Opinion
Civil Action 21 Civ. 5379 (GHW) (SLC)
06-24-2022
RAYMOND SWAINSON, Plaintiff, v. LENDINGCLUB CORPORATION, et al., Defendants.
REPORT AND RECOMMENDATION
SARAH L. CAVE, UNITED STATES MAGISTRATE JUDGE
TO THE HONORABLE GREGORY H. WOODS, United States District Judge:
I. INTRODUCTION
Pro se Plaintiff Raymond E. Swainson (“Mr. Swainson”) filed this action asserting claims under the Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692 et seq., and the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., seeking economic damages against the following Defendants: (1) LendingClub Corporation (“LendingClub”), (2) TransUnion, LLC (“TransUnion”), (3) Equifax Information Services LLC (“Equifax”), and (4) Experian (TransUnion, Equifax, and Experian, together, the “Credit Bureaus,” LendingClub and the Credit Bureaus together, “Defendants”). (ECF No. 18 at 2-4, 7 (the “Amended Complaint”)). Mr. Swainson's claims are predicated on his allegations, that inter alia, LendingClub (i) inaccurately reported late payments to the Credit Bureaus, and (ii) made an unauthorized charge to Mr. Swainson's account. (Id. at 5-6).
Citations are to the ECF page number, unless otherwise noted.
Mr. Swainson has settled his claims with Experian and Equifax. (ECF Nos. 44; 48). TransUnion has now moved to dismiss the Amended Complaint for lack of subject matter jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(1) and for failure to state claim pursuant to Federal Rule of Civil Procedure 12(b)(6). (ECF No. 45 (the “Motion”)). Mr. Swainson opposed the Motion. (ECF No. 50 (the “Opposition”)). TransUnion filed a reply in support of the Motion. (ECF No. 51 (the “Reply”)).
For the reasons set forth below, I respectfully recommend that the Motion be GRANTED.
II. BACKGROUND
A. Factual Background
The Court summarizes the factual background of Mr. Swainson's claims based on the allegations in his Amended Complaint (ECF No. 18), which the Court accepts as true for purposes of the Motion. See N.J. Carpenters Health Fund v. Royal Bank of Scot. Grp., PLC, 709 F.3d 109, 119-20 (2d Cir. 2013); see also Corbett v. City of N.Y., No. 15 Civ. 09214 (GHW), 2016 WL 7429447, at *2-3 (S.D.N.Y. Dec. 22, 2016). In addition, because Mr. Swainson is pro se, the Court may consider and include in this summary “factual allegations contained in [his] opposition papers and other court filings.” Rodriguez v. Rodriguez, No. 10 Civ. 891 (LGS), 2013 WL 4779639, at *1 (S.D.N.Y. July 8, 2013); see Davila v. Lang, 343 F.Supp.3d 254, 267 (S.D.N.Y. 2018) (“Because [Plaintiff] is proceeding pro se, the Court may consider new facts raised in opposition papers to the extent that they are consistent with the complaint, treating the new factual allegations as amending the original complaint.”).
1. Mr. Swainson's Payments
In October 2020, Mr. Swainson and LendingClub executed a “Hardship Agreement” (the “Agreement”). (ECF No. 18 at 5). According to the Agreement, Mr. Swainson was responsible for paying off a pre-existing debt as follows: (i) payment at a reduced rate of $542 for two months, October and November 2020, (ii) payment of $1,084.07 for one month, December 2020, and (iii) payment of the remaining balance by January 2021. (Id.) If Mr. Swainson made these payments, the Agreement prohibited LendingClub from reporting them as late payments to the Credit Bureaus. (Id.)
The Amended Complaint does not elaborate on the nature of the pre-existing debt.
On October 9, 2020, Mr. Swainson made a payment of $1,084.07 to LendingClub attributable to the October and November obligations. (ECF No. 18 ¶ 2). LendingClub reported to the Credit Bureaus the October payment as 30 days late, which Mr. Swainson alleges was “inaccurate[]”, but reported the November payment as “on time.” (ECF No. 18 ¶¶ 3-4). On December 1, 2020, Mr. Swainson made a payment of $1,084.07 to LendingClub to satisfy the December obligation. (ECF No. 18 ¶ 5). LendingClub reported to the Credit Bureaus the December payment as 60 days late, and charged Mr. Swainson $133.19. (ECF No. 18 ¶¶ 6-7). By January 2021, Mr. Swainson paid off the remaining balance on the account. (ECF No. 18 ¶ 8).
2. Mr. Swainson's Complaint to TransUnion
At some point, Mr. Swainson filed a complaint with TransUnion, which confirmed receipt on November 27, 2020. (ECF No. 50 at 2). To date, Mr. Swainson has not received a response from TransUnion regarding his complaint. (Id.)
B. Procedural Background
On January 11, 2021, Mr. Swainson commenced an action in Civil Court of the City of New York, County of New York against the Defendants alleging “[d]amage to credit caused by erroneous and inaccurate reporting of accounts, incomplete and not up-to-date account” against the Defendants. (ECF No. 1-1 at 2 (the “Complaint”)). On June 17, 2021, Experian removed the case to this court. (See generally ECF No. 1). On July 12, 2021, LendingClub filed a Motion for a More Definite Statement. (ECF No. 6 (the “LendingClub Motion”)).
