Short v. Allstate Credit Bureau

• Citation: 370 F.Supp.2d 1173
• Decision Date: 23 May 2005
• Docket Number: No. 2:03-cv-680-F WO.,2:03-cv-680-F WO.
• Parties: Kent Allen SHORT, et al., Plaintiffs, v. ALLSTATE CREDIT BUREAU, et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

370 F.Supp.2d 1173

Kent Allen SHORT, et al., Plaintiffs, v. ALLSTATE CREDIT BUREAU, et al., Defendants.

No. 2:03-cv-680-F WO.

United States District Court, M.D. Alabama, Northern Division.

May 23, 2005.

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Alvin T. Prestwood, Tara Smelley Knee, Prestwood & Associates PC, Montgomery, AL, for Plaintiffs.

James Michael Keel, Katherine Paige Elliott-Pinson, Thomas Renfro Elliott, Jr., London & Yancey, R. Randolph Neeley, U.S. Attorney's Office, Montgomery, AL, Birmingham, AL, Stephen Michael Doyle, United States Attorney's Office, Montgomery, AL, for Defendants.

MEMORANDUM OPINION AND ORDER

FULLER, Chief Judge.

Plaintiffs Kent Allen Short and Melissa C. Short (hereinafter "Plaintiffs") bring this civil action challenging the alleged improper procurement and use of a consumer credit report. On June 27, 2003, Plaintiffs filed the Complaint in this action against the following defendants: Allstate Credit Bureau, Farm Services Agency, Phelan B. Savage, Jr., United States Department of Agriculture, and Ann M. Veneman as the Secretary of the United States Department of Agriculture. (Doc. # 1). By their Complaint, Plaintiffs allege violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq., numerous constitutional claims, and a state law invasion of privacy claim.

This action is presently before the court on the motion to dismiss filed by Defendant Allstate Credit Bureau on August 19, 2003. (Doc. # 9). Plaintiffs filed their response to the motion on September 11, 2003 and, on October 8, 2003, Defendant Allstate Credit Bureau filed its reply. (Docs. # 13 & 19). For the reasons that follow, the court concludes that the motion to dismiss is due to be GRANTED.

I. FACTUAL BACKGROUND¹ AND PROCEDURAL HISTORY

This lawsuit stems from the inclusion of a non-applicant spouse's credit history on a consumer credit report for the applicant spouse. Plaintiffs Kent Allen Short and Melissa C. Short (hereinafter "Mr. Short" and "Mrs. Short" or collectively "Plaintiffs") are husband and wife.² (Compl.¶ 2). Mr. Short is an agricultural farmer who operates a farm in Chilton County, Alabama. Defendant Allstate Credit Bureau (hereinafter "Allstate") is a "consumer reporting agency" within the meaning of 15 U.S.C. § 1681a(f).³ Allstate prepares, sells and distributes "consumer reports" as defined in 15 U.S.C. § 1681a(d).⁴

In June of 2001, Mr. Short applied for a farm loan with the Farm Services Agency (hereinafter "FSA").⁵ Mr. Short submitted his loan application to Phelan B. Savage, Jr. (hereinafter "Savage"), a FSA Farm Loan Manager assigned to the Elmore/Montgomery County Office. In order to process the application, Savage contacted Mrs. Short and requested her social security number so that he could obtain her credit history. In response to Savage's request, Mrs. Short instructed him not to obtain her credit history.⁶

On July 9, 2001, despite the clear instructions of Mrs. Short, Savage obtained a consumer credit report from Allstate listing the credit history of Mrs. Short. Shortly thereafter, on July 16, 2001, Mrs. Short reiterated to Savage, by a written letter, her request not to have her credit history considered in relation to Mr. Short's loan application. Nonetheless, without regard to Mrs. Short's repeated requests and lacking her authorization, Savage considered Mrs. Short's credit history in determining Mr. Short's loan application. Consequently, Mr. Short's loan application was denied because of adverse information in Mrs. Short's credit history.

Dissatisfied with Savage's decision on Mr. Short's loan application, Plaintiffs filed this action on June 27, 2003. (Doc. # 1, Compl.). Plaintiffs allege claims under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq.; the Declaratory Judgment Act, 28 U.S.C. § 2201; the All Writs Act, 28 U.S.C. § 1651; the Equal Credit Opportunity Act, 15 U.S.C. § 1691, et seq.; the Fifth Amendment to the United States Constitution; and a state law claim of invasion of privacy. Plaintiffs seek compensatory and punitive damages, court costs, attorney's fees and declaratory relief. (Id.).

