Opinion
5:24-CV-188 (DNH/MJK)
05-01-2024
SHARMELL TAYLOR, Plaintiff, v. EXPERIAN and CREDIT ACCEPTANCE CORPORATION, Defendants.
SHARMELL TAYLOR, PLAINTIFF, PRO SE
SHARMELL TAYLOR, PLAINTIFF, PRO SE
ORDER AND REPORT-RECOMMENDATION
MITCHELL J. KATZ, U.S. MAGISTRATE JUDGE
The Clerk has sent to the court for review an amended complaint (Dkt. No. 6) (“AC”), filed by plaintiff in response to this court's February 14, 2024 Order and Report-Recommendation (“ February 2024 ORR”) and the District Court's approval of that recommendation on March 7, 2024 (Dkt. Nos. 4, 5). In the February 2024 ORR, this court granted plaintiff's application to proceed in forma pauperis based on her financial eligibility. (Dkt. No. 4 at 1).
However, I also stated that in addition to determining whether plaintiff meets the financial criteria to proceed IFP, the court must also consider the sufficiency of the allegations set forth in the complaint in light of 28 U.S.C. § 1915, which provides that the court shall dismiss the case at any time if the court determines that the action is (i) frivolous or malicious; (ii) fails to state a claim on which relief may be granted; or (iii) seeks monetary relief against a defendant who is immune from such relief. 28 U.S.C. § 1915 (e)(2)(B)(i)-(iii).
In determining whether an action is frivolous, the court must consider whether the complaint lacks an arguable basis in law or in fact. Neitzke v. Williams, 490 U.S. 319, 325 (1989). Dismissal of frivolous actions is appropriate to prevent abuses of court process as well as to discourage the waste of judicial resources. Neitzke, 490 U.S. at 327; Harkins v. Eldridge, 505 F.2d 802, 804 (8th Cir. 1974). Although the court has a duty to show liberality toward pro se litigants, and must use extreme caution in ordering sua sponte dismissal of a pro se complaint before the adverse party has been served and has had an opportunity to respond, the court still has a responsibility to determine that a claim is not frivolous before permitting a plaintiff to proceed. Fitzgerald v. First East Seventh St. Tenants Corp., 221 F.3d 362, 363 (2d Cir. 2000) (finding that a district court may dismiss a frivolous complaint sua sponte even when plaintiff has paid the filing fee).
To survive dismissal for failure to state a claim, the complaint must contain sufficient factual matter, accepted as true, to state a claim that is “plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citing Bell Atl. Corp., 550 U.S. at 555). The court will now turn to a consideration of the plaintiffs' complaint under the above standards, keeping in mind that pro se pleadings are interpreted to raise the strongest arguments they suggest. See Abbas v. Dixon, 480 F.3d 636, 639 (2d Cir. 2007).
Plaintiff has now filed a proposed amended complaint, which I will review based on the above standards.
I. Amended Complaint
Plaintiff asserts that defendant Experian, a credit reporting agency, “never received consent to report the information on plaintiff's consumer report.” (AC at 6-7). Plaintiff alleges that Experian nevertheless “provided [defendant] Credit Acceptance Corporation with access to the [plaintiff's] consumer report and allowed Credit Acceptance Corporation to use it for impermissible purposes.” (AC at 7). When plaintiff sent Experian a dispute regarding the transactions being reported, Experian responded to plaintiff that they had “contacted the company who was reporting the information and supplied them with all the information and instructed them to review it, verify the accuracy of the information and provide a response.” (Id.). Plaintiff states that Experian “exhibited willful and negligent disregard for maintaining reasonable procedures in handling the [plaintiff's] complaint.” (Id.). Plaintiff states that the “inaccurate information is still being reported on the [plaintiff's] consumer report and has led the [plaintiff's] credit score to be lowered which has caused a struggle to obtain any credit at all.” (Id.). She clarifies that the inaccurate information has been furnished on her consumer report “since 2018 adding up to 68 reported transactions.” (Id. at 8).
