LAWSUIT on Original CReditor

In fact, at our friend Kristy's site, someone posted this case from a couple of weeks ago. Looks like Sears ran aground on this as well.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA




RICHARD L. SHEFFER, :

Plaintiff, : CIVIL ACTION

:

v. :

:

EXPERIAN INFORMATION :

SOLUTIONS, INC., et al., : No. 02-7407

Defendants. :






MEMORANDUM AND ORDER




SCHILLER, J. February , 2003




Plaintiff Richard L. Sheffer commenced this action against Defendants Experian Information Solutions, Inc., Equifax Information Services, LLC, Equifax, Inc., Trans Union, LLC, and Sears Roebuck & Co. ("Sears"). Defendant Sears has moved to dismiss the claims against it pursuant to Federal Rule of Civil Procedure 12(b)(6). This case presents an issue under the Fair Credit Reporting Act that has not been addressed in a reported opinion by this Court or the United States Court of Appeals for the Third Circuit, and I hold that 15 U.S.C. § 1681s-2(b) provides consumers with a private right of action against credit furnishers. Consistent with this holding and for the additional reasons set forth below, I deny Sears's motion.




BACKGROUND


According to the allegations in Plaintiff's Complaint,(1) Mr. Sheffer opened a Sears charge account in January 1993. (Compl. ¶ 17.) Without obtaining Mr. Sheffer's consent, Sears subsequently converted this charge account to a Sears Mastercard account and closed the charge account. (Compl. ¶¶ 19-21.) Moreover, Sears later merged Plaintiff's Sears Mastercard account with that of a former Sears customer who was deceased. (Compl. ¶ 24.) Because of this error, Plaintiff's credit reports, prepared by the other Defendants in this action, included a notation that Mr. Sheffer was deceased. (Compl. ¶¶ 30, 35, 40, 45.) Plaintiff alleges that this error created difficulties with his creditors, harmed his credit rating, and caused him to expend considerable effort in attempting to have the error corrected. (Compl. ¶¶ 130-31, 135-36.) In addition to bringing claims against certain credit reporting agencies, Plaintiff is suing Sears for violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 (2002) et seq., and defamation.




STANDARD OF REVIEW


In considering a motion to dismiss for failure to state a claim upon which relief can be granted, courts must accept as true all of the factual allegations pleaded in the complaint and draw all reasonable inferences in favor of the non-moving party. See Bd. of Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs., Inc., 237 F.3d 270, 272 (3d Cir. 2001). Furthermore, a motion to dismiss will only be granted if it is clear that relief cannot be granted to the plaintiff under any set of facts that could be proven consistent with the complaint's allegations. See Hishon v. King & Spalding, 467 U.S. 69, 73 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46 (1957)).




DISCUSSION


In its motion, Sears contends that Plaintiff's claim under the FCRA should be dismissed because consumers have no private right of action against a credit furnisher under 15 U.S.C. § 1681s-2(b). In the alternative, Sears argues that Mr. Sheffer's allegations are legally insufficient because Plaintiff has failed to allege that a credit reporting agency has sent a dispute verification form to Sears. Sears also moves for the dismissal of Mr. Sheffer's defamation claim, arguing that the claim is preempted by the FCRA.

With respect to the issue of whether § 1681s-2(b) creates a cause of action for a consumer against a furnisher of credit information, Sears correctly notes that courts have reached different conclusions.(2) However, a clear majority of courts that have addressed this issue has "effectively recognized Congress' obvious intent [to] create a private cause of action through § 1681s-2." Vazquez-Garcia v. Trans Union De P.R., Inc., 222 F. Supp. 2d 150, 155 (D.P.R. 2002); see also Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1058 (9th Cir. 2002) (describing purpose of § 1681s-2(b) as "provid[ing] some private remedy to injured consumers"). The reasoning in support of the majority view has been aptly summarized:

The civil liability sections, 15 U.S.C. § 1681n and 1681o, explicitly provide a private right of action for consumers wishing to enforce any provision of the Fair Credit Reporting Act against "any person" who either "willfully fails to comply" or is "negligent in failing to comply." Absent any explicit limitation, the plain language of 15 U.S.C. §§ 1681n, 1681o, 1681s-2(b) and (c) provide a private right of action for a consumer against furnishers of information who have willfully or negligently failed to perform their duties upon notice of a dispute. Furthermore, the negative inference of explicitly precluding a consumer's right of action for violations of § 1681s-2(a) is that they are preserved in § 1681s-2(b). Accordingly, the plain language of the Fair Credit Reporting Act compels the conclusion that there is a private right of action for consumers to enforce the investigation and reporting duties imposed on furnishers of information.




Dimezza v. First USA Bank, Inc., 103 F. Supp. 2d 1296, 1300 (D.N.M. 2000). Consistent with this reasoning, I conclude that § 1681s-2(b) provides consumers with a private right of action against a furnisher of credit information.