On July 29, 2021, the Court held a discovery conference with the parties and denied without prejudice the LendingClub Motion, and directed Mr. Swainson to (i) file proof that he had served TransUnion and Equifax by August 2, 2021, and (ii) file an amended complaint by August 5, 2021. (ECF No. 16). On July 30, 2021, Mr. Swainson filed the Amended Complaint asserting two claims against the Defendants: (1) violation of the FCRA, pursuant to 15 U.S.C. § 1681 et seq. (the “FCRA Claim”) (ECF No. 18 at 2); and (2) violation of the FDCPA, pursuant to 15 U.S.C. § 1692 et seq. (the “FDCPA Claim”). (Id.)
On August 5, 2021, Mr. Swainson effected service of the Amended Complaint on TransUnion and Equifax. (ECF Nos. 19-20). On August 26, 2021, Equifax, Experian, and LendingClub filed their respective Answers to the Amended Complaint. (ECF Nos. 25-27).
On September 10, 2021, and October 7, 2021, Experian and Equifax, respectively, advised the Court that they each reached settlements with Mr. Swainson. (ECF Nos. 28; 34). The Honorable Gregory H. Woods approved stipulations of dismissal as to Experian on November 15, 2021 (ECF No. 44), and as to Equifax on January 13, 2022. (ECF No. 48).
On November 22, 2021, TransUnion, the only remaining Credit Bureau defendant, filed the Motion. (ECF No. 45). On February 22, 2022, the Court docketed Mr. Swainson's Opposition. (ECF No. 50). On March 1, 2022, TransUnion filed its Reply. (ECF No. 51).
On July 12, 2021, Judge Woods referred this matter to the undersigned for general pretrial supervision and to issue a Report and Recommendation on all dispositive motions including the Motion. (ECF No. 8).
III. LEGAL STANDARDS
A. Federal Rule of Civil Procedure 12(b)(1)
“Federal courts are courts of limited jurisdiction and may not preside over cases absent subject matter jurisdiction.” Zhimin Cheng v. Flushing Main St. Post Off., USPS, No. 16 Civ. 1975 (LDH) (CLP), 2017 WL 4350267, at *2 (E.D.N.Y. Apr. 12, 2017); see Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (“A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.”). “Normally, motions to dismiss for lack of jurisdiction pursuant to [Rule] 12(b)(1) must be decided before motions pursuant to other Federal Rules of Civil Procedure are considered, since dismissal of an action for lack of subject matter jurisdiction will render all other accompanying defenses and motions moot.” Morelli v. Alters, No. 19 Civ. 10707 (GHW), 2020 WL 1285513, at *6 (S.D.N.Y. Mar. 18, 2020) (quoting Liberty Ridge LLC v. RealTech Sys. Corp., 173 F.Supp.2d 129, 134 (S.D.N.Y. 2001)). The party asserting subject matter jurisdiction bears the “burden of proving by a preponderance of the evidence that it exists.” Grgurev v. Licul, No. 15 Civ. 9805 (GHW), 2020 WL 1922688, at *2 (S.D.N.Y. Apr. 21, 2020). When considering a motion made pursuant to Rule 12(b)(1), “the Court may consider evidence outside the pleadings.” Ryan v. United States, No. 15 Civ. 2248 (GHW), 2015 WL 7871041, at *3 (S.D.N.Y. Dec. 3, 2015).
B. Federal Rule of Civil Procedure 12(b)(6)
In reviewing a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court accepts as true all factual allegations in the complaint and draws all reasonable inferences in favor of the plaintiff. See N.J. Carpenters, 709 F.3d at 119-20; see State St. Glob. Advisors Tr. Co. v. Visbal, 431 F.Supp.3d 322, 334 (S.D.N.Y. 2020). To survive a motion to dismiss, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Fabian v. Pappalardo, 395 F.Supp.3d 257, 262 (S.D.N.Y. 2019) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). 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.” Iqbal, 556 U.S. at 678; see Adweek LLC v. Carnyx Grp. Ltd., No. 18 Civ. 09923 (GHW), 2019 WL 8405297, at *1 (S.D.N.Y. June 3, 2019).
Under Rule 8(a), a plaintiff must set forth a “short and plain statement of the claim[,]” Fed.R.Civ.P. 8(a), “with sufficient factual ‘heft to sho[w] that the pleader is intitled to relief.'” Trujillo v. City of N.Y., No. 14 Civ. 8501 (PGG), 2016 WL 10703308, at *4 (S.D.N.Y. Mar. 29, 2016), aff'd, 696 Fed.Appx. 560 (2d Cir. 2017) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 557 (2007) (internal citation omitted)). A complaint “cannot withstand a motion to dismiss unless it contains factual allegations sufficient to raise a ‘right to relief above the speculative level[,]"' Blackson v. City of N.Y., No. 14 Civ. 452 (VEC), 2014 WL 6772256, at *2 (S.D.N.Y. Dec. 2, 2014) (quoting Twombly, 550 U.S. at 555), and present “enough facts to state a claim to relief that is plausible on its face.” Boykin v. KeyCorp, 521 F.3d 202, 213 (2d Cir. 2008) (quoting Twombly, 550 U.S. at 570). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 556 U.S. at 678. A complaint that pleads facts “merely consistent with” a defendant's liability “stops short of the line between possibility and plausibility of entitlement to relief.” Twombly, 550 U.S. at 557 (internal citation omitted). If “the allegations in a complaint, however true, could not raise a claim of entitlement to relief,” id. at 558, or if the plaintiff has “not nudged [his] claims across the line from conceivable to plausible, the[] complaint must be dismissed.” Id. at 570. The Second Circuit has explained that, where a complaint “consist[s] of nothing more than naked assertions, and set[s] forth no facts upon which a court could find a violation of the [statute], fails to state a claim under Rule 12(b)(6).” Martin v. N.Y. State. Dep't of Mental Hygiene, 588 F.2d 371, 372 (2d Cir. 1978).
