone account appeared on the report. Wilting argued that the request of his credit report by his former phone company violated § 1681b because "the [FCRA] only allows a creditor to obtain a consumer credit report on `existing accounts' and not for previous accounts." Wilting, 227 F.3d at 476. In support of this proposition, Wilting cited to an April 29, 1999 informal opinion letter from Federal Trade Commission ("FTC") attorney Ronald G. Isaac to Don Gowen, Senior Vice President of Security Mutual Financial Services, Inc. (the "Gowen letter"). In this case, Levine relies in part on an April 30, 1999 informal FTC opinion letter that itself cites to the Gowen letter for the proposition that:
Once an account is closed because the consumer has paid the debt in full (and also, in the case of an open-end account such as a credit card account, notified the creditor to close the account), it is our view that no permissible purposes exists for a [credit reporting agency] to provide file information on a consumer to the creditor. Letter from Clarke W. Brinkerhoff to Kenneth J. Brenner (April 30, 1999) at 1 (the "Brenner letter"). In response to Wilting's argument, and even after reviewing the Gowen letter, the Fifth Circuit stated that "neither the [FCRA] nor the FTC's commentary on the [FCRA] suggests that a report may only be permissibly obtained during particular points in the parties' relationship." Id.
Preliminarily, the court notes that the FTC's opinion letters on this issue are not binding nor due administrative deference of the type outlined in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984). "Instead, interpretations contained in formats such as opinion letters are `entitled to respect' . . . but only to the extent that those interpretations have the `power to persuade.'" Christensen v. Harris County, 529 U.S. 576, 587 (2000) (citations omitted). Indeed, the Brenner and Gowen letters themselves state that the opinions set forth in the letters are informal staff opinions and are "not binding on the Commission." Brenner letter at 2; Gowen letter at 2. Accordingly, the court is presented with differing pieces of non-binding authority on the question of whether Levine has stated a claim on which relief can be granted. On the one hand, Wilting and the two prior cases filed by Levine in this court, see supra n. 5, counsel in favor of granting the Motions to Dismiss. On the other hand, the FTC opinion letters favor the opposite result.
The court first addresses Experian's Motion to Dismiss. In light of Wilting, Levine's two nearly identical (dismissed) cases in this court, additional authority holding that Experian has no duty to investigate a facially valid request for a credit report, and the fact that Levine claims no damages beyond "emotional" harm, the court will GRANT Experian's Motion to Dismiss. The Wilting court is correct that the FCRA does not suggest that a credit report may only be permissibly obtained for account review during particular points in the parties' relationship. In fact, the court notes that § 1681b itself states that one who seeks to use a consumer report "as a potential investor or servicer, or current insurer, in connection with a valuation of, or an assessment of the credit or prepayment risks associated with . . . [a] credit obligation" may only do so in the case of an "existing credit obligation," while the section that permits distribution of a consumer report for "account review" does not contain similar express limiting language. 15 U.S.C. § 1681b(a)(3)(E) (emphasis added); 15 U.S.C. § 1681b(a)(3)(A). Moreover, both Experian and the World Financial defendants point out that the FCRA can be read as affirmatively requiring consumer reporting agencies and creditors to maintain the accuracy of consumer credit information, even after a consumer's account has been closed. Neither of the FTC letters addresses this argument. See 15 U.S.C. § 1681e(b) ("Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates."); 15 U.S.C. § 1681s-2(a)(2) (subsection entitled "Duty to correct and update information" provides that a creditor that "regularly and in the ordinary course of business furnishes information to one or more consumer agencies about the [creditor's] transactions or experiences with any consumer; and . . . has furnished to a consumer reporting agency information that the [creditor] determines is not complete or accurate, shall promptly notify the consumer reporting agency of that determination" and make appropriate corrections). This, in combination with authority that provides that consumer reporting agencies such as Experian have no duty to inquire into whether a facially valid reason for a requested consumer report is in fact valid, counsels in favor of granting Experian's Motion. See Levine v. First Union Nat'l Bank, No. 1:99-cv-3173-MHS (N.D. Ga. May 8, 1999) (Shoob, J.) (unpublished Order) (finding that "[a]s a matter of law, [the consumer reporting agency] had no duty to inquire into whether the reason was valid; it merely had to provide the information upon a stated permissible purpose");Anderson v. Ray Brandt Nissan, Inc., No. 91-1162, 1991 WL 211627, *1 (E.D. La. Oct. 8, 1991) ("It is reasonable for a consumer reporting agency to assume that the user of its services will utilize the credit information obtained for a proper purpose."); see also 15 U.S.C. § 1681b (consumer reporting agencies may furnish consumer reports to those to "which it has reason to believe" will ultimately use the reports for a purpose permitted by the FCRA) (emphasis added).
The court was unable to locate any case law addressing this specific question and the parties did not direct the court to any such case law.
