Public Record Company Acting As A Credit Reporting Agency

April 23rd, 2009 by admin


IN THE UNITED STATES DISTRICT COURT

EDWIN A.

Plaintiff,

v.

EXPERIAN INFORMATION SOLUTIONS, INC., LEXISNEXIS RISK & INFORMATION ANALYTICS GROUP, INC., and REED ELSEVIER, INC.

Defendants.

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Civil Action No.

PLAINTIFF’S MEMORANDUM OF LAW IN OPPOSITION TO

DEFENDANTS LEXISNEXIS RISK & INFORMATION ANALYTICS

GROUP, INC. AND REED ELSEVIER, INC.’S MOTION

TO DISMISS PLAINTIFF’S AMENDED COMPLAINT

I. PRELIMINARY STATEMENT

Plaintiff Edwin A. filed this lawsuit against LexisNexis Risk & Information Analytics Group, Inc. (“LNRIAG”) and Reed Elsevier, Inc. (“Reed”) (collectively “Moving Defendants” or “LexisNexis”) alleging claims for violation under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681 et seq., negligence, defamation and invasion of privacy because Moving Defendants falsely reported to other consumer reporting agencies (“CRAs”) that a civil judgment had been taken out against Plaintiff, and then failed to correct the error after Plaintiff disputed the inaccuracy.  As detailed below, and contrary to Moving Defendants’ contentions, Plaintiff has pled sufficient facts and allegations to support each of his claims for relief.  Accordingly, Moving Defendants’ Motion to Dismiss pursuant to Rule 12(b)(6) (the “Motion”) should be denied.

Though styled as a motion to dismiss based upon an alleged failure to plead with sufficient specificity, the Motion is largely a preemptive strike on Plaintiff’s theory of liability that Moving Defendants may be sued as CRAs under the FCRA (and not just as furnishers of consumer report data).   Arguing that they are not a “peer” of Experian, and referring to a “forty-year history of the FCRA,” LexisNexis attempts to paint Plaintiff’s CRA theory as novel, unprecedented and unsupportable.  See Def. Mem., at 2.  It is unclear what history Moving Defendants are looking at, for it is the FCRA’s recent seven-year history that wholly undercuts Moving Defendants’ argument.  Though Moving Defendants fail to disclose it, the plain and simple truth is that over the last seven years multiple courts have in fact examined whether Moving Defendants functioned as CRAs, and every single one (to Plaintiff’s knowledge) has found that they are.

Regarding the sufficiency of Plaintiff’s allegations, the Motion is premised upon two misguided assumptions: first, that a complaint’s allegations must include every possible fact known to Plaintiff, and second, that a plaintiff must prove his or her case in the pleadings.  Both of these erroneous assumptions are explicitly contradicted by the Supreme Court’s opinions in Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) and more recently Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009).  Both Twombly and Iqbal confirm that Plaintiff only needs to plead a sufficient amount of facts to give Defendants notice that a plausible claim exists.

Notably, the Honorable in the matter of XX v. Experian Information Solutions, Inc., et al., granted in part and denied in part a largely identical motion to dismiss in a similar consumer protection action filed against the same Defendants and/or their corporate successors.  The XX decision, which is attached hereto, reviewed the same facts and allegations under the FCRA as those pled in this case and specifically found that the plaintiff’s complaint “alleges sufficient facts under Twombly and Iqbal to survive a motion to dismiss on its FCRA claims.”  The same result should be reached in this case.

Applying the proper standard for pleading, even a cursory review of the Amended Complaint reveals that the allegations plausibly state claims for relief consistent with the literally thousands of cases that have been brought through the years against all types of actors who deal in credit information for violations the FCRA.  Despite the forty year FCRA history that Moving Defendants taut, they do not cite one case which was dismissed under Rule 12(b)(6) based upon allegations similar to those in the instant case.