On August 19, 2003, Defendant Allstate⁷ filed a Motion to Dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) arguing that all of the claims alleged by Plaintiffs are due to be dismissed. (Doc. # 7). As previously mentioned, this motion is fully briefed whereas Plaintiffs filed their response (Doc. # 13) and Allstate filed its reply (Doc. # 19).

II. JURISDICTION AND VENUE

The court exercises subject matter jurisdiction over this action pursuant to 28 U.S.C. § 1331 (federal question jurisdiction) and 15 U.S.C. § 1681, et seq. (Fair Credit Reporting Act). The parties do not contest personal jurisdiction or venue, and the court finds adequate allegations supporting both.

III. STANDARD OF REVIEW

A court may dismiss a complaint for failure to state a claim only if it is clear that no relief could be granted under any set of facts that could be proven consistent with the allegations in the complaint. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984); see also Wright v. Newsome, 795 F.2d 964, 967 (11th Cir.1986) ("[W]e may not ... [dismiss] unless it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims in the complaint that would entitle him or her to relief.") (citation omitted). The court will accept as true all well-pleaded factual allegations and will view them in a light most favorable to the nonmoving party. Hishon, 467 U.S. at 73, 104 S.Ct. 2229. Furthermore, the threshold is "exceedingly low" for a complaint to survive a motion to dismiss for failure to state a claim. See Ancata v. Prison Health Servs., Inc., 769 F.2d 700, 703 (11th Cir.1985).

IV. DISCUSSION

A. Fair Credit Reporting Act Claims

In the Complaint, Plaintiffs allege violations of the Fair Credit Report Act generally against all the defendants. Specifically, Plaintiffs allege claims of "willful noncompliance with 15 U.S.C. § 1681b(2) and § 1681b(3)" and "willful noncompliance with 15 U.S.C. § 1681d." (Compl. ¶¶ 16 & 19). According to the Complaint, these violations occurred when "Defendants sought a credit report that was not for the consumer applicant, but for a non-applicant that had given instructions not to be associated with the loan" and because "the procurement of a consumer report [] was not disclosed to the consumer applicant or the non-applicant." (Id.).

Congress enacted the Fair Credit Reporting Act (hereinafter "FCRA") in order to ensure "that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit ... and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information...." 15 U.S.C. § 1681(b); see also Yang v. Gov't Employees Ins. Co., 146 F.3d 1320, 1322 (11th Cir.1998) ("The FCRA seeks to promote the credit reporting industry's responsible dissemination of accurate and relevant information."). Sections 1681n and 1681o provide private rights of action for willful and negligent noncompliance with any duty imposed by the FCRA and allow recovery for actual damages and attorneys' fees and costs, as well as punitive damages in the case of willful noncompliance.

1. Claims under § 1681b(2) and § 1681b(3)

The provisions of § 1681b upon which Plaintiffs rely, namely subsections (2) and (3), address the permissible purposes for which consumer reports may be furnished.⁸ Plaintiffs argue that Allstate is liable for the inclusion of Mrs. Short's credit history on the credit report conveyed to Savage because the inclusion was impermissible under the FCRA. Allstate challenges Plaintiffs' argument and contends that the joint credit report was properly obtained because it was furnished with a permissible purpose. The Court proceeds by addressing these arguments.

Allstate's position is not without support. See Koropoulos v. Credit Bureau, Inc., 734 F.2d 37 (D.C.Cir.1984). In Koropoulos, the wife claimed that she was damaged when she applied for a department store credit card and was refused because of adverse information in her husband's credit history. Even though the court was unable to grant summary judgment due to a dispute of material facts, it reasoned that the credit report of a spouse could be properly obtained under 15 U.S.C. § 1681b(3)(A). Although the plain language of § 1681b(3)(A) — that a consumer report may be furnished in connection with a credit transaction involving the consumer on whom the information is to be furnished — seems to prohibit obtaining spousal credit reports, the court noted that the definition of "consumer report" is more liberal. Under the FCRA, a "consumer report" is "any ... communication bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living....." 15 U.S.C. § 1681a(d). Thus, the court reasoned, a spouse's credit report could constitute an applicant's consumer report. Other courts have adopted this reasoning. See Smith v. GSH Residential Real Estate Corp., 935 F.2d 1287, 1991 WL 106191 (4th Cir.1991) (affirming district court's holding, which was based upon Koropoulos, where individual applied for a residential lease but the application was denied based on adverse information in the credit file of the applicant's separated spouse). This court finds no reason to reach a dissimilar conclusion.

Moreover, under § 1681b(3)(A), a creditor may request information on an applicant's spouse in a number of circumstances. Such situations which permit creditors to request spousal information include circumstances where the spouse will use the account or be contractually liable on the account, or where the applicant is relying on the spouse's income or acting as the spouse's agent. See 15 U.S.C. § 1681b(3)(...