Anthony Heras v. Nelnet, Inc., et al

NOTICE OF MOTION AND MOTION to Dismiss Second Amended Complaint

C.D. Cal.November 14, 2016

B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241230.1 1 NELNET, INC. AND NELNET SERVICINGLLC'S NOTICE OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Brownstein Hyatt Farber Schreck, LLP Jonathan C. Sandler (State Bar No. 227532) JSandler@bhfs.com Sherli Shamtoub (State Bar No. 270022) SShamtoub@bhfs.com 2049 Century Park East, Suite 3550 Los Angeles, CA 90067 Telephone: 310.500.4600 Facsimile: 310.500.4602 Attorneys for Defendants NELNET, INC. and NELNET SERVICING, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ANTHONY HERAS, Plaintiff, v. NELNET, INC., NELNET SERVICING, LLC, U.S. DEPARTMENT OF EDUCATION, EXPERIAN INFORMATION SOLUTIONS, INC., TRANSUNION LLC, TRANSUNION CORP. and EQUIFAX, INC., Defendants. Case No. 2:16-cv-06388-FMO (PLAx) DEFENDANTS NELNET, INC. AND NELNET SERVICING, LLC'S NOTICE OF MOTION TO DISMISS SECOND AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently Memorandum of Points and Authorities ISO Motion to Dismiss pursuant to F.R.C.P. 12(b)(6); Declaration of Sherli Shamtoub; and[Proposed] Order] Date: December 15, 2016 Time: 10:00 a.m. Ctrm: 22, 5th Floor Judge: Hon. Fernando M. Olguin Case 2:16-cv-06388-FMO-PLA Document 66 Filed 11/14/16 Page 1 of 4 Page ID #:434 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241230.1 2 NELNET, INC. AND NELNET SERVICINGLLC'S NOTICE OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TO THE UNITED STATES DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AND TO PLAINTIFF AND HIS ATTORNEY OF RECORD: PLEASE TAKE NOTICE THAT on December 15, 2016 at 10:00 a.m., or as soon thereafter as the matter may be heard before the Honorable Fernando M. Olguin, United States District Court Judge, in Courtroom 22, 5nd Floor of the United States District Court, Central District of California, Western Division, located at 312 North Spring Street, Los Angeles, California 90012, Defendants NELNET SERVICING, LLC and NELNET, INC. (collectively “Nelnet”), by and through undersigned counsel, will move to dismiss the claims asserted by Plaintiff Anthony Heras (“Plaintiff”) in his Second Amended Complaint. Nelnet’s Motion is brought under Federal Rules of Civil Procedure Rule 12(b)(6) on the grounds that the Second Amended Complaint fails to state a claim for which relief may be granted because loan servicers, such as Nelnet, are not liable under the Fair Credit Reporting Act and the Fair Credit Reporting Act does not apply to a party who merely passes along information concerning particular debts owed to it. On November 3, 2016, pursuant to the Court’s order dated October 14, 2016, counsel for Nelnet engaged in an in-person meet and confer with Plaintiff, wherein counsel discussed the grounds for dismissing the Second Amended Complaint with Plaintiff. See Declaration of Sherli Shamtoub at ¶¶ 2-8. This motion is based upon the accompanying Memorandum of Points and Authorities, the Declaration of Sherli Shamtoub, the documentation on file and such other argument of counsel as the Court may wish to consider. Case 2:16-cv-06388-FMO-PLA Document 66 Filed 11/14/16 Page 2 of 4 Page ID #:435 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241230.1 3 NELNET, INC. AND NELNET SERVICINGLLC'S NOTICE OF MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: November 14, 2016 BROWNSTEIN HYATT FARBER SCHRECK, LLP By: /s/ Jonathan C. Sandler JONATHAN C. SANDLER SHERLI SHAMTOUB Attorneys for Defendant NELNET SERVICING, LLC and NELNET, INC. Case 2:16-cv-06388-FMO-PLA Document 66 Filed 11/14/16 Page 3 of 4 Page ID #:436 Case 2:16-cv-06388-FMO-PLA Document 66 Filed 11/14/16 Page 4 of 4 Page ID #:437 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 1 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jonathan C. Sandler (State Bar No. 227532) JSandler@bhfs.com Sherli Shamtoub (State Bar No. 270022) SShamtoub@bhfs.com BROWNSTEIN HYATT FARBER SCHRECK LLP 2049 Century Park East, Suite 3550 Los Angeles, CA 90067 Telephone: 310.500.4600 Facsimile: 310.500.4602 Attorneys for Defendants NELNET, INC. and NELNET SERVICING, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ANTHONY