In reviewing the Motion, the Court considers “the allegations contained within the four corners of” the Complaint, Pani v. Empire Blue Cross Blue Shield, 152 F.3d 67, 71 (2d Cir. 1998), and may consider “documents attached . . . as exhibits, and documents incorporated by referenced" DiFolco v. MSNBC Cable L.L.C., 622 F.3d 104, 111 (2d Cir. 2010). The Court may also consider a document that, although not incorporated by reference, the Complaint relies on for its terms such that the document is “‘integral' to the complaint.” Id. (quoting Mangiafico v. Blumenthal, 471 F.3d 391, 398 (2d Cir. 2006)). Finally, the Court may take judicial notice of the fact, but not the content or truth, of testimony in another judicial proceeding. See Nestle Waters N. Am., Inc. v. City of N.Y., No. 15 Civ. 05189 (ALC), 2016 WL 3080722, at *4 (S.D.N.Y. May 25, 2016), aff'd, 689 Fed.Appx. 87 (2d Cir. 2017) (“[A] court may take judicial notice of a document filed in another court not for the truth of the matters asserted in the other litigation, but rather to establish the fact of such litigation and related filings.”) (internal quotation marks omitted); see Lia v. Saporito, 909 F.Supp.2d 149, 178 (E.D.N.Y. 2012).
The Court is mindful that Mr. Swainson is proceeding pro se in this case. Pro se plaintiffs are generally entitled to a liberal construction of their pleadings, and “a pro se complaint, however inartfully pleaded, must be held to less stringent standards than formal pleadings drafted by lawyers[.]” Erickson v. Pardus, 551 U.S. 89, 94 (2007) (per curiam); see Green v. United States, 260 F.3d 78, 83 (2d Cir. 2001). Mr. Swainson, however, is “not exempt from the ‘rules of procedural and substantive law.'” DiPilato v. 7-Eleven, Inc., 662 F.Supp.2d 333, 343 (S.D.N.Y. 2009) (quoting Traguth v. Zuck, 710 F.2d 90, 95 (2d Cir. 1983)). Accordingly, “dismissal of a pro se complaint is [] appropriate where a plaintiff has clearly failed to meet minimum pleading requirements.” Tolliver v. Jordan, No. 19 Civ. 11823 (PMH), 2021 WL 2741728, at *3 (S.D.N.Y. July 1, 2021) (quoting Thomas v. Westchester Cnty., No. 12 Civ. 6718 (CS), 2013 WL 3357171, at *2 (S.D.N.Y. July 3, 2013)).
C. FCRA
“The FCRA regulates consumer credit reporting agencies to ensure accuracy, confidentiality, relevancy, and proper utilization of consumer credit information.” Perez v. Experian, No. 20 Civ. 9119 (PAE) (JLC), 2021 WL 4784280, at *5 (S.D.N.Y. Oct. 14, 2021). “The FCRA creates a private right of action against credit reporting agencies for the negligent or willful violation of any duty imposed under the statute.” Braun v. United Recovery Sys., LP, 14 F.Supp.3d 159, 165 (S.D.N.Y. 2014) (quoting Neclerio v. Trans Union, LLC, 983 F.Supp.2d 199, 208 (D. Conn. 2013)).
Section 1681i outlines the “procedures consumer reporting agencies [‘CRAs'] must follow to investigate disputes as to the accuracy of reported information[,]” including “reinvestigating a consumer's record within a reasonable period of time after a consumer ‘directly conveys' a dispute as to the ‘completeness or accuracy of an item on his credit report' to the [CRA].” Khan v. Equifax Info. Servs., LLC, No. 18 Civ. 6367 (MKB), 2019 WL 2492762, at *3 (E.D.N.Y. June 14, 2019) (quoting Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 101 (2d Cir. 1997)). If a consumer files a dispute with the CRA, Section 1681i imposes on “both the [CRA] and the furnisher of the disputed information[] a duty to investigate the dispute.” Nguyen v. Ridgewood Sav. Bank, 66 F.Supp.3d 299, 304 (E.D.N.Y. 2014); see also Fashakin v. Nextel Commc'ns, No. 5 Civ. 3080 (RRM), 2009 WL 790350, at *10 (E.D.N.Y. Mar. 25, 2009) (“Where credit information is disputed, § 1681i(a) requires [CRAs] to ‘conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate.'” (quoting 15 U.S.C. 1681i(a)(1)(A))).