Moving Defendants’ arguments also contain contradictions that undercut their credibility in arguing for a dismissal on the pleadings.  For example, Moving Defendants argue that Plaintiff has not sufficiently pled his CRA claims, but they do not challenge his allegations that Moving Defendants violated the FCRA as credit furnishers.  In doing so, Moving Defendants either misapprehend or ignore the fact that Plaintiff is specifically permitted under Rule 8 to plead claims in the alternative.   Moving Defendants’ piecemeal and compartmentalized challenges confirm that Moving Defendants are in reality simply targeting claims that they dislike as opposed to raising a legitimate objection to the sufficiency of the pleadings.

The tone of the Motion suggests that at least part of it was designed to garner sympathy from the Court by painting Moving Defendants as the unfortunate target of aggressive and maverick FCRA claims.  Yet, as set forth above, Moving Defendants’ effort is nullified by the spate of recent decisions that Moving Defendants fail to disclose to this Court in which other courts have held that Moving Defendants may be sued as CRAs.   In addition, Moving Defendants also conveniently fail to disclose that many different types of companies (not just Equifax, Experian and Trans Union), including companies that traffic in public records data, have been found to be covered as CRAs under the FCRA.

II.      BACKGROUND

A. Plaintiff’s Allegations Parallel Those Found In Most Other Lawsuits Against Consumer Reporting Agencies And Furnishers Of Credit Information For Reporting Inaccurate Information About A Consumer Despite Dispute By The Consumer.

 

The inaccuracies that end up appearing on consumer credit reports are commonly the result of wrongdoing by multiple actors that include both credit reporting agencies, debt collectors, resellers and furnishers of credit information.  See, e.g., Sheffer v. Experian Information Solutions, Inc., 249 F. Supp 2d. 560, 561 (E.D. Pa. 2003); White v. TransUnion, LLC, 462 F. Supp 2d 1079 (C.D. Cal. 2006).  In this case, Plaintiff was harmed by a series of transgressions committed by Experian and LexisNexis in the selling and reselling of a civil judgment that does not belong to Plaintiff.  (Am. Compl. ¶¶ 12-13).

B. LexisNexis’ Invisible Public Records Reporting Operation.

Contrary to Moving Defendants’ contentions, Plaintiff does not rely upon bald, boilerplate and conclusory allegations; rather, the allegations detail the roles that Moving Defendants play in the sale of public records and other consumer report data.  Plaintiff alleges the following:

LexisNexis sells and/or publishes consumer reports containing public record information (bankruptcies, judgments and tax liens) about consumers to other CRAs (such as Trans Union, Equifax and Experian) for a fee.  (Am. Compl. ¶¶ 15-18).  LexisNexis was the original supplier of the erroneous public record in this case.  (Am. Compl. ¶ 15).  LexisNexis knows that public record information reported to the other CRAs is used in connection with determining a consumer’s eligibility for credit and goes on credit reports.  (Am. Compl. ¶ 19).

In contrast to Experian, Equifax and Trans Union, LexisNexis conceals its role in selling consumer reports containing public record information.  (Am. Compl. ¶ 23).  LexisNexis does not identify itself on the public record reports it sells and does not list any telephone number, website, street address or any other means available to consumers in order to dispute inaccurate public records information that LexisNexis sells about consumers.  (Am. Compl. ¶ 24).  The only mechanism available to Plaintiff and other consumers to put LexisNexis on notice of such errors is through the procedures established by Equifax, Experian and Trans Union.  (Am. Compl. ¶ 25).

Moreover, even when Plaintiff and other consumers receive responses from Equifax, Experian and Trans Union to their dispute, Plaintiff was not advised that LexisNexis was the entity that reported and investigated the inaccurate information.  (Am. Compl. ¶ 23).  Consumers such as Plaintiff are thus shielded from learning about LexisNexis, which only makes resolving the credit reporting error more difficult.

C. LexisNexis Received Notice Of The Public Record Error, Purportedly Investigated, But Failed To Correct The Error.

Plaintiff used every mechanism available to him to try to correct the public record error appearing on his credit reports.  (Am. Compl. ¶ 25).  Plaintiff disputed the error, and LexisNexis received notice of Plaintiff’s disputes through Experian.  (Am. Compl. ¶¶ 21-22).  LexisNexis believed that it had a duty to investigate the error, purportedly “investigated,” but failed to correct the erroneous public record that it had originally supplied.  (Am. Compl. ¶ 26).

