Hubbard v. TD Bank, National Association et al

MOTION to dismiss for failure to state a claim

M.D. Fla.November 4, 2016

1 UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA ORLANDO DIVISION ------------------------------------------------------------------------------------------------------------ Jayme Hubbard, Plaintiff, v. TD Bank, National Association; and Synchrony Bank, Defendants. No. 6:16-cv-01894-GAP-KRS DEFENDANT TD BANK USA, N.A.’S MOTION FOR DISMISSAL ________________________________________________________________________ Motion Defendant TD Bank USA, N.A. (named in the complaint’s exhibits as “TD Bank USA” but misnamed in the caption as “TD Bank, National Association”), respectfully moves this Court for dismissal as to Ms. Hubbard’s claim against TD under the Fair Credit Reporting Act under Rule 12(b)(6) for failure to state a claim upon which relief can be granted. Relief requested. TD seeks a dismissal under Rule 12(b)(6) as to Ms. Hubbard’s claim against TD under the Fair Credit Reporting Act. TD also seeks an order correcting the caption to name the moving Defendant as TD Bank USA, N.A., rather than TD Bank, N.A. Basis for relief requested. This motion is made on these grounds: I. The complaint incorrectly names the moving Defendant. Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 1 of 16 PageID 73 2 II. The complaint fails to state a claim because TD’s duties under the Fair Credit Reporting Act were never triggered by a notice from a consumer reporting agency. III. Ms. Hubbard’s claim against TD is shotgun pleading. IV. The complaint nowhere alleges any fact that can support a violation of 15 U.S.C. § 1681s-2(b). V. The complaint fails to state a claim against TD because it “pleads no factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Memorandum of legal authority. TD respectfully submits the following memorandum in support of its motion. Facts On a motion for dismissal under Rule 12(b), the court “must assume the truth of the material facts as alleged in the complaint.” 1 Ms. Hubbard’s claims against TD therefore consist of the factual allegations in her complaint. The court need not accept “conclusions of law” 2 or “conclusory allegations, unwarranted deductions of facts or legal conclusions masquerading as facts,” 3 even when 1 Jackson v. Birmingham Bd. of Educ., 544 U.S. 167, 171 (2005) (quoting Summit Health, Ltd. v. Pinhas, 500 U.S. 322, 325 (1991)). 2 Associated Builders, Inc. v. Ala. Power Co., 505 F.2d 97, 100 (5th Cir. 1974). 3 Jackson v. BellSouth Telecomms., 372 F.3d 1250, 1262 (11th Cir. 2004) (quoting Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002)); accord Berry v. Coleman, 172 Fed. App’x 929, 932 (11th Cir. 2006). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 2 of 16 PageID 74 3 pleaded as factual allegations. A court must likewise disregard “[u]nsupported conclusions of law or of mixed fact and law” 4 — even when pleaded as factual allegations. Such allegations “will not prevent dismissal”: 5 “To survive a motion to dismiss, plaintiffs must do more than merely state legal conclusions; they are required to allege some specific factual bases for those conclusions or face dismissal of their claims.” 6 And a court “need not resolve unclear questions of law in favor of the plaintiff.” 7 Moreover, a court on a motion for dismissal may take into account a defense that appears from the complaint itself. 8 The court need not “ignore facts set forth in the complaint that undermine the plaintiff’s claims.” 9 4 Gonzalez v. Reno, 325 F.3d 1228, 1235 (11th Cir. 2003) (quoting Marsh v. Butler County, 268 F.3d 1014, 1036 n.16 (11th Cir. 2001)). 5 Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1188 (11th Cir. 2002). 6 Jackson v. BellSouth Telecomms., 372 F.3d at 1263. 7 Kansa Reins. Co. v. Congressional Mortgage Corp., 20 F.3d 1362, 1366 (5th Cir. 1994). 8 Jones v. Bock, 549 U.S. 199, 215 (2007) (“Whether a particular ground for opposing a claim may be the basis for dismissal for failure to state a claim depends on whether the allegations in the complaint suffice to establish that ground”); Bingham v. Thomas, 654 F.3d 1171, 1175 (11th Cir. 2011) (“A complaint may be dismissed if an affirmative defense . . . appears on the face of the complaint.” (citing Jones)); LeFrere v. Quezada, 582 F.3d 1260, 1263 (11th Cir. 2009). 9 Richardson v. DSW, Inc., No. 05 C 4599, 2005 U.S. Dist. LEXIS 26750, at *4 (N.D. Ill. Nov. 3, 2005) (citing Scott v. O’Grady, 975 F.2d 366, 368 (7th Cir. 1992)). