Gorman v. Wolpoff & Abramson, Llp, C 04-04507JW.

• Decision Date: 04 May 2005
• Docket Number: No. C 04-04507JW.,C 04-04507JW.
• Court: U.S. District Court — Northern District of California
• Parties: John GORMAN, Plaintiff(s), v. WOLPOFF & ABRAMSON, LLP, et al, Defendant(s).

370 F.Supp.2d 1005

John GORMAN, Plaintiff(s), v. WOLPOFF & ABRAMSON, LLP, et al, Defendant(s).

No. C 04-04507JW.

United States District Court, N.D. California, San Jose Division.

May 4, 2005.

COPYRIGHT MATERIAL OMITTED

Tomio B. Narita, Wineberg, Simmonds & Narita LLP, San Francisco.

ORDER GRANTING MOTIONS TO DISMISS

WARE, District Judge.

I. INTRODUCTION

John Gorman ("Gorman" or "Plaintiff") filed a Complaint against MBNA and MBNA's attorney, Wolpoff & Abramson, alleging libel and violations of various state and federal fair credit reporting and debt collection statutes. MBNA and Wolpoff & Abramson (collectively "Defendants") each filed a Motion to Dismiss the Complaint. Plaintiff failed to file an Opposition, and instead filed a First Amended Complaint. The Court dismissed Plaintiff's First Amended Complaint, but has granted a Motion for Reconsideration because, technically, the First Amended Complaint rendered moot Defendants' Motions to Dismiss. Defendants have each filed a Motion to Dismiss the First Amended Complaint. Based on all papers filed to date and the hearing conducted on April 25, 2005, the Court grants Defendants' Motions to Dismiss.

II. BACKGROUND

Gorman's First Amended Complaint ("FAC") alleges the following facts. Gorman is an attorney and a former holder of a MBNA Visa credit card. (FAC ¶ 4.) "In or about 2003," Gorman "timely" gave notice that he disputed the legitimacy of "certain charges" that were posted to his account. (FAC ¶¶ 7, 8.) Upon receiving the written notification, MBNA temporarily removed the charges, but later reposted them and refused to remove them again. (FAC ¶ 8.) MBNA retained Wolpoff & Abramson, a law firm that handles debt collection cases, to initiate legal action against Gorman. (FAC ¶¶ 2, 9.) From 2003 through 2004, MBNA and Wolpoff & Abramson placed multiple "threatening and harassing" telephone calls to Gorman's residence and office regarding his alleged debt. (FAC ¶ 10.) Gorman requested in writing that they cease making such telephone communications. (FAC ¶ 10.)

In Spring 2004, Gorman discovered that MBNA was "falsely and inaccurately reporting" to various credit reporting agencies that he was delinquent on his obligations to MBNA, without reporting that the debt was "disputed." (FAC ¶¶ 11, 12.) Gorman wrote MBNA, requesting that it correct the information. (FAC ¶ 10.) He also wrote the credit reporting agencies to notify them that MBNA's information was "disputed, mistaken and [should] be corrected." (FAC ¶ 12.) The credit reporting agencies, in turn, notified MBNA about Gorman's dispute. (FAC ¶ 12.) MBNA did not conduct a "complete and sufficient investigation,"¹ and continues to report Gorman's debt as delinquent without indicating that the charges are disputed. (FAC ¶ 12.)

Gorman filed the underlying First Amended Complaint, asserting against MBNA claims based on libel and violations of California Civil Code § 1785.25(a) (furnishing incomplete or inaccurate information to a credit reporting agency), the Fair Credit Reporting Act ("FCRA") (15 U.S.C. §§ 1681n (willful violation of the FCRA), 1681o (negligent violation of the FCRA)) and the Fair Debt Collection Practices Act ("FDCPA") (15 U.S.C. §§ 1692c (improper debt collection communications),² 1692d (harassment or abuse)).³ The First Amended Complaint also asserts a claim against Wolpoff & Abramson for violating the FDCPA. (FAC ¶¶ 34-36.) MBNA and Wolpoff & Abramson, each filed a Motion to Dismiss the First Amended Complaint based on Fed. R. Civ. P. 12(b).

III. STANDARDS

A complaint can be dismissed if it fails to state a claim upon which relief can be granted. Fed. R. Civ. P. 12(b)(6). A complaint can fail to state a claim if it fails to allege sufficient facts under a cognizable legal claim. Robertson v. Dean Witter Reynolds. Inc., 749 F.2d 530, 534 (9th Cir.1984). In ruling on a motion to dismiss, the Court must accept all allegations of material fact as true and must construe those allegations in the light most favorable to the non-moving party. Western Reserve Oil & Gas Co. v. New, 765 F.2d 1428, 1430 (9th Cir.1985). Any existing ambiguities must be resolved in favor of the pleading. Walling v. Beverly Enterprises, 476 F.2d 393, 396 (9th Cir.1973). A Rule 12(b)(6) motion must not be granted unless it appears beyond doubt that the plaintiffs can prove no set of facts in support of their claim which would entitle them to relief. Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957). A motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. Gilligan v. Jamco Development Corp., 108 F.3d 246, 249 (9th Cir.1997).

