Ketsenburg v. ChexSystems, Inc., 4:21-CV-220 RLW

CourtUnited States District Courts. 8th Circuit. United States District Court (Eastern District of Missouri)
Docket Number4:21-CV-220 RLW
Decision Date10 February 2022


CHEXSYSTEMS, INC., Defendants.

No. 4:21-CV-220 RLW

United States District Court, E.D. Missouri, Eastern Division

February 10, 2022



This matter is before the Court on Defendant's Motion to Dismiss First Amended Complaint (ECF No. 23). This matter is fully briefed and ready for disposition. For the reasons stated herein, the Court grants, in part, and denies, in part, Defendant ChexSystems, Inc.'s Motion to Dismiss First Amended Complaint.


Plaintiff Joseph Matthew Ketsenburg (“Ketsenburg”) alleges that, on June 28, 2018, his ex-girlfriend, Barbara Holcomb (“Holcomb”), fraudulently obtained a $300 online loan from CashNet USA (“CashNet”), using Ketsenburg's identity and financial information (First Amended Complaint (“FAC”), ECF No. 22, ¶ 28). This loan was repaid through automatic deductions from Ketsenburg's bank account with First Midwest Bank (“FMB account”). (Id.) The automatic deductions depleted Ketsenburg's FMB account, and the account was closed. (Id., ¶¶ 60-62). The ChexSystems report regarding Ketsenburg reflected the FMB account was closed. (Id., (“the


information furnished by FMB to ChexSystems on September 11, 2018 alleged ‘non-sufficient funds (NSF) activity'”)). Ketsenburg alleges he was aware in “mid-October 2018” that his FMB account was closed due to insufficient funds. At that time, Ketsenburg notified FMB regarding his alleged identity theft. (Id., ¶ 67). Law enforcement declined to bring charges against Holcomb for identity theft. (Id., ¶¶ 66, 78, 84, 112, 121).

On February 1, 2019, Ketsenburg contacted ChexSystems and “identified every single inquiry upon his consumer report” that was inaccurate. (Id., ¶ 90). On February 6, 2019, ChexSystems responded with a letter, “Identity Theft Summary of Rights” documents, and Ketsenburg's consumer report. (Id., ¶¶ 90-94). On February 11, 2019, ChexSystems provided written correspondence to Ketsenburg regarding the disputed information. (Id., ¶¶ 99-101). On February 15, 2019, Ketsenburg telephoned ChexSystems regarding the allegedly inaccurate information on his report, resulting from identity theft. (Id., ¶¶ 102-104).

Ketsenburg states that he contacted all of the inquirers on his consumer report and contends that ChexSystems failed to block the inaccurate information. (Id., ¶¶ 105-130). For example, Ketsenburg notes that ChexSystems failed to mark information furnished by CashNet as “disputed” even though Ketsenburg provided CashNet with information that he had been the victim of identity theft.

In summary, Ketsenburg argues that ChexSystems failed to conduct a reasonable investigation into his disputes and failed to properly investigate his February 1, 2019 dispute regarding his alleged identity theft. See FAC, ¶¶ 87, 89, 259. Ketsenburg claims that ChexSystems did not maintain reasonable procedures to ensure the accuracy of the information on his credit report; did not conduct a reasonable investigation regarding his disputes; did not provide him with


information provided to it in connection with the disputes; and did not detail the procedures it used to conduct its reinvestigation. (Id., ¶¶ 258, 262).


Ketsenburg purports to bring claims against ChexSystems under the Fair Credit Reporting Act (FCRA) based upon information reported, allegedly caused by identity theft. In enacting the FCRA, Congress recognized the vital role consumer reporting agencies (CRAs) have in assembling and evaluating consumer credit, as well as the need to insure that CRAs exercise their responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy. 15 U.S.C. § 1681(a)(3)-(4). Under section 1681e(b) of the FCRA, a CRA, when preparing a credit report on a consumer, is required to “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b). If a consumer brings a dispute to the CRA regarding the completeness or accuracy of a credit report, the CRA is required by section 1681i(a) “within a reasonable period of time [to] reinvestigate and record the current status of that information unless it has reasonable grounds to believe that the dispute by the consumer is frivolous or irrelevant.” 15 U.S.C. § 1681i(a). The FCRA addresses the duties of CRAs and of furnishers of information to those agencies as follows.