Plaintiff alleges that Experian is “aware of the consequences of a company furnishing information that is inaccurate and owes a duty as a CRA when receiving disputes to have a better procedure than just sending it to the furnisher.” (AC at 8). She states that after she disputed the information reported by Experian, they “said they did an investigation into the dispute on two different occasions. On both occasions Experian stated they had sent the dispute to the furnisher of the information.” (Id.). Based on this representation, plaintiff asserts that Experian merely “push[ed] the investigation off to Credit Acceptance who was already furnishing the inaccurate information,” even though Experian “had the opportunity to fix the inaccurate information on two occasions ....” (Id.). She states Experian “could have pulled up the [plaintiff's] credit report and actually investigated the dispute.” (Id. at 9). Instead, plaintiff asserts, Experian relied on Credit Acceptance Corporation to “hold themselves accountable” and “fix the dispute.” (Id.). Experian continued to communicate to plaintiff that they had “done an investigation” concerning her dispute. (Id. at 9-10). Plaintiff asserts that Experian “never actually did an investigation of the information being reported on their own.” (Id. at 10).
Plaintiff further alleges that defendant Credit Acceptance Corporation is a “debt collector” under the FDCPA. (AC at 10). She asserts that when Credit Acceptance Corporation received the dispute from Experian, “they were supposed to remove the transactions that were at dispute but they failed to do so.” (Id.). Plaintiff asserts that Credit Acceptance Corporation has never responded to her multiple communications regarding her disputes. (Id.).
DISCUSSION
II. The Fair Debt Collection Practices Act
A summary of the relative scope and purpose of the FDCPA was set forth in this court's February 2024 ORR, and thus will not be restated herein. (Dkt. No. 4 at 5-7). In her amended complaint, plaintiff asserts a claim for relief under the FDCPA against defendant Credit Acceptance Corporation, whom she identifies as a “debt collector” for purposes of the statute. Credit Acceptance Corporation holds itself out to be an auto finance company providing automobile loans and other related financial products. At least one other court has recognized Credit Acceptance Corporation to operate as the assignee of automobile retail installment sales contracts. See Wadlington v. Credit Acceptance Corp., 76 F.3d 103, 104 (6th Cir. 1996).
See https://www.creditacceptance.com/about (last visited April 26, 2024).
The definition of the term “debt collector” is set forth in 15. U.S.C. §1692a(6), and begins as follows:
The term “debt collector” means any person who uses any instrumentality of interstate commerce or the mails in any business the principal purpose of which is the collection of any debts, or who regularly collects or attempts to collect, directly or indirectly, debts owed or due or asserted to be owed or due another.
The legislative history of the FDCPA indicates “conclusively that a debt collector does not include the consumer's creditors, a mortgage servicing company, or an assignee of a debt, as long as the debt was not in default at the time it was assigned.” In re Residential Cap., LLC, No. 12-12020, 2015 WL 4747860, at *8 (Bankr. S.D.N.Y. Aug. 4, 2015) (quoting Whittle v. Wells Fargo Bank, N.A., No. CV F 10-0429, 2010 WL 1444532, at *9 (E.D. Cal. Apr. 9, 2010)). In Wadlington, the Sixth Circuit concluded that Credit Acceptance Corporation did not fall under the statutory definition of a debt collector. 76 F.3d at 106.
Here, plaintiff has provided little to no information about Credit Acceptance Corporation's conduct as a purported “debt collector,” nor is there any indication from the amended complaint, other than plaintiff's conclusory statement as to this fact, that Credit Acceptance Corporation actually operated in this capacity. Because plaintiff has not plausibly alleged that Credit Acceptance Corporation is a “debt collector” under the FDCPA, plaintiff has failed to state a claim under the statute. See Ghiazza v. Anchorage Marina, Inc., No. 19-CV-2792, 2021 WL 4392482, at *4 (S.D.N.Y. Sept. 24, 2021) (citing Johnson-Gellineau v. Steine & Associates, No. 16-CV-9945, 2019 WL 2647598, at *8-9 (S.D.N.Y. June 27, 2019) (dismissing FDCPA claim where the plaintiff failed to allege facts showing that the defendants constituted “debt collectors” under the FDCPA); Dash v. Bank of America Corp., No. 18-CV-4807, 2019 WL 1780140, at *10 (S.D.N.Y. Apr. 23, 2019) (dismissing claim under the FDCPA where the plaintiff “failed to plead facts to show that [the defendant] is actually a debt collector within the meaning of the statute”); Qurashi v. Ocwen Loan Servicing, LLC, 760 Fed.Appx. 66, 68 6 (2d Cir. 2019) (affirming dismissal of FDCPA claim where the plaintiff's “complaint fail[ed] adequately to allege that the defendants qualif[ied] as debt collectors for purposes of the FDCPA”)).
