595 F.3d 26 (1st Cir. 2010), 09-1214, Chiang v. Verizon New England Inc.

Docket Nº:09-1214.
Citation:595 F.3d 26
Opinion Judge:LYNCH, Chief Judge.
Party Name:Wen Y. CHIANG, Plaintiff, Appellant, v. VERIZON NEW ENGLAND INC., Defendant, Appellee.
Attorney:Dean Carnahan with whom Law Offices of Dean Carnahan were on brief for appellant. Joshua A. Lewin with whom William A. Worth and Prince, Lobel, Glovsky & Tye LLP were on brief for appellee.
Judge Panel:Before LYNCH, Chief Judge, LIPEZ and HOWARD, Circuit Judges.
Case Date:February 09, 2010
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

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595 F.3d 26 (1st Cir. 2010)

Wen Y. CHIANG, Plaintiff, Appellant,


VERIZON NEW ENGLAND INC., Defendant, Appellee.

No. 09-1214.

United States Court of Appeals, First Circuit.

February 9, 2010

Heard Dec. 9, 2009.

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Dean Carnahan with whom Law Offices of Dean Carnahan were on brief for appellant.

Joshua A. Lewin with whom William A. Worth and Prince, Lobel, Glovsky & Tye LLP were on brief for appellee.

Before LYNCH, Chief Judge, LIPEZ and HOWARD, Circuit Judges.

LYNCH, Chief Judge.

In July 2006, plaintiff Wen Y. Chiang sued his telecommunications company, Verizon New England Inc. (Verizon NE), in state court, alleging in part that the company had billed his account for telephone service he had not ordered. Chiang filed a second state court suit against Verizon NE in February 2007 over a billing dispute triggered by Chiang's conceded failure to pay telephone bills on two accounts, totaling approximately $200. Chiang's substantive billing disputes with Verizon NE were resolved in these state court lawsuits and are not at issue here.

In November 2006, Chiang brought this suit against Verizon NE in Massachusetts federal court, seeking more than $1 million for claimed violations of his rights under § 1681s-2(b) of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. , and under the Fair Debt Collection Practices Act (FDCPA), id. § 1692 et seq., as to Verizon NE's handling of the disputes resolved in state court. The district court granted summary judgment for Verizon NE on all of Chiang's claims in January 2009. Chiang v. Verizon New England, Inc., No. 06-cv-12144-DPW, 2009 WL 102707 (D.Mass. Jan. 13, 2009). Chiang appeals from the grant of summary judgment.

In particular, Chiang asserts that Verizon NE, as a furnisher of information, failed to adequately investigate disputes about the furnished information reported to it by consumer reporting agencies (CRAs), as required under the FCRA. 15 U.S.C. § 1681s-2(b). He also alleges that Verizon NE was a debt collector and its practices were abusive, in violation of the FDCPA. Id. § 1692a. Creditors are generally not liable under the FDCPA when collecting on their own accounts, but Chiang asserts that Verizon NE falls within a limited exception for creditors who collect their own debts under a name that suggests a third party is collecting the account. Id. § 1692a(6).

His claims raise several issues of first impression for our court. They include whether § 1681s-2(b) of the FCRA provides for a private right of action and the standards for asserting a claim under that section. We join other circuits in recognizing that under § 1681s-2(b) there is a private cause of action, that the investigation must be reasonable, that this test is objective, and that plaintiff bears the burden of proof. We further hold that a

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§ 1681s-2(b) claim requires plaintiff to show actual inaccuracies that a furnisher's objectively reasonable investigation would have been able to discover. However, we reject the defendant's argument that the restriction in an earlier section of the statute, id. § 1681s-2(a)(1)(D), which precludes reliance on a plaintiff's allegations for the purposes of that subsection, applies to a plaintiff's own assertions in support of his claim under § 1681s-2(b).

We affirm summary judgment for Verizon NE on the FCRA § 1681s-2(b) claims, because Chiang fails to raise a genuine issue of material fact on two issues on which he bears the burden: (1) that Verizon NE's investigation as a furnisher to CRAs was unreasonable and (2) that there were actual inaccuracies that Verizon NE could have detected in a reasonable investigation. We also affirm entry of summary judgment on Chiang's FDCPA claim because there is no material dispute of fact that Verizon NE is not a debt collector.


When reviewing a grant of summary judgment, we draw all reasonable inferences in favor of the nonmoving party " while ignoring conclusory allegations, improbable inferences, and unsupported speculation." Sutliffe v. Epping Sch. Dist., 584 F.3d 314, 325 (1st Cir.2009) (internal quotation marks omitted). Chiang's argument is that the court drew the wrong legal conclusions from the undisputed facts. Accordingly, " [w]e take the facts largely as described by the district court and from the record of the district court proceedings." Boston & Me. Corp. v. Mass. Bay Transp. Auth., 587 F.3d 89, 92 (1st Cir.2009).

