Opinion
CIVIL NO. 20-606(DSD/ECW)
2021-01-25
Christa L. PETERSON, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC., Defendant.
David A. Chami, Esq. and Price Law Group, Apc., 8245 North 85 Way, Scottsdale, AZ 85258, counsel for plaintiff. Adam W. Wiers, Esq. and Jones Day, 77 W. Wacker, Suite 3500, Chicago, IL 60601, counsel for defendant.
David A. Chami, Esq. and Price Law Group, Apc., 8245 North 85th Way, Scottsdale, AZ 85258, counsel for plaintiff.
Adam W. Wiers, Esq. and Jones Day, 77 W. Wacker, Suite 3500, Chicago, IL 60601, counsel for defendant.
ORDER
David S. Doty, Judge
This matter is before the court upon defendant Experian Information Solutions, Inc.’s motion for judgment on the pleadings. Based on a review of the file, record, and proceedings herein, and for the following reasons, the motion is denied.
BACKGROUND
This Fair Credit Reporting Act (FCRA) dispute arises out of allegedly inaccurate information on plaintiff Christa Peterson's credit report following her discharge from bankruptcy. Peterson filed a Chapter 7 bankruptcy petition in the United States Bankruptcy Court for the District of Minnesota in March 2019. Compl. ¶ 10. She obtained a discharge on June 24, 2019. Id. ¶ 11. Eager to ensure that her discharge was being accurately reported, Peterson requested and, on August 30, 2019, received a consumer credit report from Experian. Id. ¶¶ 12-13.
Peterson claims that the report contained inaccurate information about her Southpoint Federal Credit Union credit card account (Account). Id. ¶ 14. Specifically, Peterson alleges that although the Account was discharged in the bankruptcy in June, Experian reported the Account with a balance of $2,481 as of July 2019, and as being thirty days late in May 2019, sixty days late in June 2019, and ninety days late in July 2019. Id. ¶¶ 14-15, 18; Myers Decl. Ex. C, at 5. Experian further reported the Account as "[o]pen $214 past due as of July 2019." Compl. ¶ 14; Myers Decl. Ex. C, at 5. On the same report, Experian also correctly indicated that Peterson's Chapter 7 bankruptcy was discharged in June 2019. Compl. ¶ 19; Myers Decl. Ex. C, at 2.
In response to this motion, Peterson states that she also alleged that Experian incorrectly reported that her Southpoint line of credit showed a balance of $321 as of July 2019. ECF No. 55, at 7. The complaint alleges, however, that the Equifax report reflected this error rather than the Experian report. Compl. ¶ 16. The Experian credit report provided by Peterson does show that she owed $321 as of July 2019 on her Southpoint line of credit, however. Dunn Decl. Ex A, at 6. The court therefore will consider these allegations in deciding this motion.
Peterson alleges that the description of the Account was inaccurate because it did not show the Account "as discharged in bankruptcy" or otherwise reflect a "zero balance." Id. ¶ 15. Peterson argues that because Experian reported that her Chapter 7 bankruptcy was discharged in June 2019, it therefore "knew or had reason to know" that its reporting of the Account was inaccurate. Id. ¶ 21. Accordingly, Peterson contends that Experian failed to "maintain reasonable procedures to ensure debts that are derogatory prior to a consumer's bankruptcy filing do not continue to report balances owing or past due amounts when those debts are almost certainly discharged in bankruptcy," in violation of the FCRA, 15 U.S.C. § 1681e(b). Id. ¶¶ 21, 31. Peterson alleges that she has suffered damages in the form of loss of credit opportunities; credit denials; less favorable credit rates; and embarrassment, distress, humiliation, and mental anguish. Id. ¶ 32.
Peterson filed suit against Experian on February 26, 2020, alleging one violation of the FCRA. Peterson contends that Experian violated the FRCA by reporting that she still owed money on the Account despite also reporting that her debts were discharged in bankruptcy. Id. ¶ 30. She seeks declaratory relief; actual, statutory, and punitive damages; fees and costs; and pre-and post-judgment interest. Experian now moves for judgment on the pleadings. DISCUSSION
Peterson also sued Equifax Information Services, LLC, but they have resolved their dispute and Equifax is no longer a party to this action. See ECF No. 33.
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I. Standard of Review
The same standard of review applies to motions under Federal Rules of Civil Procedure 12(c) and 12(b)(6). Ashley Cty., Ark. v. Pfizer, Inc., 552 F.3d 659, 665 (8th Cir. 2009). Thus, to survive a motion for judgment on the pleadings, "a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face." Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 594 (8th Cir. 2009) (citation and internal quotation marks omitted). "A claim has facial plausibility when the plaintiff [has pleaded] factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). Although a complaint need not contain detailed factual allegations, it must raise a right to relief above the speculative level. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "[L]abels and conclusions or a formulaic recitation of the elements of a cause of action" are not sufficient to state a claim. Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (citation and internal quotation marks omitted).