Sears also argues that the facts Plaintiff has pleaded in his Complaint are insufficient to state a claim for a violation of § 1681s-2(b). Specifically, Sears argues that under § 1681s-2(b) Plaintiff must allege that Sears failed to respond to a credit agency's notification that Plaintiff disputed certain information. With respect to Plaintiff's factual allegations, Sears states that "[t]he only direct allegations directed at Sears state that Plaintiff advised Sears directly of the error in Plaintiff's credit report, and that Sears failed to respond." (Def. Sears's Mot. to Dismiss at 6 (emphasis in original).) Sears's argument mischaracterizes Mr. Sheffer's allegations. In his Complaint, one of Mr. Sheffer's overriding assertions is that he contacted several credit agencies to dispute the "deceased" notation, and those credit reporting agencies informed him that they had investigated the disputed information. The notation, however, was not initially removed from his credit report. (Compl. ¶¶ 28-59, 75-76.) That is, Plaintiff's FCRA claim does not turn solely on the fact that Plaintiff contacted Sears directly, but includes allegations that, at the very least, create the reasonable inference that Sears failed to adequately respond to the credit reporting agencies' investigatory inquiries.(3)

For purposes of ruling on a motion to dismiss, courts "must accept as true all of the factual allegations in the complaint as well as the reasonable inferences that can be drawn from them," Doe v. Delie, 257 F.3d 309, 313 (3d Cir. 2001), and, thus, Sears's argument cannot succeed.

Lastly, Sears contends that Plaintiff's defamation claim is preempted by the FCRA's immunity provisions. See 15 U.S.C. §§ 1681h(e) and 1681t(b)(1). These immunities, however, may not apply when "false information [is] furnished with malice or willful intent to injure." Vazquez-Garcia, 222 F. Supp. 2d at 162 (quoting 15 U.S.C. § 1681h(e)). Here, Mr. Sheffer has alleged such willfulness (Compl. ¶¶ 129, 131-32), and, as such, his defamation cannot be dismissed at this stage of the proceedings.




CONCLUSION
Accordingly, I deny Defendant Sears's motion to dismiss. An appropriate Order follows.







IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA




RICHARD SHEFFER, :

Plaintiff, : CIVIL ACTION

:

v. :

:

EXPERIAN INFORMATION :

SOLUTIONS, INC., et al., : No. 02-7407

Defendants. :






ORDER


AND NOW, this day of February, 2003, upon consideration of Defendant Sears Roebuck & Co.'s Motion to Dismiss, Plaintiff Richard L. Sheffer's response thereto, and Defendant's reply thereto, and for the foregoing reasons, it is hereby ORDERED that:

Defendant Sears Roebuck & Co.'s Motion to Dismiss (Document No. 25) is DENIED.
Defendant Sears Roebuck & Co.'s Motion to Strike Exhibits to Plaintiff's Opposition to Defendant's Motion to Dismiss is DENIED as moot.


BY THE COURT:








__________________________

Berle M. Schiller, J.













1. In ruling on Sears's motion to dismiss pursuant to Rule 12(b)(6), the Court is required to accept the truth of the allegations set forth in Plaintiff's Complaint.

2. Sears principally relies on Carney v. Experian Information Solutions, Inc., 57 F. Supp. 2d 496 (W.D. Tenn. 1999). This decision has been described as "baffling." Dimezza, 103 F. Supp. 2d at 1301.

3. Under the FCRA, a credit reporting agency that has received a notice of a dispute from a consumer is required to promptly provide notification of that dispute to the furnisher of the relevant credit information. See 15 U.S.C. § 1681i(a)(2). Thus, in light of Plaintiff's allegations, it appears that Sears would have been notified by the Defendants about the disputed information in Plaintiff's credit report unless those credit reporting agencies were acting in violation of the FCRA. In any event, this issue is one appropriately resolved after discovery has been completed. See Sullivan v. Equifax, Inc., Civ. A. No. 01-4336, 2002 WL 799856, 2002 U.S. Dist. LEXIS 7884, at * 6 n.

 

Whychat I got a question for you that I think might be right down your alley.

An automobile accident occurs and an ambulance is called. Someone is taken to the hospital and the case must go to court. In the shuffle the attorney for the plaintiff fails to notify the ambulance company (city owned and operated) that they have to wait for the settlement just like everybody else. So they send the bill to a collection agency who puts it on the plaintiff's credit report.

Is there anything under HIPAA that would demand that the derog be removed and if so what section of HIPAA would you refer me to?

 

After a careful review of Jthomas' posts (above) I find his/her assertion, while technically accurate, slightly misleading. I guess if we are to focus exclusively on the tech. accuracy part of his argument we'd have to say that Jthoma is correct.

