Himmelstein v. Comcast of the Dist., L.L.C.

• Decision Date: 20 March 2013
• Docket Number: Civil Action No. 12–1475(JEB).
• Citation: 931 F.Supp.2d 48
• Parties: Marc HIMMELSTEIN, Plaintiff, v. COMCAST OF THE DISTRICT, L.L.C., et al., Defendants.
• Court: U.S. District Court — District of Columbia

931 F.Supp.2d 48

Marc HIMMELSTEIN, Plaintiff,

v.COMCAST OF THE DISTRICT, L.L.C., et al., Defendants.

Civil Action No. 12–1475(JEB).

United States District Court, District of Columbia.

March 20, 2013.

Nathan I. Finkelstein, Finkelstein & Goldman, P.C., Bethesda, MD, Matthew E. Feinberg, Finkelstein & Goldman, PC, Washington, DC, for Plaintiff.

Adam Shartzer Caldwell, Leslie Gallagher Moylan, Davis Wright Tremaine, LLP, Washington, DC, Ronald S. Canter, The Law Offices of Ronald S. Canter, Rockville, MD, for Defendant.

MEMORANDUM OPINION

JAMES E. BOASBERG, District Judge.

As the Court explained in an earlier Opinion, a $220 dispute over an unreturned cable modem has mushroomed into a federal lawsuit involving complex issues of tort, federal debt-collection laws, and preemption. See Himmelstein v. Comcast of the District, LLC, ( Himmelstein I ), 908 F.Supp.2d 49, 2012 WL 6103219 (D.D.C. Dec. 10, 2012). To quickly recap, Plaintiff Marc Himmelstein's failure to return a modem when terminating his cable service ultimately led to a negative credit report and $26,000 in additional financing costs when he refinanced his home. He thus sued both Comcast and Credit Protection Association, L.P., a collection agency. Having granted in part and denied in part Comcast's first Motion to Dismiss in Himmelstein I, the Court now reaches the same result with respect to CPA's Motion to Dismiss: Count IV, Plaintiff's Fair Credit Reporting Act claim, survives, but Count III's assertion of negligence is preempted by the FCRA and does not.

I. Background

According to the Amended Complaint, which must be presumed true at this stage, Himmelstein was a long-time customer of Comcast, from whom he received residential cable and high-speed internet service. See Am. Compl., ¶¶ 9–10 & Exh. A (Comcast Agreement for Residential Services). When Himmelstein elected to terminate his contract around June 2010, a Comcast technician came to his residence to remove the equipment, picking up the cable box, but inadvertently leaving behind a modem. See Am. Compl., ¶¶ 12–21. In August 2010 he was informed for the first time he owed Comcast approximately $220 for cable-modem equipment that had not been returned. See id., ¶ 21. “Shortly thereafter, Himmelstein received a demand letter from a collection agency [CPA] seeking to recover, on Comcast's behalf, the alleged $220.00 outstanding balance.” Id., ¶ 23. He then contacted Comcast again regarding the status of the account and was told that the charge would be removed and corrected when he returned the missing modem. See id. Himmelstein located the missing modem and returned it immediately to Comcast. See id., ¶ 24.

Himmelstein never received his refund check, however, and CPA continued to pursue collection of the $220 balance. See id., ¶¶ 26–29. The collection agency, moreover, reported the debt to the national credit-reporting agencies in December 2010. See id., ¶ 28. When Himmelstein contacted CPA to dispute the debt, it acknowledged the error, ceased collection on the account, and contacted Comcast to report the account for deletion—but never contacted the national credit bureaus regarding the mistake. See id., ¶¶ 29–30. At around the same time, Himmelstein himself notified the national credit bureaus that he was disputing the debt. See id., ¶ 31.

The following spring, Himmelstein sought to refinance his mortgage with Citibank. See id., ¶ 30. His credit report continued to reflect the Comcast debt, despite his repeated efforts to redress the error with both Comcast and CPA. See id. Because of this outstanding debt, Citibank required Himmelstein to pay an additional $26,000 (1% of the value of the mortgage) for the same loan. See id., ¶ 32.

In 2012, he filed this action, alleging several common-law counts against Comcast, as well as a violation of the Fair Credit Reporting Act and a common-law negligence claim against CPA. In late 2012, the Court granted Comcast's Motion to Dismiss in part and narrowed the case against the both defendants. Plaintiff's FCRA (Count IV) and negligence (Count III) claims survived the Motion, and Plaintiff filed an Amended Complaint (ECF No. 26), and CPA has now moved to dismiss the two counts against it.

