Opinion
Civil Action. No. 2:18-cv-1062
12-06-2018
BRADLEY A. RUPERT, Plaintiff, v. TRANS UNION, LLC and TEBO FINANCIAL SERVICES, INC., Defendants.
District Judge Nora Barry Fischer
ECF No. 4 REPORT AND RECOMMENDATION
I. RECOMMENDATION
It is respectfully recommended that the Motion to Dismiss (ECF No. 4) filed by Defendant Tebo Financial Services, Inc. ("Tebo") be DENIED given that Plaintiff Bradley A. Rupert ("Plaintiff") has standing and has sufficiently alleged a claim under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq.
II. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff filed a Complaint against Defendants Trans Union, LLC ("Trans Union") and Tebo in the Court of Common Pleas of Indiana County, Pennsylvania. (ECF No. 1). Prior to Tebo being served, Trans Union removed the case to this Court. (Id.) According to the Complaint, Plaintiff entered into a retail installment contract for an automobile with Defendant Tebo in 2017. (ECF No. 1-2 ¶ 6). Pursuant to the contract, Plaintiff was to make monthly payments, and in March 2018, Plaintiff paid off the account. (Id. ¶¶ 7, 8). Plaintiff never submitted a late payment. (Id. ¶ 10). Nevertheless, in March 2018, Tebo reported that the account was open and late and disseminated that misinformation to credit bureaus. (Id. ¶¶ 9, 28). Plaintiff disputed the accuracy of his credit status with Trans Union, the disputes were sent along to Tebo, and then Tebo failed to conduct an investigation of the information that Plaintiff disputed. (Id. ¶¶ 13, 26).
Count I of Plaintiff's complaint is a violation of the FCRA against Trans Union. (Id. ¶¶ 16-22). Count II alleges a violation of the FCRA against Tebo. (Id. ¶¶ 23-30). Trans Union filed an answer on August 29, 2018. (ECF No. 3). Tebo filed its Motion to Dismiss (ECF No. 4), with a Memorandum in Support of the Motion to Dismiss, (ECF No. 5). Plaintiff filed a Brief in Opposition, (ECF No. 15), and Tebo replied, (ECF No. 16).
III. LEGAL STANDARD
Motion to Dismiss Pursuant to FED. R. CIV. P. 12(b)(1)
A Rule 12(b)(1) motion is the proper vehicle for asserting lack of standing "because standing is a jurisdictional matter." Ballentine v. United States, 486 F.3d 806, 810 (3d Cir. 2007) (citations omitted). A motion to dismiss under Rule 12(b)(1) "may be treated as either a facial or factual challenge to the court's subject matter jurisdiction." Gould Elecs. Inc. v. United States, 220 F.3d 169, 176 (3d Cir. 2000). "A factual attack, in which the defendant contests the truth of the jurisdictional allegations, is a different matter: the court need not treat the allegations as true, and a plenary trial is held to resolve any material factual disputes." Long v. Se. Pa. Transp. Auth., 903 F.3d 312, 320 (3d Cir. 2018). In a facial attack, however, the court must consider the allegations of the complaint as true, in the light most favorable to the plaintiff, similar to a motion to dismiss under Rule 12(b)(6). Id.
In the case at bar, Tebo expressly asserts a facial challenge. (ECF No. 5 at 3); see Long, 903 F.3d at 320 (explaining defendant "filed the attack before it filed any answer to the Complaint or otherwise presented competing facts, so its motion is, by definition, a facial attack") (internal citation and quotation omitted).
Motion to Dismiss Pursuant to Fed. R. Civ. P. 12(b)(6)
A complaint may be dismissed under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim upon which relief can be granted." Connelly v. Lane Constr. Corp., 809 F.3d 780, 786 (3d Cir. 2016). "But[,] detailed pleading is not generally required." Id. The Rules demand only "a short and plain statement of the claim showing that the pleader is entitled to relief to give the defendant fair notice of what the claim is and the grounds upon which it rests. Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (quoting FED. R. CIV. P. 8(a)(2)).
