Morris v. Experian Info. Solutions, Inc.

• Decision Date: 13 August 2020
• Docket Number: Case No. 20-CV-0604 (PJS/HB)
• Parties: Shanise N. MORRIS, Plaintiff, v. EXPERIAN INFORMATION SOLUTIONS, INC. and Trans Union, LLC, Defendants.
• Court: U.S. District Court — District of Minnesota

478 F.Supp.3d 765

Shanise N. MORRIS, Plaintiff,

v.EXPERIAN INFORMATION SOLUTIONS, INC. and Trans Union, LLC, Defendants.

Case No. 20-CV-0604 (PJS/HB)

United States District Court, D. Minnesota.

Signed August 13, 2020

David A. Chami and Dawn McCraw, PRICE LAW GROUP APC; Douglas Weimerskirch, HOGLUND, CHWIALKOWSKI, & MROZIK, PLLC, for plaintiff.

Adam Wiers and Cory Carone, JONES DAY; Gregory Myers, LOCKRIDGE GRINDAL NAUEN P.L.L.P., for defendant Experian Information Solutions, Inc.

Katherine Carlton Robinson, SCHUCKIT & ASSOCIATES, P.C., for defendant Trans Union, LLC.

ORDER

Patrick J. Schiltz, United States District Judge

Plaintiff Shanise Morris brings this action under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., alleging that defendants Experian Information Solutions, Inc. ("Experian") and Trans Union, LLC ("Trans Union") failed to "follow reasonable procedures to assure maximum possible accuracy" of the information in her credit report. 15 U.S.C. § 1681e(b). This matter is before the Court on Experian's motion to dismiss and Trans Union's motion for judgment on the pleadings. For the reasons that follow, defendants’ motions are denied.

I. BACKGROUND

In May 2019, Morris filed a voluntary Chapter 7 bankruptcy petition, and she was discharged on August 6, 2019. Compl.

¶¶ 11-12. Among the debts listed in Schedule F of her petition was a $2,703 debt to Comenity Bank. Compl. ¶ 23. Following her discharge, Morris obtained consumer credit reports from Experian and Trans Union, both of which are "consumer reporting agencies" ("CRAs") within the meaning of the FCRA. Compl. ¶¶ 6, 8, 14, 16; see 15 U.S.C. § 1681a(f).

The Experian report, dated September 15, 2019, included an "ADS/COMENITY/KAY JEWELERS" tradeline under the heading "Your accounts that may be considered negative." Myers Decl. ¶ 3 & Ex. A at 1–2 (September 15, 2019 Experian Credit Report). The account's status is reported as closed in October 2018 with the comments "Account closed at consumer's request" and "Purchased by another lender." Compl. ¶¶ 14, 17; Myers Decl. Ex. A at 2. The report provides a September 2018 "Account Balance" of $2,702 and, under "Recent balance," states "Not reported." Myers Decl. Ex. A at 2.¹ The report also lists Morris's August 2019 Chapter 7 bankruptcy discharge and reports all of her other bankruptcy debts as discharged. Compl. ¶¶ 24, 27.

The Trans Union report, dated November 8, 2019, included a "COMENITYBANK/KAY JEWELERS" tradeline under the heading "Adverse Accounts." ECF No. 45-1 at 4–5.² The report states that the account was purchased from Kay Jewelers. ECF No. 45-1 at 5. The "Pay Status" is listed as "Charged Off" with an "Original Charge-off" in October 2018 of $2,702 and "Payment Received" of $0. Compl. ¶ 21; ECF No. 45-1 at 5. The report further states that the account was closed in January 2018 and includes codes indicating that the account was closed by the consumer and purchased by another creditor. ECF No. 45-1 at 4–5. Like the Experian report, the Trans Union report also lists Morris's August 2019 Chapter 7 bankruptcy discharge and reports all of her other bankruptcy debts as discharged. Compl. ¶¶ 26–27.

Morris alleges that both of these reports are inaccurate. She alleges that, because Experian and Trans Union knew that Morris had received a bankruptcy discharge and were reporting all of her other bankruptcy debts as discharged, they should also have reported the disputed Comenity account as discharged in bankruptcy with a zero balance.³ Compl. ¶¶ 18, 22, 24, 26–27. Morris alleges that, as a result of defendants’ alleged FCRA violations, she has been denied credit several times and obtained credit at less favorable rates. Compl. ¶ 33. She also alleges that she has suffered stress, anxiety, embarrassment, and other emotional distress. Compl. ¶¶ 29, 31, 38.

II. ANALYSIS

A. Standard of Review

Motions for judgment on the pleadings under Fed. R. Civ. P. 12(c) are assessed under the same standards as motions to dismiss under Fed. R. Civ. P. 12(b)(6). Ashley Cty. v. Pfizer, Inc. , 552 F.3d 659, 665 (8th Cir. 2009). In reviewing a motion to dismiss for failure to state a claim under Fed. R. Civ. P. 12(b)(6), a court must accept as true all of the factual allegations in the complaint and draw all reasonable inferences in the plaintiff's favor. York v. Wellmark, Inc. , 965 F.3d 633, 638 (8th Cir. 2020). Although the factual allegations need not be detailed, they must be sufficient to "raise a right to relief above the speculative level ...." Bell Atl. Corp. v. Twombly , 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). The complaint must "state a claim to relief that is plausible on its face." Id. at 570, 127 S.Ct. 1955.