III.     LEGAL STANDARD

A. A Well Pled Complaint Need Only Allege Claims That Are Not “Speculative” To         Defeat A Motion To Dismiss.

Universally recognized as a notice pleading standard, Rule 8(a)(2) of the Federal Rules of Civil Procedure calls for a plaintiff filing a complaint in the federal courts to simply provide “a short and plain statement of the claim showing that the pleader is entitled to relief.”  See Bell Atlantic Corp. v. Twombly, 550 U.S. 554, 555 (2007) (“A complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations.”) See also Swierkiewicz v. Sorema N. A., 534 U.S. 506, 513 (2002) (calling Rule 8 a “simplified notice pleading standard”):

When a federal court reviews the sufficiency of a complaint, before the reception of any evidence either by affidavit or admissions, its task is necessarily a limited one. The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.

Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).  “[T]he threshold level to be met by a plaintiff to withstand a motion to dismiss is very low.”  Smith v. Weeks, 2002 WL 31750203, at *5 (E.D. Pa. Dec. 9, 2002).

The Third Circuit after Twombly has consistently held that in considering a motion to dismiss pursuant to Rule 12(b)(6) the Court shall:

“accept all factual allegations in the complaint as true and view them in the light most favorable to the plaintiff” and  “determine whether, under any reasonable reading of the complaint, the plaintiff may be entitled to relief.”

Umland v. PLANCO Financial Services, Inc., 542 F.3d 59, 64 (3d Cir. 2008) (quoting Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006) and Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).  See also Phillips v. County of Allegheny, 515 F.3d 224, 233 (3d Cir. 2008) (finding Pinker “remains an acceptable statement of the standard”).  “Rule 12(b)(6) does not countenance … dismissals based on a judge’s disbelief of a complaint’s factual allegations.” Twombly, 550 U.S. at 556 (quoting Neitzke v. Williams, 490 U.S. 319, 327 (1989)). “A well-pleaded complaint may proceed even if it appears ‘that a recovery is very remote and unlikely.’” Id. (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)).

To the extent Twombly or more recently Ashcroft v. Iqbal, 129 S.Ct. 1937 (2009), impacts the standard of review of a Rule 12(b)(6) motion, the opinion merely clarifies  that a complaint must “raise a right to relief above the speculative level.”   Id. at 555.  The Third Circuit in Phillips noted that Twombly “‘simply calls for enough facts to raise a reasonable expectation that discovery will reveal evidence’ of the necessary element.” 515 F.3d 224, 234 (3d Cir. 2008) (quoting Twombly, 550 U.S. at 556).

B. Rule 8 Permits Pleading Claims In The Alternative Or Hypothetical Even If Those

Claims Are Inconsistent.

Rule 8(d)(2) and (3) also permits a plaintiff to:

set out two or more statements of a claim . . . alternatively or hypothetically, either in a single count . . . or in separate ones. If a party makes alternative statements, the pleading is sufficient if any one of them is sufficient. . . . A party may state as many separate claims or defenses as it has, regardless of consistency.

(emphasis added).   See Showalter v. Brubaker, 283 Fed. Appx. 33, 36 (3d Cir. 2008) (“litigants are free to make alternative arguments in support of their positions” citing Rule 8(d)(2)); J & J Sports Productions, Inc. v. 4326 Kurz, Ltd., 2008 WL 4630508, at *3 (E.D. Pa. Oct. 17, 2008) (“plaintiff is entitled to plead alternative theories of liability for purposes of discovery” even where such theories are mutually exclusive and cannot both be sustained).