Most of us know that in order to file suit against a DF one must first go through the CRA, which in turn is required to notify (and forward evidence furnished by the consumer) directly to the DF within 5 days.

Should the consumer attempt to file suit at all against the DF without first notifying the CRA FIRST his suit will fail. So yes, technically one may not "sue the OC", not only for not listing an account as in dispute but for anything else for that matter.


But to say that "failure to list an account as in dispute" is not in and of itself a violation sufficient to bring an action is, in my opinion, a stretch, here's why:


A DF has 4 separate and distinct responsibilities when receiving a dispute from the consumer OR the CRA.

§ 623. Responsibilities of furnishers of information to consumer reporting agencies [15 U.S.C. § 1681s-2]

(b) Duties of furnishers of information upon notice of dispute.

(1) In general. After receiving notice pursuant to section 611(a)(2) [§ 1681i] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall

(A) conduct an investigation with respect to the disputed information;

(B) review all relevant information provided by the consumer reporting agency pursuant to section 611(a)(2) [§ 1681i];

(C) report the results of the investigation to the consumer reporting agency; and

(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.


Jthoma may be correct in that if one files a suit against a DF and merely states a cause of action as "failure to list as disputed" may be grounds for a dismissal and perhaps even a sanction. I won't argue that minor point.

But what is the purpose for the dispute in the first place? It's because the information is NOT complete or accurate, which IS a cause of action.

Studying only the Nelson V. Chase case would promulgate confusion when focusing on this issue.

During the case the FTC was asked to file it's (Amicus Curiae) brief to the court in order to render their opinion on the matter and hopefully clarify for the court. There we can find very interesting language.

http://subscript.bna.com/SAMPLES/la...96ba85a310bdf7bb85256b7d00740a15?OpenDocument


The FTC states:

The bank argued that Section 1681s-2(b) does not even mention consumers, so the private actions authorized by Section 1681n and 1681o do not apply. This argument, the court said, "has specious plausibility" but "overlooks the fact that the notice which starts the process provided by (b) is notice of a dispute as to the accuracy or completeness of information" contained in a consumer's file. When information in a consumer's file is disputed by a consumer, it is hard to say there is no "requirement ... with respect to a consumer" under Section 1681n, the court said.


The ninth circuit agreed. In other words the fact that a dispute was asserted by the consumer has a genesis, a beginning. That genesis IS the fact that the information is NOT complete or accurate. That's the reason for the dispute in the first place.

A court would be remiss if they simply handled this exercise in linguistic gymnastics with a dismissal, rather than seeking further clarification from the plaintiff.

That's not to say however that it would be impossible, considering the lousy degree of professionalism we see in small claims courts. To be on the safe side I would not file on the "failure to list as disputed" argument ONLY.

Lets throw another violation in here as well.

 

CRAP!!!

Correction! The brief filed by the FTC, for the most part quoted the Nelson V. Chase case. For the original language just go see Nelson.


Chase argues that as consumers are unmentioned by namein § 1681s-2(b), this section does not impose a requirement"with respect to any consumer," so the private right of actionunder §§ 1681n & o do not apply to § 1681s-2(b). The argu-ment has a specious plausibility. It overlooks the fact that thenotice which starts the process provided by (b) is notice of adispute as to the accuracy or completeness of information"contained in a consumer's file." See 15 U.S.C.§ 1681i(a)(1)(A). The information to be investigated does notexist in the air. It is hard to say that, when information in aconsumer's file is the issue, there is no requirement "withrespect to a consumer." The information is disputed by theconsumer. See id. Its completeness or accuracy is of primeconcern to the consumer.


BTW Diva,

I'm sure you have seen LK's case against Sears. But if not here's the link:

http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&threadid=27168&highlight=1681s2

 

The one thing I miss most about being a moderator is that I could correct my posts anytime I wanted to.

Now I'm limited by the 15 minute limit.

LOL

 

Keepmine, bbauer, Why Chat, butch --

I think we've beaten this dead horse enough....

I enjoyed reading your comments and analysis.

 

I continue to stand by my posts, I also value the opinion of jthoma. Brought up very interesting points indeed!

Tac

 

Re: Re: LAWSUIT on Original CReditor

I actually thought you'd let us in on your conclusions.

I'm not used to beating dead horses.

???

 

Re: Re: LAWSUIT on Original CReditor

wow - your rights are violated yet that is not enough. I guess one would have to be turned down for credit during this same period in order to show damages? or would showing a pattern of repeated violations change matters?

 

uniondiva, would you mind telling me who the OC was? please dont tell me it was sears!

 

Wow.

Pursing CAs and OCs for violations in court is going to be tougher than I thought if it comes down to that. For someone who is doing this without a lawyer, they have their work cut out for them.

--delgato