II. Legal Standard

Under Federal Rule of Civil Procedure 12(b)(6), a court must dismiss a complaint that “fail[s] to state a claim upon which relief can be granted.” In evaluating a motion to dismiss, the Court must “treat the complaint's factual allegations as true and must grant plaintiff the benefit of all inferences that can be derived from the facts alleged.” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.Cir.2000) (citation and internal quotation marks omitted); see also Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). A court need not accept as true, however, “a legal conclusion couched as a factual allegation,” nor an inference unsupported by the facts set forth in the complaint. Trudeau v. FTC, 456 F.3d 178, 193 (D.C.Cir.2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986)). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), “a complaint must contain sufficient factual matter, [if] accepted as true, to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 678, 129 S.Ct. 1937 (internal quotation omitted). Though a plaintiff may survive a Rule 12(b)(6) motion even if “recovery is very remote and unlikely,” the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974)).

III. Analysis

In moving to dismiss, CPA contends both that Plaintiff's FCRA claim is facially deficient and that his negligence claim is preempted. The Court will discuss the two counts separately.

A. FCRA Claim

In Count IV of the Amended Complaint, Plaintiff alleges that CPA violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., by

reporting a false debt to the national credit bureaus; failing to conduct a proper investigation into Himmelstein's dispute; failing to correct the false debt reported to the national credit bureaus despite acknowledgment that the information previously provided was inaccurate; failing to report to the national credit bureaus that Himmelstein disputed the accuracy and validity of the alleged debt; and failing to modify, delete or permanently block the inaccurate information.

See Am. Compl., ¶ 67. Himmelstein contends that these actions violated § 1681s–2(b), which imposes certain requirements on furnishers of credit information like CPA. See id., ¶ 66. Moving to dismiss, CPA argues that Himmelstein has failed to properly allege facts that would trigger any legal duty running from CPA to Plaintiff under that section. See Mot. at 3, 7–8. The Court disagrees. While Plaintiff's pleadings could be more complete regarding the full sequence of events, the facts as currently alleged and “all inferences that can be derived” from them, Sparrow, 216 F.3d at 1113 (internal quotation marks and citation omitted), are sufficient to provide CPA with “fair notice of the claim and the ground on which it rests.” Kingman Park Civic Ass'n v. Williams, 348 F.3d 1033, 1040 (D.C.Cir.2003) (citing Fed.R.Civ.P. 8(a)(2)).

The Court will first address the FCRA and the duties it imposes on furnishers, then move on to an analysis of the sufficiency of Plaintiff's allegations.

1. Duties of Furnishers

The FCRA was enacted “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007) (internal citations omitted). “As an important means to this end, the Act sought to make ‘consumer reporting agencies exercise their grave responsibilities [in assembling and evaluating consumers' credit, and disseminating information about consumers' credit] with fairness, impartiality, and a respect for the consumer's right to privacy.’ ” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir.2009) (quoting 15 U.S.C. § 1681(a)(4)). In addition to imposing duties on consumer reporting agencies (CRAs), “Section 1681s–2 [of the Act] sets forth ‘[r]esponsibilities of furnishers of information to consumer reporting agencies.’ ” Id. at 1154. While the statute does not explicitly define “furnishers” of credit information, “ ‘[t]he most common ... furnishers of information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies.’ ” Chiang v. Verizon New England, Inc., 595 F.3d 26, 35 n. 7 (1st Cir.2010) (quoting H.R. Rep. 108–263, at 24 (2003)). Neither party here disputes that CPA is a “furnisher” of information for FCRA purposes.

The FCRA imposes two sets of duties on furnishers, one under § 1681s–2(a) and one under § 1681s–2(b). The first “prohibits any person from furnishing information to a CRA that the person knows is inaccurate,” and “any person who ‘regularly and in the ordinary course of business furnishes information to one or more [CRAs]’ must correct and update the information provided so that it is ‘complete and accurate.’ ” Saunders v. Branch Banking and Trust Co. of Va., 526 F.3d 142, 148 (4th Cir.2008) (quoting 15 U.S.C. § 1681s–2(a)). As to the second, “a furnisher incurs [additional duties] under § 1681s–2(b) if a consumer disputes the accuracy of information that the furnisher reports.” Id. “If a consumer notifies a CRA that he disputes the accuracy of an item in his file, [the] FCRA requires the CRA to notify the furnisher of the dispute.” Id. (citing § 1681i(a)(2)). Once notified, a furnisher must:

(a) conduct an investigation with respect to the...