II. Section 1681e(b) of the FCRA
The FCRA outlines a number of procedural and substantive requirements meant to "ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Poehl v. Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir. 2008) (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) ). Section 1681e(b) requires consumer reporting agencies like Experian to "follow reasonable procedures to assure maximum possible accuracy of the information" contained in a consumer's credit report. 15 U.S.C. § 1681e(b).
To state a claim under § 1681e(b), Peterson must plausibly allege that Experian "failed to follow reasonable procedures to assure maximum possible accuracy and that this failure caused inaccurate information to appear on her credit report." Morris v. Experian Info. Sols., Inc., 478 F.Supp.3d 765, 768 (D. Minn. 2020) (quotation omitted) (citing Hauser v. Equifax, Inc., 602 F.2d 811, 814–15 (8th Cir. 1979) ).
A. Collateral Estoppel
Experian first argues that the class action settlement in White v. Experian Information Solutions, Inc., No. SA CV 05-1070, 2008 WL 11518799 (C.D. Cal. Aug. 19, 2008), precludes her claim under the doctrine of collateral estoppel. In White, the parties’ settlement identified what constitutes "reasonable procedures" in the context of reporting accounts subject to discharge in bankruptcy. Specifically, the settlement requires Experian and other credit reporting agencies to automatically update a consumer's debt status to "discharged in bankruptcy" when they learn of a consumer's Chapter 7 discharge. See id. But under the settlement Experian is permitted to exclude certain accounts from this blanket statement if those accounts are "reporting in a Current status." See id. at *10 (§ 3.2(b)(ii)(E)). In other words, if an account is not overdue at the time the consumer filed the bankruptcy, that account is excluded from the automatic "scrub" indicating that the account will be discharged in bankruptcy.
Experian argues that it reported Peterson's Account in keeping with the terms of the White settlement because it correctly noted that the Account was "current" – i.e., was not overdue - in March 2019, when she filed for bankruptcy. The Account later became delinquent in May 2019, during bankruptcy proceedings. Because the account was "current" at the time Peterson filed for bankruptcy, Experian argues that White conclusively permits Experian to exclude the Account from its automatic "scrubbing" and to later report that the account became overdue. Peterson responds that collateral estoppel does not apply here because she was not a class member in White and because White is not binding authority.
Judges within this district have already held that White is not binding on this court, and the court agrees with those decisions. See Morris v. Experian Info. Sols., Inc., 478 F.Supp.3d 765, 770 (D. Minn. 2020) ("That a report complies with the White settlement does not by itself establish that the report complies with § 1681e(b), however."); Alsibai v. Experian Info. Sols., Inc., 488 F.Supp.3d 840, 847 (D. Minn. 2020) (" White is not binding on a federal district court in Minnesota.") (internal citation and brackets omitted). As a result, Peterson is not foreclosed from pursuing her claim on this basis. White may nevertheless be instructive regarding the reasonableness of Experian's procedures and reporting.
B. Reasonableness
As noted, the White settlement indicates that it is reasonable to exclude an account from a bankruptcy scrub when the account was "current" at the time the consumer filed for bankruptcy. There appears to be no dispute that the Account was indeed "current" in March 2019, when Peterson filed for Chapter 7 bankruptcy. There is also no dispute that Peterson stopped paying on the Account after she filed for bankruptcy but before her debt was discharged. The question is whether Experian violated the FRCA by including Peterson's overdue status on her report after the debt had been discharged in bankruptcy, particularly when Experian simultaneously reported that Peterson's debt had been discharged. See Compl. ¶ 19; Myers Decl. Ex. C, at 2. Given the timing of the facts presented here, White is less persuasive than urged by Experian.
Here, Peterson alleges that Experian failed to follow reasonable procedures by inaccurately reporting post-bankruptcy that the Account was delinquent. She asserts that had Experian met its duty, it would have correctly reported that the Account, which became delinquent after she filed bankruptcy, was discharged in the bankruptcy and no longer carried a balance. White appears to be inapposite given that it addresses a credit reporting agency's reporting obligation before a debt is discharged in bankruptcy.
In short, the court finds that Peterson has plausibly alleged that Experian "failed to follow reasonable procedures to assure maximum possible accuracy" on her report and that this failure "caused inaccurate information to appear on her credit report." Morris, 478 F.Supp.3d at 768. As a result, Experian's motion must be denied.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that the motion for judgment on the pleadings [ECF No. 48] is denied.