Opinion
Case No.: 2:22-cv-07760-MEMF-JC
2023-07-19
Lars F. BRAUER, on behalf of himself and all others similarly situated, Plaintiff, v. EXAMONE WORLD WIDE INC. and Quest Diagnostics Clinical Laboratories, Inc., Defendants.
Adrienne D. McEntee, Pro Hac Vice, Beth E. Terrell, Pro Hac Vice, Jennifer R. Murray, Pro Hac Vice, Terrell Marshall Law Group PLLC, Seattle, WA, James A. Francis, Pro Hac Vice, Lauren K.W. Brennan, Pro Hac Vice, John Soumilas, Pro Hac Vice, Francis Mailman Soumilas PC, Philadelphia, PA, James C. Shah, Miller Shah LLP, Irvine, PA, Kolin Tang, Miller Shah LLP, Irvine, CA, for Plaintiff. Mark B. Blocker, Pro Hac Vice, Sidley Austin LLP, Chicago, IL, Sean A. Commons, Sidley Austin LLP, Los Angeles, CA, for Defendants.
Adrienne D. McEntee, Pro Hac Vice, Beth E. Terrell, Pro Hac Vice, Jennifer R. Murray, Pro Hac Vice, Terrell Marshall Law Group PLLC, Seattle, WA, James A. Francis, Pro Hac Vice, Lauren K.W. Brennan, Pro Hac Vice, John Soumilas, Pro Hac Vice, Francis Mailman Soumilas PC, Philadelphia, PA, James C. Shah, Miller Shah LLP, Irvine, PA, Kolin Tang, Miller Shah LLP, Irvine, CA, for Plaintiff. Mark B. Blocker, Pro Hac Vice, Sidley Austin LLP, Chicago, IL, Sean A. Commons, Sidley Austin LLP, Los Angeles, CA, for Defendants.
ORDER DENYING MOTION TO DISMISS COUNT 2 OF THE COMPLAINT [ECF NO. 40]
MAAME EWUSI-MENSAH FRIMPONG, United States District Judge
Before the Court is the Motion to Dismiss filed by Defendants ExamOne World Wide Inc. and Quest Diagnostics Clinical Laboratories Inc.
I. Background
A. Factual Background
Unless otherwise indicated, the following factual background is derived from the Complaint. Complaint, ECF No. 1, ("Compl.").
Defendants ExamOne World Wide Inc. ("ExamOne") and Quest Diagnostics Clinical Laboratories Inc. ("Quest Diagnostics") are specialty consumer reporting agencies ("CRA"). Compl. ¶ 7. ExamOne and Quest Diagnostics are in the business of gathering and selling reports about consumers which contain information about their medical histories, including detailed histories of medications prescribed by doctors. Id. These reports are referred to as "ScriptCheck" reports. Id. Defendants prepare ScriptCheck reports by gathering information from "some of the largest pharmacy benefits management (PBM) companies in the country" and other data contributors, such as Medical Information Bureau ("MIB"). Id. ¶ 10-11. They interpret the data, summarize and assemble it, categorize the prescriptions by health conditions, and communicate if an individual is a higher risk for insurance purposes if they see a particular provider. Id. ¶ 12. Defendants prepare and sell these reports for a fee to insurance companies in connection with applications for life insurance. Id. ¶ 14. Defendants are regulated by the Fair Credit Reporting Act ("FCRA"), which was enacted to ensure fair and accurate credit reporting and protect consumer privacy. 15 U.S.C.S. § 1681; Compl. ¶ 15. The reports that Defendants sell are consumer reports intended to be used to determine consumers' eligibility for insurance. Id.
Collectively, Defendants ExamOne and Quest Diagnostics will be referred to hereinafter as the "Defendants."