III. The Fair Credit Reporting Act
A. Credit Acceptance Corporation
Under the doctrine of claim preclusion, also known as “res judicata,” a litigant may not bring a new case that includes claims or defenses that were, or could have been, raised in an earlier case in which the same parties were involved if that case resulted in a judgment on the merits. Brown v. Felsen, 442 U.S. 127, 131 (1979). Claim preclusion thus “prevents parties from raising issues that could have been raised and decided in a prior action - even if they were not actually litigated.” Marcel Fashions Grp., Inc. v. Lucky Brand Dungarees, Inc., 898 F.3d 232, 236-37 (2d Cir. 2018), rev'd on other grounds, 509 U.S. 405 (2020). Claim preclusion generally applies if: “(1) the prior decision was a final judgment on the merits, (2) the litigants were the same parties, (3) the prior court was of competent jurisdiction, and (4) the causes of action were the same.” In re Motors Liquidation Co., 943 F.3d 125, 130 (2d Cir. 2019) (citation and internal quotation marks omitted).
To determine whether a claim could have been raised in an earlier action, courts look to whether the present claim arises out of the same transaction or series of transactions asserted in the earlier action. See Pike v. Freeman, 266 F.3d 78, 91 (2d Cir. 2001). In other words, whether facts essential to the second suit were present in the first suit, NLRB v. United Techs. Corp., 706 F.2d 1254, 1260 (2d Cir. 1983). Claims are treated as the same if they “arise from the same transaction, or involve a common nucleus of operative facts.” Cayuga Nation v. Tanner, 6 F.4th 361, 375 (2d Cir. 2021) (quoting Lucky Brand Dungarees, Inc., 590 U.S. at 412) “A party cannot avoid the preclusive effect of res judicata by asserting a new theory or a different remedy.” Brown Media Corp. v. K&L Gates, LLP, 854 F.3d 150, 157 (2d Cir. 2017) (internal quotation marks and citation omitted).
This court's review of PACER indicates that on January 10, 2024, plaintiff filed a pro se complaint in the Eastern District of Michigan against defendant Credit Acceptance Corp., alleging violations of the Fair Credit Reporting Act. See Taylor v. Credit Acceptance Corp., Case No. 2:24-CV-10080 (E.D. Mich.) (“Taylor I”). Specifically, plaintiff alleged that she “sent out” two “disputes” to Credit Acceptance Corp. in October and December of 2023 requesting that they “remove the transactions and experiences they were reporting to the credit bureaus.” Taylor I, Dkt. No. 1 at 5. Plaintiff further alleged that Credit Acceptance Corp. failed to respond to either of her letters. Id.
On January 18, 2024, the Honorable Gershwin A. Drain of the Eastern District of Michigan undertook an initial review of the Taylor I complaint pursuant to 28 U.S.C. § 1915(e)(2)(B). Taylor I, Dkt. No. 5. Judge Drain issued an order explaining that plaintiff failed to state a claim under the FCRA, because in order to do so she was “required to plausibly allege that the furnisher received notice from a consumer reporting agency, not the plaintiff, that the credit information is disputed.” Id. at 3 (internal quotations and citation omitted). Accordingly, Judge Drain dismissed the Taylor I complaint for failure to state a clam under 28 U.S.C. § 1915(e)(2)(B). Id. Plaintiff did not file an amended complaint, nor did she appeal Judge Drain's order.
Plaintiff proceeded to file the instant action in the Northern District of New York on February 7, 2024. Although her original complaint did not name Credit Acceptance Corporation as a defendant, the amended complaint asserts, among other things, FCRA claims against this entity. (AC at 10-11). A dismissal for failure to state a claim pursuant to 28 U.S.C. § 1915(e)(2)(B) operates as a “final judgment on the merits and thus has res judicata effects.” West v. City of New York, No. 23-CV-2256, 2024 WL 1639347, at *5 (S.D.N.Y. Apr. 15, 2024) (quoting Garcia v. Superintendent of Great Meadow Corr. Facility, 841 F.3d 581, 583 (2d Cir. 2016)); see also Berrios v. N.Y.C. Hous. Auth., 564 F.3d 130, 135 (2d Cir. 2009) (endorsing the “dismissal of an in forma pauperis complaint on the ground of res judicata where the plaintiff's prior complaint arising out of the same events, albeit raising a different legal theory, had been dismissed pursuant to § 1915(e)(2)(B)(ii) for failure to state a claim.”).
Taylor I was therefore dismissed in a final judgment on the merits by a court of competent jurisdiction. Furthermore, Taylor I asserts FCRA claims against Credit
Acceptance Corporation under the same legal theories and arising from the same facts as those raised in the instant amended complaint. Accordingly, these claims are barred by claim preclusion and should be dismissed.
