Pedro v. Equifax, Inc.

• Decision Date: 24 August 2017
• Docket Number: No. 16-13404,16-13404
• Citation: 868 F.3d 1275
• Parties: Kathleen N. PEDRO, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. EQUIFAX, INC., Defendant, TransUnion LLC, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

868 F.3d 1275

Kathleen N. PEDRO, on behalf of herself and all others similarly situated, Plaintiff-Appellant,

v. EQUIFAX, INC., Defendant,TransUnion LLC, Defendant-Appellee.

No. 16-13404

United States Court of Appeals, Eleventh Circuit.

August 24, 2017

Jonathan D. Selbin, Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, CA, Michael Joseph Boyle, Jr., Matthew R. Wilson, Meyer Wilson Co., LPA, Columbus, OH, Kenneth S. Byrd, Andrew R. Kaufman, Lieff Cabraser Heimann & Bernstein, LLP, Nashville, TN, Kenneth S. Canfield, Doffermyre Shields Canfield & Knowles, LLC, Atlanta, GA, James A. Francis, Francis & Mailman, PC, Philadelphia, PA, Jared M. Hartman, Babak Semnar, Semnar & Hartman, LLP, Vista, CA, for Plaintiff-Appellant.

Stephen J. Newman, Stroock & Stroock & Lavan, LLP, Los Angeles, CA, Alex Michael Barfield, Stanton Law Office, Atlanta, GA, Brian C. Frontino, Alisa Marie Taormina, Stroock & Stroock & Lavan, LLP, Miami, FL, for Defendant-Appellee.

Before WILLIAM PRYOR, MARTIN and ROSENBAUM, Circuit Judges.

WILLIAM PRYOR, Circuit Judge:

This appeal requires us to decide whether a consumer reporting agency adopted an objectively unreasonable interpretation of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. , when it stated on a consumer's credit report that she was an authorized user of her parents' credit card account. Kathleen Pedro's parents listed her as an authorized user on their credit card account, which later went into default. A consumer reporting agency, TransUnion LLC, listed the delinquent account on Pedro's credit report with a notation that she was an authorized user of the account. TransUnion also included the account when calculating Pedro's credit score, which caused her credit score to fall. Pedro then filed a complaint that TransUnion willfully violated a provision of the Act that requires that a consumer reporting agency "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), 1681n. The district court dismissed the complaint for failing to allege a plausible claim for relief. Because it was not objectively unreasonable for TransUnion to interpret section 1681e(b) to permit it to report an account for which a consumer is an authorized user, we affirm.

I. BACKGROUND

When Kathleen Pedro's parents fell ill, they designated her as an authorized user on their credit card account with Capital One. Pedro used the card to help her parents make purchases and to purchase airline tickets that she used to visit her parents. She alleged that, as an authorized user, "she never assumed and had no financial responsibility for any debts on that card."

When Pedro's parents died in 2014, their account with Capital One went into default. On January 25, 2015, Pedro received an alert from a credit monitoring service that informed her that her credit score had dropped more than 100 points on her Equifax credit report. Pedro also discovered that her credit score had dropped on her TransUnion credit report, and she determined that the default on her parents' Capital One account caused the credit drop.

After Pedro complained that the delinquency on her parents' account had affected her credit, Capital One removed Pedro from the account. But TransUnion did not remove the account from Pedro's credit report. TransUnion instead listed the account on her credit report with the notation "account relationship terminated." Capital One eventually requested that TransUnion and Equifax delete the account from Pedro's credit reports, and the agencies complied. Pedro alleged that her credit score then "returned to its prior excellent level."

Pedro filed a complaint in the district court that Equifax and TransUnion had willfully violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. , by failing to "follow reasonable procedures to assure maximum possible accuracy" of the credit reports of authorized users of credit card accounts, id. §§ 1681e(b), 1681n. She alleged that the procedures used by Equifax and TransUnion that led them to report her parents' account on her credit report caused her credit reports to reflect a debt she did not owe, which in turn caused her credit report and score to be inaccurate. The gravamen of Pedro's complaint was that it was inaccurate to list her parents' credit card account on her credit report because it implied that she was liable on the account when she was not. She sought statutory damages, punitive damages, attorney's fees, and the certification of a class action.