IV. ARGUMENT

A. PLAINTIFF HAS APPROPRIATELY ALLEGED CLAIMS AGAINST ALL MOVING DEFENDANTS.

Moving Defendants claim the Amended Complaint “makes no distinction in [the] allegations as to which defendant acted as alleged.”  See Def. Br., Argument III, at 8-9.  This argument falsely suggests that Moving Defendants are somehow separate business entities operating at arms’ length from one another which played different roles in the sale of Plaintiff’s public record data.  LNRIAG, however, is wholly owned by Reed.   “Unsupported protestations regarding the corporate structure are insufficient to support a Rule 12(b)(6) motion in the face of a complaint that taken as true, as we must in the present procedural posture, pleads sufficient facts to establish successor corporation liability.” Procentury Ins. Co. v. Harbor House Club Condominium Ass’n, Inc., ___ F. Supp. 2d ___,  2009 WL 2580356, *9 (D.N.J., Aug. 19, 2009).  Plaintiff here has specifically pled LNRIAG’s affiliation with Reed. (Am. Compl., at ¶¶ 6-11).  Moreover, Moving Defendants do not contest that Plaintiff has somehow misrepresented the current status of these business entities which would certainly be a prerequisite to raising an argument of this kind.

Nowhere has Twombly or Iqbal been interpreted to require a plaintiff to sort out the internal operations of affiliated business entities at the pleading stage. See id. (“Whether that allegation is eventually proven or legally sufficient will be left to discovery and future motion practice.”).   See also Premier Pork L.L.C. v. Westin, Inc., 2008 WL 724352, *4 (D.N.J. Mar. 17, 2008) (applying Twombly and recognizing plaintiff’s claim of successorship liability in pleadings based on general allegations of successorship).  Indeed, such a requirement would be impossible for a plaintiff to comply with since it would require Plaintiff to obtain information that only Moving Defendants possess.  Discovery on LNRIAG’s and Reed’s current business structure would certainly be appropriate in the context of this litigation and may warrant amendment of named parties in the pleading as some later point consistent with discovery, but for the moment Plaintiff’s pleadings satisfactorily give Moving Defendants notice of the plausible claims asserted against them.

B. PLAINTIFF HAS PLED A SUFFICIENT AMOUNT OF FACTS TO ESTABLISH THAT PLAUSIBLE CLAIMS EXIST AGAINST MOVING DEFENDANTS.

Moving Defendants also surgically dissect the factual allegations in Plaintiff’s Amended Complaint, pointing out areas where they believe Plaintiff could have pled the allegations with more specificity.  See Def. Br., Argument II, at 11-13.  Moving Defendants’ generalized dissatisfaction with the quantum of facts that Plaintiff has pled, however, does not advance their arguments for dismissal.  A well pled complaint in the federal courts is not meant to unearth every single fact or piece of information in existence in connection with a claim. The District Court in J & J Sports Productions, Inc. succinctly summarizes Moving Defendants’ misunderstanding:

defendants note that the Amended Complaint does not allege whether there was a cover charge to enter the bar on the night of the fight, the number of people present at the bar during the fight, and the number of television sets exhibiting the fight. Defendants contend that plaintiff probably had this information prior to filing the lawsuit and should have included these allegations in the Amended Complaint. It is not clear whether plaintiff had this information, but for purposes of a motion to dismiss, it is not relevant because the Rule 8 pleading “standard does not require ‘detailed factual allegations.’ ”

2008 WL 4630508, *4 (E.D.Pa., Oct. 18, 2008) (J. Yohn).

Even though Moving Defendants spend numerous pages in their brief scrutinizing the holdings in Twombly and Iqbal, they appear to have lost site of the two most basic tenets of these opinions: (1) a plaintiff may not plead a cause of action that is devoid of any factual support, and (2) a plaintiff may not substitute legal conclusions for facts.  See Twombly, 550 U.S. at 555; Iqbal 129 S.Ct. at 1949-51.  Neither Twombly nor Iqbal stand for the proposition that a plaintiff is required to plead every single fact that he or she may possess.  See al-Kidd v. Ashcroft, __ F.3d ___, 2009 WL 2836448, *24 (9th Cir. Sept. 4, 2009) (“Twombly and Iqbal do not require that the complaint include all facts necessary to carry the plaintiff’s burden.”); Fowler v. UPMC Shadyside, __ F.3d __, 2009 WL 2501662 (3d Cir. Aug. 18, 2009) (“Although plaintiff’s complaint is not as rich with detail as some might prefer, it need only set forth sufficient facts to support plausible claims.”)

