Benjamin v. Experian Info. Sols.
| Decision Date | 04 August 2021 |
| Docket Number | Civil Action 1:20-cv-02466-CC-RDC |
| Parties | CHARLYNDA BENJAMIN, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC., Defendant. |
| Court | U.S. District Court — Northern District of Georgia |
ORDER AND FINAL REPORT & RECOMMENDATION
Before the Court are the parties' Cross-Motions for Summary Judgment. (Docs. 48, 49). Plaintiff Charlynda Benjamin brings this action pursuant to 15 U.S.C. § 1681e(b) of the Fair Credit Reporting Act (“FCRA”), challenging Defendant Experian Information Solutions, Inc.'s (“Experian”) procedures for updating debts discharged through Chapter 7 of the Bankruptcy Code. For the reasons discussed below, the undersigned RECOMMENDS that the District Court DENY Plaintiff's Motion for Partial Summary Judgment (Doc. 48) and GRANT IN PART and DENY IN PART Defendant's Motion for Summary Judgment (Doc. 49).
On November 6, 2020, Plaintiff opened this action by filing the complaint against Experian for one count of violating 15 U.S.C. § 1681e(b) of the FCRA. (Doc. 1). Plaintiff alleged that Experian, a credit reporting agency (“CRA”) as defined in 15 U.S.C. § 1681a(f) failed to maintain reasonable procedures in reporting a debt that was discharged in her Chapter 7 bankruptcy.[1] According to the complaint, Plaintiff opened an account with MoneyLion, Inc. (the “Account”) in August 2019. She filed for bankruptcy in this district in September 2019. On January 6, 2020, her bankruptcy was discharged, but she discovered in May 2020 that Experian continued to reflect an owed balance of $330 and a past-due amount of $139 on the Account. Particularly relevant to this case, Plaintiff also alleged that Experian failed to follow procedures that it had previously agreed to in a 2008 class action settlement in the Central District of California regarding debts discharged in consumer bankruptcies (the “White Order”). She alleged that the inaccurate reporting prevented her from reestablishing her credit worthiness following bankruptcy, resulted in a denial in obtaining a credit card, and caused her stress and anxiety concerning her past debts and her ability to establish new credit.
Experian filed an answer to the complaint on July 27, 2020, and the case proceeded to discovery in August 2020. (Docs. 11, 15). Discovery concluded in January 2021. (See Docs. 29, 36).
On February 23, 2021, the parties filed cross-motions for summary judgment. (Docs. 48, 49). They have each filed response and reply briefs on the issues before the Court. (Docs. 52, 53, 54, 55). After considering the parties' arguments, the relevant authority, and the record evidence, the undersigned finds that this matter is ripe for review.
i. The White Order
In 2005, a group of consumers proceeding on behalf of a putative nationwide class sued the three major CRAs-Experian, Equifax Information Services, LLC (“Equifax”), and Trans Union, LLC (“Trans Union”)-in the Central District of California, asserting that the defendants had failed to maintain reasonable procedures to ensure the accurate reporting of debts that had been discharged in Chapter 7 bankruptcy. See White v. Experian Info. Sols., Inc., Case No. 05-CV-1073, 2008 WL 11518799, at *1 (C.D. Cal. Aug. 19, 2008). In August 2008, the parties entered into an approved settlement agreement “incorporating new procedures that make use of assumptions regarding the likely discharged status of certain pre-bankruptcy tradelines.” Id. at *3. The White court certified the class of plaintiffs as all consumers who had active credit files with the defendants prior to August 2008. Id. at *7 (defining the “23(b)(2) Settlement Class”). The White Order required the CRAs to update the credit reports for current class members, but it also mandated prospective relief for future consumers who had received a Chapter 7 bankruptcy discharge. See Id. at *7-12.
The updated procedures for future consumers included the following. Experian was required to update each “pre-bankruptcy judgment, tradeline, or Collection Account” in a consumer's file “[w]ithin 60 days of adding a public record entry reflecting a Chapter 7 discharge to a Consumer's credit File.” Id. at *9. For pre-bankruptcy tradelines that had been reported as open accounts, Experian “shall identify each tradeline . . . that is reported with a date opened that predates or is equal either to the month of or to the month prior to the Bankruptcy Date and is not reported in the File as a Closed Account.”[3] Id. at *10. For those tradelines, Experian agreed to “code the tradeline . . .to indicate that the account is discharged in the Consumer's Chapter 7 bankruptcy (e.g., by use of the terminology ‘included in bankruptcy') and shall update the tradeline . . . to reflect a zero-dollar or blank account balance and past due balance as to the Consumer who received the bankruptcy discharge, so as to indicate that no debt is due or owing by the Consumer after the discharge date.” Id. at *4, *10.