CRAs have thirty days to conduct a reinvestigation after receiving “notice of the dispute from the consumer or reseller.” 15 U.S.C. § 1681i(1)(A). “If after reinvestigation a [CRA] determines that the disputed information is inaccurate, incomplete, or cannot be verified, the agency must delete or modify the disputed item of information.” Phipps v. Experian, No. 20 Civ. 3368 (LLS), 2020 WL 3268488, at *2 (S.D.N.Y. June 15, 2020).
D. FDCPA
“Congress enacted the FDCPA after finding ‘abundant evidence of the use of abusive, deceptive, and unfair debt collection practices by many debt collectors.'” Polanco v. NCO Portfolio Mgmt., Inc., 132 F.Supp.3d 567, 578 (S.D.N.Y. 2015) (quoting 15 U.S.C. § 1692(a)). Accordingly, the FDCPA was enacted “to protect consumers from deceptive or harassing actions taken by debt collectors, with the purpose of limiting the suffering and anguish often inflicted by independent debt collectors[,]” Polanco, 132 F.Supp.3d at 578 (internal quotation marks and alterations omitted), and “to eliminate abusive debt collection practices by debt collectors.” Sykes v. Mel S. Harris & Assocs. LLC, 780 F.3d 70, 82 (2d Cir. 2015) (quoting 15 U.S.C. § 1692(e)). The FDCPA provides, “a private right of action to a consumer who receives a communication that violates the [FDCPA].” Jacobson v. Healthcare Fin. Servs., Inc., 516 F.3d 85, 91 (2d Cir. 2008).
To state a claim under the FDCPA, “a plaintiff must show that: (1) []he has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA.” Jenkins v. Chase Bank USA, N.A., No. 14 Civ. 5685 (SJF) (AKT), 2015 WL 4988103, at *4 (E.D.N.Y. Aug. 19, 2015). “[A] single violation of the FDCPA is sufficient to impose liability.” Ossipova v. Pioneer Credit Recovery, Inc., No. 18 Civ. 11015 (GHW), 2019 WL 6792318, at *3 (S.D.N.Y. Dec. 11, 2019) (quoting Ellis v. Solomon & Solomon, P.C., 591 F.3d 130, 133 (2d Cir. 2010)). Further, “[b]ecause the [FDCPA] imposes strict liability, a consumer need not show intentional conduct by the debt collector to be entitled to damages.” Russell v. Equifax A.R.S., 74 F.3d 30, 33 (2d Cir. 1996).
IV. DISCUSSION
A. Mr. Swainson's Opposition
As an initial matter, TransUnion “respectfully requests that this Court look past [Mr. Swainson]'s improper attempt [to] raise new factual allegations” in the Opposition. (ECF No. 51 at 3). Because Mr. Swainson is proceeding pro se, however, “the Court may consider new facts raised in opposition papers to the extent that they are consistent with the complaint, treating the new factual allegations as amending the original complaint.” Davila, 343 F.Supp.3d at 267; see also Vlad-Berindan v. MTA N.Y. City Transit, No. 14 Civ. 675 (RJS), 2014 WL 6982929, at *6 (S.D.N.Y. Dec. 10, 2014) (“In evaluating the legal sufficiency of a pro se plaintiff's claims, a court may rely on the plaintiff's opposition papers.”); see also Postell v. Fallsburg Libr., No. 20 Civ. 03991 (NSR), 2022 WL 1092857, at *5 (S.D.N.Y. Apr. 8, 2022) (“Courts consistently permit pro se litigants to raise a claim for the first time in their opposition papers to the motion to dismiss.”); but see Crum v. Dodrill, 562 F.Supp.2d 366, 374 (N.D.N.Y. 2008) (observing that when a plaintiff is proceeding pro se, “all normal rules of pleading are not absolutely suspended”).
A pro se plaintiff may not raise novel causes of action for the first time in opposition papers, “but the Court may consider new claims appearing for the first time in briefing if the claims could have been asserted based on the facts alleged in the complaint.” Davila, 343 F.Supp.3d at 267 (internal quotation marks omitted); see also Vlad, 2014 WL 6982929, at *6 (“Where a plaintiff's motion papers assert entirely new claims that do not arise out of the facts alleged in the complaint, the court need not consider them.”); see also Santana v. City of N.Y., No. 15 Civ. 6715 (ER), 2018 WL 1633563, at *4 (S.D.N.Y. Mar. 29, 2018) (observing that a pro se plaintiff “cannot amend his Complaint to add additional causes of actions in his opposition papers”). Nevertheless, “the liberal pleading standard afforded to pro se litigants does not apply to new causes of actions that are raised for the first [time] in an opposition brief.” Snyder v. Allen, No. 18 Civ. 08238 (ALC), 2020 WL 1233815, at *3 (S.D.N.Y. Mar. 13, 2020).