Moving Defendants here do not argue that Plaintiff has left out supporting facts for his claims, nor do they argue Plaintiff is supplanting legal conclusions for factual allegations.   Moving Defendants notably do not even argue that the Plaintiff’s facts are implausible.  Moving Defendants merely point out that they have a countervailing point of view in connection with the circumstances giving rise to these claims and numerous discovery questions that they would like answered.  Nonetheless, even though Moving Defendants may be dissatisfied that they are being sued and obviously have discovery questions that they may wish to pursue to validate their defenses, filing a motion to dismiss on claims that clearly have not been pled in a “speculative” manner only to block Plaintiff from taking discovery on the claims is plainly an abuse of Rule 12(b)(6).

C. PLAINTIFF HAS ADEQUATELY PLED PLAUSIBLE CLAIMS AGAINST MOVING DEFENDANTS FOR VIOLATIONS OF THE FCRA.

1. The “Willfulness” Of Moving Defendants’ Conduct Is A Jury Question.

Moving Defendants similarly have lost site of the fact that the holdings in Twombly and Iqbal regarding the sufficiency of averments in a complaint was not a call to make a plaintiff prove his or her case at the pleadings stage.  See Twombly, 550 U.S. at 545, (“Asking for plausible grounds does not impose a probability requirement at the pleading stage”).  Despite specific admonitions in Twombly and Iqbal against doing so, Moving Defendants erroneously argue that they are entitled to a dismissal of Plaintiff’s FCRA claims because Plaintiff has not proven “willful” conduct by Moving Defendants even though Plaintiff has sufficiently pled that Moving Defendants’ conduct was “willful.” (Am. Compl. ¶¶ 23, 28, 47).   The “willfulness” of a defendant’s conduct in the context of FCRA litigation, however, is classically a jury question.  See Edwards v. Toys “R” Us, 527 F. Supp. 2d 1197, 1210 (C.D. Cal. 2007) (“Willfulness under the FCRA is generally a question of fact for the jury.”); Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1333 (9th Cir. 1995) (“The reasonableness of the procedures and whether the [defendant] followed them will be jury questions in the overwhelming majority of cases”).

Furthermore, “willful” conduct is not required in connection with a valid claim of violations of the FCRA.  See 15 U.S.C. §1681n, §1681o (providing relief for consumer resulting from either willful or negligent conduct).  The “willfulness” of Moving Defendants’ conduct as such speaks only to the degree of damages which Plaintiff is entitled to recover, but does nothing to dispose of the underlying claim itself.  See id.  Accordingly, engaging in an analysis as to whether Moving Defendants’ conduct is “willful” at the pleadings stage when Moving Defendants remarkably appear to have already admitted that their conduct was minimally negligent is unwarranted.  In an unrelated case, the Northern District of Illinois provided a succinct account of the same error that Moving Defendants make here:

[Defendant] argues that [plaintiff] does not allege sufficient facts to indicate a willful violation of FACTA. There is, however, no requirement that a plaintiff provide such specificity. As indicated above, at this juncture, a plaintiff need only provide sufficient allegations to show that a claim is “plausible on its face.” . . . The willfulness issue cannot always be resolved at the motion to dismiss stage since it may involve facts beyond the pleadings. . . . [plaintiff] has stated a valid FACTA claim and it is premature based on the complaint before us to resolve the willfulness issue.

Romano v. Active Network Inc., 2009 WL 2916838, *3 (N.D. Ill. Sept. 3, 2009) (citations omitted).

2. Plaintiff Has Adequately Pled In The Alternative FCRA Claims Against Moving Defendants As A “Consumer Reporting Agency” And As A “Furnisher.”

Plaintiff appropriately pled in the alternative that LexisNexis operates as a “consumer reporting agency” (giving rise to claims pursuant to § 1681e(b), § 1681i and other CRA claims) and/or as a “furnisher” of credit information (giving rise to claims pursuant to § 1681s-2(b)) as both terms are defined by the FCRA because Moving Defendants have held themselves out as both types of entities.  (Am. Compl. ¶¶ 6-11, 15-28).  Moving Defendants’ motion notably only disputes the sufficiency of Plaintiff’s pleadings with respect to the claims alleging that it is a “consumer reporting agency” but not the sufficiency of Plaintiff’s claim that it is a “furnisher.”  Considering this posture, Moving Defendants’ argument is legally flawed because a defendant is not entitled to dismissal of only a portion of claims that have been pled in the alternative pursuant to Rule 8(d) regardless of how many facts have been pled.