Under the pleading regime established by Twombly and Iqbal, a court reviewing the sufficiency of a complaint must take three steps. First, the court must "tak[e] note of the elements [the] plaintiff must plead to state a claim." Ashcroft v. Iqbal, 556 U.S. 662, 675 (2009). Second, the court should identify allegations that, "because they are no more than conclusions, are not entitled to the assumption of truth." Id. at 679; see also Burtch v. Milberg Factors, Inc., 662 F.3d 212, 224 (3d Cir. 2011) (explaining "[m]ere restatements of the elements of a claim are not entitled to the assumption of truth") (citation omitted). Finally, "[w]hen there are well-pleaded factual allegations, [the] court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Iqbal, 556 U.S. at 679. "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." Id.; see also Connelly, 809 F.3d at 786. Ultimately, the plausibility determination is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Iqbal, 556 U.S. at 679.
IV. ANALYSIS
Standing
Tebo challenges standing on the basis that Plaintiff has not sustained a concrete injury or an injury that is "sufficient to meet the concreteness requirement." (ECF No. 5 at 8). The issue of standing may be raised anytime by either a party or by the court. Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 280 (3d Cir. 2014) (other citations omitted). A "plaintiff generally must assert [his or her] own legal rights and interests, and cannot rest [his or her] claim to relief on the legal rights or interests of third parties." Sec'y of State of Md. v. Joseph H. Munson Co., 467 U.S. 947, 955 (1984). Importantly, the party invoking federal jurisdiction bears the burden of establishing standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992).
The United States Court of Appeals for the Third Circuit has noted the following regarding standing:
The Supreme Court has explained that "the irreducible constitutional minimum of standing contains three elements": (1) the invasion of a concrete and particularized legally protected interest and resulting injury in fact that is actual or imminent, not conjectural or hypothetical; (2) a causal connection between the injury and the conduct complained of, meaning that the injury must be fairly traceable to the challenged action of the defendant; and (3) it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.Blunt, 767 F.3d at 278 (quoting Lujan, 504 U.S. at 560) (emphasis added). Tebo challenges the first element - whether Plaintiff sustained a concrete and particular injury. "[T]he injury-in-fact element is not Mount Everest [and] require[s] only that claimant allege some specific, identifiable trifle of injury." In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 633 (3d Cir. 2017) (alterations omitted) (quoting Blunt, 767 F.3d at 278). An injury is "particularized" if it "affects the plaintiff in a personal and individual way." Id. (internal citation and quotation omitted). Plaintiff was affected in a personal and individual way given that it was his credit report that was negatively affected.
An injury is concrete if it is "de facto" and "actually exists." Long, 903 F.3d at 321 (3d Cir. 2018) (internal citation and quotation omitted). Even an intangible harm can constitute an injury-in-fact. Id.
"In determining whether an intangible harm constitutes injury in fact, both history and the judgment of Congress play important roles." The historical inquiry asks whether an intangible harm "has a close relationship" to one that historically has provided a basis for a lawsuit, and the congressional inquiry acknowledges that Congress's judgment is "instructive and important" because that body "is well positioned to identify intangible harms that meet minimum Article III requirements."Id. (quoting Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1548-49 (2016)). "A 'bare procedural violation, divorced from any concrete harm," cannot "satisfy the injury-in-fact requirement of Article III.'" Id. at 325 (quoting Spokeo, 136 S.Ct. at 1548-49). But see Lugo v. Experian Information Sols., Inc., Case No. 5:16-cv-04647-EJD, 2017 WL 2214641, at *3 (N.D. Cal. May 19, 2017) (explaining "[s]ince Plaintiff alleges that TD Bank was notified that its credit reporting was inaccurate and failed to undertake one of its duties under § 1681s-2(b), she has not merely alleged a 'bare procedural violation' but rather a harm the court finds sufficiently concrete based on Congress' intent in enacting the FCRA") (emphasis added).
As to the Congressional inquiry, Congress, in enacting the FCRA, clearly sought to make this type of injury redressable. The FCRA was enacted, in part, to "to ensure fair and accurate credit reporting." Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). As to the historical inquiry, the inaccurate reporting of Plaintiff's credit history "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." Pedro v. Equifax, Inc., 868 F.3d 1275, 1280 (11th Cir. 2017) (citing RESTATEMENT (FIRST) OF TORTS § 569 cmt. g (1938)).