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 3 of 16 PageID 75 4 Legal Standard To survive a motion for dismissal for failure to state a claim upon which relief can be granted, “a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’” 10 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.” 11 When a plaintiff has not “nudged [his] claims across the line from conceivable to plausible,” then dismissal is mandatory. 12 Argument This action concerns a claim that TD violated the Fair Credit Reporting Act. I. The complaint incorrectly names the moving Defendant. This action concerns the manner in which an account for a Target-branded credit card has been reported on Ms. Hubbard’s consumer reports. The complaint’s exhibits, which are “a part of the pleading for all purposes,” 13 include a letter addressed to “TD BANK USA/Target Credit.” 14 10 Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 678 (2009) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007)); see also Twombly, 550 U.S. at 555–56. 11 Iqbal, 556 U.S. at 678. 12 Twombly, 550 U.S. at 570. 13 Fed. R. Civ. P. 10(c). 14 See Stmt. Claim [Dkt. 2], Ex. A. Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 4 of 16 PageID 76 5 Target-branded credit cards are issued by TD Bank USA, N.A. (not TD Bank, N.A.). TD Bank, N.A., is a separate entity in its own right, which is not an alter ego of TD Bank USA, N.A., and was not involved in the alleged activity in the complaint. TD therefore seeks an order correcting the caption to name the moving Defendant as TD Bank USA, N.A., rather than TD Bank, N.A. II. The complaint fails to state a claim because TD’s duties under the Fair Credit Reporting Act were never triggered by a notice from a consumer reporting agency. Congress, finding that “[a]n elaborate mechanism has been developed for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers,” 15 has extensively and exhaustively regulated the credit-granting and consumer-credit-reporting industries. To impose uniform nationwide standards on the industry, Congress enacted the Fair Credit Reporting Act, 16 which regulates both consumer reporting agencies 17 and creditors who furnish information to them. 18 The Act establishes a detailed scheme by which a consumer can dispute any information that is being reported to a consumer reporting 15 15 U.S.C. § 1681(a)(2). 16 Fair Credit Reporting Act, Pub. L. No. 91-508, 84 Stat. 1127 (1970) (codified at 15 U.S.C. ch. 42, subch. III). 17 See 15 U.S.C. § 1681(a)(3) (“Consumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers.”); id. (4) (“There is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer’s right to privacy.”). 18 See 15 U.S.C. § 1681s-2(b) (duties of furnishers of information). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 5 of 16 PageID 77 6 agency. 19 The Act likewise sets forth detailed steps that a furnisher must take in case of such a dispute. 20 The duties of a creditor who furnishes information about a consumer to consumer reporting agencies under the Fair Credit Reporting Act are triggered only “[a]fter receiving notice pursuant to [15 U.S.C. § 1681i(a)(2)] of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency.” 21 Only a consumer reporting agency can give such a notice. 22 The complaint contains no allegation of any “notice” that would have triggered TD’s duties to Ms. Hubbard, but rather alleges only that “the Plaintiff mailed a dispute letter to the Defendants.” 23 There is no allegation of a dispute through a consumer reporting agency, or that any consumer reporting agency sent notice to TD of any dispute. The complaint also alleges that “[d]espite having received a dispute letter from the Plaintiff, the Defendants failed to properly conduct a reasonable investigation and make the corrections to the Plaintiff’s credit profile as required by 15 U.S.C. § 1681i . . .” Section 1681i applies only to consumer reporting agencies, not to furnishers. Section 1681i imposes no duty on furnishers, so a furnisher cannot violate section 1681i; the only provision in the Fair Credit Reporting Act that applies directly to furnishers is section 19 See 15 U.S.C. § 1681i (procedure in case of disputed accuracy). 20 See 15 U.S.C. § 1681s-2(b) (duties of furnishers of information). 21 15 U.S.C. § 1681s-2(b)(1). 22 See 15 U.S.C. § 1681i(a)(2) (prompt notice of dispute to furnisher of information). 23 Stmt. Claim [Dkt. 2], ¶ 8 at 2. Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 6 of 16 PageID 78 7 1681s-2. Paragraph 1681i(a)(2) is titled “[p]rompt notice of dispute to furnisher of information,” 24 and it provides for the notice that triggers the furnisher’s duties under section 1681s-2(b). Again, there is no allegation of a dispute through a consumer reporting agency, or that any consumer reporting agency sent notice to TD of any dispute. The complaint refers to “false, derogatory information reported in violation of § 1681c(g).” 25 Section 1681c, like section 1681i, applies only to consumer reporting agencies, not to furnishers. The Fair Credit Reporting Act does impose a “[d]uty of furnishers of information to provide accurate information” in section 1681s-2(a). 26 But the Act provides for administrative enforcement as the exclusive remedy for any violation of that duty. The Fair Credit Reporting Act provides for civil liability through a private civil action in two sections: 15 U.S.C. §§ 1681n–o. But section 1681s-2, which establishes the “responsibilities of furnishers of information to consumer reporting agencies,” 27 provides that “sections 1681n and 1681o of this title do not apply to any violation of . . . subsection (a) of this section, including any regulations issued thereunder.” 28 “Subsection (a)” refers to section 1681s-2(a), captioned “[d]uty of furnishers of information to provide accurate information,” and enforcement of that provision can occur only “as 24 15 U.S.C. § 1681i(a)(2). 25 Stmt. Claim [Dkt. 2], ¶ 11 at 2. 26 15 U.S.C. § 1681s-2(a) (caption). 27 15 U.S.C. § 1681s-2 (caption). 28 Id. (c)(1) (limitation on liability). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 7 of 16 PageID 79 8 provided in section 1681s(c)(1)(B) of this title” 29 — which provides for enforcement by “the chief law enforcement officer of a State, or an official or agency designated by a State,” 30 who “may bring an action on behalf of the residents of the State” 31 to recover “damages for which the person would, but for section 1681s-2(c) of this title, be liable to such residents as a result of the violation” 32 of “any of paragraphs (1) through (3) of section 1681s-2(c) of this title.” 33 TD’s alleged violation occurred under section 1681s- 2(a), and therefore falls within the limitation of liability under section 1681s-2(c), so administrative enforcement is the exclusive remedy under section 1681s(c)(1)(B) for those alleged violations. 34 The Fair Credit Reporting Act therefore provides for administrative enforcement as the exclusive remedy for TD allegedly providing inaccurate information. The Act’s scheme does provide in section 1681s-2(b) for a case where a consumer can bring a civil action directly against a furnisher of information — but only after the furnisher “receiv[es] notice . . . of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency” and has had an 29 15 U.S.C. § 1681s(c). 30 Id. (c)(1) (State action for violations—authority of States). 31 Id. (c)(1)(B). 32 Id. (c)(1)(B)(ii). 33 Id. 34 See Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1059 (9th Cir. 2002). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 8 of 16 PageID 80 9 opportunity for investigation. 35 Thus, a consumer (like Ms. Hubbard) can sue a furnisher (like TD) directly, but only after notice from a consumer reporting agency to the furnisher and an opportunity for the furnisher to investigate the consumer’s dispute and modify the information that the furnisher is reporting. If the consumer does not follow the statutory procedures under section 1681s-2(b) and allow such notice and opportunity, then under section 1681s-2(a) & (c) only administrative enforcement is available for the alleged violation, and the consumer has no private right of action. 36 The complaint alleges no conduct for which TD can be subject to civil liability under the Fair Credit Reporting Act, and therefore fails to state a claim under the Act. III. Ms. Hubbard’s claim against TD is shotgun pleading. A shotgun pleading is a pleading that “incorporate[s] every antecedent allegation by reference into each subsequent claim for relief . . . ,” 37 as a result of which “it is ‘virtually impossible to know which allegations of fact are intended to support which claim(s) for relief.’” 38 The United States Court of Appeals for the Eleventh Circuit “has 35 15 U.S.C. § 1681s-2(b) (duties of furnishers of information upon notice of dispute). 36 Nelson, 282 F.3d at 1059. 37 Muhammad v. Muhammad, No. 15-15440, 2016 U.S. App. LEXIS 11675, at *3 (11th Cir. June 27, 2016) (quoting Wagner v. First Horizon Pharm. Corp., 464 F.3d 1273, 1279 (11th Cir. 2006)). 