Chuluunbat v. Experian Info. Solutions, Inc., 20-2373

• Decision Date: 15 July 2021
• Docket Number: No. 20-2776, No. 20-2392, No. 20-3000,No. 20-2373, No. 20-2775, No. 20-3351, No. 20-3368,20-2373
• Citation: 4 F.4th 562
• Parties: Unensaikhan CHULUUNBAT, Plaintiff-Appellant, v. EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants-Appellees. Juan Rodas, Plaintiff-Appellant, v. TransUnion Data Solutions LLC, Defendant-Appellee. Anibal Molina, Plaintiff-Appellant, v. Trans Union, LLC, Defendant-Appellee. Everardo Hoyos, Plaintiff-Appellant, v. Equifax Information Services, LLC and TransUnion LLC, Defendants-Appellees. Olamide Soyinka, Plaintiff-Appellant, v. Equifax Information Services, LLC, Defendant-Appellee. Adel Amorah, Plaintiff-Appellant, v. Equifax Information Services, LLC and TransUnion Data Solutions LLC, Defendants-Appellees. Edward Cowans, Plaintiff-Appellant, v. Equifax Information Services, LLC, and TransUnion Data Solutions LLC, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

4 F.4th 562

Unensaikhan CHULUUNBAT, Plaintiff-Appellant,

v.EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants-Appellees.

Juan Rodas, Plaintiff-Appellant,

v.TransUnion Data Solutions LLC, Defendant-Appellee.

Anibal Molina, Plaintiff-Appellant,

v.Trans Union, LLC, Defendant-Appellee.

Everardo Hoyos, Plaintiff-Appellant,

v.Equifax Information Services, LLC and TransUnion LLC, Defendants-Appellees.

Olamide Soyinka, Plaintiff-Appellant,

v.Equifax Information Services, LLC, Defendant-Appellee.

Adel Amorah, Plaintiff-Appellant,

v.Equifax Information Services, LLC and TransUnion Data Solutions LLC, Defendants-Appellees.

Edward Cowans, Plaintiff-Appellant,

v.Equifax Information Services, LLC, and TransUnion Data Solutions LLC, Defendants-Appellees.

No. 20-2373

No. 20-2392

No. 20-2775

No. 20-2776

No. 20-3000

No. 20-3351

No. 20-3368

United States Court of Appeals, Seventh Circuit.

Argued April 22, 2021

Decided July 15, 2021

Celetha C. Chatman, Michael J. Wood, Attorneys, Community Lawyers LLC, Chicago, IL, Daniel Richard Brown, Attorney, Main Street Attorney, LLC, Chicago, IL, for Plaintiffs-Appellants.

Jules H. Cantor, Adam William Wiers, Christopher A. Hall, Attorneys, Jones Day, Chicago, IL, for Defendant-Appellee Experian Information Solutions, Inc.

Rodney L. Lewis, Claire Brennan, Attorneys, Polsinelli PC, Chicago, IL, for Defendant-Appellee Equifax Information Services, LLC.

Camille R. Nicodemus, Scott Edwin Brady, Laura K. Rang, Kari A. Morrigan, William R. Brown, Attorneys, Schuckit & Associates, P.C., Zionsville, IN, for Defendant-Appellee TransUnion Data Solutions LLC.

Before Wood, Brennan, and St. Eve, Circuit Judges.

Brennan, Circuit Judge.

In these consolidated cases, plaintiffs owe consumer debts they claim are not owned by the creditors listed on their credit reports. They approached the consumer reporting agencies—defendants here—and requested an investigation of their claims. The consumer reporting agencies contacted the purported creditors for verification that they owned the debts, which the creditors confirmed. Although informed of these confirmations, plaintiffs did not believe that the consumer reporting agencies investigated the claims as thoroughly as 15 U.S.C. § 1681i of the Fair Credit Reporting Act (FCRA) requires, so they sued. But in each case the district court either dismissed their claims or granted judgment on the pleadings to the creditors.

We are tasked in this FCRA context with discerning the sometimes-murky boundary between "law" and "fact." We hold that plaintiffs’ allegations that the creditors did not own their debts are not factual inaccuracies that the consumer reporting agencies are statutorily required to guard against and reinvestigate, but primarily legal issues outside their competency. So we affirm the district court's decision in each case.

I

In each of these disputes (as well as those pending resolution on the outcome of this case), the facts present a similar pattern. Each plaintiff incurred a consumer credit card debt.¹ The debts were purportedly sold and assigned to other companies—creditors—and this change appeared on plaintiffs’ credit reports.² The creditors then attempted to collect the debts from the plaintiffs.

Rodas, Molina, and Amorah were sued by Midland, their alleged new creditor, who demanded payment. They defended those lawsuits by claiming that Midland did not own their debts, demanding proof of ownership, and requesting arbitration. In each case, Midland moved to voluntarily dismiss the lawsuit before arbitration was set to commence.

Chuluunbat, Hoyos, Soyinka, and Cowans—plaintiffs who were not sued—sent letters to their creditors, contending that the creditors did not own their debts. These creditors either did not respond or replied that they owned the debts but did not provide any assignment agreement from the previous creditor.