B. Experian
The FCRA claims against Experian raised by plaintiff in her amended complaint suffer from many of the same pleading deficiencies as those raised in her original complaint. With respect to plaintiff's claim asserting liability under Section 1681b, plaintiff appears to operate under the mistaken belief that Experian required her “consent” to report the information on her consumer credit report in order to constitute a “permissible purpose.” (AC at 6-7). As plaintiff notes, §1681b(a)(2) states that one of the limited purposes a CRA may furnish a consumer report is “in accordance with the written instructions of the consumer to whom it relates.” Plaintiff, however, fails to acknowledge that §1681b(a) lists several other “permissible purposes” for which a CRA may furnish a consumer report, including the common practice of doing so in connection with the extension of credit to a consumer, among others. §1681b(a)(1)-(6). See Ahmad v. Experian Info. Sols., Inc., No. 23-CV-2222, 2023 WL 8650192, at *7 (S.D.N.Y. Dec. 14, 2023) (“Under the FCRA, there are circumstances pursuant to which a consumer's credit report may be obtained without the consent or even the knowledge of the consumer.”) (quoting Gamble v. Citifinancial & Landers, No. 3:02-CV-693, 2002 WL 31643028, at *2 (D. Conn. Nov. 19, 2002)). Because plaintiff's allegation that she did not provide consent for Experian to issue a credit report does not amount to a plausible allegation that Credit Acceptance Corporation accessed or used the consumer report for an impermissible purpose, for which liability against Experian under §1681b could attach, this claim is subject to dismissal.
Plaintiff's claims against Experian pursuant to §§1681e(b) and 1681i are also deficiently pled. Among other things, plaintiff continues to fail to specify what information in her credit report was inaccurate, and why. Instead, plaintiff makes only conclusory allegations that Experian reported “inaccurate information.” (AC at 7, 8, 9, 11). “Other courts . . . routinely dismiss Section 1681e(b) and 1681i claims like this that do not identify specific misstatements and explain why they were incorrect.” Rogers v. Trans Union LLC, No. 23-CV-0536, 2024 WL 1556890, at *2 (E.D.N.Y. Apr. 10, 2024) (listing cases).
Accordingly, plaintiff's FCRA claims against Experian should be dismissed for failure to state a claim.
IV. State Law Claims
Plaintiff's state law claims against Experian and Credit Acceptance Corporation suffer from the same deficiencies as those pled in the original complaint. Not only has plaintiff failed to allege anything more than conclusory statements to suggest that these defendants reported and/or furnished the allegedly inaccurate information with “malice” or “willful intent,” but her allegations still lack the sufficient specificity required of such claims to put the defendants on notice. (See Dkt. No. 4 at 16-18). Accordingly, the state law claims raised in plaintiff's amended complaint should be dismissed.
V. Opportunity to Amend
Generally, before the court dismisses a pro se complaint or any part of the complaint sua sponte, the court should afford the plaintiff the opportunity to amend at least once; however, leave to re-plead may be denied where any amendment would be futile. Ruffolo v. Oppenheimer & Co., 987 F.2d 129, 131 (2d Cir. 1993).
This court has already afforded plaintiff the opportunity to amend, and she has been unable to plausibly associate the defendants' alleged actions to any statutorily or constitutionally prohibited conduct. Thus, the court will recommend dismissing plaintiff's amended complaint without the further opportunity to amend.
WHEREFORE, based on the findings above, it is
RECOMMENDED, that plaintiff's amended complaint be DISMISSED WITH PREJUDICE for failure to state a claim pursuant to 28 U.S.C. § 1915(e)(2)(B)(ii), and it is
ORDERED, that the Clerk of the Court serve a copy of this Order and Report Recommendation on plaintiff by regular mail.
The Clerk shall also provide plaintiff with copies of all unreported decisions cited herein in accordance with Lebron v. Sanders, 557 F.3d 76 (2d Cir. 2009) (per curiam).
Pursuant to 28 U.S.C. § 636(b)(1) and Local Rule 72.1(c), the parties have fourteen (14) days within which to file written objections to the foregoing report. Such objections shall be filed with the Clerk of the Court. FAILURE TO OBJECT TO THIS REPORT WITHIN FOURTEEN DAYS WILL PRECLUDE APPELLATE REVIEW. Roldan v. Racette, 984 F.2d 85, 89 (2d Cir. 1993) (citing Small v. Sec'y of Health and Hum. Servs., 892 F.2d 15 (2d Cir. 1989)); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72.