A. Background: Chiang's Disputes with Verizon NE over His Telephone Service and the State Court Litigation

The merits of Chiang's disagreements with Verizon NE are not at issue in this case and have already been resolved in state court litigation. However, we outline these disputes to clarify the events that triggered the debt collection and credit reporting practices at issue in this federal case.

Chiang is the president of a residential construction and painting company in Massachusetts, which, Chiang says, also engages in international trade. At various points between 2005 and 2007, Chiang obtained telephone service on two lines from Verizon NE, a telecommunications company that conducts business in Massachusetts. During this period, Chiang had several disputes with Verizon NE over his service on both accounts. How Verizon NE handled these disputes is the subject of Chiang's federal litigation.

The first disagreement involved Chiang's assertion that Verizon NE charged him from July to November 2005 for long distance service on one line that he says he had not ordered. Chiang alleged in his affidavit, but provided no documentation, that he discussed these charges with a Verizon NE representative in November 2005 but that the company did not follow through on its promise to correct his bill.

A second conflict arose in early 2006, after Chiang temporarily switched his telephone service on both lines to another provider but continued to receive bills from Verizon NE. On May 16, 2006, Chiang sent two demand letters to Verizon NE, noting that he had switched to a different carrier, effective on February 8 of that year, and asking the company to adjust his bill accordingly.

Chiang switched his telephone service back to Verizon NE in the summer of 2006. Although his installation was scheduled

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for July 5, 2006, Chiang claims that Verizon NE did not install his service until July 13. On July 18, 2006, Chiang filed suit against Verizon NE in Massachusetts state court, alleging damages stemming from the delayed installation, as well as from the charges he continued to accrue after switching his service away from Verizon NE.

Chiang asserts that Verizon NE overcharged him for telephone service between July and December 2006, billing him for calls he did not make and for services he did not order while failing to credit him for payments he had made on his account. In August 2006, Chiang stopped paying his telephone bills on both telephone lines. He believed that he owed Verizon NE nothing and that the company instead owed him compensation for the amount that he had been overcharged.1

Chiang's affidavit says he discussed his concerns with a Verizon NE representative in late August 2006. In September 2006, Chiang wrote a letter to Verizon NE's attorney, in which he complained about his experience with Verizon NE customer service and alleged that the representative had told him his service would be discontinued if he did not pay his bill. He also threatened further legal action if Verizon NE continued to " abuse" him.

In December 2006, after providing notice of discontinuance, Verizon NE suspended Chiang's service for delinquent payment. The company later restored limited service to him. In January 2007, Chiang switched both disputed telephone lines to another provider. The following month, he filed a second state court suit against Verizon NE for alleged damages arising out of the suspension and partial restoration of his account.

The state court suits were consolidated and resolved primarily for Verizon NE on its motion for summary judgment.2

B. Verizon NE's Debt Collection and Credit Reporting Practices

Chiang's federal claims are about the debt collection and credit reporting practices of Verizon NE during and after the period of his contested service. We describe the evidence on those practices.

1. FDCPA Claim

We first review facts related to Chiang's claim that Verizon NE is liable under the FDCPA. Chiang alleges that Verizon NE was a debt collector, its debt collection practices were abusive, and it attempted to collect its own debts under a name that suggested the debts were being collected by a third party. In August 2006, Chiang began to receive letters and telephone calls from debt collection agencies seeking to collect on his delinquent accounts with Verizon NE, which totaled just over $200.3

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Chiang says that at least one of the collection agencies used profane, abusive language and called repeatedly, despite his request that he not be contacted by telephone.

The collection letters identified Chiang's creditor by a variety of names, including " Verizon-North," " Verizon North NE (MASS R)," and " Verizon New England Inc." Chiang also claims to have received notice from a collection agency and his " credit alert company" that " Verizon Massachusetts, Inc.," based in Columbus, Ohio, was seeking payment on his delinquent account. At the time, he believed that " Verizon Massachusetts, Inc." was an independent corporation that collected debts for Verizon NE.

2. FCRA Claim

Turning to facts pertinent to Chiang's FCRA claim, in addition to letters from debt collection agencies, Chiang received communications from CRAs, including Equifax and TransUnion, reflecting his delinquent Verizon NE accounts. Chiang responded to these credit reports with demand letters to the CRAs, in which he requested that the...

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