Levine's two strikingly similar cases from 1999, filed in this court by the same attorney who represents him in this matter, also support dismissal. In Levine v. First Union Nat'l Bank, No. 1-99-cv-3173-MHS (N.D. Ga. 1999) (Shoob, J.), Levine sued First Union National Bank ("First Union"), First Union's agent, Electronic Data Systems, Inc. ("EDS"), and Equifax. As in this case, Levine alleged that First Union, through EDS, twice improperly requested Levine's credit report from Equifax for account review purposes when in fact Levine had no account with First Union. Judge Shoob granted Equifax's Motion to Dismiss because "Equifax had reason to believe that First Union had a proper purpose in requesting the information" by virtue of First Union's request under the auspices of "account review." First Union, No. 1:99-cv-3173-MHS (N.D. Ga. May 8, 1999) (unpublished Order at 3) (Shoob, J.). Since the FCRA in 1999 would have required First Union to tell Equifax when Levine closed his account, and would have further required Equifax to note such account closing on Levine's credit report, there is no material difference between Levine's allegations against Equifax in First Union and against Experian in this case. See 15 U.S.C. § 1681c(e); see also Levine v. Beneficial Nat'l Bank, No. 1:99-cv-3172-WBH (N.D. Ga. May 17, 2000) (unpublished Order) (Hunt, J.) (dismissing Levine's suit against Equifax for failure to state a claim where, as here, Levine alleged that the credit reporting agency twice improperly released his credit report to a bank that requested the report for "account review" because "[t]o require Equifax to go beyond a requestor's facially valid representation without any suggestion of impropriety regarding the request `places too heavy a burden on consumer reporting agencies'") (citation omitted).
The court also located through its own research a third similar lawsuit filed in this court on Levine's behalf by the same counsel representing him herein. See Levine v. Equifax Information Services, LLC, No. 1:01-cv-1968-JOF (N.D. Ga. July 17, 2002) (unpublished Order) (Forrester, J.). In that case, Levine apparently sought to re-open a settlement agreement that he reached with Equifax in 1999, alleging additional violations of the FCRA beyond those addressed by the agreement. It is unclear from Judge Forrester's Order whether the settlement agreement at issue in Equifax arose out of Levine v. First Union Nat'l Bank, No. 1:99-cv-3173-MHS (N.D. Ga. 1999) (Shoob, J.), because as discussed infra, Judge Shoob ultimately granted Equifax's motion to dismiss Levine's Complaint in First Union. Nevertheless, the court's discovery of Equifax indicates that Levine, via the same attorney, has filed at least three lawsuits remarkably similar to this one, all of which were ultimately dismissed for one reason or another against the credit reporting agency defendants. The court will DENY Experian's Motion for Attorneys' Fees [Doc. No. 22] (despite the fact that such Motionis unopposed), because the court finds that no additional evidence of bad faith beyond the similarity of these lawsuits has been presented, and the decisions of the other judges of this court are persuasive rather than mandatory authority.
Finally, Levine's damages allegations require dismissal of his claims against Experian. Levine seeks compensatory damages for his "emotional suffering and distress" as well as "any other compensatory damages to be proven at trial," but he does not specify what injury such damages might compensate him for. Levine alleges nothing akin to a wrongful denial of credit, an injury to his credit rating, or any objectively verifiable injury as a result of the Defendants' supposed wrongdoing. Moreover, although the Eleventh Circuit recently stated that its "prior conclusion that a plaintiff must produce evidence of objective manifestations of purported emotional distress is . . . inconsistent" with the Supreme Court's decision in Norfolk Western Ry. Co. v. Ayers, 538 U.S. 135 (2003), the court finds that the Eleventh Circuit's ruling was limited to the facts of that case. See Jones v. CSX Transp., 337 F.3d 1316, 1317 (11th Cir. 2003). In Jones, the Eleventh Circuit had stayed (pending the outcome of Ayers) the implementation of its prior decision that a plaintiff claiming emotional damages, stemming from asbestosis based on a fear of contracting cancer, had to show "objective manifestations" of his emotional distress. Id. This previous grant of a stay was "[b]ased on the factual similarity between [the claim at issue in Jones] and Ayers," and accordingly this court interprets the three paragraph per curiam opinion in Jones as simply following the Supreme Court's holding in Ayers, and nothing more. Id. In fact,Ayers itself recognizes that there are two separate types of emotional distress cases: (1) "[s]tand-alone emotional distress claims not provoked by any physical injury," and (2) "emotional distress claims brought on by a physical injury" (in Ayers andJones, asbestosis). Ayers, 538 U.S. at 147 (emphasis added). To be sure, in an asbestosis case or any case involving a claim for emotional distress arising out of a physical injury, Ayers requires only a showing that the emotional distress is "genuine and serious," rather than any "objective manifestation" of such distress. The court understands that the "genuine and serious" standard may well be overly pliable to support a dismissal as a matter of law, at least in this case, if that standard is applicable. However, the Ayers decision also re-affirmed the Supreme Court's prior holdings that in the case of "stand-alone emotional distress claims," a plaintiff must still show that he either suffered a "physical impact" (i.e., an objective manifestation) or was placed in the "zone-ofdanger" of suffering an "immediate risk of physical harm." Id. at 146-47 (citing Metro-North Commuter R.R. Co. v. Buckley, 521 U.S. 424, 430 (1997) (mere exposure to asbestos is not sufficient for emotional distress claim).
