Sessa v. Linear Motors, LLC
| Decision Date | 20 December 2021 |
| Docket Number | 19-CV-9914 (KMK) |
| Citation | 576 F.Supp.3d 1 |
| Parties | Gia SESSA, on behalf of herself and all others similarly situated, Plaintiff, v. LINEAR MOTORS, LLC, et al., Defendants. |
| Court | U.S. District Court — Southern District of New York |
Daniel A. Schlanger, Esq., Evan S. Rothfarb, Esq., Schlanger Law Group LLP, New York, NY, Counsel for Plaintiff.
Michael C. O'Neil, Esq., Albert E. Hartmann, Esq., Maxwell J. Eichenberger, Esq., Reed Smith LLP, Chicago, IL, Counsel for Defendants.
Gia Sessa of Putnam Valley ("Plaintiff") brings this putative class action suit against Linear Motors, LLC d/b/a/ Curry Hyundai Subaru, Hudson Valley Federal Credit Union ("HVFCU"), CULA, LLC (collectively, "Lessor Defendants"), and TransUnion, LLC, (collectively, "Defendants"), alleging that Lessor Defendants hid certain fees and taxes paid by Plaintiff upon leasing a car in violation of the Consumer Leasing Act, 15 U.S.C. §§ 1667, et seq. ; New York Vehicle and Traffic Law, N.Y. Veh. & Traf. § 415, et seq. ; and the New York General Business Law, N.Y. Gen. Bus. § 349, and alleging that Defendant TransUnion failed to accurately report Plaintiff's debt obligations vis-à-vis her vehicle lease in violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. ("FCRA"), and New York General Business Law § 380, et seq. ("NY FCRA"). Before the Court is TransUnion's Motion for Summary Judgment. (Not. of Mot. (Dkt. No. 111).) For the following reasons, TransUnion's Motion is granted.
The following facts are taken from the Parties’ statements pursuant to Local Civil Rule 56.1, specifically TransUnion's 56.1 Statement (Def.’s Rule 56.1 Statement ("Def.’s 56.1") (Dkt. No. 113)) and Plaintiff's 56.1 Counterstatement (Pl.’s Rule 56.1 Counterstatement ("Pl.’s 56.1 Counterstatement") (Dkt. No. 123-20 (filed under seal), Dkt. No. 126 (redacted))), and the admissible evidence submitted by the Parties. The facts are recounted "in the light most favorable to" Plaintiff, the non-movant. Wandering Dago, Inc. v. Destito , 879 F.3d 20, 30 (2d Cir. 2018) (citation and quotation marks omitted). The facts as described below are in dispute only to the extent indicated.1
The FCRA requires that credit reporting agencies ("CRAs") prepare "consumer reports," known otherwise as credit reports, using "reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 15 U.S.C. § 1681e(b). The FCRA does not, however, require CRAs to review the underlying legal documents giving rise to a consumer's debt obligations to verify the legal validity thereof prior to reporting said debt on the consumer's credit report. (Pl.’s 56.1 Counterstatement ¶ 32.)
The FCRA also imposes various obligations on organizations that supply data to CRAs, known as "furnishers." See 16 C.F.R. § 660.2. Relevant to this case, the law bars furnishers from supplying information to CRAs it "knows or has reasonable cause to believe ... is inaccurate." 15 U.S.C. § 1681s-2(a)(1)(A) ; see also 12 C.F.R. § 1022.42(a) (). The Consumer Financial Protection Bureau ("CFPB"), which oversees credit ratings practices, also requires furnishers to provide CRAs with information that "correctly[ ] [r]eflects the terms of and liability for the account." 12 C.F.R. § 1022.41(a)(1).
The FCRA does not pertain only to institutions; to the contrary, it encourages consumers to participate in the credit reporting process, animated by the belief that "enhancing consumers’ access to their credit reports is an effective step towards ensuring an accurate credit reporting system." S. Rep. No. 103-209, at 5 (1993). To enable such participation, the FCRA affords consumers two mechanisms to dispute the accuracy of information listed on a credit report. First, a consumer can submit a dispute directly to a CRA, who must then forward the dispute to the appropriate furnisher. See 15 U.S.C. § 1681i(a)(1)(A). Second, a consumer can submit a dispute directly to the furnisher. See id. § 1681s-2(a)(8).
Pursuant to the charge that a CRA use "reasonable procedures" to ensure accuracy, TransUnion will review a furnisher prior to accepting any information from that furnisher, a vetting process commonly referred to as "credentialing." (See Pl.’s 56.1 Counterstatement ¶ 68.) TransUnion's multi-faceted credentialing process includes but is not limited to reviewing the furnisher's reputation as well as the nature of the data to be furnished. (See id. ¶¶ 63–67.)
If a furnisher passes the credentialing process, TransUnion also requires a furnisher to "contractually agree to, among other things, comply with all of the obligations imposed on that furnisher," including all applicable statutory and regulatory obligations under the FCRA, regulations promulgated thereunder, and equivalent state laws and regulations. (Id. ¶ 69.) Importantly, per the agreement, data are also supposed to be furnished in a particular way, namely an industry-wide format called "Metro2," (id. ¶ 74), which "allows a furnisher to report a balloon payment obligation for any type of account with a deferred payment obligation, including an auto lease," (id. ¶ 41).