Here, the Court first notes that Mr. Swainson used the Court's complaint template, which is available to all pro se litigants in this district. Mr. Swainson attributes any deficiencies to his Amended Complaint to the template's instruction that litigants state “briefly the FACTS that support your case.” (ECF Nos. 18 at 5; 50 at 1-2). Accordingly, Mr. Swainson asks the Court to allow him to “include additional detailed information [about] how TransUnion LLC violated the [FDCPA] as well as the [FCRA] on multiple occasions[.]” (ECF No. 50 at 2).
The Court does not attribute to Mr. Swainson any deficiency arising from the template. See McLeod v. Jewish Guild for the Blind, 864 F.3d 154, 158 (2d Cir. 2017) (holding that the district court was required to construe a deficient form complaint leniently); see also Koehl v. Greene, No. 6 Civ. 0478 (LEK) (GHL), 2007 WL 2846905, at *14 (N.D.N.Y. Sept. 26, 2007) (finding Plaintiff's argument that they were relying on the form complaint unpersuasive where Plaintiff made modifications and supplied supplemental pages and exhibits to the form complaint). Because “the Court may consider new facts raised in opposition papers to the extent that they are consistent with the complaint, treating the new factual allegations as amending the original complaint[,]” Davila, 343 F.Supp.3d at 267, and “the mandate to read the papers of pro se litigants generously[,]” Crum, 562 F.Supp.2d at 373, the Court will consider the additional facts contained in the Opposition to the extent that they are consistent with the allegations in the Amended Complaint.
B. Standing
As to the FCRA Claim, TransUnion argues that Mr. Swainson “does not have standing to pursue a claim against [TransUnion] because he has not suffered any required ‘concrete harm' that was caused by [TransUnion].” (ECF No. 46 at 5). TransUnion argues that, “[Mr. Swainson] does not claim, as required, that [TransUnion] reported inaccurate information about him; does not claim, as required, to have suffered damages related to inaccurate reporting by [TransUnion]; does not claim, as required, to have been denied loans due to inaccurate reporting by [TransUnion]; and he does not claim, as required, that [TransUnion] disseminated any consumer reports to any third party.” (Id.) In the absence of standing, TransUnion argues, the Court lacks subject matter jurisdiction over Mr. Swainson's claims. (Id.) Although Mr. Swainson does not directly address these arguments, he asserts that he filed a complaint with TransUnion, and that TransUnion failed to satisfy its statutory obligation under § 1681i. (ECF No. 50 at 1-2).
Given “that the submissions of a pro se litigant must be construed liberally and interpreted ‘to raise the strongest arguments that they suggest[,]'” Triestman v. Fed. Bureau of Prisons, 470 F.3d 471, 474 (2d Cir. 2006) (quoting Pabon v. Wright, 459 F.3d 241, 248 (2d Cir. 2006)), the Court construes these allegations as making claims for the negligent, see 15 U.S.C. § 1681o, or willful, see 15 U.S.C. § 1681n, violation of duties or requirements imposed under the FCRA for credit reporting agencies, specifically § 1681e(b) (requiring reasonable procedures to assure accuracy), and § 1681i(a) (requiring reinvestigation of disputed information). See Perez, 2021 WL 4784280, at *5.
1. Legal Standard
“[U]nder Article III [of the United States Constitution], a federal court may resolve only ‘a real controversy with real impact on real persons.'” TransUnion LLC v. Ramirez, 141 S.Ct. 2190, 2203 (2021) (quoting Am. Legion v. Am. Humanist Ass'n, 139 S.Ct. 2067, 2103 (2019)). Accordingly, “[a]s a threshold matter[,] a court has an obligation to examine a litigant's standing under Article III.” Zlotnick v. Equifax Info. Servs., LLC, No. 21 Civ. 7089 (GRB) (JMW), 2022 WL 351996, at *2 (E.D.N.Y. Feb. 3, 2022). To satisfy the “irreducible constitutional minimum of standing[,]” Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992), the plaintiff bears the burden of demonstrating “(1) an injury in fact, (2) a sufficient causal connection between the injury and the conduct complained of, and (3) a likelihood that the injury will be redressed by a favorable decision.” Susan B. Anthony List v. Driehaus, 573 U.S. 149, 157-58 (2014) (internal quotation marks and alterations omitted). “To demonstrate ‘injury in fact,' a plaintiff must show the ‘invasion of a legally protected interest' that is (a) ‘concrete and particularized' and (b) ‘actual or imminent, not conjectural or hypothetical.'” Frydman v. Experian Info. Sols., Inc., No. 14 Civ. 9013 (PAC) (HBP), 2017 WL 9538165, at *6 (S.D.N.Y. Aug. 30, 2017) (“Frydman I”), report and recommendation adopted, No. 14 Civ. 9013 (PAC) (FM) (HBP), 2017 WL 4221086 (S.D.N.Y. Sept. 21, 2017), aff'd, 743 Fed.Appx. 486 (2d Cir. 2018) (quoting Lujan, 504 U.S. at 560 (1992)).
In Spokeo, Inc. v. Robins, the Supreme Court considered whether a consumer had standing to assert a claim under the FCRA. 578 U.S. 330 (2016). There, the consumer alleged that a website operator violated the FCRA by disseminating false information about him in a consumer report. Id. at 333. The Court observed that, although “intangible injuries can nevertheless be concrete[,]” an injury satisfies Article III where the injury is “de facto; that is, it must actually exist.” Id. at 340. Simply put, the injury must be “real, and not abstract.” Id. (internal quotation marks omitted). The Court elaborated that,
Congress cannot erase Article III's standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing. ....
Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.Id. at 339, 341. Accordingly, “a bare procedural violation, divorced from any concrete harm,” is insufficient for purposes of Article III standing. Id. at 341; see also Bautz v. ARS Nat'l Servs., Inc., 226 F.Supp.3d 131, 138-41 (E.D.N.Y. 2016) (summarizing Spokeo and subsequent Second Circuit applications); see also Frydman I, 2017 WL 9538165, at *6-8 (same).
In 2021, the Supreme Court again reviewed concreteness for purposes of FCRA claims in TransUnion LLC v. Ramirez, 141 S.Ct. 2190 (2021). In Ramirez, the Court emphasized that “Spokeo is not an open-ended invitation for federal courts to loosen Article III based on contemporary, evolving beliefs about what kinds of suits should be heard in federal courts.” Id. at 2204. Instead, “[c]ourts must afford due respect to Congress's decision to impose a statutory prohibition or obligation on a defendant, and to grant a plaintiff a cause of action to sue over the defendant's violation of that statutory prohibition or obligation.” Id. The Court distinguished between “(i) a plaintiff's statutory cause of action to sue a defendant over the defendant's violation of federal law, and (ii) a plaintiff's suffering concrete harm because of the defendant's violation of federal law.” Id. at 2205.
Accordingly, “[o]nly those plaintiffs who have been concretely harmed by a defendant's statutory violation may sue that private defendant over that violation in federal court.” 141 S.Ct. at 2205. Because “the mere risk of future harm, standing alone, cannot qualify as a concrete harm[,] at least unless the exposure to the risk of future harm itself causes a separate concrete harm[,]” the Court concluded that “class members whose internal TransUnion credit files were not disseminated to third-party businesses did not suffer a concrete harm.” Id. at 2210-12; see also In re FDCPA Mailing Vendor Cases, 551 F.Supp.3d 57, 62-63 (E.D.N.Y. 2021) (summarizing Ramirez and subsequent district court applications).
2. Analysis
Here, Mr. Swainson fails to allege that TransUnion caused him to sustain a concrete injury. Despite Mr. Swainson's allegations that LendingClub reported to the Credit Bureaus an inaccurate characterization of late payments, he does not allege that TransUnion disseminated any inaccurate reports. (See generally ECF Nos. 1-1; 18; 50). While Mr. Swainson alleges that LendingClub's allegedly inaccurate report resulted in “[i]njury to [his] credit rating which resulted in increased interest rates for [his] personal and business accounts[,]” and a “den[ial] [of] capital in the form of loans and lines of credit which were desperately needed to maintain and run my business[,]” he does not allege any act or omission by TransUnion in those injuries. (ECF No. 18 at 6). Thus, while Mr. Swainson alleges his credit score decreased due to LendingClub's improper reporting, he fails to allege any particularized injury or actual dissemination by TransUnion to third-parties. See Zlotnick, 2022 WL 351996, at *3 (“Where a plaintiff claims that an improper notation on his credit report resulted in a credit score reduction that could cause him reputational and financial harm, the absence of allegations of dissemination to third parties requires dismissal.”)
Absent evidence of dissemination, the only possible theory is Mr. Swainson's reduced credit score. (ECF No. 18 at 6). The Second Circuit held in Maddox v. Bank of N.Y. Mellon Trust Company, N.A. that adverse effects on a credit score do not confer standing where, “it is not alleged that th[e] purported risk materialized[.]” 19 F.4th 58, 65 (2d Cir. 2021). As the Supreme Court posited in Ramirez, the question is, “if inaccurate information falls into a consumer's credit file, does it make a sound?” 141 S.Ct. at 2209 (internal quotation marks omitted). In other words, absent dissemination, an inaccuracy in a credit report, standing alone, does not give a consumer standing to bring a FCRA claim.
Here, Mr. Swainson does not allege that TransUnion disseminated any inaccurate information, and his reduced credit score, alone, does not confer standing for Article III purposes. Therefore, because he has not alleged that TransUnion caused him a concrete injury, his FCRA
Claim against TransUnion does not present “a real controversy with real impact on real persons” as is required for this Court to have jurisdiction under Article III, and, thus, Mr. Swainson has failed to demonstrate constitutional standing. Am. Legion, 139 S.Ct. at 2103. Therefore, the Court respectfully recommends dismissal of the FCRA Claim against TransUnion for lack of standing.
C. Failure to State a Claim
In the alternative, TransUnion argues that Mr. Swainson has failed to plausibly allege claims under the FCRA and the FDCPA. (ECF Nos. 46 at 4-6; 51 at 4-6). Mr. Swainson did not address these arguments in his Opposition, but instead asserted additional facts in support of his claims. (See generally ECF No. 50). The Court analyzes the sufficiency of Mr. Swainson's allegations as to each claim.