After dismissal of these lawsuits (or, if the plaintiff was not sued, after the collection attempts), the plaintiffs contacted the "Big Three" consumer reporting agencies: Experian, TransUnion, and Equifax. The plaintiffs requested that the consumer reporting agencies reinvestigate the accuracy of their credit reports to determine if the purported creditors owned these debts. In response, the consumer reporting agencies sent an inquiry to each creditor to verify ownership. The creditors all confirmed that the reports were correct and that they owned the plaintiffs’ debts. The creditors did not, however, produce the original sale or assignment agreement in any case. After receiving this confirmation, the consumer reporting agencies informed the plaintiffs that no further steps would be taken to investigate.

Plaintiffs then sued the consumer reporting agencies, claiming that the presence of the allegedly inaccurate debt ownership information in their credit reports and the consumer reporting agencies’ failure to fully investigate their claims violated § 1681e(b) and § 1681i of the Fair Credit Reporting Act. 15 U.S.C. § 1681, et seq . In each case, the district court entered judgment on the pleadings or dismissed the lawsuits. Relying on Denan v. Trans Union LLC , 959 F.3d 290, 296 (7th Cir. 2020) —which held that a consumer's defense to a debt is a legal question to resolve in an action against the creditor, not a duty imposed on the consumer reporting agencies by the FCRA—each court agreed that the plaintiffs did not plead the type of inaccuracies in their credit reports that the consumer reporting agencies can correct.

In each of the consolidated cases the district court reasoned differently but came to the same conclusion. As to Rodas and Cowans, the court determined that whether the creditors owned the debts was a question of law and therefore categorically outside of the consumer reporting agencies’ statutory duties. As for Chuluunbat, the court instead decided that ownership of a debt was a mixed question of law and fact, but it also concluded that the consumer reporting agencies were not required to reinvestigate the claim. For Soyinka, Molina, Hoyos, and Amorah, the court eschewed a rigid distinction between law and fact and focused on the institutional competency of the consumer reporting agencies to resolve the claims. Whether the creditors owned the debts was a question outside the competencies of the consumer reporting agencies, the court decided, and not an inaccuracy to correct through reinvestigation.

Plaintiffs appealed, and we consolidated the cases for review. In some cases, the district court granted judgments on the pleadings, and in others motions to dismiss, but our review of either disposition is de novo. Gill v. City of Milwaukee , 850 F.3d 335, 339 (7th Cir. 2017).

II

The Fair Credit Reporting Act "imposes duties on consumer reporting agencies and furnishers in a manner consistent with their respective roles in the credit reporting market." Denan , 959 F.3d at 294.³ Furnishers—the creditors here—provide consumer credit data to the consumer reporting agencies, and the consumer reporting agencies reflect that information on a consumer's credit report. Id . The statutory scheme primarily tasks furnishers with providing accurate information to the consumer reporting agencies, but 15 U.S.C. § 1681e(b) also requires that consumer reporting agencies "follow reasonable procedures to assure maximum possible accuracy of" information in credit reports. And if a consumer disputes "the completeness or accuracy of any item of information contained in" a credit report, a consumer reporting agency must "conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate." 15 U.S.C. § 1681i(a)(1)(A). A threshold requirement for claims under both sections is that there must be an inaccuracy in the consumer's credit report.

In Denan v. Trans Union LLC , this court held that "inaccurate information under § 1681i ... mean[s] factually inaccurate information, as consumer reporting agencies are neither qualified nor obligated to resolve legal issues." 959 F.3d at 296. Denan recognized a dichotomy between factual inaccuracies that consumer reporting agencies are statutorily obligated to reinvestigate, and "legal inaccuracies" which are outside the competency of the consumer reporting agencies. Id.⁴ Other circuits employ this same framework for interpreting § 1681i. See Wright v. Experian Info. Sols. , Inc. , 805 F.3d 1232, 1242 (10th Cir. 2015) ; Carvalho v. Equifax Info. Servs. , LLC , 629 F.3d 876, 892 (9th Cir. 2010). ("We agree that reinvestigation claims are not the proper vehicle for collaterally attacking the legal validity of consumer debts."); DeAndrade v. Trans Union LLC , 523 F.3d 61, 68 (1st Cir. 2008).

The plaintiffs argue that whether the creditors were assigned, and now own, their debts is a factual question that triggers the twin statutory obligations. They rely on Chemetall GMBH v. ZR Energy , Inc ., 320 F.3d 714, 720–21 (7th Cir. 2003), for the proposition that whether parties intended to assign something is a question of fact to be decided by a jury in court. By the plaintiffs’ account, all that the consumer reporting agencies need to ascertain is whether a purchase and sale agreement for each of the plaintiffs’ debts exists. If one does not, the plaintiffs argue, the consumer reporting agencies could conclude that the creditor does not own the debt. They see requesting the purchase and sale agreement as a straightforward factual inquiry.

A clear line has not been drawn between legal and factual inaccuracies in the FCRA context. Decisions of this court and other circuits do provide helpful guideposts. The paradigmatic example of a legal dispute is when a consumer argues that although his debt exists and is reported in the right amount, it is invalid due to a violation of law. In Denan , for example, the plaintiff did not dispute whether a debt existed or its amount, but instead contended he was not required to pay the debt because it was "legally invalid." 959 F.3d at 293. We concluded that the...