Beseke v. Equifax Info. Servs. LLC

• Decision Date: 22 November 2019
• Docket Number: Civil No. 17-4971 (DWF/KMM)
• Citation: 420 F.Supp.3d 885
• Parties: Kurt A. BESEKE, Plaintiff, v. EQUIFAX INFORMATION SERVICES LLC, Defendant.
• Court: U.S. District Court — District of Minnesota

420 F.Supp.3d 885

Kurt A. BESEKE, Plaintiff,

v.EQUIFAX INFORMATION SERVICES LLC, Defendant.

Civil No. 17-4971 (DWF/KMM)

United States District Court, D. Minnesota.

Signed November 22, 2019

E. Michelle Drake, Esq., and John G. Albanese, Esq., Berger & Montague, PC; and John H. Goolsby, Esq., Goolsby Law Office, LLC, counsel for Plaintiff.

Billie B. Pritchard, Esq., Meryl W. Roper, Esq., and Zachary Andrew McEntyre, Esq., King & Spalding LLP; and Christopher J. Haugen, Esq., Joseph W. Lawver, Esq., and Terri A. Running, Esq., Messerli & Kramer P.A., counsel for Defendant.

MEMORANDUM OPINION AND ORDER

DONOVAN W. FRANK, United States District Judge

INTRODUCTION

This matter is before the Court on Plaintiff Kurt A. Beseke's ("Beseke")¹ Motion for [partial] Summary Judgment (Doc. No. 61) and Defendant Equifax Information Services LLC's ("Equifax") Motion for Summary Judgment.² (Doc. No. 76.) For the reasons set forth below, the Court grants in part and denies in part Beseke's motion, and denies Equifax's motion.

BACKGROUND

Equifax is a consumer reporting agency ("CRA") regulated by the Fair Credit Reporting Act ("FCRA") pursuant to 15 U.S.C. § 1681, et seq. (Doc. No. 32 ("Sec. Am. Compl.") ¶ 13; see also 15 U.S.C. § 1681, et seq. ) Beseke alleges that Equifax violated certain provisions of the FCRA in connection with its alleged reporting of his Chase Bank mortgage account ("Chase Mortgage").³ (See generally Sec. Am. Compl.)

Specifically, Beseke alleges that Equifax willfully and/or negligently violated the "obsolescence" provision of the FCRA pursuant to 15 U.S.C. § 1681c(a) by including information about his Chase Mortgage in one or more consumer reports after the period allowed by statute.⁴ (Sec. Am. Compl. ¶¶ 66-70 ("Count I"); see also 15 U.S.C. § 1681c(a).) He also alleges that Equifax willfully and/or negligently violated the "accuracy" provision of the FCRA pursuant to § 1681e(b) by failing to include a "Date of First Delinquency" in consumer reports (Sec. Am. Compl. ¶¶ 71-75 ("Count II"); see also 15 U.S.C. § 1681e(b) ), and that Equifax willfully and/or negligently violated the "reinvestigation" provision of the FCRA pursuant to § 1681i by failing to conduct a reasonable reinvestigation when Beseke disputed the accuracy of information about his Chase Mortgage and by failing to modify his file thereafter (Sec. Am. Compl. ¶¶ 76-80 ("Count III"); see also 15 U.S.C. § 1681i ). Beseke moves for summary judgment on Count I. Equifax moves for summary judgment on all counts.

1. The Delinquency

From at least October 2008 through June 2011, Beseke was behind on his Chase Mortgage. (Sec. Am. Compl. ¶ 32.) While he was delinquent, Beseke alleges that he received collection letters, including those that stated the letters were from "a debt collector" "attempt[ing] to collect a debt." (Doc. No. 72 ("Beseke Memo."); see also Doc. No. 63 ("Albanese Decl. 1") ¶ 3, Doc. No. 64, Ex. 1 ("Collection Letters").) In 2011, Beseke entered into a loan modification with Chase, brought his Chase Mortgage current, and eventually paid it off in 2014. (Doc. No. 87 ("Beseke Dep.") 51-52; Sec. Am. Compl. ¶ 31; Doc. No. 92 at 5.)

On or around March 2, 2017, Beseke obtained a credit disclosure from Equifax that reflected a history of "past due" for certain months during the period his Chase Mortgage was delinquent. (Albanese Decl. 1 ¶ 3, Doc. No. 66, Ex 6 ("Leslie Dep.) at 37- 38.) Beseke alleges that even applying the longer seven years and 180 days obsolescence period of § 1681c(c), Equifax could not report the derogatory trade history stemming from the delinquency period that commenced in October 2008 any later than April 2016. (Beseke Memo. at 20; see also Sec. Am. Compl. ¶¶ 37-39.)

Beseke disputed the reporting of his Chase Mortgage to Equifax in March 2017. (Albanese Decl. 1 ¶ 3, Doc. No. 68, Ex. 6 ("Willis Dep.") at 61-65, Exs. 15-16).) Beseke also alleges that while the obsolete information appeared on his credit file, Equifax sold credit reports reflecting the derogatory history to others. (Beseke Memo. at 10; see also Willis Dep. at 24-26, Exs. 14, 17.) Beseke contends that he was upset by Equifax's reporting and subsequent refusal to fix the report upon his dispute, and that it caused him stress, anger, and frustration. (Beseke Dep. at 140-142.)