1. FCRA Claim
Mr. Swainson claims TransUnion failed to conduct a reasonable reinvestigation pursuant to § 1681i. (ECF No. 50 at 1-2). TransUnion argues that Mr. Swainson must, but has failed to, plausibly allege an inaccuracy in TransUnion's reporting, and therefore, he has failed to state a claim under either § 1681e(b) or § 1681i. (ECF No. 51 at 4-5). The Court agrees.
“The threshold question in a § 1681e(b) action is whether the challenged credit information is inaccurate.” Houston v. TRW Info. Servs., Inc., 707 F.Supp. 689, 691 (S.D.N.Y. 1989); see Wimberly v. Experian Info. Sols., No. 18 Civ. 6058 (MKV), 2021 WL 326972, at *5 (S.D.N.Y. Feb. 1, 2021) (“[A] plaintiff asserting a claim under Section 1681i ‘must demonstrate that the disputed information is inaccurate.' (quoting Khan, 2019 WL 2492762, at *3)); see also Fashakin, 2009 WL 790350, at *11 (“A plaintiff asserting claims under § 1681i must demonstrate that the disputed information is inaccurate in order to prevail on allegations that a [CRA] had failed to reasonably reinvestigate a disputed item.”). The burden rests on the plaintiff to “[i] identify the specific information on his credit report that is inaccurate and [ii] explain why the identified information is inaccurate.” Phipps, 2020 WL 3268488, at *3; see Viverette v. Experian, No. 21 Civ. 6989 (LTS), 2022 WL 357274, at *3 (S.D.N.Y. Feb. 7, 2022) (finding that “[a]bsent additional facts explaining why the disputed information and inquiries are false, Plaintiff has failed to plead an essential element of a claim under Section 1681e(b) or Section 1681i”). Merely reporting inaccurate information, however, is insufficient to give rise to liability under either § 1681e(b) or § 1681i. See Abdallah v. LexisNexis Risk Sols. FL Inc., No. 19 Civ. 3609 (MKB), 2021 WL 6197060, at *6 (E.D.N.Y. Dec. 30, 2021) (collecting cases).
Here, Mr. Swainson fails to allege sufficient facts to make the threshold showing that his TransUnion credit report contained inaccurate information. Mr. Swainson asserts only that LendingClub reported late payments to the Credit Bureaus in violation of the Agreement and that he sent a complaint to TransUnion. (ECF Nos. 18 at 5-6; 50 at 1-2). Mr. Swainson never identifies the basis of his complaint, whether the allegedly inaccurate information arose from the dispute with LendingClub, or why any information in his TransUnion credit report is incorrect. Absent this showing, Mr. Swainson has failed to plead an essential element of a claim under § 1681e(b) or § 1681i. See Cabrera v. Experian, No. 21 Civ. 8313 (LTS), 2021 WL 5166980, at *3 (S.D.N.Y. Nov. 5, 2021); see also Neclerio, 983 F.Supp.2d at 218 (observing that the “Court does not find that section 1681i provides Plaintiff any relief for such a scenario[,]” where “there is no individual piece of inaccurate information in Plaintiff's own file or report”); see also Gestetner v. Equifax Info. Servs. LLC, No. 18 Civ. 5665 (JFK), 2019 WL 1172283, at *1-2 (S.D.N.Y. Mar. 13, 2019) (dismissing complaint alleging that credit report “showed erroneous and inaccurate information[,]” without an explanation why the information was inaccurate, for failure to state claim under § 1681i and § 1681e(b)); see also Ogbon v. Beneficial Credit Servs., Inc., No. 10 Civ. 03760 (GBD), 2011 WL 347222, at *3 (S.D.N.Y. Feb. 1, 2011) (dismissing claims under 1681e(b) and 1681i because the complaint, inter alia, “does not identify the inaccurate information reported by each CRA Defendant, or when the information was reported or to whom”).
A “plaintiff asserting claims under § 1681i [or § 1681e(b)] must demonstrate that the disputed information is inaccurate in order to prevail on allegations that a [CRA] had failed to reasonably reinvestigate a disputed item[,]” Fashakin, 2009 WL 790350, at *11, and Mr. Swainson has failed to plausibly allege that TransUnion's credit report contained inaccurate information. Accordingly, the Court respectfully recommends that TransUnion's Motion as to Mr. Swainson's FCRA Claim be GRANTED.
2. FDCPA Claim
TransUnion argues that, to the extent Mr. Swainson is seeking to hold it liable under the FDCPA, an FDCPA Claim fails because TransUnion is not a debt collector. (ECF No. 51 at 5 n.1). The Court agrees.
To state a claim under the FDCPA, plaintiff bears the burden of illustrating: “[]he ‘has been the object of collection activity arising from consumer debt, (2) the defendant is a debt collector as defined by the FDCPA, and (3) the defendant has engaged in an act or omission prohibited by the FDCPA.'” Carrington v. Chrysler Fin., No. 10 Civ. 1024 (NGG) (VVP), 2010 WL 1371664, at *1 (E.D.N.Y. Apr. 6, 2010) (quoting Awah v. Donaty, No. 9 Civ. 116 (AW), 2009 WL 3747201, at *2 (D. Md. Nov. 4, 2009)). According to the FDCPA,
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.15 U.S.C.A. § 1692a(6); compare 15 U.S.C. 1692a(6) (defining debt collector) with 15 U.S.C. § 1681a(f) (defining CRA).