Defendants, however, sell inaccurate ScriptCheck reports that, for example, fail to properly list the medications prescribed to an applicant or constitute "mixed files." Id. ¶ 18-20. A "mixed file" is a consumer report in which some or all the information in the report pertains to an individual who is not the subject of the report. Id. ¶ 21. Defendants conceal the identities of the third-party sources from which they obtain prescription records. Id. ¶ 25. In their disclosures of information to consumers, Defendants fail to identify the sources from which they obtain information, including pharmacy benefit managers and other "data contributors." Id. ¶ 27. Thus, consumers have no way of knowing whether a particular item of information was retrieved directly from a pharmacy, from a pharmacy benefit manager, from a "data contributor" or even from another consumer reporting agency (CRA), and thus consumers cannot determine the true origin of the data Defendants sell about them, nor can they dispute any inaccuracies directly with the sources of the inaccurate information. Id. ¶ 28.
Plaintiff Lars F. Brauer ("Brauer") is a consumer about whom ExamOne sold inaccurate prescription and medical history information. Id. ¶ 34. In or about early December 2021, Brauer applied for life insurance with Sproutt Aktibo, Inc. ("Sproutt"). Id. ¶ 35. Sproutt requested a consumer report from Defendants about Brauer, including Brauer's prescription history, and provided ExamOne with Brauer's first and last name, social security number, and full date of birth. Id. ¶ 36.
On or about December 7, 2021, ExamOne prepared a report about Brauer, including prescription history, prescriber information, drug compliance data, and associated risk indicators, and sold it to Sproutt for a fee (the "Report"). Id. ¶ 37. The Report was grossly inaccurate because it included seven different medications that Brauer has never been prescribed or taken. Id. ¶ 40. Furthermore, the Report inaccurately identified prescribing physicians who had never treated Brauer, including a pediatric specialist listed with a medium risk indicator, and a home health provider with a high risk indicator. Id. ¶ 42. The seven inaccurate medications had been prescribed not to Brauer, but to his young son, who was 15 months old in December 2021 when Defendants prepared the Report. Id. ¶ 44. Further, the Report included a medical prescriber of Armaghan Azad, who had never prescribed any medication to Brauer, and the Report gave Brauer a risk score of "10." Id. ¶ 45.
At the hearing, the parties explained that the report contains entries for both prescriptions and prescribers, and each individual entry is given a risk score.
On or about December 1, 2021, Sproutt denied Brauer's application for life insurance due to the inaccurate Report. Id. ¶ 47. Brauer immediately contacted ExamOne and requested a copy of his file. Id. ¶ 48. On or about December 10, 2021, Defendants provided a response to Brauer's request, which consisted of a letter and a copy of the report provided to Sproutt (the "Letter"). Id. ¶ 49. In the Letter, Defendants state that the records in the Report came from "databases of pharmacy benefit managers and other data contributors" but failed to specifically identify the sources from which Defendants obtained any of the information included on the Report. Id. ¶¶ 50-51.
After receiving the copy of the inaccurate Report, Brauer contacted Defendants on or about December 13, 2021, to dispute the accuracy of the Report, specifically identifying each inaccurate record. Id. ¶ 53. Defendants conceded that some of the disputed information was inaccurate and removed it from Brauer's Report. Id. ¶ 54. However, Defendants did not remove all inaccurate information until after Brauer made further efforts. Id. ¶¶ 54-55.Brauer was able to move forward with his application through Sproutt after Defendants finally removed all inaccurate records from the Report. Id. ¶ 56. Because Defendants did not identify the sources from which they obtained the inaccurate prescription records at issue, Brauer could not contact those sources to determine the course of the inaccuracy to prevent further misreporting. Id. ¶ 57. He remained unable to do so as of the date this lawsuit was initiated. Id.
At the hearing the parties indicated that some additional information has been provided, but they were unclear if this constituted source information and on what basis the additional information was provided.
As a result of Defendants' conduct, Plaintiff has suffered damages in the form of (a) loss of insurance opportunity, (b) harm to reputation, (c) time spent to resolve the problem, (d) emotional distress, and (f) denial of statutorily mandated information necessary to prevent future misreporting. Id. ¶ 60.
B. Procedural History
On October 25, 2025, Brauer filed a complaint on his own behalf and on behalf against all other persons similarly situated against ExamOne and Quest Diagnostics, alleging three (3) causes of action: (1) violations of the FCRA, 15 U.S.C. § 1681e(b); (2) violations of the FCRA, 15 U.S.C. § 1681g(a)(2); and (3) defamation. Compl. ¶¶ 69-79.