In addition to an inaccuracy in his credit report, Plaintiff also claims that he lost time repeatedly disputing the inaccuracy in his credit report. (ECF No. 1-2 ¶ 26). "[T]ime spent trying to resolve problems with the credit reporting agency may also be taken into account. Cortez v. Trans Union, LLC, 617 F.3d 688, 719 (3d Cir. 2010). Additionally, although not specifically alleged in the complaint, Plaintiff suggests that he suffered accompanying distress. Common sense dictates an inaccurate credit report would cause distress. Ashcroft, 556 U.S. at 679 ("[d]etermining whether a complaint states a plausible claim for relief will, as the Court of Appeals observed, be a context-specific task that requires the reviewing court to draw on its judicial experience and common sense"). At this juncture, Plaintiff has pled facts when viewed in the light most favorable to him, pass the standing hurdle by the slimmest of margins.
Failure to state a claim under § 1681s-2(b) of the FCRA
Tebo argues that Plaintiff failed to state a claim under the FCRA because Plaintiff did not present Tebo with notice of a potentially meritorious dispute as his payment was in fact late; Tebo satisfied any duty it owed to Plaintiff by removing the delinquent notification from Plaintiff's credit report; and Plaintiff has failed to allege any actual damages. (ECF No. 5 at 6-7). Plaintiff has stated a claim under § 1681s-2(b). "Section 1681s-2(b) imposes certain duties on a furnisher/creditor who has been notified by a consumer credit reporting agency that a consumer has disputed information furnished by that furnisher/creditor." Harris v. Pa. Higher Educ. Assistance Agency/ Am. Educ. Servs., 696 F. App'x 87, 90 (3d Cir. 2017) (citing Seamans v. Temple Univ., 744 F. 3d 853, 864-65 (3d Cir. 2014); Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429-30 (4th Cir. 2004)). The statute provides in relevant part, "After receiving notice pursuant to section 1681i(a)(2) of this title 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." 15 U.S.C. § 1681s-2(b)(1)(a).
The FCRA allows for a private cause of action for the failure to investigate credit-reporting discrepancies based on the following duties: (1) the consumer must inform the credit agency that he disputes the information that the furnisher provided; (2) the credit agency must then notify the furnisher of the information about the consumer's dispute; and (3) the furnisher must conduct a reasonable investigation with respect to the disputed information.Berkey v. Verizon Comms. Inc., 658 F. App'x 172, 175 (3d Cir. 2016). "[A] reasonable procedure is one that a reasonably prudent person would undertake under the circumstances." Seamans, 744 F.3d at 864 (internal citation and quotation omitted). Plaintiff alleged that he submitted a credit dispute to Trans Union, Trans Union forwarded the dispute to Tebo, and Tebo failed to conduct a reasonable investigation in response to a credit dispute. This is sufficiently pleaded Circuit to survive a motion to dismiss in accordance with the standard laid out by the Court of Appeals for the Third. See Berkey, 658 F. App'x at 175.
Tebo also argues that actual damages are required to state a claim for violation of the FRCA. Actual damages are not the only damages available under 15 U.S.C. §§ 1681n, 1681o.
Nevertheless, Tebo argues that Plaintiff's claim must be dismissed because the information Tebo provided to Trans Union regarding the delinquency of Plaintiff's account was accurate and because it did reasonably investigate Plaintiff's claim and determined that Plaintiff's payment had been late, albeit by a day. (ECF No. 5 at 5-8). A FED. R. CIV. P. 12(b)(6) motion tests the sufficiency of the complaint. Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993). In making its argument, Tebo wholly ignores the standard and introduces new facts unsupported by the record. At the motion to dismiss stage, courts "generally consider only the allegations contained in the complaint, exhibits attached to the complaint[,] matters of public record," and "an undisputedly authentic document." Levins v. Healthcare Revenue Recovery Grp. LLC, 902 F.3d 274, 279 (3d Cir. 2018) (internal citation and quotation omitted). Thus, Tebo's argument is entirely without merit.
V. CONCLUSION
For the foregoing reasons, it is respectfully recommended that the Motion to Dismiss (ECF No. 4) filed by Defendant be DENIED. In accordance with the Magistrate Judge's Act, 28 U.S.C. § 636(b)(1)(B) and (C), and Local Rule of Court 72.D.2, the parties are allowed fourteen (14) days from the date of service to file objections to this report and recommendation. Any party opposing the objections shall have fourteen (14) days from the date of service of objections to respond thereto. Failure to file timely objections will constitute a waiver of any appellate rights. Dated: December 6, 2018
BY THE COURT:
s/Lisa Pupo Lenihan
LISA PUPO LENIHAN
United States Magistrate Judge cc: All counsel of record by Notice of Electronic Filing