As a threshold matter, Plaintiff has pled with specific facts that Moving Defendants operate as a CRA.  Plaintiff’s Amended Complaint avers that Moving Defendants regularly assemble and sell reports for a fee to third parties which contain information about public records that bear upon Plaintiff’s credit worthiness and which are used, and expected to be used, in ordinary consumer transactions involving credit, employment and insurance.  (Am. Compl. ¶¶ 5-22, 29, 32).  If one were to look at the FCRA’s definition of a CRA, that factual description fits the bill perfectly.  15 U.S.C. §§ 1681a(f) and a(d).  Thus, the CRA claims (at ¶¶ 47(a), 47(b) and 47(d)) cannot be dismissed on the theory that Plaintiff has not pled that LexisNexis operates as a CRA.

Moreover, Moving Defendants have completely ignored the plain language of Rule 8(d)(2) which states that “[i]f a party makes alternative statements, the pleading is sufficient if any one of them is sufficient.”  Since Moving Defendants do not dispute the sufficiency of Plaintiff’s claims against it as a “furnisher,” it makes no difference whether Plaintiff’s allegations that Moving Defendants operate as a CRA are supported in the Amended Complaint by an encyclopedia of facts or are purely hypothetical.  Plaintiff is thus entitled take discovery on whether Moving Defendants are in fact operating as a CRA or as a furnisher.

The claims in Plaintiff’s Amended Complaint are hardly “speculative” in nature anyway.  Moving Defendants have omitted from their papers that they have already been found to be a CRA in a class action lawsuit that settled for more than $20 million.  See fns. 3 & 6, supra.  Moreover, Moving Defendants have been found to be a CRA by a number of courts as well as the FTC, the governing body charged with enforcing the FCRA.  See id.  These cases alone supply a reasonable basis to allege claims holding Moving Defendants responsible as a CRA.  Moreover, in another case involving Moving Defendants’ public record business an expert has opined in a report that is publicly available on PACER that ChoicePoint, LexisNexis’ predecessor, has “historically readily admitted their role as a consumer reporting agency.”  See Pires v. ChoicePoint Srvcs. Inc., N.D. Ga., C.A. 07-3112, PACER Entry No. 70.

Moving Defendants offer no legal support to corroborate their argument that it cannot be held responsible as a CRA.  Instead, Moving Defendants dubiously claim that they need a more detailed factual pleading to afford it sufficient “notice” of the claims.  One can only imagine how Moving Defendants could possibly need more facts about their own operations in the credit reporting industry.  Furthermore, Moving Defendants remarkably make this demand on Plaintiff when no discovery whatsoever has been taken on this issue to date.

Invoking the classic “sky is falling” fallacy, Moving Defendants further suggest that if Plaintiff’s Amended Complaint is allowed to stand, even the “Clerk of the Court” or “PACER” would be a ‘consumer reporting agency.’”  See Def. Mem., at 18.  This is not so.  Unlike Moving Defendants, the Clerk of the Court and PACER do not, for a profit, sell personal financial and credit history data about individuals to third parties with the specific knowledge that such information will specifically be used for credit eligibility decisions.  The Clerk of the Court and PACER also do not ensure the accuracy of that data, and investigate consumer disputes about the data when there is an error. These are the hallmark functions of a CRA which Moving Defendants desperately seek to divorce.  Moving Defendants obviously envision a world where only Equifax, Experian and Trans Union can be sued as CRAs, but there is no basis in the law for Moving Defendants’ utopia.  The fact remains that Moving Defendants cannot dispute that they too functioned as a CRA when they gathered public records data, sold the erroneous public record about Plaintiff to third parties, “investigated” Plaintiff’s dispute, and knew that the inaccurate derogatory public record would be used for credit eligibility decisions relating to Plaintiff.