Ordinarily, if the parties present, and the court considers, matters outside of the pleadings, a Rule 12(b)(6) motion must be treated as a motion for summary judgment. Fed. R. Civ. P. 12(d). But the court may consider materials that are necessarily embraced by the complaint as well as any exhibits attached to the complaint without converting the motion into one for summary judgment. Mattes v. ABC Plastics, Inc. , 323 F.3d 695, 697 n.4 (8th Cir. 2003). In this case, the Court considers the allegedly inaccurate credit reports, which are embraced by the complaint, and whose authenticity is not in dispute.

B. 15 U.S.C. § 1681e(b)

Morris brings a claim under 15 U.S.C. § 1681e(b), which provides:

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

To prevail on a claim under § 1681e(b), a plaintiff must show that the CRA failed to "follow reasonable procedures to assure maximum possible accuracy" and that this failure caused inaccurate information to appear on her credit report. See Hauser v. Equifax, Inc. , 602 F.2d 811, 814-15 (8th Cir. 1979). Information that is technically correct may nevertheless be considered inaccurate if it is misleading. See Taylor v. Tenant Tracker, Inc. , 710 F.3d 824, 827 n.2 (8th Cir. 2013) ("We do not agree with the district court that the ‘technical accuracy’ standard endorsed in Wilson v. Rental Research Services, Inc. , Civ. No. 3–96–820 (D. Minn. Nov. 10, 1997), states the law of this circuit."); see also Sepulvado v. CSC Credit Servs., Inc. , 158 F.3d 890, 895 (5th Cir. 1998) ("A credit entry may be ‘inaccurate’ within the meaning of the statute either because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions."); Koropoulos v. Credit Bureau, Inc. , 734 F.2d 37, 40 (D.C. Cir. 1984) ("Certainly reports containing factually correct information that nonetheless mislead their readers are neither maximally accurate nor fair to the consumer who is the subject of the reports.").

As noted, Morris alleges that the CRAs’ reporting of her Comenity account was inaccurate and that, because the CRAs knew that she had obtained a Chapter 7 bankruptcy discharge, the "reasonable procedure[ ] to assure maximum possible accuracy" would have been to report all her unsecured debts—including the Comenity debt—as discharged in bankruptcy. To support her argument that such a procedure would be reasonable, Morris points to the settlement reached in White v. Experian Information Solutions, Inc. , No. SA CV 05-1070 DOC (C.D. Cal. Aug. 19, 2008). See Weimerskirch Decl. ¶ 3 & Ex. A. In that settlement, both Experian and Trans Union essentially agreed that, when they learn that a consumer has received a Chapter 7 bankruptcy discharge, they will assume that all of the consumer's unsecured debts were discharged in that bankruptcy and update the reporting of those debts accordingly, unless they are notified otherwise.

Defendants argue that Morris's claim fails as a matter of law because she did not notify them of the alleged inaccuracy or take any other steps to remedy it. Notifying the CRA of an inaccuracy is not a prerequisite to asserting a claim under § 1681e(b), however. Defendants point to cases holding that a CRA cannot be held liable under § 1681e(b) for reporting information unless it had notice that the source of the information may be unreliable. See, e.g. , Henson v. CSC Credit Servs. , 29 F.3d 280, 285 (7th Cir. 1994) ("as a matter of law, a credit reporting agency is not liable under the FCRA for reporting inaccurate information obtained from a court's Judgment Docket, absent prior notice from the consumer that the information may be inaccurate"). Defendants read too much into those cases, however. Those cases do not require the plaintiff to provide notice in every § 1681e(b) case, but merely hold that, unless a CRA has reason to doubt the reliability of a source of information, the CRA acts reasonably in relying on that source and does not have to independently investigate the accuracy of the source's information.

Here, however, Morris alleges that the CRAs acted unreasonably given the information that was already in their possession. Specifically, Morris alleges that the CRAs knew that she had obtained a Chapter 7 discharge and, as the White settlement makes clear, the CRAs knew that unsecured consumer debts such as the Comenity account are typically discharged in Chapter 7 proceedings. Morever, the White settlement itself provides notice that not updating such accounts after a Chapter 7 bankruptcy may fail to comport with § 1681e(b). The Court therefore rejects the CRAs’ argument that, because Morris did not notify them of the error or otherwise seek to correct the reports before filing suit, her § 1681e(b) claim fails as a matter of law.

The CRAs next argue that their reporting of the Comenity account was accurate. This is a more difficult issue.

The Court finds plausible Morris's claim that if a CRA reports that a consumer owes an unsecured debt to a particular creditor as of the date on which the consumer files for ...