On December 16, 2022, Defendants filed the instant Motion to Dismiss. ECF No. 40 ("Motion" or "Mot."). The Motion was fully briefed on March 9, 2023. ECF Nos. 49 ("Opp'n"); 50 ("Reply").
II. Applicable Law
A. Motions to Dismiss for Failure to State a Claim Under Federal Rule of Civil Procedure 12(b)(6)
Under Federal Rule of Civil Procedure Rule 12(b)(6), a party may file a motion to dismiss for "failure to state a claim upon which relief can be granted." FED. R. CIV. P. 12(b)(6). The purpose of Rule 12(b)(6) is to "enable defendants to challenge the legal sufficiency of claims asserted in a complaint." Rutman Wine Co. v. E. & J. Gallo Winery, 829 F.2d 729, 738 (9th Cir. 1987). A district court may properly dismiss a claim under Rule 12(b)(6) if the complaint fails to allege sufficient facts to support a cognizable legal theory. Caltex Plastics, Inc. v. Lockheed Martin Corp., 824 F.3d 1156, 1159 (9th Cir. 2016).
"To survive a motion to dismiss, a complaint must contain sufficient factual matter . . . to 'state a claim for relief that is plausible on its face.' " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)). "The plausibility standard is not akin to a 'probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. While a complaint does not need detailed factual allegations, a plaintiff's obligation to provide the grounds of his entitlement to relief requires more than "threadbare recitals of the elements of a cause of action." Id. "Determining whether a complaint states a plausible claim for relief is 'a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.' " Ebner v. Fresh, Inc., 838 F.3d 958, 963 (9th Cir. 2016) (quoting Iqbal, 556 U.S. at 679, 129 S.Ct. 1937).
When evaluating a complaint under Rule 12(b)(6), the court "must accept all well-pleaded material facts as true and draw all reasonable inferences in favor of the plaintiff." Caltex, 824 F.3d at 1159; Manzarek v. St. Paul Fire & Marine Ins. Co., 519 F.3d 1025, 1031 (9th Cir. 2008) ("We accept factual allegations in the complaint as true and construe the pleadings in the light most favorable to the nonmoving party."). This tenet, however, is "inapplicable to legal conclusions." Iqbal, 556 U.S. at 678, 129 S.Ct. 1937.
III. Discussion
A. Brauer's alleged request for a copy of his "file" triggered the obligation to disclose the sources of the information in his consumer report in light of the statutory definition of "file."
The FCRA obligates CRAs to provide certain information to consumers upon request. 15 U.S.C. § 1681g. The relevant provision reads as follows:
Every consumer reporting agency shall, upon request, . . . clearly and accurately disclose to the consumer:
All information in the consumer's file at the time of the request . . . .
(2) The sources of the information . . . .
(3) . . . Identification of each person . . . that procured a consumer report . . . .
(4) The dates, original payees, and amounts of any checks upon which is based any adverse characterization of the consumer, included in the file at the time of the disclosure.
(5) A record of all inquiries received by the agency during the 1-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer.
(6) If the consumer requests the credit file and not the credit score, a statement
that the consumer may request and obtain a credit score.15 U.S.C.A. § 1681g(a).
Defendants ExamOne and Quest Diagnostics contend that Brauer's request for a copy of his "file" does not trigger the FCRA's obligation to disclose the sources of the information contained in the Report because Brauer did not specifically request the "sources of information." MTD at 2. ExamOne asserts that it complied with Brauer's request by delivering a copy of his consumer report the same day as his request. Id. In response, Brauer contends that any request by a consumer, regardless of the specific words used, triggers the FCRA's obligation to provide all enumerated information in Section 1681g(a). Opp'n at 7.
Counsel indicated that this is consistent with the practice of the major three credit reporting agencies when a "report" is requested. The Court cannot take judicial notice of this as a fact and it would be inappropriate to do so in any event given that the request here was for the "file," not a "report."