If the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly of such dispute, the agency shall reinvestigate free of charge and record the current status of the disputed information, or delete the item from the file in accordance with [15 U.S.C. § 1681i(a)(5)], before the end of the 30-day period beginning on the date on which the agency receives the notice of the dispute from the consumer

15 U.S.C. § 1681i(a)(1)(A). Within five days after a CRA “receives notice of a dispute from any consumer in accordance with paragraph (1), the agency shall provide notification of the dispute to any person who provided any item of information in dispute, at the address and in the manner


established with the person.” 15 U.S.C. § 1681i(a)(2)(A). The notice must include all relevant information regarding the dispute that the CRA received from the consumer. Id. In addition, the CRA must promptly provide the furnisher of the information in dispute all relevant information about the dispute that the agency received from the consumer. 15 U.S.C. § 1681i(a)(2)(B). “After receiving notice of a dispute pursuant to § 1681i(a)(2), the provider of information must (A) conduct an investigation with respect to the disputed information, (B) review all relevant information provided by the CRA under § 1681i(a)(2), (C) report the results of the investigation to the CRA, and (D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other CRAs to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis. 15 U.S.C. § 1681s-2(b)(1)(A)- (D).” Zetta v. NationsCredit Fin. Servs. Corp., 297 F.Supp.2d 1196, 1202-03 (E.D. Mo. 2003). As part of its enforcement mechanism, the FCRA creates a private right of action against CRAs for negligent or willful violation of these or other duties imposed by this legislation. Id. §§ 1681n and o; Murphy v. Midland Credit Mgmt., Inc., 456 F.Supp.2d 1082, 1088 (E.D. Mo. 2006).

A. Rule 8

ChexSystems first argues that Ketsenburg's FAC should be dismissed because it does not comply with Fed.R.Civ.P. 8. Rule 8(a)(2) “requires a short and plain statement showing the pleader is entitled to relief, and that each allegation in the pleading be simple, concise, and direct.” Cody v. Loen, 468 Fed.Appx. 644, 645 (8th Cir. 2012) (unpublished per curiam); Mariano v. Correct Care Sols., LLC, No. 5:17-CV-05011, 2017 WL 3034358, at *1 (W.D. Ark. July 17, 2017). The primary purpose of Rule 8 is to allow the Court and the opposing party to understand whether a valid claim is alleged and, if so, what it is. Id. The complaint must be sufficiently clear so the Court or opposing party “is not required to keep sifting through it in search of what it is plaintiff asserts.”


Id. (citing Vicom, Inc. v. Harbridge Merch. Servs., Inc., 20 F.3d 771, 775-76 (7th Cir. 1994)); City of Webster Groves, MO v. CCATT LLC, No. 4:18-CV-1910 RLW, 2020 WL 4192447, at *3 (E.D. Mo. July 21, 2020)

ChexSystems argues that this Court should dismiss Ketsenburg's FAC because it is not short or plain, nor does it put ChexSystems on notice of the claims directed against it. (ECF No. 24 at 4 (citing Rule 8)). ChexSystems argues that the factual claims against ChexSystems are interspersed with allegations regarding Speedy Cash, Clarity, FactorTrust, Opportunity Financial, and CNU Online Holdings (CashNet), making it impossible for ChexSystems to properly respond. (Id.)

The Court finds that Ketsenburg's FAC satisfies the pleading standards of Rule 8. His pleadings could be more succinct and direct, but the Court finds that his FAC adequately alleges facts to support his claims under the FCRA. Ketsenburg outlined that ChexSystems continued reporting information about Ketsenburg and did not identify the information as “disputed” after he reported that the information was inaccurate. At this early stage of the litigation, and given Ketsenburg's pro se status, the Court finds that Ketsenburg's FAC satisfies Rule 8. See Stone v. Harry, 364 F.3d 912, 914 (8th Cir. 2004) (pro se complaints are to be liberally construed, but must allege sufficient facts to support the claims).

B. Rule 12(b)(6) standard

To survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), a complaint “must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Bell Atlantic Corp., v. Twombly, 550 U.S. 544, 570 (2007)). A “formulaic recitation of the elements of a cause of action” will not suffice. Twombly, 550 U.S. at 555. “The plausibility


standard is not akin to a ‘probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 556).

Here, ChexSystems argues that the Court should dismiss Ketsenburg's Section 1681i(a) claims because they are untimely under the appliable statute of limitations, do not allege inaccurate factual information, and fail to state a claim.

C. Section 1681i(a)

1. Statute of Limitations

Under the FCRA, “[a]n action to enforce any liability created under this subchapter may be...

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