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Saunders v. Equifax Information Systems

United States District Court, W.D. Texas, Austin Division

June 6, 2017

BELINDA A. SAUNDERS,
v.
EQUIFAX INFORMATION SYSTEMS

          REPORT AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE

          ANDREW W. AUSTIN UNITED STATES MAGISTRATE JUDGE.

         TO: THE HONORABLE LEE YEAKEL UNITED STATES DISTRICT JUDGE

         Before the Court are Defendant Equifax Information System's LLC's Motion to Dismiss Amended Complaint (Dkt. No. 38); Saunders' Response (Dkt. No. 43); and Equifax's Reply (Dkt. No. 44). The District Court referred the above motions to the undersigned Magistrate Judge for a report and recommendation pursuant to 28 U.S.C. §636(b) and Rule 1(c) of Appendix C of the Local Rules.

         I. BACKGROUND

         Saunders sues Equifax for violations of the Fair Credit Reporting Act. Saunders alleges that Equifax listed on her credit report two accounts on which she is only an “authorized user, ” and included in the report negative history on those two accounts. Saunders alleges this negatively impacted her credit rating. Saunders disputed the information related to the accounts in a letter to Equifax dated January 28, 2016. The letter informed Equifax that Saunders was not a signer, obligor or accommodation party to the original contracts but merely an authorized user of the accounts, and demanded that the accounts be removed from her credit history. Equifax responded that the accounts were being accurately reported and that it would continue to report the authorized user accounts with the negative history.

         Saunders argues that since she is not contractually or financially responsible or obligated for paying the accounts, the information on her credit report is both false and misleading. She asserts Equifax violated its duty under 15 U.S.C. §1681i(a)(1)(a) to conduct a good faith and reasonable investigation into this dispute. Additionally, Saunders complains that Equifax did not send any notifications of the dispute to either Chase or Capital One, in violation of 15 U.S.C. §1681i(a)(2)(A). Saunders also asserts that Equifax is also currently violating 15 U.S.C. §1681e(b), by not following reasonable procedures to assure maximum possible accuracy, because it is allowing a data furnisher (Chase and Capital One) to report negative information on Saunders' credit report.

         In this motion, Equifax asserts that Saunders' pleadings fail to allege that Equifax's reporting of the two accounts was inaccurate because she admits that she was an authorized user on the accounts and does not contend that either the balance or status information on those accounts was inaccurate. Saunders responds that reporting information about authorized user accounts is misleading when it includes “negative” payment history information, as it both has an adverse impact on her credit score, and because it could lead to the denial of credit based on a misunderstanding that she was in some way responsible for the outstanding balance.

         II. LEGAL STANDARD

         Federal Rule of Civil Procedure 12(b)(6) allows a party to move to dismiss an action for failure to state a claim upon which relief can be granted. Fed. R. Civ. P.12(b)(6). In deciding a Rule 12(b)(6) motion to dismiss for failure to state a claim, “[t]he court accepts all well-pleaded facts as true, viewing them in the light most favorable to the [nonmovant].” In re Katrina Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007) (internal quotation marks omitted), cert. denied, 552 U.S. 1182 (2008). The Supreme Court has explained that a complaint must contain sufficient factual matter “to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)). “A claim has facial plausibility when the [nonmovant] pleads factual content that allows the court to draw the reasonable inference that the [movant] is liable for the misconduct alleged.” Id. The court generally is not to look beyond the pleadings in deciding a motion to dismiss. Spivey v. Robertson, 197 F.3d 772, 774 (5th Cir. 1999).

         III. ANALYSIS

         A. The FCRA

         The FCRA “defines a complex set of rights and obligations that attend the relationships among and between the provider of a credit report, the user of that information and the consumer who is made the subject of such a report.” Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir. 1998), cert. denied, 526 U.S. 1044 (1999). Among the obligations that the FCRA imposes is the requirement that “[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b).

In addition, if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer . . . the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file.

15 U.S.C. § 1681i(a). Importantly, to state a claim for relief under the act, the consumer must “establish that a credit report contained an actual inaccuracy [otherwise] the plaintiff's claims fail as a matter of law.” Doster v. Experian Info. Sols., Inc., 2017 WL 264401, at *3 (N.D. Cal. Jan. 20, 2017) (internal punctuation and citation omitted); see also Washington v. CSC Credit Services Inc., 199 F.3d 263, 267 n. 3 (5th Cir. 2000) (“In order to pursue a cause of action based ...


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