There appears to be no binding authority addressing this precise question. This Court is therefore required to interpret the statute, and any statutory interpretation must begin with the plain language of the statutory provisions. See Dodd v. United States, 545 U.S. 353, 359, 125 S.Ct. 2478, 162 L.Ed.2d 343 (2005); Lamie v. United States Trustee, 540 U.S. 526, 534, 124 S.Ct. 1023, 157 L.Ed.2d 1024 (2004) ("[W]hen the statute's language is plain, the sole function of the courts - at least where the disposition required by the text is not absurd - is to enforce it according to its terms.").
The leading case in this Circuit is Tailford v. Experian Info. Sols., Inc., 26 F.4th 1092 (9th Cir. 2022). The plaintiffs in Tailford contended that the Defendant failed to include in its 1681g disclosures several information required by the FCRA to provide. 26 F.4th at 1097. Notably, the sources for the information in the plaintiffs' credit reports was not at issue. The data requested was not included in the individual consumer report because it was aggregate data and not individualized to any consumer. Id. at 1102. Similarly, Guimond v. Trans Union Credit Information Co., 45 F.3d 1329 (9th Cir. 1995) does not directly answer the question posed by the parties. The plaintiff in Guimond specifically requested the source information; the court therefore did not have occasion to opine on whether a request for the "file" was sufficient to request the source information. 45 F.3d at 1332. Defendants point to Steinmetz v. Am. Honda Fin. Corp., 835 F. App'x 199, 201 (9th Cir. 2020) as Ninth Circuit authority. They argue that the Ninth Circuit in Steinmetz affirmed a district court decision dismissing a 1681g(a)(2) claim because Plaintiff did not allege that she requested the source of information. However, they later acknowledge that the Ninth Circuit appeal arose from a sister case. The Steinmetz decision is also unpublished and non-binding. As a result, it doesn't appear that there is any binding authority explicitly discussing this question. ECF No. 49.
The Defendants' arguments fail under the plain language of the statute. The FCRA defines "file" as follows:
(g) The term "file", when used in connection with information on any consumer, means all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.15 U.S.C. § 1681a(g). In contrast, the FCRA defines "consumer report" as follows:
(d) Consumer report.
(1) In general. 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 [creditworthiness], credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected
in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for—15 U.S.C. § 1681a(d).
(A) credit or insurance to be used primarily for personal, family, or household purposes;
(B) employment purposes; or
(C) any other purpose authorized under section 604.
First, as the plain language demonstrates, "file" is defined extremely broadly. Therefore, unless the Defendants assert that the sources from which they obtained the information in Brauer's Report was not recorded and retained by them, these sources clearly fall within the plain language definition of "file," and should have been provided to Brauer when he requested his file.
The Court notes that in Tailford and Shaw, the Ninth Circuit clarified and narrowed the broad reach of the term "file." See Shaw v. Experian Info. Sols., Inc., 891 F.3d 749, 759 (9th Cir. 2018) ("A consumer's file includes all information on the consumer that is recorded and retained by a [CRA] that might be furnished, or has been furnished, in a consumer report on that consumer." (quotations and citations omitted)); Tailford, 26 F.4th at 1101-02 ("the word 'file' cannot be given the expansive definition suggested at first glance by the phrase 'might be furnished' [as used in Shaw]"). Neither case concerned the sources for the information in a consumer report and neither case suggested that these sources should not be required to be provided to a consumer upon request for his "file."
Second, "file" and "consumer report" have distinct definitions. The plain language demonstrates that "file" is not simply a "consumer report." It is contrary to the canons of statutory interpretation for the Defendants to answer that "file" simply means "report" when "file" was not defined as "report" nor given the same definition as the definition provided for "report." Compare 15 U.S.C. § 1681a(g) with 15 U.S.C. § 1681a(d). Furthermore, even the cases relied upon by the Defendants and counsel's own arguments at the hearing do not support what the Defendants allegedly did in this case—which is only provide the report. In fact, at the hearing, the parties agreed that some CRAs do provide source information in some of their products. It appears that ExamOne does not. The Court finds that there was no allegation or assertion in Tailford and Shaw that the information withheld was information that any CRA typically provided, and the cases therefore cannot be read that way.