Plaintiff has complied with all requirements for pleading in his Amended Complaint, and is entitled to the opportunity to proceed with his case and conduct discovery on the relevant CRA claims.

3. Plaintiff Sufficiently Disputed The Inaccuracies On His Credit Report To Moving Defendants In Order To Trigger A Claim Pursuant To FCRA Section 1681i.

 

Alternatively, Moving Defendants argue that even if they are a CRA, Plaintiff should not be able to pursue a claim for relief under one FCRA section covering CRA dispute investigations – FCRA section 1681i.  See Def. Mem., at 18.  Moving Defendants are erroneously relying on an ultra-technicality in the language of § 1681i by claiming that they were not given adequate notice of Plaintiff’s dispute because they did not receive a dispute from Plaintiff “directly.”  See 15 U.S.C § 1681i(a)(1)(A).  Moving Defendants, however, have conveniently omitted the fact that it was impossible for Plaintiff to log a dispute with the company directly because they conceal their role in selling the relevant consumer reports.  Moving Defendants do not have any telephone number, website, street address or any other means available to consumers in order to dispute inaccurate public records information that Moving Defendants sell about consumers, and Moving Defendants’ current names appear nowhere on reports in connection with the erroneous public record.

The FCRA, however, places stringent requirements on CRAs to provide consumers with a means to dispute inaccurate information appearing on their credit reports.  For example, section 1681g states that a CRA is required to provide a consumer with the following information:

(i) the right of a consumer to obtain a copy of a consumer report under subsection (a) of this section from each consumer reporting agency;

(ii) the frequency and circumstances under which a consumer is entitled to receive a consumer report without charge under section 1681j of this title;

(iii) the right of a consumer to dispute information in the file of the consumer under section 1681i of this title;

(iv) the right of a consumer to obtain a credit score from a consumer reporting agency, and a description of how to obtain a credit score;

(v) the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency without charge, as provided in the regulations of the Commission prescribed under section 211(c) of the Fair and Accurate Credit Transactions Act of 2003; and

(vi) the method by which a consumer can contact, and obtain a consumer report from, a consumer reporting agency described in section 1681a(w) of this title, as provided in the regulations of the Commission prescribed under section 1681j(a)(1)(C) of this title.

15 U.S.C. § 1681g(c).  Moving Defendants do not provide any of this information when they sell reports about consumers despite these requirements.

It is clear from the above that section 1681i cannot reasonably be read to permit a CRA to avoid the FCRA’s investigation duties by concealing its identity and location from consumers, and then arguing that consumers never disputed with it “directly.”  It is also important to note that liability under section 1681i can attach against a CRA where, as here, a dispute is made with another CRA (often called resellers), and such dispute is indirectly relayed to a defendant CRA. 15 U.S.C. §1681i(a)(1)(A).  The fact is that Plaintiff disputed the inaccurate public record at issue in this case according to the method communicated to him.  Moving Defendants’ arguments are fundamentally flawed in the respect that they ignore section 1681g, and the general framework of the FCRA as a whole, which gives consumers the right to inspect and correct credit information sold about them.

The implications of Moving Defendants’ interpretation would also have harmful consequences for consumers.  CRAs such as Experian, Equifax and Trans Union would have every incentive to halt their dispute protocols so as to make it impossible for a consumer to dispute inaccuracies “directly” and thereby eliminate liability under section 1681i.  Indeed, such a practice would turn the FCRA on its head, undermining the very purpose of a consumer protection statute that is to be liberally construed.

Moving Defendants’ argument about not being directly contacted by Plaintiff is another classic example of form over substance because Moving Defendants did in fact receive notice of Plaintiff’s dispute, and did investigate Plaintiff’s dispute (albeit in a manner which was inadequate and violated the FCRA) when the dispute was forwarded along by the other CRAs.  Moving Defendants also hastily dismiss the possibility that Plaintiff’s actions did comply with the letter of the statute permitting “indirect” disputes.  See 15 U.S.C § 1681i(a)(1)(A).  Although “indirect” disputes contemplate that the dispute is logged with a “reseller,” the FCRA defines a “reseller” to also be a CRA.  See 15 U.S.C §§ 1681a(f) and 1681a(u).  Accordingly, a reasonable reading of the statute would permit a consumer to dispute indirectly with one CRA so as to place another CRA in the chain on notice of the dispute.