HERAS, Plaintiff, v. NELNET, INC., NELNET SERVICING, LLC, U.S. DEPARTMENT OF EDUCATION, EXPERIAN INFORMATION SOLUTIONS, INC., TRANSUNION LLC, TRANSUNION CORP. and EQUIFAX, INC., Defendants. Case No. 2:16-cv-06388-FMO (PLAx) DEFENDANTS NELNET SERVICING, LLC AND NELNET INC.'S MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT OF MOTION TO DISMISS SECOND AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently with the Notice of Motion to Dismiss Pursuant to F.R.C.P. 12(b)(6); Declaration of Sherli Shamtoub; and [Proposed] Order] Date: December 15, 2016 Time: 10:00 a.m. Ctrm: 22, 5th Floor Judge: Hon. Fernando M. Olguin Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 1 of 13 Page ID #:438 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 TABLE OF CONTENTS Page 009913\0041\15242527.3 i NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION ........................................................................................... 1 II. PROCEDURAL AND FACTUAL BACKGROUND .................................... 2 A. Procedural Background ......................................................................... 2 B. Factual Allegations ............................................................................... 3 III. STANDARD OF REVIEW ............................................................................ 4 IV. THE CASE IS SUBJECT TO DISMISSAL PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) .................................. 5 A. The Second Amended Complaint Should Be Dismissed For Failure To State A Claim ...................................................................... 5 B. No Claim Can be Asserted Against Nelnet Under The FCRA Because Nelnet Merely Furnished Information Relating To A Debt It Services ..................................................................................... 6 C. The Second Amended Complaint Should Be Dismissed With Prejudice Because Amendment Would Be Futile................................. 8 V. CONCLUSION ............................................................................................... 8 Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 2 of 13 Page ID #:439 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 i NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 TABLE OF AUTHORITIES Page(s) Cases al-Kidd v. Ashcroft, 580 F.3d 949 (9th Cir. 2009) ................................................................................. 4 Ashcroft v. Iqbal, 556 U.S. 662 (2009) .............................................................................................. 4 Balistreri v. Pacifica Police Dep’t., 901 F.2d 696 (9th Cir. 1990) ................................................................................. 4 Crane v. Bank of New York Mellon, 2012 WL 2620522 (E.D. Cal. July 5, 2012).......................................................... 6 DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655 (9th Cir. 1992) ................................................................................. 5 DiGianni v. Stern’s, 26 F.3d 346 (2d Cir. 1994) ................................................................................ 1, 7 Freeman v. Southern National Bank, 531 F. Supp. 94 (S.D. Tx. 1982) ........................................................................... 7 Hedman v. Aurora Loan Servs., 2010 WL 3784170 (E.D. Cal. Sept.27, 2010) ....................................................... 7 Jackson v. Nelnet, Inc., 2011 WL 6934446 (E.D. Tex. Dec. 6, 2011) ........................................................ 6 Jackson v. Ocwen Loan, 2012 WL 882493 (S.D. Fla. Mar. 14, 2012) ......................................................... 6 Kakogui v. Am. Brokers Conduit, 2010 WL 1265201 (N.D. Cal. Mar.30, 2010) ....................................................... 6 Mirfasifi v. Fleet Mortg. Corp., 551 F.3d 682 (7th Cir. 2008) ................................................................................. 7 Mitchell v. First National Bank of Dozier, 505 F.Supp. 176 (M.D. Ala. 1981) ........................................................................ 