After TransUnion credentials and signs an agreement with a furnisher, it "conducts an onboarding process ... with a furnisher to test and verify the integrity of the data the company intends to furnish." (Def.’s 56.1 ¶ 75.)2 Once the data furnisher begins providing TransUnion with information, the company continues to monitor, screen, and validate the quality and integrity of data furnished, including using proprietary techniques and strategies. (See id. ¶¶ 76–82.)
In November 2018, Plaintiff leased a Subaru Forester from Linear Motors, which was financed by HVFCU.3 (See id. ¶¶ 1–3.) The lease obligated Plaintiff to pay $237.75 per month. (See Decl. of Gia Sessa ("Sessa Decl."), Ex. 1 (Dkt. No. 124-1) at 4.) The lease states that $12,721.25 is the "Total of Payments," meaning "the Amount [Plaintiff] will have paid to [the lessor] by the end of the Lease." (Id. ) The lease also states that the "Residual Value," meaning "[t]he value of the Vehicle at the end of the Lease used in calculating [Plaintiff's] Base Monthly Payment," is $19,444.07. (Id. at 2.)
Section 14 of the lease purports to release Plaintiff from any obligation following the termination of liability assuming Plaintiff had performed by the terms of the contract. (See id. at 3.) Per Section J of the lease, Plaintiff had "the option to purchase the Vehicle ... at the end of the Lease Term for the Residual Value, assuming all payments are made on the exact scheduled date, plus a Purchase Option Fee of $325 and applicable fees and costs." (Id. at 4.)
Notwithstanding the lease's terms, the Parties agree that "[t]he data [HVFCU] furnished to [TransUnion] indicated that Plaintiff owed a ... payment of $19,444.00 ... that was due on January 1, 2022," which is referred to as a "balloon payment." (Pl.’s 56.1 Counterstatement ¶ 8.)4 HVFCU "also furnished information to [TransUnion] indicating that the ‘High Balance’ amount for her account was $25,928.60." (Id. ¶ 13 (citation omitted).) It is also undisputed that HVFCU furnished data regarding the lease in Metro2 format. (Id. ¶ 35 (citations omitted).)
TransUnion credentialed HVFCU. (See id. ¶ 67 (citations omitted).) TransUnion then entered into an agreement with HVFCU in 2016. (See id. ¶ 70.) TransUnion entered into a second agreement with HVFCU in 2019. (See id. ) Both the 2016 and 2019 Agreements to which HVFCU agreed contain an identical, specific clause: "all information furnished to [TransUnion by HVFCU] shall be complete and accurate." (Id. ¶ 72 (citations omitted).) The Agreements also require HVFCU to furnish data in the industry-standard Metro2 format. (See id. ¶ 74.)
During the time period in which the balloon payment appeared on Plaintiff's credit report, TransUnion did not receive any "hard" credit inquiries regarding Plaintiff, meaning Plaintiff did not make a formal application for new credit. Throughout this time, though, TransUnion sent 13 credit reports to JP Morgan Chase Bank, Plaintiff's Bank. (See id. ¶ 50.)
Prior to the initiation of this suit, Plaintiff had "never spoken with anybody [representing TransUnion] about [her] Hudson Valley account." (Id. ¶ 61 (citation omitted).) According to Plaintiff, she instead "disputed the balloon payment information with her lessors multiple times." (Id. ¶ 60.)
The original Complaint was filed on October 25, 2019. Six days later, Plaintiff filed her First Amended Complaint. (See FAC (Dkt. No. 4).5 ) Following an extension of time to answer the Complaint, (see Dkt. No. 20), HVFCU requested a pre-motion conference preceding a motion to dismiss the action, (see Dkt. No. 21). Plaintiff opposed this request. (See Dkt. No. 27.) The Court ordered HVFCU to respond to Plaintiff's request. (See Dkt. No. 28.) HVFCU did so, (see Dkt. No. 29), and the Court ordered a pre-motion conference on February 13, 2020, (see Dkt. No. 31). Pending the pre-motion conference, motion practice and correspondent deadlines were stayed. (See Dkt. No. 35.)
Notwithstanding the stay, on January 7, 2020, Linear Motors filed an Answer with crossclaims against all other Defendants. (See Dkt. No. 43.) The following week, CULA similarly answered Plaintiff's Complaint and asserted crossclaims against all other Defendants. (See Dkt. No. 48.)
On January 28, 2020, TransUnion filed an Answer to Plaintiff's Amended...
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... ... Sessa v. Trans Union, LLC , in which it ... clarified Mader 's holding. 74 F.4th 38 (2d Cir ... information.” 15 U.S.C. § 1681i(a)(1)(A); see ... also Sessa v. Linear Motors, LLC , 576 F.Supp.3d 1, 10 ... n.9 (S.D.N.Y. 2021), vacated on other grounds , ... ...