Kang v. Credit Bureau Connection, Inc.
| Decision Date | 04 March 2021 |
| Docket Number | Case No. 1:18-CV-01359-AWI-SKO |
| Citation | 523 F.Supp.3d 1174 |
| Parties | Sung Gon KANG, Plaintiff, v. CREDIT BUREAU CONNECTION, INC., Defendant. |
| Court | U.S. District Court — Eastern District of California |
James A. Francis, PHV, Pro Hac Vice, John Soumilas, PHV, Pro Hac Vice, Jordan Sartell, PHV, Pro Hac Vice, Francis & Mailman, P.C., Philadelphia, PA, Michael A. Caddell, Amy Elizabeth Tabor, Cynthia B. Chapman, Caddell & Chapman, Houston, TX, for Plaintiff.
John V. Tamborelli, Tamborelli Law Group, Woodland Hills, CA, Rachel Rodman, PHV, Pro Hac Vice, Cadwalader, Wickersham & Taft, Washington, DC, for Defendant.
ORDER ON DEFENDANT'S MOTION FOR SUMMARY JUDGMENT
Plaintiff Sung Gon Kang alleges that Defendant Credit Bureau Connection, Inc., caused him injury in its violation of several state and federal consumer credit reporting statutes. Credit Bureau now moves for summary judgment under Federal Rule of Civil Procedure 56. For the following reasons, the Court will deny Credit Bureau's motion.
In November 2017, Kang sought to buy a car from an automobile dealership in Huntington Beach, California. Doc. No. 85-1, ¶ 19. When Kang applied for a loan to finance his purchase, the dealership conducted a credit check using the services of Credit Bureau. Id. Kang represents that the dealership informed him that it would not be able to extend him credit without a co-signer because the credit check showed that he was an "OFAC hit" with a North Korea-related affiliation. Kang Dep. at 40, 50, 55 (Doc. No. 85-8). (As discussed in more detail below, this reference goes to the United States Treasury Department's Office of Foreign Assets Control ("OFAC") and its list of entities and individuals with whom United States persons are generally prohibited from doing business.) Kang was able to secure the loan with his father serving as a co-signer, but he felt "angry," "mad," and "embarrassed" to be "hit with the OFAC" and to be identified as a person affiliated with North Korea. Id. at 40, 55. He later returned to the dealership and requested the credit check documents. Id. at 56. The dealership ordered a second credit check after explaining to Kang that it no longer had the original documents. Id. at 46–49.
Although the parties use slightly different terminology to describe the evidence, they have each produced the same two OFAC-related documents that they represent the credit checks produced. Doc. Nos. 82-4 at 4–5; 85-9; 85-10. The Court will refer to this evidence as the "OFAC Check documents" throughout this order. Other than Kang's identifying information in the upper left-hand corner, the top line of these one-page documents reads "Red Flag Compliance," beneath which is provided: "Pursuant to your company's Identity Theft Protection Program, the following Red Flag Indicators shown below may necessitate further required action(s)." Underneath this information the documents state "HIT" above the words "OFAC Check."2 Below this, a checked box accompanies the following text: "I have reviewed and determined this OFAC HIT to be a false positive - CLEARED." Further down, each document contains a section titled "OFAC Search results for SUNG KANG," with different timestamps corresponding to the separately ordered credit checks. The first OFAC Check document—produced during Kang's original visit to the dealership—includes a single search result for a North Korean citizen and passport-holder with a name of "KANG, Song Nam," birth year of 1962, title of "Bureau Director," link to "Ministry of State Security," and listed address of North Korea.3 The result is marked with a "score" of 94%. The second OFAC Check document—produced on Kang's return to the dealership—includes a second search result (in addition to an identical entry for Song Nam Kang) for a registered vessel identified as "KANG SONG 1" and linked to Korea Kumbyol Trading Company. This result is also marked with a score of 94%.
Kang filed this lawsuit on behalf of himself and a class of similarly situated consumers, pleading causes of action under the federal Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., and California's Consumer Credit Reporting Agencies Act ("CCRAA"), Cal. Civil Code § 1785.1 et seq. Doc. No. 1. Specifically, on behalf of a putative class, Kang alleged that Credit Bureau failed to follow reasonable procedures to assure the maximum possible accuracy of the consumer information included in its OFAC Check documents, in violation of 15 U.S.C. § 1681e(b) and Cal. Civil Code § 1785.14(b) ; and failed to disclose upon request all information in consumer files, in violation of 15 U.S.C. § 1681g(a) and Cal. Civil Code §§ 1785.10 and 1785.15. On behalf of only himself, Kang alleged that Credit Bureau failed to reinvestigate the disputed OFAC-related information that it had prepared and sold to the dealership, in violation of 15 U.S.C. § 1681i.