7 Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 3 of 13 Page ID #:440 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 ii NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Moss v. U.S. Secret Serv., 572 F.3d 962 (9th Cir. 2009) ................................................................................. 4 Rush v. Macy’s New York, 775 F.2d 1554 (11th Cir.1985) .......................................................................... 6, 7 Summit Technology, Inc. v. High-Line Medical Instruments Co., Inc., 922 F. Supp. 299 (C.D. Cal. 1996) ........................................................................ 4 White v. Hillcrest Davidson & Associates, 952 F. Supp. 2d 80, 85 (D.D.C. 2013) .................................................................. 5 Statutes 15 U.S.C. § 1681 ......................................................................................................... 1 15 U.S.C. § 1681(a)(4) ............................................................................................... 6 15 U.S.C. § 1681a(d) .................................................................................................. 7 28 U.S.C. §1446(a) ..................................................................................................... 2 Other Authorities Federal Rule of Civil Procedure, Rule 12(b)(6) ................................................. 2, 4, 5 Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 4 of 13 Page ID #:441 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 1 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 MEMORANDUM OF POINTS AND AUTHORITIES I. INTRODUCTION On October 14, 2016, this Court cautioned Plaintiff Anthony Heras (“Plaintiff”) that it would “give plaintiff one last opportunity to amend his complaint.” Dkt. No. 41 (October 14, 2016 Order (hereinafter the “Order”) at 1:23- 24. In granting defendants Nelnet Servicing, LLC and Nelnet, Inc.’s (collectively “Nelnet”) previous motion to dismiss with leave to amend, the Court instructed Plaintiff to “carefully evaluate the contentions set forth in defendants’ Motions.” Order at 1:24-25. Plaintiff failed to do so. Despite the Court’s express instruction to Plaintiff to look to Nelnet’s previous two motions to dismiss, which detailed the deficiencies in each of Plaintiff’s successive complaints, Plaintiff filed a substantially similar Second Amended Complaint. As a result, for the third time Nelnet moves to dismiss Plaintiff’s insufficiently pled and legally unsound complaint. As before, the Second Amended Complaint prays for $2 million dollars in damages and punitive damages because Nelnet, Plaintiff’s student loan service provider, reported Plaintiff’s past due balances to leading credit agencies. Second Amended Complaint (“SAC”) at ¶¶ 11, 44, 55. The Second Amended Complaint alleges the same previously asserted cause of action – violation of the Fair Credit Reporting Act (“FCRA”).1 Plaintiff fails to identify any provision in the FCRA that Nelnet allegedly violated. Nor can Plaintiff. The FCRA does not apply to a party who merely passes along information concerning particular debts owed to it. See DiGianni v. Stern's, 26 F.3d 346, 349 (2d Cir. 1994). That is precisely what Plaintiff alleges here – that 1 Plaintiff improper asserts a “claim” for punitive damages. Punitive damages is not a cause of action. Rather, it hinges on the validity of Plaintiff’s FCRA claim. Thus, as Plaintiff’s FCRA claim must be dismissed for failure to state a claim, so too must Plaintiff’s request for punitive damages be dismissed. Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 5 of 13 Page ID #:442 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 2 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Nelnet is passing along information concerning Plaintiff’s student loans that Nelnet services to credit agencies. SAC at ¶ 11. Accordingly, as a matter of law, Plaintiff’s claim fails. At the time Plaintiff filed his Second Amended Complaint, he had the benefit of Nelnet’s briefing regarding the deficiencies in his allegations and the baselessness of his FCRA claim. Plaintiff, however, failed to make any substantive changes to his allegations, and he failed further to remove the FCRA claim. Plaintiff has demonstrated that his “one last opportunity to amend his