Scott v. Synchrony Bank

• Decision Date: 21 May 2021
• Docket Number: 6:20-CV-06524 EAW
• Citation: 540 F.Supp.3d 337
• Parties: Kohobi SCOTT, Plaintiff, v. SYNCHRONY BANK and U.S. Department of Education, Defendants.
• Court: U.S. District Court — Western District of New York

540 F.Supp.3d 337

Kohobi SCOTT, Plaintiff,

v.SYNCHRONY BANK and U.S. Department of Education, Defendants.

6:20-CV-06524 EAW

United States District Court, W.D. New York.

Signed May 21, 2021

Daniel Zemel, Zemel Law, LLC, Kearny, NJ, for Plaintiff.

John V. Moore, Pro Hac Vice, Reed Smith LLP, Pittsburg, PA, Tracy L. Edwards, William D. Christ, Phillips Lytle LLP, Buffalo, NY, for Defendant Synchrony Bank.

Michael S. Cerrone, U.S. Attorney's Office, Buffalo, NY, for Defendant US Department of Education.

DECISION AND ORDER

ELIZABETH A. WOLFORD, United States District Judge

INTRODUCTION

Plaintiff Kohobi Scott ("Plaintiff") brings this action alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. ("the FCRA") against Synchrony Bank ("Synchrony") and the United States Department of Education (the "Department of Education").¹ Currently pending before the Court are a motion to dismiss filed by Synchrony (Dkt. 14) and a motion to dismiss or for summary judgment filed by the Department of Education (Dkt. 22). For the reasons that follow, the Court (1) finds that it lacks subject matter jurisdiction over Plaintiff's claims against the Department of Education and accordingly grants the Department of Education's motion to dismiss and (2) denies Synchrony's motion to dismiss.

FACTUAL BACKGROUND

Plaintiff alleges that Synchrony and the Department of Education are "inaccurately reporting their tradelines ... with ... erroneous scheduled monthly payment amounts on Plaintiff's Equifax credit disclosure." (Dkt. 1 at ¶ 7). More particular, Plaintiff claims that Synchrony is reporting a tradeline with a scheduled monthly payment amount of $39.00 and the Department of Education is reporting a tradeline with a scheduled monthly payment amount of $421.00, when in fact the accounts reflected by these tradelines "are closed with $0.00 balance[s]" and "Plaintiff no longer has an obligation nor the right to make monthly payments to [Synchrony and the Department of Education] such as to bring the accounts current." (Id. at ¶¶ 8-10).

According to Plaintiff, on or about May 5, 2020, she submitted a letter to Equifax disputing the tradelines reported by Synchrony and the Department of Education, explaining that the accounts they reflected were closed. (Id. at ¶ 13). Plaintiff claims that Equifax forwarded her consumer dispute to Synchrony and the Department of Education, and that Synchrony and the Department of Education "verified to Equifax that the reporting of" the disputed tradelines was accurate. (Id. at ¶¶ 14-16).

PROCEDURAL BACKGROUND

Plaintiff filed this action on July 22, 2020. (Dkt. 1). Synchrony filed its motion to dismiss on October 5, 2020. (Dkt. 14). Plaintiff filed her response on October 26, 2020, and Synchrony filed its reply on November 2, 2020 (Dkt. 17; Dkt. 18).

The Department of Education filed its motion to dismiss or for summary judgment on December 21, 2020. (Dkt. 22). Plaintiff filed her response on January 12, 2021, and the Department of Education filed its reply on January 19, 2021. (Dkt. 25; Dkt. 26).

DISCUSSION

I. The Department of Education's Motion to Dismiss or For Summary Judgment

In support of its motion to dismiss or for summary judgment, the Department of Education makes three arguments: (1) the Court lacks subject matter jurisdiction over Plaintiff's claims against it because the United States has not waived its sovereign immunity to claims under the FCRA; (2) Plaintiff has not plausibly pled a violation of the FCRA by the Department of Education; and (3) the Department of Education never received notice from Equifax of Plaintiff's consumer dispute. (Dkt. 22-4).

Where a party has called into question both the Court's subject matter jurisdiction and the merits of the claims against it, the Court is generally constrained to consider the jurisdictional issue as a threshold matter. See Sinochem Int'l Co. v. Malaysia Int'l Shipping Corp. , 549 U.S. 422, 430-31, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) ("[A] federal court generally may not rule on the merits of a case without first determining that it has jurisdiction over the category of claim in suit (subject-matter jurisdiction) and the parties (personal jurisdiction)."). The Court accordingly turns first to the Department of Education's assertion of sovereign immunity.