Pursuant to Federal Rule of Civil Procedure 12(b)(6), Credit Bureau moved to dismiss all five claims on the ground that it was not subject to these provisions of the FCRA and CCRAA because it was not acting as a credit reporting agency under the factual allegations of the complaint. Doc. No. 10. The Court denied this motion. Doc. No. 20. Credit Bureau now moves for summary judgment partly on the same ground. Doc. No. 81.
Summary judgment is proper where there exists no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56 ; Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970) ; Fortyune v. Am. Multi-Cinema, Inc., 364 F.3d 1075, 1080 (9th Cir. 2004). The party moving for summary judgment bears the initial burden of informing the court of the basis for its motion and identifying the portions of any declarations, pleadings, and discovery that demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ; Soremekun v. Thrifty Payless, Inc., 509 F.3d 978, 984 (9th Cir. 2007). When the nonmoving party will have the burden of proof on an issue at trial, the movant may prevail by presenting evidence that negates an essential element of the nonmoving party's claim or by merely pointing out that there is an absence of evidence to support an essential element of the nonmoving party's claim. See James River Ins. Co. v. Hebert Schenk, P.C., 523 F.3d 915, 923 (9th Cir. 2008) ; Soremekun, 509 F.3d at 984. If the moving party meets its initial burden, the burden then shifts to the opposing party to establish that a genuine issue as to any material fact actually exists. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ; Nissan Fire & Marine Ins. Co. v. Fritz Cos., 210 F.3d 1099, 1102–03 (9th Cir. 2000). If the nonmoving party fails to produce evidence sufficient to create a genuine issue of material fact, the moving party is entitled to summary judgment. Nissan Fire, 210 F.3d at 1103. On the other hand, if the nonmoving party produces sufficient evidence to create a genuine issue of material fact, the nonmoving party defeats the motion. Id.
Credit Bureau contends that it is entitled to summary judgment because Kang's claims are based on FCRA and CCRAA provisions that do not apply under the factual circumstances of this case. Kang disputes this contention. A quick survey of the greater legal landscape in which Kang's claims arise serves as useful context for unpacking the parties’ specific arguments.
The Office of Foreign Assets Control of the U.S. Department of the Treasury administers and enforces economic and trade sanctions against threats to the national security, foreign policy, and economy of the United States. Cortez v. Trans Union, LLC, 617 F.3d 688, 696 (3d Cir. 2010). Amongst its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries, as well as individuals and entities that are not country-specific (e.g., terrorists and narcotics traffickers). Id. Collectively, these listed entities—which are referred to as "Specially Designated Nationals" or "SDNs"—populate what is known as the OFAC's Specially Designated Nationals and Blocked Persons List ("SDN List"). Id. The OFAC provides public access to the SDN List, which includes publication online where the SDN List can be reviewed and downloaded. See 31 C.F.R. ch. V, app. A (describing OFAC's online publication of the SDN List); Specially Designated Nationals And Blocked Persons List (SDN) Human Readable Lists , U.S. DEPARTMENT OF THE TREASURY , http://www.treasury.gov/sdn (last visited Mar. 4, 2021) (access to the SDN List). Under federal law, it is generally illegal for United States individuals and businesses to extend credit to or otherwise do business with any entity on the SDN List. Cortez, 617 F.3d at 696–97, 701.
To regulate the credit reporting industry, Congress enacted the Fair Credit Reporting Act and California enacted the Consumer Credit Reporting Agencies Act. The purpose of both statutory acts is to protect consumers by ensuring that credit reporting agencies report fair and accurate credit information. See 15 U.S.C. § 1681 ; Cal. Civil Code § 1785.1(d). It is well-recognized that the CCRAA is analogous to the FCRA, and the Ninth Circuit "operate[s] under the assumption that California courts would interpret the FCRA and CCRAA consistently." Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010). Each act authorizes private rights of action for victims of violations of their respective provisions. See 15 U.S.C. §§ 1681n – 1681p ; Cal. Civil Code § 1785.31. On the basis of this authorization, Kang raises claims under the following statutes:
Two of the class claims are based on statutory requirements regarding credit...
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