complaint” was futile. Order at 1:23-24. Accordingly, the Court should grant Nelnet’s motion to dismiss the Second Amended Complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim without leave to amend. II. PROCEDURAL AND FACTUAL BACKGROUND A. Procedural Background On or about July 20, 2016, Plaintiff filed the Complaint in state court within the County of Los Angeles. On August 25, 2016, counsel for defendants Experian Information Solutions, Inc. (“Experian”), TransUnion LLC (“TransUnion”), and Equifax, Inc. (“Equifax”) removed the matter to federal court pursuant to 28 U.S.C. §1446(a) on the basis that Plaintiff’s claim for relief arose under the FDCPA. Additionally, as the United States is a defendant, the removal papers reference that this Court has exclusive jurisdiction over the case. On September 1, 2016, Nelnet filed a motion to dismiss pursuant to Rule 12(b)(6), and in the alternative, Rule 12(e). Rather than oppose Nelnet’s motion to dismiss, on September 12, 2016, Plaintiff filed a First Amended Complaint. On September 26, 2016, Nelnet filed a second motion to dismiss. On October 14, 2016, the Court granted Nelnet’s motion to dismiss with leave to amend. The Court held that “given the policy favoring amendment of complaints, the court will give plaintiff one last opportunity to amend his complaint.” Order at 1:22-24 (internal citation omitted). Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 6 of 13 Page ID #:443 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 3 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In addition, the Court ordered the parties to meet and confer prior to filing another motion to dismiss. Order at 2:25-3:5. On November 3, 2016, Nelnet’s counsel and Plaintiff (pro se) met in person and discussed the basis of Nelnet’s motion to dismiss in accordance with the Court’s Order. See Declaration of Sherli Shamtoub at ¶¶ 4-8. B. Factual Allegations The Second Amended Complaint purports to assert claims against Nelnet, the U.S. Department of Education, Experian, TransUnion and Equifax. Although his allegations are factually deficient, Plaintiff is claiming that payment for three of his student loans were reported 120 days delinquent by Nelnet, his student loan servicer. SAC at ¶ 11. Plaintiff’s reported delinquency has allegedly negatively impacted his credit report. SAC at ¶ 38. Plaintiff is claiming that all of the defendants are somehow at fault for the negative information on his credit report. In regard to Nelnet, Plaintiff asserts bare and conclusory allegations that Nelnet supposedly failed to provide some documentation requested by Plaintiff. SAC at ¶¶ 23-31. The bulk of the alleged requested documents relate to whether Nelnet could report the delinquent payments. SAC at ¶ 23 (requesting documents showing that “Nelnet had the proper authority to legally report payments to the credit bureaus”); SAC at ¶¶ 24-27. However, at the same time, Plaintiff acknowledges and alleges that Nelnet was indeed his loan servicer (and thereby could report delinquencies on the loan it was servicing). SAC at ¶ 11, 23. Plaintiff also provides no factual allegations regarding how or why the debt at issue was allegedly “erroneously” reported to any credit bureaus. SAC at ¶ 45. Although the Second Amended Complaint purports to assert one claim under the FCRA, it fails to identify any specific provisions of the FCRA that Nelnet allegedly violated or explain how Nelnet was subject to the FCRA. SAC at ¶¶ 42- 49. Based on his claims, Plaintiff seeks to cover $2,000,000 in damages. SAC at ¶ 55. Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 7 of 13 Page ID #:444 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 4 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 III. STANDARD OF REVIEW Federal Rule of Civil Procedure 12(b)(6) permits dismissal for “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P. 12(b)(6). Dismissal under Rule 12(b)(6) is appropriate where the complaint lacks a cognizable legal theory or sufficient facts to support a cognizable legal theory. See Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 699 (9th Cir. 1990). A complaint may survive a motion to dismiss only if, taking all well-pleaded factual allegations as true, it contains enough facts 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 plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citation omitted). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. (citation omitted). In reviewing a Rule 12(b)(6) motion, the Court accepts as true all facts alleged in the complaint, and draws all reasonable inferences in favor of the plaintiff. al-Kidd v. Ashcroft, 580 F.3d 949, 956 (9th Cir. 2009). “However, a court need not accept as true unreasonable inferences, unwarranted deductions of fact, or conclusory legal allegations cast in the form of factual allegations.” Summit Technology, Inc. v. High-Line Medical Instruments Co., Inc., 922 F. Supp. 299, 304 (C.D. Cal. 1996)(citing Western Mining Council v. Watt, 643 F.2d 618, 624 (9th Cir. 1981) cert. denied, 454 U.S. 1031 (1981)(citation omitted). “In sum, for a complaint to survive a motion to dismiss, the non-conclusory factual content, and reasonable inferences from that content, must be plausibly suggestive of a claim entitling the plaintiff to relief.” Moss v. U.S. Secret Serv., 572 F.3d 962, 969 (9th Cir. 2009) (quotations omitted). Where a motion to dismiss is granted, “leave to amend should be granted ‘unless the court determines that the allegation of other facts consistent with the Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 8 of 13 Page ID #:445 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 5 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 challenged pleading could not possibly cure the deficiency.’” DeSoto v. Yellow Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992) (quoting Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986)). In other words, where leave to amend would be futile, the Court may deny leave to amend. See Desoto, 957 F.2d at 658 (citation omitted). Here, Plaintiff has had two bites at the apple, been admonished by the Court and still failed to correct the deficiencies in his pleading. IV. THE CASE IS SUBJECT TO DISMISSAL PURSUANT TO FEDERAL RULE OF CIVIL PROCEDURE 12(B)(6) A. The Second Amended Complaint Should Be Dismissed For Failure To State A Claim. The Second Amended Complaint should be dismissed in its entirety pursuant to Federal Rule of Civil Procedure 12(b)(6) because it lacks any cognizable legal theory or sufficient facts to support any cognizable legal theory. As a threshold matter, Plaintiff fails to identify any provision of the FCRA that Nelnet allegedly violated. Rather, Plaintiff simply asserts conclusory allegations that Nelnet, Plaintiff’s student loan servicer, reported to credit agencies that Plaintiff failed to make timely payments on his student loans by 120 days. SAC at ¶¶ 11, 45 (alleging that his credit report “erroneously shows 120 days late payments”). Plaintiff, however, does not state that he made payments that were not reflected in the reporting. Moreover, Plaintiff fails to identify how or why the alleged reported 120-day late payment was allegedly “erroneous.” Such bare allegations are insufficient to state a claim. See White v. Hillcrest Davidson & Associates, 952 F. Supp. 2d 80, 85 (D.D.C. 2013) (dismissing complaint for failure to state a claim when “the complaint alleges simply that [defendant] incorrectly reported to credit agencies that she owed it a debt”). Without providing any information about what in fact was allegedly Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 9 of 13 Page ID #:446 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 6 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 inaccurate and how Nelnet engaged in a wrongful act or violated the law, Plaintiff’s claim undoubtable fails. Accordingly, the Second Amended Complaint must be dismissed with prejudice for failure to state a claim upon which relief can be granted. B. No Claim Can be Asserted Against Nelnet Under The FCRA Because Nelnet Merely Furnished Information Relating To A Debt It Services. The FRCA was enacted in order to ensure that consumer reporting agencies “exercise their grave responsibilities with fairness ...” 