38 Id. (quoting Anderson v. Dist. Bd. of Trs. of Cent. Fla. Cmty. Coll., 77 F.3d 364, 366 (11th Cir. 1996)). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 9 of 16 PageID 81 10 repeatedly condemned shotgun pleadings,” 39 which “wre[a]k havoc on the judicial system” 40 because they “divert already stretched judicial resources into disputes that are not structurally prepared to efficiently use those resources.” 41 Ms. Hubbard’s claim against TD appears in count I, which consists of two one- sentence paragraphs: 13. Plaintiff re-alleges and incorporates the background allegations contained herein. 14. At all times to this action, Defendant violated § 1681n and § 1681o of the FCRA by engaging in willful and negligent acts which violate § 1681s(2)(B). 42 This claim, consisting only of a wholesale adoption by reference and a legal conclusion, is a shotgun pleading of “[t]he most common type,” 43 from which “it is virtually impossible to know which allegations of fact are intended to support which claim(s) for relief.” 44 39 Lacroix v. W. Dist. of Ky., 627 F. App’x 816, 818 (11th Cir. 2015) (citing PVC Windoors, Inc. v. Babbitbay Beach Constr., N.V., 598 F.3d 802, 806 n.4 (11th Cir. 2010); Davis v. Coca-Cola Bottling Co. Consol., 516 F.3d 955, 979 (11th Cir. 2008)). 40 Wagner, 464 F.3d at 12 (quoting Byrne v. Nezhat, 261 F.3d 1075, 1130 (11th Cir. 2001)). 41 Id. 42 Stmt. Claim [Dkt. 2], ¶¶ 13–14 at 3. 43 Weiland v. Palm Beach Cnty. Sheriff’s Office, 792 F.3d 1313, 1321 & n. 11 (11th Cir. 2015) (“The most common type — by a long shot — is a complaint containing multiple counts where each count adopts the allegations of all preceding counts, causing each successive count to carry all that came before and the last count to be a combination of the entire complaint.”). 44 Lacroix, 627 F. App’x at 818. Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 10 of 16 PageID 82 11 IV. The complaint nowhere alleges any fact that can support a violation of 15 U.S.C. § 1681s-2(b). Even if Ms. Hubbard’s shotgun pleading were permissible, the complaint nowhere alleges any fact that can support a violation of 15 U.S.C. § 1681s-2(b). (TD assumes that the complaint’s reference to “§ 1681s(2)(B)” in paragraph 14 means 15 U.S.C. § 1681s- 2(b), which is cited correctly in count I’s heading.) Section 1681s-2(b), titled “duties of furnishers of information upon notice of dispute,” provides: (b) Duties of furnishers of information upon notice of dispute (1) In general After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall— (A) conduct an investigation with respect to the disputed information; (B) review all relevant information provided by the consumer reporting agency pursuant to section 1681i(a)(2) of this title; (C) report the results of the investigation to the consumer reporting agency; (D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis; and (E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1), for purposes of reporting to a consumer reporting agency only, as appropriate, based on the results of the reinvestigation promptly— (i) modify that item of information; (ii) delete that item of information; or (iii) permanently block the reporting of that item of information. Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 11 of 16 PageID 83 12 (2) Deadline A person shall complete all investigations, reviews, and reports required under paragraph (1) regarding information provided by the person to a consumer reporting agency, before the expiration of the period under section 1681i(a)(1) of this title within which the consumer reporting agency is required to complete actions required by that section regarding that information. 45 Thus, a furnisher can violate section 1681s-2(b) only in six possible ways: (1) by failure to “conduct an investigation with respect to the disputed information,” (2) by failure to “review all relevant information provided by the consumer reporting agency,” (3) by failure to “report the results of the investigation to the consumer reporting agency,” (4) by failure to report a finding of “incomplete or inaccurate” information “to all other consumer reporting agencies to which the person furnished the information,” (5) by failure to modify, delete, or block disputed information that “is found to be inaccurate or incomplete or cannot be verified,” or (6) by taking the required actions but in an untimely manner. No such alleged violation appears here. V. The complaint fails to state a claim against TD because it “pleads no factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” A claim lacks “facial plausibility” unless “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” 46 For a claim of inaccurate credit reporting, the United States Court 45 Fair Credit Reporting Act § 623(b), 15 U.S.C. § 1681s-2(b). 