IV. DISCUSSION

Defendant MBNA argues that Plaintiff's libel and Cal. Civ. Code § 1785.25 claims should be dismissed pursuant to Fed. R. Civ. P. 12(b)(6) because they are preempted by the FCRA. (Mem. of P. & A. in Supp. of MBNA's Mot. to Dismiss FAC at 3-7.) MBNA also argues that the FCRA claims should be dismissed because there is no private right of action and, even if there is, sufficient facts have not been alleged to state a claim. (Id. at 8-10.) Defendant Wolpoff & Abramson argues that the FDCPA claim should be dismissed because the First Amended Complaint contains nothing except conclusory allegations. (Mem. of P. & A. in Supp. of Wolpoff & Abramson's Mot. to Dismiss FAC at 3-8.) The Court will address each claim seriatim.

A. Preemption

Not all state claims related to credit reporting are preempted by the FCRA. 15 U.S.C. § 1681t(a). Subsection 1681t(b), however, preempts all state claims to the extent that they regulate the responsibilities of persons who furnish information to consumer reporting agencies. Compare 15 U.S.C. § 1681t(b)(1)(F) (preempting state law that imposes requirements or prohibitions on subject matter regulated by § 1681s-2) and 15 U.S.C. § 1681s-2 (regulating the responsibilities of persons who furnish information to consumer reporting agencies)

1. Plaintiff's Libel Claim Is Not Preempted, But Is Not Sufficiently Stated

MBNA argues that Plaintiff's libel claim is preempted by § 1681t(b) since it attempts to regulate MBNA's responsibilities as a furnisher of information to credit reporting agencies. (Mem. P. & A. in Supp. of MBNA's Mot. to Dismiss FAC at 3-4.) Plaintiff does not appear to dispute that his claim would be preempted if § 1681t(b) were the only relevant provision. Rather, Plaintiff argues that his libel claim is not preempted by § 1681t(b) because another subsection of the FCRA, § 1681h(e), specifically allows him to state a cognizable libel claim by alleging "malice" or "willful intent to injure." (Plaintiff's Mem. P. & A. in Opp'n to MBNA's Mot. to Dismiss FAC at 10, 11.)

The FCRA contains multiple preemption provisions — some general, some specific. Gordon v. Greenpoint Credit, 266 F.Supp.2d 1007, 1013 (S.D.Iowa 2003). Subsection 1681t(b) is a general preemption provision. Id. (noting that § 1681t is entitled "General exceptions"). Subsection 1681h(e), by contrast, is a specific provision that preempts, inter alia, certain defamation claims. Id. (finding that § 1681h(e) is a much narrower preemption provision than § 1681t(b)). Section 1681h provides in relevant part:

(e) Limitation of liability.... [N]o consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against ... any person who furnishes information to a consumer reporting agency ... except as to false information furnished with malice or willful intent to injure such consumer.

15 U.S.C. § 1681h (2005). Subsection 1681h(e) preempts only defamation actions that do not allege malice or willful intent to injure. Swecker v. Trans Union Corp., 31 F.Supp.2d 536, 539 (E.D.Va.1998).

Gorman's libel claim is not preempted by the FCRA because it alleges malice or willful intent to injure, even if it otherwise would be preempted by § 1681t(b). One canon of statutory construction mandates that a general statute yield when there is a specific statute involving the same subject matter. In re Garmon, 572 F.2d 1373, 1376 (9th Cir.1978). Section 1681h(e) is a more specific statute, which preempts only a limited number of common law torts rather than all state claims that regulate furnishers of information to credit reporting agency. Consequently, § 1681t(b) must yield if it involves the same subject matter as § 1681h(e). Here, it does. The Court can analyze MBNA's alleged reporting of libelous information under either subsection. Thus, § 1681t(b) must yield to § 1681h(e). Section 1681h(e) permits Gorman to bring his claim for libel so long as he alleges maliciousness or willfulness.

The Court realizes that its holding today conflicts with Davis v. Maryland Bank, which holds that § 1681t(b)(1)(F) preempts all state claims based on conduct falling within the coverage of 1681s-2, even malicious and willful tortious conduct. 2002 WL 32713429 (N.D.Cal.2002). In Davis, the Court reconciled the apparent conflict between the general and specific statutes by applying § 1681h(e) only to conduct that is not already governed by 1681s-2 and thereby preempted by 1681t(b). Davis at *14 (concluding that where a furnisher of information calls a consumer a "liar", such conduct is not governed by 1681s-2 and, therefore, a claim for intentional inflection of emotional distress may be filed; however, where a furnisher of information fails to properly investigate information disclosed to a credit reporting agency, such conduct is governed by 1681s-2 and, therefore, any claim for negligence is preempted). The Court is not persuaded by the logic in Davis because it violates a canon of statutory construction by allowing a general statute to trump a specific statute.

Gorman's libel claim is not preempted, but its dismissal is still proper because Gorman fails to allege sufficient facts. Robertson, 749 F.2d at 534. Gorman uses non-descriptive phrases (e.g., "[i]n or...