15 U.S.C. § 1681(a)(4). The statute “applies to consumer reporting agencies or users of reported information who willfully or negligently violate its provisions.” Rush v. Macy's New York, 775 F.2d 1554, 1557 (11th Cir.1985). Here, the Second Amended Complaint asserts that the FCRA “governs the behavior of the individuals that report information to the consumer reporting agencies or credit bureaus,” and that Nelnet is a defendant that “report[s] information to the credit bureaus.” SAC at ¶ 44. 2 As briefed in Nelnet’s last motion to dismiss (Dkt. No. 31 at 11:11-12-6), a 2 Plaintiff does not allege that Nelnet is subject to the FCRA as a “consumer reporting agency” (SAC at ¶¶ 43-44), nor can it. Nelnet is a student loan servicer. See Jackson v. Nelnet, Inc., 2011 WL 6934446 at *3 (E.D. Tex. Dec. 6, 2011) (agreeing with Nelnet that it “was the servicer of the [student] loans”); see also SAC, at ¶¶ 11, 23. Loan servicers are not “consumer reporting agencies” within the meaning of the FCRA. See Kakogui v. Am. Brokers Conduit, 2010 WL 1265201 at *5 (N.D. Cal. Mar.30, 2010) (holding that loan servicers and assignees are not credit reporting agencies as defined in the FCRA). Where FCRA claims are asserted against loan servicers, such as Nelnet, they are dismissed with prejudice. See e.g., Jackson v. Ocwen Loan, 2012 WL 882493, at *3 (S.D. Fla. Mar. 14, 2012) (dismissing FRCA claim with prejudice because defendant was a loan servicer); Crane v. Bank of New York Mellon, 2012 WL 2620522, at *4 (E.D. Cal. July 5, 2012) (granting defendant’s motion to dismiss without leave to amend where defendant loan servicer was not a consumer reporting agency under the FCRA). Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 10 of 13 Page ID #:447 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 7 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 cause of action does not lie against a student loan servicer for furnishing information relating to a debt it services to credit reporting agencies. “The [FCRA] does not impose obligations upon a creditor who merely passes along information concerning particular debts owed to it.” DiGianni, 26 F.3d at 349; see also Rush, 775 F.2d at 1557 (defendant that supplied credit information about consumer’s account was not liable under FRCA); Mitchell v. First National Bank of Dozier, 505 F.Supp. 176 (M.D. Ala. 1981) (motion to dismiss FCRA claim granted to party who simply furnished information to credit reporting agencies); Hedman v. Aurora Loan Servs., 2010 WL 3784170 at *3 (E.D. Cal. Sept.27, 2010) (granting motion to dismiss plaintiff’s FCRA claim and holding that “Parties who do no more than furnish information to a credit reporting agency are not covered by the [FCRA].”) (citation omitted). Furthermore, “a creditor who merely passes along information concerning particular debts owed to it is not a purveyor of ‘consumer reports.’” Mirfasifi v. Fleet Mortg. Corp., 551 F.3d 682, 686 (7th Cir. 2008) (citation omitted). The FRCA definition of “consumer report” expressly excludes “any report containing information solely as to transactions or experiences between the consumer and the person making the report.” 15 U.S.C. § 1681a(d). The alleged information that Nelnet provided to other defendants, if any, was based on internal records of Plaintiff’s student loans. SAC at ¶¶ 11, 23, 44. Thus, it cannot constitute a “consumer report” under the FCRA. See Rush, 775 F.2d at 1557 (Dismissal of FCRA complaint affirmed where consumer report was limited to consumer’s transactions with defendant); Freeman v. Southern National Bank, 531 F. Supp. 94 (S.D. Tx. 1982) (FCRA complaint dismissed where bank conveyed only information based on its own credit experience with consumer). Accordingly, as Plaintiff fails to state a claim for relief against Nelnet under the FCRA, the Court should dismiss the Second Amended Complaint against Nelnet with prejudice Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 11 of 13 Page ID #:448 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15242527.3 8 NELNET, INC. AND NELNET SERVICING, LLC'S MEMORANDUM OF POINTS AND AUTHORITIES ISO MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 C. The Second Amended Complaint Should Be Dismissed With Prejudice Because Amendment Would Be Futile. Plaintiff was on notice that this was his “last opportunity” to amend