In this case, Levine claims no physical injury of any kind outside of his rather amorphous claim for emotional distress. In other words, this is a "stand-alone" claim for emotional distress, and the more lenient "genuine and serious" standard does not apply. There is also no allegation that Levine was somehow placed in a "zone of danger" by the Defendants' alleged wrongdoing. Moreover, Levine has not alleged, and the court has difficulty conceiving of, any objectively verifiable harm that has inured to Levine as a result of the Defendants' alleged conduct. Finally, Levine does not seek statutory damages under the FCRA. The only specific compensatory damages he seeks are for his "emotional distress." Accordingly, dismissal of Levine's claims against Experian is proper. See Reed v. Experian Information Solutions, Inc., 321 F. Supp. 2d 1109, 1115 (D. Minn. 2004) (granting summary judgment for defendants in claim for damages under FCRA where plaintiff alleged "severe emotional distress," because "[i]n federal causes of action, claims of emotional distress generally `must be supported by evidence of a genuine injury, such as evidence of the injured party's conduct and the observations of others'") (quoting Cousin v. Trans Union Corp., 246 F.3d 359, 371 (5th Cir. 2001) (citing Carey v. Piphus, 435 U.S. 247, 264 n. 20 (1978))); but see Moore v. Equifax Information Services LLC, 333 F. Supp. 2d 1360, 1365 n. 3 (N.D. Ga. 2004) (Shoob, J.) (denying motion for summary judgment in FCRA claim against Equifax and rejecting Equifax's contention that the Eleventh Circuit requires evidence of an "objective manifestation" of emotional distress as "without merit" in light of Jones).
Dismissal of Levine's claims against the World Financial defendants is also proper, although it is a slightly closer question. The court acknowledges that the authorities that provide that consumer reporting agencies (such as Experian) have no duty to inquire into the true nature of a facially valid request for a consumer report do not apply to the requesters of those consumer reports (such as the World Financial defendants). See supra at 11-12. However, the same as against Experian, Levine alleges nothing more than "emotional distress" damages supposedly caused him by the World Financial defendants. Additionally, given the Fifth Circuit's holding inWilting that the FCRA does not place a time limit on when a consumer report may be permissibly obtained, and further given the FCRA's language arguably requiring the World Financial defendants to continually update and verify the accuracy of a consumer's credit information, even after that consumer's account has been closed, under the specific circumstances alleged herein, dismissal is proper. Certainly, in light of these factors and the specific allegations of the Complaint, the court finds that Levine has failed to state a claim for a violation of § 1681n, which requires a showing of willful noncompliance with the FCRA. In his specific claims for relief, Levine only claims that the defendants violated § 1681n, and although the first sentence of the Complaint states that the lawsuit is also brought under 15 U.S.C. § 1681o ("§ 1681o") (civil liability for negligent noncompliance with the FCRA), § 1681o is not mentioned anywhere else in the Complaint. Cf. 15 U.S.C. § 1681o and 15 U.S.C. § 1681n. Accordingly, the World Financial defendants' Motion to Dismiss is GRANTED.
Levine's Motion to Submit Additional Authority is also GRANTED; however, the court's review of the contents of that Motion and Levine's Supplemental Response fail to dissuade the court from its view that this case should be dismissed. Levine's Supplemental Response is essentially a submission of evidence that, in Levine's view, establishes that the Defendants' records showed Levine's Structure account to be closed at the times that Levine's consumer report was requested. In reaching its decision, the court assumed to be true Levine's allegations that the Defendants' records showed Levine's account to be closed at the time of the requests. However, as discussed supra, the court finds that dismissal is proper even after accepting these allegations to be true.
IV. Summary
For the foregoing reasons, Experian's Motion to Dismiss [Doc. No. 8] and the World Financial defendants' Motion to Dismiss [Doc. No. 9] are GRANTED. To the extent that Experian's Motion to Stay Discovery [Doc. No. 7] was not previously granted by the court's Order of September 29, 2004, such Motion is GRANTED. Levine's Motion for Leave to File his Belated Brief in Opposition to Experian's Motion to Stay Discovery [Doc. No. 12] is DENIED AS MOOT, and Levine's Motion to Submit Additional Authority, filed November 5, 2004 is GRANTED. Finally, Experian's Motion to Submit Additional Authority [Doc. No. 22] is GRANTED, but its Motion for Attorneys' Fees [Doc. No. 22] is DENIED.
IT IS SO ORDERED.