2. Equifax's Reporting System

Equifax's core online credit reporting database is called "ACRO." (Leslie Dep. at 19.) ACRO includes encoded algorithms that automatically delete obsolete information at multiple stages. (Id. at 83.) Equifax alleges that it relies on creditors to report accurate information including the date of first delinquency ("DOFD") and any collection activity, and determines obsolescence accordingly.⁵ (Id. at 109, 137, 167-168.) Specifically, Equifax alleges that it has no independent ability to verify whether a consumer has missed a payment or if an account has been placed for collection. (Doc. No. 77 ("Equifax Memo.") at 5-6.)

According to Equifax, if a creditor notifies Equifax that a consumer's account has been placed for collection, and the consumer never brings the account current, Equifax deletes the account, in its entirety, six years and eleven months after the DOFD. (Id. at 6; see also Leslie Dep. at 86-87.) If a consumer's account was delinquent but then becomes current, however, Equifax does not remove the account in its entirety. (Id. at 7; see also Leslie Decl. ¶¶ 9-10.) Instead, Equifax removes the DOFD, and replaces it with the date of the consumer's last payment on the account—"date of last activity."⁶ (Id. ; see also Leslie Dep. at 70-72, 173-175.) For accounts that are delinquent but that are not charged off or placed for collection, Equifax claims that it deletes each individual payment six years and eleven months after the DOFD. (Id. at 7; see also Leslie Decl. ¶¶ 9-10.)

Equifax alleges that Chase first reported that Beseke was delinquent on the Chase Mortgage in October 2008, and continued to report that he was late on his mortgage payments each month through June 2011. (Id. at 8; see also Leslie Dep. at 70.) Equifax further alleges that it was never informed that the Chase Mortgage was placed for collection. (Id. at 8-9; see also Leslie Dep. at 173.) When Beseke brought the Chase Mortgage current around August 2011, Chase began reporting that the account was current, and reported a date of last activity as July 2011. (Leslie Dep. at 73-74.)

When Beseke disputed the allegedly obsolete information that appeared in 2017, Equifax claims that it verified its dates with Chase pursuant to its automated online dispute system and confirmed that its reporting was accurate. (Equifax Memo. at 12; see also Willis Dep. at 50-51.) Accordingly, Equifax maintains that it did not violate the FCRA because it never reported a single late payment that was more than seven years old. (Id. at 7.) Equifax further maintains that the information it reported was accurate, and that it conducted a reasonable reinvestigation when Beseke disputed its reporting. (Equifax Memo. at 3-4.)

DISCUSSION

I. Legal Standard

Summary judgment is appropriate if the "movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Courts must view the evidence and all reasonable inferences in the light most favorable to the nonmoving party. Weitz Co., LLC v. Lloyd's of London , 574 F.3d 885, 892 (8th Cir. 2009). However, "[s]ummary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed ‘to secure the just, speedy, and inexpensive determination of every action.’ " Celotex Corp. v. Catrett , 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (quoting Fed. R. Civ. P. 1 ).

The moving party bears the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Enter. Bank v. Magna Bank of Mo. , 92 F.3d 743, 747 (8th Cir. 1996). The nonmoving party must demonstrate the existence of specific facts in the record that create a genuine issue for trial. Krenik v. Cty. of Le Sueur , 47 F.3d 953, 957 (8th Cir. 1995). A party opposing a properly supported motion for summary judgment "may not rest upon mere allegation or denials of his pleading, but must set forth specific facts showing that there is a genuine issue for trial." Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 256, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

II. Fair Credit Reporting Act

The FCRA was crafted to protect consumers from the transmission of inaccurate information about them, and to establish credit reporting practices that utilizes accurate, relevant, and current information in a confidential and responsible manner." Cortez v. Trans Union, LLC , 617 F.3d 688, 706 (3d Cir. 2010) (internal citations omitted). " ‘[C]onsumer oriented objectives support a liberal construction of the FCRA,’ and any interpretation of this remedial statute must reflect those objectives." Cortez , 617 F.3d at 706 (quoting Guimond v. Trans Union Credit Info. Co. , 45 F.3d 1329, 1333 (9th Cir. 1995) ).

One of the ways the FCRA protects consumers is by barring CRAs from reporting obsolete information:

[N]o consumer reporting agency may make any consumer report containing any of the following items of information:

(4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years.

(5) Any adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years.

15 U.S.C. §§ 1681c(a)(4); 1681c(a)(5).⁷ For delinquent accounts that are placed for collection or charged to profit and loss, the seven year period begins to run 180 days from the commencement of the delinquency. 15 U.S.C. § 1681a(c)(1). The FCRA "reflects a policy choice to allow dated adverse credit data to ‘age off’ a credit report because such information might...