Here, it is well-settled that a Credit Bureau such as TransUnion is not a “debt collector” under the FDCPA. See Perez, 2021 WL 4784280, at *13 (“Equifax, Experian, and [TransUnion] are credit reporting agencies that do not collect debts, and therefore do not fall within the meaning of debt collector under the FDCPA, but instead under the term [CRA] as defined in § 1681a(f).” (internal quotation marks omitted)); see also Anderson v. Experian, No. 19 Civ. 8833 (CM), 2019 WL 6324179, at *2 (S.D.N.Y. Nov. 26, 2019) (dismissing claims under FDCPA because the complaint, inter alia, “names Experian as the sole defendant, appears to identify Experian as a debt collector,” and “Experian is not normally identified as a debt collector”); see also Pottetti v. Educ. Credit Mgmt. Corp., No. 19 Civ. 4479 (PKC) (SMG), 2020 WL 5645194, at *5 (E.D.N.Y. Sept. 22, 2020) (dismissing plaintiff's FDCPA claims where, “[p]laintiff does not set forth a factual basis for legally categorizing [d]efendant as a statutorily-defined ‘debt collector' under the FDCPA” (quoting 15 U.S.C.A. § 1692a(6))).
Because the FDCPA does not apply to CRAs, and Mr. Swainson has not plausibly alleged that TransUnion is a debt collector within the meaning of the FDCPA, Mr. Swainson has failed to state a FDCPA claim against TransUnion. Accordingly, the Court respectfully recommends that TransUnion's Motion as to Mr. Swainson's FDCPA Claim be GRANTED.
D. Leave to Amend
Mr. Swainson does not expressly request, in his Opposition or otherwise, leave to amend. (See generally ECF Nos. 1-1; 18; 50). TransUnion argues “even if [Mr. Swainson] were granted a second chance to amend to add the new allegations and new § 1681i claims, such claim[s] still cannot survive because without an inaccuracy, there is no conceivable cause of action against [TransUnion] for which [Mr. Swainson] can plausibly be granted relief. (ECF No. 51 at 5).
Absent good reason to deny leave to amend, such as “futility, bad faith, undue delay, or undue prejudice to the opposing party,” Kumaran v. Nat'l Futures Ass'n, LLC, No. 20 Civ. 3668 (GHW), 2022 WL 1805936, at *8 (S.D.N.Y. June 2, 2022) (quoting TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 505 (2d Cir. 2014)), “[i]t is the usual practice upon granting a motion to dismiss to allow leave to replead.” Cortec Indus., Inc. v. Sum Holding L.P., 949 F.2d 42, 48 (2d Cir. 1991); see also Ravi v. Citigroup Glob. Markets Holdings, Inc., No. 21 Civ. 02223 (GHW), 2022 WL 92775, at *2 (S.D.N.Y. Jan. 10, 2022) (“The court should freely give leave to amend when justice so requires.” (quoting Fed.R.Civ.P. 15(a)(2)) (internal alterations omitted)). However, “[w]here it appears that granting leave to amend is unlikely to be productive, . . . it is not an abuse of discretion to deny leave to amend.” Davila, 343 F.Supp.3d at 283 (quoting Apotex Inc. v. Acorda Therapeutics, Inc., 823 F.3d 51, 62 (2d Cir. 2016)). “Although district judges should, as a general matter, liberally permit pro se litigants to amend their pleadings, leave to amend need not be granted when amendment would be futile.” Terry v. Inc. Vill. of Patchogue, 826 F.3d 631, 633 (2d Cir. 2016).
Here, Mr. Swainson may be able to add allegations to correct the deficiencies the Court has identified in his FCRA Claim, including a concrete injury for standing purposes, the contents of the complaint he made to TransUnion, or the inaccuracy in his TransUnion credit report. Based on the precedent cited above, however, Mr. Swainson will not be able to demonstrate that TransUnion is a debt collector under the FDCPA and any attempted amendment would be futile. Accordingly, the Court respectfully recommends that Mr. Swainson be permitted to amend his FCRA Claim only.
V. CONCLUSION
For the reasons set forth above, the Court respectfully recommends that TransUnion's Motion be GRANTED, and that Mr. Swainson be provided a final opportunity to amend his FCRA Claim only.
The Clerk of the Court is respectfully directed to mail a copy of this Report and Recommendation to Mr. Swainson at the address below.
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NOTICE OF PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
The parties shall have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file written objections pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure. See also Fed.R.Civ.P. 6(a), (d) (adding three additional days when service is made under Fed.R.Civ.P. 5(b)(2)(C), (D) or (F)). A party may respond to another party's objections within fourteen (14) days after being served with a copy. Fed.R.Civ.P. 72(b)(2). Such objections, and any response to objections, shall be filed with the Clerk of the Court. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b). Any requests for an extension of time for filing objections must be addressed to Judge Woods.
FAILURE TO OBJECT WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), (d), 72(b); Thomas v. Arn, 474 U.S. 140 (1985). If Mr. Swainson does not have access to cases cited in this Report and Recommendation that are reported on Westlaw, he may request copies from TransUnion's counsel. See Local Civ. R. 7.2.