Equifax moved to dismiss Pedro's complaint, Fed. R. Civ. P. 12(b)(6), and TransUnion joined the motion. The agencies argued that Pedro could not establish a willful violation of the Act because the agencies followed an objectively reasonable interpretation of the Act. See Safeco Ins. Co. of Am. v. Burr , 551 U.S. 47, 69, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). The district court granted the motion to dismiss. It determined that Pedro failed to allege a willful violation of section 1681e(b) because it was not objectively unreasonable for the consumer reporting agencies to read section 1681e(b) to permit them to report information about accounts for which the consumer is an authorized user. Pedro appealed, and at her request, we dismissed her appeal as to Equifax.

II. STANDARD OF REVIEW

"We review de novo the dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and construe all the allegations as true." Feldman v. Am. Dawn, Inc. , 849 F.3d 1333, 1339 (11th Cir. 2017). "A plaintiff must plausibly allege all the elements of the claim for relief. Conclusory allegations and legal conclusions are not sufficient; the plaintiff[ ] must state a claim to relief that is plausible on its face." Id. at 1339–40 (citations and internal quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

III. DISCUSSION

We divide our discussion in two parts. First, we explain that Pedro has standing because she alleged that she suffered an injury in fact. Second, we explain that the district court correctly dismissed Pedro's complaint because TransUnion could not have willfully violated the Fair Credit Reporting Act.

A. Pedro Alleged That She Suffered an Injury in Fact.

Article III of the Constitution of the United States "restricts the jurisdiction of the federal courts to litigants who have standing to sue." Nicklaw v. CitiMortgage, Inc. , 839 F.3d 998, 1001 (11th Cir. 2016). This threshold requirement "must be addressed prior to and independent of the merits of a party's claims." Common Cause/Ga. v. Billups , 554 F.3d 1340, 1349 (11th Cir. 2009) (citation omitted). Pedro, as the party invoking federal jurisdiction, "bears the burden of proving standing." Id. (citation omitted).

The "irreducible constitutional minimum of standing" consists of three elements: injury in fact, causation, and redressability. Lujan v. Defs. of Wildlife , 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). TransUnion contends that Pedro lacks standing because she failed to prove that she suffered an injury in fact. We disagree.

"An injury sufficient for standing purposes is ‘an invasion of a legally protected interest which is (a) concrete and particularized, and (b) actual or imminent, not conjectural or hypothetical.’ " Common Cause/Ga. , 554 F.3d at 1350 (quoting Lujan , 504 U.S. at 560, 112 S.Ct. at 2136 ). A concrete injury "must actually exist," meaning it must be "real and not abstract." Spokeo, Inc. v. Robins , ––– U.S. ––––, 136 S.Ct. 1540, 1548, 194 L.Ed.2d 635 (2016) (citations and internal quotation marks omitted). An intangible injury, like a violation of the right to free speech, can be concrete. Id. at 1549.

"In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles." Id. "[I]t is instructive to consider whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts." Id. And Congress may "elevate to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law." Id. (alteration adopted) (quoting Lujan , 504 U.S. at 578, 112 S.Ct. at 2145 ). An injury is "particularized" if it "affect[s] the plaintiff in a personal and individual way." Id. at 1548 (quoting Lujan , 504 U.S. at 560 n.1, 112 S.Ct. at 2136 ).

Pedro alleged an injury that is both concrete and particular. Pedro alleged a concrete injury because the harm caused by the alleged violation of the Act—the reporting of inaccurate information about Pedro's credit to a credit monitoring service—has a close relationship to the harm caused by the publication of defamatory information, which has long provided the basis for a lawsuit in English and American courts. See, e.g. , Restatement (First) of Torts § 569 cmt. g (Am. Law Inst. 1938) (explaining that it is "actionable per se" to publish a false statement that another has "refus[ed] to pay his debts"). Pedro also alleged a concrete injury because she alleged that she "lost time ... attempting to resolve the credit inaccuracies." Cf. Palm Beach Golf Center-Boca, Inc. v. John G. Sarris, D.D.S., P.A. , 781 F.3d 1245, 1252–53 (11th Cir. 2015) (explaining that the occupation of a fax machine during the transmission of an unwanted fax constituted a concrete injury). And Pedro's alleged injuries affected her personally. Indeed, her credit score dropped 100 points as a result of the challenged conduct. Because Pedro alleged that she suffered an injury in fact, she has standing to pursue her complaint.

B. Pedro's Complaint Failed to State a...