D. PLAINTIFF ADEQUATELY PLED A CLAIM AGAINST MOVING DEFENDANTS FOR DEFAMATION.

Plaintiff’s Amended Complaint also alleges a sufficient amount of facts to provide Moving Defendants with adequate notice of the plausible claims for defamation including that:

1. the defamatory statement at issue is the reporting of a two tax liens against Plaintiff;

2. the statement was false because the both the tax liens reported do not belong to Plaintiff;

3. the statement was defamatory because it placed a derogatory reflection on Plaintiff’s credit information and debt repayment history, paints Plaintiff as financially irresponsible and delinquent, reflected disgracefully on Plaintiff’s character, and diminished Plaintiff’s high standing, reputation and good name;

4. the statement was published by LexisNexis either directly via communications to the national CRAs containing the defamatory statements, or  indirectly via the sale and publication of Plaintiff’s credit reports to creditors, credit grantors and other entities containing the defamatory statement received from Defendants;

5. the statement was made by LexisNexis knowingly, recklessly, and/or with negligent disregard for the truth of the statements and was a direct and proximate cause, as well as a substantial factor, in bringing about the injured alleged.

(Am. Compl. ¶¶12-26, 49-56).  Similar to Plaintiff’s claims regarding Moving Defendants operating as a CRA, these allegations are hardly “speculative” in nature and should not be dismissed.

E. PLAINTIFF IS PERMITTED TO SEEK EQUITABLE RELIEF AS A COMMON LAW REMEDY.

Finally, Moving Defendants’ Motion regarding Plaintiff’s claims for equitable relief under the common law marks another example where Moving Defendants have ignored the rules on alternative pleading.  Just as a plaintiff is permitted to plead alternative theories of liability, the same applies to remedies:

A motion to dismiss which invokes Rule 12(b)(6) challenges the sufficiency of the amended complaint. In my view, the amended complaint, whatever its failings, cannot be dismissed for lack of specificity, and plaintiff has a right to pursue alternate theories of recovery.

U.S. v. Abington Memorial Hosp., 2003 WL 22358490 at *1 (E.D. Pa. Sept. 9, 2003).  See also  Preferred Real Estate Investments, Inc. v. Edgewood Properties, Inc., 2007 WL 81881, at * 4 (D.N.J. Jan. 9, 2007) (“Plaintiffs may plead alternative theories requesting damages and specific performance until discovery may better elucidate which remedy, if any, is appropriate.”); In re K-Dur Antitrust Litigation, 338 F. Supp. 2d 517, 544 (D.N.J. 2004) (“Plaintiffs, however, are clearly permitted to plead alternative theories of recovery.  Consequently, it would be premature at this stage of the proceedings to dismiss the Indirect Purchasers’ and the Commonwealth’s unjust enrichment claims on this basis.”); Green v. Altman, 2004 WL 2106552, at *9 (E.D. Pa. Sept. 21, 2004) (“Plaintiff is correct in his contention that the election of remedies rule does not prevent him from pleading alternative theories at this stage of the proceedings.”)

Furthermore, Moving Defendants’ statement that monetary relief is the preferred or only appropriate remedy here is cavalier and mistaken.  Plaintiff does not wish to have public records that do not belong to him accompany him for the rest of his life, and it is certainly within this Court’s power to grant declaratory or equitable relief.

Moving Defendants’ unfounded accusations that Plaintiff has “camouflaged” his intent to seek equitable relief pursuant to the FCRA have no basis in fact.  There is nothing in the Amended Complaint that suggests as much.  On the contrary, Plaintiff amended his original Complaint specifically to withdraw his claims for equitable relief under the FCRA.

V.    CONCLUSION

For the foregoing reasons, Plaintiff respectfully requests that this Court deny LexisNexis Risk & Information Analytics Group, Inc. and Reed Elsevier, Inc.’s Motion to Dismiss in its entirety.

Respectfully Submitted,

 

FRANCIS & MAILMAN, P.C.

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