For these reasons, this Court finds that a request for a "file" should yield the source information sought by Brauer.
This Court does not reach the question of whether a request for any one Section 1681g category of information triggers an obligation to provide all of the Section 1681g categories of information. This Court also does not reach the question whether a request for the "file" triggers the obligation to provide all of the 1681g categories. And it does not reach the question of what a request for a "report" would trigger. This Court only decides—and only needs to decide—whether the request for "file" includes the source information: It does.
Although the Court need not reach the question of whether a request for "file" requires a CRA to provide all of the enumerated categories of information in Section 1681g to be complaint, the reasoning of the court in Tailford suggests that it may. Tailford appears to contemplate a singular "1681g disclosure" containing everything listed in that provision, including the "file" and the "sources of information." The following discussion is illustrative:
To give consumers the opportunity to verify the accuracy of data maintained by CRAs, the FCRA requires CRAs to disclose certain information to the consumer upon request. The willful failure to comply with such a disclosure request gives rise to a private cause of action for actual or statutory damages. As relevant here, the disclosure must include the following three categories of information . . . [listing three of the categories under 1681g] . . . .Tailford, 26 F.4th at 1095-96 (emphasis added) (citations omitted). In addition, this Court also acknowledges the reasoning in Kelly v. RealPage, Inc., 47 F.4th 202 (3rd Cir. 2022). In Kelly, the court addressed the issue of whether a consumer's general request for information triggers the duty of a consumer reporting agency to provide all categories of information outlined in § 1681g(a)(1)-(6) of the FCRA. The court held that "a single generalized 'request' under § 1681g(a) entitles the consumer to all categories of information outlined in § 1681(a)(1)-(6)" because the purpose of the FCRA is to provide consumers with access to accurate and complete credit information. 47 F.4th at 202, 219-20.
B. The Court's reading of § 1681g(a)(2) is consistent with its purpose.
Moreover, protecting consumers and ensuring the accuracy of credit reports lie at the heart of the FCRA. The statute's purpose is to protect individuals from potential harms caused by misleading or incorrect credit information. TransUnion LLC v. Ramirez, 594 U.S. 413, 141 S. Ct. 2190, 2213, 210 L.Ed.2d 568 (2021) ("[T]he disclosure and summary-of-rights requirements are designed to protect consumers' interests in learning of any inaccuracies in their credit files so that they can promptly correct the files before they are disseminated to third parties."); Tailford, 26 F.4th at 1095-96 (explaining that the purpose of the 1681g requirement was "[t]o give consumers the opportunity to verify the accuracy of data maintained by CRAs"). The Court's interpretation of "file" to include the sources of information in a report is consistent with this purpose and with the Ninth Circuit's guidance that "[t]hese consumer oriented objectives support a liberal construction of the FCRA." Guimond, 45 F.3d at 1333.
ExamOne and Quest Diagnostics essentially contend that § 1681g(a)(2) should be read to exempt them from disclosing the requested information based on a technicality—use of the phrase "sources of information" rather than the broad term "file." At the hearing, counsel for the Defendants even conceded that a request for "everything you have on me" would properly trigger an obligation to provide the source information. Given that the definition of "file" comes very close to "everything you have on me," the Defendants' position is untenable. Their suggested reading would lead to absurd outcomes and frustrate the remedial character of the FCRA.
The Court therefore finds that interpreting § 1681g(a)(2) in a manner consistent with the purpose of the FCRA and avoiding absurd outcomes is in line with protecting and promoting the rights and interests of consumers in the context of credit reporting, as intended by Congress. The Court therefore finds that under § 1681g(a)(2), Brauer's request for a copy of his "file" triggered the Defendants' obligation to provide Brauer with the sources of information in the Report.
The Court therefore DENIES the Motion to Dismiss.
IV. Conclusion
For the foregoing reasons, the Court hereby ORDERS as follows:
1. The Motion is DENIED as to Count 2 of the Complaint.
IT IS SO ORDERED.