"The United States, as sovereign, is immune from suit unless it waives immunity and consents to be sued." Cooke v. United States , 918 F.3d 77, 81 (2d Cir. 2019), cert. denied , ––– U.S. ––––, 139 S. Ct. 2748, 204 L.Ed.2d 1134 (2019). "A waiver of the Federal Government's sovereign immunity must be unequivocally expressed in statutory text, and will not be implied." Lane v. Pena , 518 U.S. 187, 192, 116 S.Ct. 2092, 135 L.Ed.2d 486 (1996) (citations omitted). Sovereign immunity "extends to federal agencies and officers acting in their official capacities." Foster v. Fed. Emergency Mgmt. Agency , 128 F. Supp. 3d 717, 723 (E.D.N.Y. 2015). "Where there is no statute expressly waiving the sovereign immunity of the United States, the court lacks subject matter jurisdiction to adjudicate the claim." Stewart v. I.R.S. , No. 99-CV-2589(JS)(MDG), 1999 WL 1332373, at *1 (E.D.N.Y. Dec. 6, 1999).

As another judge in this Circuit recently explained, "[t]he Second Circuit has not ruled on the issue of whether the FCRA contains a waiver of sovereign immunity. However, two of the three circuits that have considered this issue have concluded that the FCRA does not contain such a waiver." Stein v. U.S. Dep't of Educ. , 450 F. Supp. 3d 273, 277 (E.D.N.Y. 2020) (citing Robinson v. U.S. Dep't of Educ. , 917 F.3d 799 (4th Cir. 2019) (finding no waiver); Daniel v. Nat'l Park Serv. , 891 F.3d 762 (9th Cir. 2018) (finding no waiver); and Bormes v. United States , 759 F.3d 793 (7th Cir. 2014) (finding waiver)).

Having carefully considered the issue, the Court agrees with the Fourth and Ninth Circuits that the FRCA does not unambiguously and unequivocally waive the United States’ sovereign immunity. As the Fourth Circuit explained in Robinson , the FCRA provides that " ‘[a]ny person who is negligent in failing to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer’ for actual damages, costs, and attorney's fees." 917 F.3d at 802 (quoting 15 U.S.C. § 1681o). Accordingly, resolution of whether the FRCA waives federal sovereign immunity turns on the meaning of "person" as used in the statute. Id. ("This case centers on the meaning of the word ‘person’ in [the FCRA], specifically whether the federal government is a ‘person’ for purposes of FCRA's general civil liability provisions.").

The Supreme Court has established a "longstanding interpretive presumption that ‘person’ does not include the sovereign." Vermont Agency of Nat. Res. v. U.S. ex rel. Stevens , 529 U.S. 765, 780, 120 S.Ct. 1858, 146 L.Ed.2d 836 (2000). Here there is evidence cutting against that presumption—namely, that the FCRA defines "person" as including a "government or governmental subdivision or agency[.]" 15 U.S.C. §§ 1681a(b), n. However, this definition "does not specifically mention the United States or the federal government," Robinson , 917 F.3d at 803, and "[g]enerally, when Congress intends to include a waiver of sovereign immunity in a statute, Congress includes the words ‘United States’ in the waiver," Stein , 450 F. Supp. 3d at 277. Moreover, reading "person" as used in the FCRA to include the federal government "leads to implausible results," Daniel , 891 F.3d at 770, most prominently that it would both authorize the government to bring criminal proceedings against itself and empower federal agencies and state governments to pursue civil enforcement actions against the United States, see id. at 770-71. This would be an unprecedented scheme, and it is doubtful "that Congress meant to build a novel enforcement regime without doing so explicitly." Id. at 771 (noting that "[t]he spectre of the Federal Trade Commission suing the United States, aka itself, to recover a civil penalty from itself makes little sense." (quotation omitted)).

Moreover, there is an express waiver of federal sovereign immunity in a separate provision of the FCRA. See 15 U.S.C. § 1681u(j) ("Any agency or department of the United States obtaining or disclosing any consumer reports, records, or information contained therein in violation of this section is liable to the consumer" for statutory and actual damages, and, "if the violation is found to have been willful or intentional, such punitive damages as a court may allow."). "Because Congress knew how to explicitly waive sovereign immunity in the FCRA, it could have used that same language when enacting subsequent enforcement provisions." Daniel , 891 F.3d at 772.

In sum, "Plaintiff is unable to overcome the presumption that the word ‘person’ does not include the sovereign and, thus, cannot show that the statute's text contains a clear and unambiguous waiver of sovereign immunity." Stein , 450 F. Supp. 3d at 278 ; see also F.A.A. v. Cooper , 566 U.S. 284, 290, 132 S.Ct. 1441, 182 L.Ed.2d 497 (2012) ("Any ambiguities in the statutory language are to be construed in favor of immunity[.]"). Indeed, at least two other judges in this Circuit to have considered the issue have reached the same conclusion. See Stein , 450 F. Supp. 3d at 278 ; Edelman v. United States Gov't , No. 18-CV-2143(JS)(AKT), 2020 WL 7123175, at *7 (E.D.N.Y. Dec. 4, 2020) ("[B]ecause the FCRA does not contain a clear and unequivocal waiver of the Government's sovereign immunity, this Court is without subject matter jurisdiction to adjudicate Plaintiff's FCRA claims against the Federal Defendants.").

Accordingly, the Court finds that it lacks subject matter jurisdiction over Plaintiff's FCRA claims against the Department of Education, and dismisses those claims without prejudice. The Court accordingly cannot and does not reach the Department of Education's merits-based arguments.

II. Synch...