his pleading. Order at 1:23-24. Despite this warning, Plaintiff fails to state any cause of action against Nelnet. As discussed in detail above, even if Plaintiff’s allegations are accepted as true for the purpose of this motion, Nelnet is not subject to liability under the FCRA as a matter of law. Accordingly, the Second Amended Complaint must be dismissed with prejudice. V. CONCLUSION For the foregoing reasons, Nelnet requests that the Court dismiss Plaintiff’s Second Amended Complaint in its entirety with prejudice. Dated: November 14, 2016 BROWNSTEIN HYATT FARBER SCHRECK, LLP By: /s/ Jonathan C. Sandler JONATHAN C. SANDLER SHERLI SHAMTOUB Attorneys for Defendant NELNET SERVICING, LLC and NELNET, INC. Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 12 of 13 Page ID #:449 Case 2:16-cv-06388-FMO-PLA Document 66-1 Filed 11/14/16 Page 13 of 13 Page ID #:450 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241504.3 1 DECLARATION OF SHERLI SHAMTOUB IN SUPPORT OF NELNET, INC. AND NELNET SERVICING LLC’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Jonathan C. Sandler (State Bar No. 227532) JSandler@bhfs.com SHERLI SHAMTOUB (STATE BAR NO. 270022) SShamtoub@BHFS.COM BROWNSTEIN HYATT FARBER SCHRECK, LLP 2049 Century Park East, Suite 3550 Los Angeles, CA 90067 Telephone: 310.500.4600 Facsimile: 310.500.4602 Attorneys for Defendants NELNET, INC. and NELNET SERVICING, LLC UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ANTHONY HERAS, Plaintiff, v. NELNET, INC., NELNET SERVICING, LLC, U.S. DEPARTMENT OF EDUCATION, EXPERIAN INFORMATION SOLUTIONS, INC., TRANSUNION LLC, TRANSUNION CORP. and EQUIFAX, INC., Defendants. Case No. 2:16-cv-06388-FMO (PLAx) DECLARATION OF SHERLI SHAMTOUB IN SUPPORT OF DEFENDANTS NELNET SERVICING, LLC AND NELNET INC.'S MOTION TO DISMISS SECOND AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6) [Filed concurrently with the Notice of Motion to Dismiss pursuant to F.R.C.P. 12(b)(6); Memorandum of Points and Authorities ISO Motion to Dismiss; and [Proposed] Order] Date: December 15, 2016 Time: 10:00 a.m. Ctrm: 22, 5th Floor Judge: Hon. Fernando M. Olguin Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 1 of 9 Page ID #:451 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241504.3 2 DECLARATION OF SHERLI SHAMTOUB IN SUPPORT OF NELNET, INC. AND NELNET SERVICING LLC’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I, Sherli Shamtoub, declare as follows: 1. I am an associate at the law firm of Brownstein Hyatt Farber Schreck, LLP, attorneys of record for Defendant NELNET SERVICING, LLC and NELNET, INC. (collectively “NELNET”). I am licensed to practice law in the state of California and am admitted to practice before the U.S. District Court for the Central District of California. I have personal knowledge of the facts in this declaration, except as to those matters that are based on information and belief, which matters I believe to be true. If called as a witness, I could testify competently to these facts. I make this declaration in support of Defendant's Motion to Dismiss. 2. On October 14, 2016, this Court dismissed Plaintiff Anthony Heras’ (“Plaintiff”) First Amended Complaint with leave to amend. See Dkt. No. 41. The Court instructed Plaintiff to file his amended complaint, and ordered the parties to meet and confer should a subsequent motion to dismiss be deemed necessary. See Dkt. No. 41. 3. On October 26, 2016, Plaintiff timely filed his Second Amended Complaint. I analyzed Plaintiff’s complaint, compared it to the previously filed complaints and Nelnet’s previously filed motions to dismiss. I concluded that the Second Amended Complaint failed to state a claim under the Fair Credit Reporting Act, and therefore was properly subject to a motion to dismiss. 4. Pursuant to the Court’s order, the parties arranged an in-person meet and confer to discuss the basis of the respective motions to dismiss. Attached hereto as exhibit 1 is a true and accurate copy of the email exchanges between counsel relating to the in-person meet and confer. 5. On November 3, 2016, I attended the in-person meeting of defense counsel and pro se Plaintiff held at the offices of Jones Day, located at 555 South Flower Street, Fiftieth Floor, Los Angeles CA 90071. The meeting last approximately an hour in length, from approximately 12 p.m. to 1 p.m. Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 2 of 9 Page ID #:452 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15241504.3 3 DECLARATION OF SHERLI SHAMTOUB IN SUPPORT OF NELNET, INC. AND NELNET SERVICING LLC’S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6. During the meeting, defense counsel discussed their respective client’s grounds for filing a motion to dismiss the Second Amended Complaint, including that the Second Amended Complaint failed to meet the pleading standards under the Federal Rules of Civil Procedure. Specifically, counsels for TransUnion, Equifax, and Experian stated their position that the Second Amended Complaint failed to state any facts in support of a claim against their respective clients. 7. On behalf of Nelnet, I stated Nelnet’s position that Second Amended Complaint failed to state any claims against Nelnet. I also stated that Nelnet could not be liable under the Fair Credit Reporting Act because Nelnet was a loan servicer and because the Fair Credit Reporting Act does not apply to a party who merely passes along information concerning particular debts owed to it. Plaintiff alleges the debt at issue (the student loans) were serviced by Nelnet and Nelnet reported Plaintiff’s delinquent payment to credit reporting agencies. Given Plaintiff’s allegations, I advised Plaintiff that a cause of action against Nelnet is not proper. I also reminded Plaintiff that Nelnet’s last motion to dismiss was based on the same grounds. 8. Plaintiff maintained his position that the Second Amended Complaint is sufficiently pled. I declare under penalty of perjury under the laws of the United States of America that the foregoing is true and correct. Executed the 14th day of November, 2016 at Los Angeles, California. /s/ Sherli Shamtoub Sherli Shamtoub Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 3 of 9 Page ID #:453 EXHIBIT 1 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 4 of 9 Page ID #:454 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 5 of 9 Page ID #:455 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 6 of 9 Page ID #:456 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 7 of 9 Page ID #:457 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 8 of 9 Page ID #:458 Case 2:16-cv-06388-FMO-PLA Document 66-2 Filed 11/14/16 Page 9 of 9 Page ID #:459 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15248002.1 1 [PROPOSED] ORDER GRANTING NELNET INC. AND NELNET, SERVICING, LLC'S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA ANTHONY HERAS, Plaintiff, v. NELNET, INC., NELNET SERVICING, LLC, U.S. DEPARTMENT OF EDUCATION, EXPERIAN INFORMATION SOLUTIONS, INC., TRANSUNION LLC, TRANSUNION CORP. and EQUIFAX, INC., Defendants. Case No. 2:16-cv-06388-FMO (PLAx) [PROPOSED] ORDER GRANTING DEFENDANTS NELNET, SERVICING, LLC AND NELNET, INC.'S MOTION TO DISMISS SECOND AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(b)(6) Date: December 15, 2016 Time: 10:00 a.m. Ctrm: 22, 5th Floor Judge: Hon. Fernando M. Olguin Case 2:16-cv-06388-FMO-PLA Document 66-3 Filed 11/14/16 Page 1 of 3 Page ID #:460 B R O W N ST E IN H Y A T T F A R B E R S C H R E C K , L L P 20 49 C en tu ry P ar k E as t, S ui te 3 55 0 L os A ng el es , C A 9 00 67 009913\0041\15248002.1 2 [PROPOSED] ORDER GRANTING NELNET INC. AND NELNET, SERVICING, LLC'S MOTION TO DISMISS 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Defendant NELNET SERVICING, LLC AND NELNET, INC.'S (collectively "Nelnet") Motion to Dismiss the Second Amended Complaint pursuant to Fed. R. Civ. P. 12(b)(6) came before the Court for hearing on December 15, 2016 upon duly noticed motion. IT IS HEREBY ORDERED, pursuant to Rule 12 (b)(6) of the Federal Rules of Civil Procedure that Nelnet’s Motion to Dismiss is granted, and that Plaintiff Anthony Heras’ Second Amended Complaint is hereby dismissed with prejudice. IT IS SO ORDERED. Dated: , 2016 Fernando M. Olguin United States District Judge Case 2:16-cv-06388-FMO-PLA Document 66-3 Filed 11/14/16 Page 2 of 3 Page ID #:461 Case 2:16-cv-06388-FMO-PLA Document 66-3 Filed 11/14/16 Page 3 of 3 Page ID #:462