46 Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 12 of 16 PageID 84 13 of Appeals for the Eleventh Circuit recognized in Cahlin v. General Motors Acceptance Corp. a requirement that the consumer’s credit report must contain an actual inaccuracy: In order to make out a prima facie violation of section 607(b), the Act implicitly requires that a consumer must present evidence tending to show that a credit reporting agency prepared a report containing “inaccurate” information. If he fails to satisfy this initial burden, the consumer, as a matter of law, has not established a violation of section 607(b), and a court need not inquire further as to the reasonableness of the procedures adopted by the credit reporting agency. 47 The Cahlin court was addressing a consumer reporting agency’s duties under Fair Credit Reporting Act § 607 (codified at 15 U.S.C. § 1681e), but the same requirement of actual inaccuracy also applies to claims against furnishers. 48 Here, the complaint does refer in a vague and general way to “false, derogatory information reported,” 49 but does not say how the information was allegedly false; indeed, the complaint says nothing at all about what information TD was allegedly furnishing to the consumer reporting agencies, let alone why any such information violated the law. Without even that minimum level of detail about her credit-reporting claims, Ms. Hubbard’s complaint’s bald conclusion does not “nudge[] [her] claims across the line from conceivable to plausible,” and dismissal is mandatory. 50 As another federal court held recently, a cause of action under the furnisher-liability statute “fails as a matter 47 Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991). 48 Sampson v. Wash. Mut. Bank, 453 F. App’x 863, 867 (11th Cir. 2011) (“Sampson does not allege in his complaint that he notified the defendants of any inaccuracies in his credit report, and he thus fails to state a claim under § 1681s-2(b) of the FCRA.”). 49 Stmt. Claim [Dkt. 2], ¶ 11 at 2. 50 Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 13 of 16 PageID 85 14 of law” and is subject to dismissal where the “complaint fails to provide any facts as to what negative information was reported, let alone the supposed inaccuracy.” 51 Conclusion The complaint incorrectly names the moving Defendant. The complaint fails to state a claim because TD’s duties under the Fair Credit Reporting Act were never triggered by a notice from a consumer reporting agency. Ms. Hubbard’s claim against TD is shotgun pleading. The complaint nowhere alleges any fact that can support a violation of 15 U.S.C. § 1681s-2(b). The complaint “pleads no factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Therefore, TD respectfully asks that this Court dismiss Ms. Hubbard’s claim against TD under the Fair Credit Reporting Act. TD also seeks an order correcting the caption to name the moving Defendant as TD Bank USA, N.A., rather than TD Bank, N.A. 51 O’Connor v. Capital One, N.A., No. CV 14-00209-KAW, 2014 U.S. Dist. LEXIS 74102, at *19 (N.D. Cal. May 29, 2014). Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 14 of 16 PageID 86 15 November 4, 2016. DYKEMA GOSSETT PLLC /s/ Brian Melendez ____________________________________ Brian Melendez, Fla. Bar. No. 0103559 4000 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402-3903 Ph. 612.486.1589 Fax 866.637.2804 bmelendez@dykema.com in association with HILL WARD HENDERSON Sherilee J. Samuel, Fla. Bar No. 017499 Hill Ward Henderson 3700 Bank of America Plaza 101 East Kennedy Boulevard Tampa, FL 33602 Ph. 813.221.3900 Fax 813.221.2900 sherilee.samuel@hwhlaw.com Attorneys for Defendant TD Bank USA, N.A. (misnamed in the caption as “TD Bank, National Association”) Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 15 of 16 PageID 87 16 Certificate of Service I hereby certify that on November 4, 2016, I electronically filed the foregoing with the Clerk of the Court by using the CM/ECF system. DYKEMA GOSSETT PLLC s/ Brian Melendez ____________________________________ Brian Melendez, Fla. Bar No. 0103559 Dykema Gossett PLLC 4000 Wells Fargo Center 90 South Seventh Street Minneapolis, MN 55402 Ph. 612.486.1589 Fax 866.637.2804 bmelendez@dykema.com 4823-1546-0667.4 ID\MELENDEZ, BRIAN Case 6:16-cv-01894-GAP-KRS Document 11 Filed 11/04/16 Page 16 of 16 PageID 88