The White Order recognized that there was a “statistical likelihood” that “certain categories of pre-bankruptcy consumer debts have been discharged . . . without either the affected creditors or Consumers reporting the debt to Defendants.” Id. at *13. The Order also recognized that these procedures “will introduce some inaccurate, potentially harmful information onto the credit Files . . .of certain Consumers who would be subject to the new procedures on a prospective basis.” Id. This information “may impair those Consumers' creditworthiness, including their ability to use pre-bankruptcy accounts that they may have intended to exclude from the bankruptcy discharge and their ability to obtain post-bankruptcy credit.” Id. Despite that risk, the parties and the White court agreed that the updated procedures were reasonable, and the court concluded that they were “conclusively deemed to comply with the FCRA.” Id. at *14.[4]
i. Experian's Current Procedures
Experian receives its information on consumer bankruptcies electronically from a third-party vendor, LexisNexis. (Def.'s Statement of Material Facts (“DSMF”) ¶ 13, Doc. 49-1). LexisNexis provides information on consumer bankruptcy filings and discharges on either a daily or weekly basis. (Pl.'s Statement of Material Facts (“PSMF”) ¶¶ 12-13, Doc. 48-1; see also Rogers Dep. at 9-10, Doc. 48-9; Rogers Decl. ¶ 7, Doc. 49-4).[5] When Experian receives notice of a bankruptcy discharge for a consumer, it performs an automated “scrub” of the consumer's credit file to clear discharged debts, which then reflect the discharge and a $0 balance. (DSMF ¶ 14). A debt qualifies for the scrub if it (1) it has an opening date before filing of the consumer's bankruptcy petition, (2) its status is not finalized (e.g., closed or paid off), and (3) the account was delinquent by more than 90 days as of the date of the scrub. (DSMF ¶ 15). Experian's stated purpose for the 90-day delinquency threshold is to distinguish “consumers who have fallen behind on a debt but intend to catch up from those who have stopped paying a debt and are treating it as discharged.” (Rogers Decl. ¶ 16, Doc. 49-4). If a creditor independently informs Experian that a debt is discharged in bankruptcy, Experian will also update the consumer's file to reflect a $0 balance and the discharge. (Id. ¶ 21).
Every other month after the discharge, Experian performs a second scrub- which it calls a “look-back scrub”-that updates reported debts from the preceding 18 months that the initial scrub may have missed. (Id. ¶¶ 19-20). For instance, if an account was open at the time of a consumer's discharge but the consumer had made timely payments on the debt, then only the look-back scrub would update the trade line in the consumer's credit file. Sometime after the events of this case, Experian updated its procedures so that the initial scrub includes accounts that are delinquent by only 30 days.[6] (Doc. 52-7). Experian also changed the look-back scrub to run every month, instead of every two months. (Rogers Decl. ¶ 19, Doc. 49-4).
ii. The MoneyLion Account & Plaintiff's Chapter 7 Bankruptcy
In August 2019, Plaintiff received a secured loan of $1, 000 from MoneyLion, Inc., with $500 provided to her in cash and $500 set aside as collateral for the Account. (DSMF ¶¶ 26-28, Doc. 49-1). On September 27, 2019, Plaintiff filed a petition for voluntary bankruptcy in the U.S. Bankruptcy Court for the Northern District of Georgia, pursuant to Chapter 7 of Title 11 of the Bankruptcy Code. (PSMF ¶ 1, Doc. 48-1); see also In re Charlynda Benjamin, No. 19-65334-lrc (Bankr. N.D.Ga. Sept. 28, 2019) (“Bankr. Dkt.”), Doc. 1. The bankruptcy court entered a general discharge order in Plaintiff's case on January 13, 2020. (Bankr. Dkt., Doc. 12).
For September and October 2019, MoneyLion reported to Experian that the Account was current.[7] (DSMF ¶ 33). MoneyLion's records reflect that Plaintiff's first delinquency on the Account occurred on November 2, 2019, and it reported a delinquency for November 2019, December 2019, and January 2020. (Doc. 52-3). However, Plaintiff made at least one payment on the Account sometime around December 2019 or January 2020. (DSMF ¶ 34; Doc. 52-3 at 2). In March 2020, MoneyLion reported to Experian that the Account was delinquent by 60 days. (DSMF ¶ 35; see Doc. 48-6 at 3). In April 2020, Experian reported that the Account had been placed in collections. (Doc. 48-6 at 3).
Experian's initial scrub executed on or about January 20, 2020, which updated several tradelines to reflect Plaintiff's bankruptcy and a $0 balance. (Rogers Decl. ¶ 28, Doc 49-4). Experian's look-back scrub likely executed on June 1, 2020, and updated the Account to reflect that it had been...
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