Utter v. Jpmorgan Chase Bank, NA

Motion to Dismiss for Failure to State a Claim . Oral Argument requested.

D. Or.August 19, 2016

122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 1 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT Brian T. Kiolbasa, OSB No. 112890 kiolbasab@lanepowell.com LANE POWELL PC 601 SW Second Avenue, Suite 2100 Portland, Oregon 97204-3158 Telephone: 503.778.2103 Facsimile: 503.778.2200 Attorneys for Defendant UNITED STATES DISTRICT COURT DISTRICT OF OREGON EUGENE DIVISION DAVID UTTER, Plaintiff, v. JPMORGAN CHASE BANK, NA, Defendant. Case No. 6:16-cv-864-MC Defendant’s MOTION TO DISMISS PLAINTIFF’S COMPLAINT ORAL ARGUMENT REQUESTED I. LR 7-1(A) CERTIFICATION Counsel for defendant Chase Bank USA, N.A. (incorrectly named here as JPMorgan Chase Bank, N.A.) (“Chase”), certifies that he has conferred with plaintiff’s counsel in a good faith attempt to resolve the dispute that is the subject of this motion, but the parties have been unable to resolve the issues raised herein. II. MOTION Chase, by and through its counsel, respectfully moves this Court to dismiss plaintiff’s Complaint with prejudice. In support of this motion and supporting memorandum of law, Chase relies on the Court’s files and records in this case. Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 1 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 2 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT III. MEMORANDUM A. Introduction. In threadbare allegations, plaintiff David Utter (“plaintiff”) alleges that Chase inaccurately reported to the credit reporting agencies a debt that plaintiff claims he is not responsible for. (See generally, Compl. ¶¶ 6, 11-12, 18-19.1) Based on this alleged inaccurate credit reporting, plaintiff attempts to state claims for the willful and negligent violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq. (Id.) The Complaint, however, should be dismissed for failure to state a claim because plaintiff has failed to allege the required elements of an FCRA claim, and because the Complaint is an improper attempt to enforce provisions of the FCRA that are specifically reserved for the federal agencies and state officials—not private consumers. Plaintiff claims that his dispute involves a business loan and accompanying personal guarantee that plaintiff signed. (Compl. ¶ 6.) But plaintiff has not identified the loan number, stated when the loan in question was obtained, or stated the amount he (or his business) borrowed. Plaintiff has also not attached the loan agreement or the personal guarantee that he claims to have signed, nor has he identified the Chase representative that he claims to have discussed the business loan with, or when or how his purported discussions took place. (Id.) The lack of supporting factual allegations is understandable—because Chase never extended a business loan to plaintiff or plaintiff’s business. Chase did, however, issue plaintiff’s business two credit card accounts for which plaintiff agreed to be liable, the first in 2004, and the second in 2008. Despite Chase’s good faith request for clarification, plaintiff has refused to dismiss this action or amend his claims. So, now faced with those current circumstances, Chase assumes the truth of plaintiff’s allegations—as it must at this stage. But even if plaintiff’s bare-bones and doubtful allegations are taken as true, plaintiff’s Complaint fails to state a claim for relief under the FCRA for the simple reasons that plaintiff has failed to plead required elements of the FCRA, and because 1 The Complaint omits paragraphs 13-17. Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 2 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 3 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT plaintiff’s claims are based on a provision of the FCRA for which no private right of action has been granted to consumers. Dismissal of this action pursuant to Rule 12(b)(6) is appropriate. B. Legal Standard. To survive a Rule 12(b)(6) motion, a complaint must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). In explaining this standard, the Supreme Court emphasized that a “plaintiff’s obligation to provide the ‘grounds’ of her ‘entitlement to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Id. at 555. “Nor does a complaint suffice if it tenders ‘naked assertion[s]’ devoid of ‘further factual enhancement.’” Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949 (2009) (quoting Twombly, 550 U.S. at 557). Plaintiff must demonstrate more than “a sheer possibility that a defendant has acted unlawfully.” Id. Indeed, the “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555. A complaint may fail to show a right to relief either by lacking a cognizable legal theory or by lacking sufficient facts alleged under a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1990); see also Moss v. U.S. Secret Service, 572 F.3d 962, 967-69 (9th Cir. 2009) (summarizing applicable pleading standards after Iqbal). C. Dismissal is Required Because the Complaint Lacks Allegations That Are Required to State a Claim Under the FCRA. The FRCA was enacted to “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007). It imposes responsibilities on “consumer reporting agencies” (“CRAs”) regarding assembling and evaluating consumers’ credit and disseminating information about consumers’ credit. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009) (citing 15 U.S.C. § 1681(a)(4)). Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 3 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 4 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT In certain circumstances, the FCRA provides a private right of action to individual consumers to enforce the FCRA’s terms. However, the private right of action only arises after the consumer has challenged information provided by a CRA, and the furnisher of information receives a notice from the CRA that the consumer disputes the information. See 15 U.S.C. § 1681s-2(b) (“After receiving notice * * * 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 * * *.”); Gorman 584 F.3d at 1154–55 (discussing when duty to investigate arises); see also Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1059–60 (9th Cir. 2002) (stating that subsection 1681s-2(b) “specifies what happens after a CRA receives notice ‘pursuant to section 1681i(a)(2) * * * of a dispute with regard to the completeness or accuracy of information provided by a person’ to the CRA.”). Once a furnisher of information receives a notice of dispute from a CRA, under 15 U.S.C. § 1681s-2(b), the furnisher is required to investigate within specified time limits to determine the accuracy or completeness of the information provided to the CRA and must modify, delete, or block reporting information that is inaccurate, incomplete, or cannot be verified. Saucedo v. Bank of Am., N.A., No. 3:11-CV-00813-MO, 2011 WL 6014008, at *3 (D. Or. Dec. 1, 2011). Subsection 1681s-2(b)(1) can be enforced by a private plaintiff who establishes: (1) the furnisher of information received notice of the dispute from a credit reporting agency; (2) it failed to perform a reasonable investigation upon receiving such notice; (3) the failure to investigate was willful or negligent; and (4) plaintiff was harmed. Id. (citations omitted). However, while a furnisher of information, like Chase, must investigate and respond to the CRA, the furnisher has no obligation to modify, delete, or block reporting information merely because the consumer disagrees with the information that is being reported. See Baldin v. Wells Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 4 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 5 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT Fargo Bank, N.A., No. 3:12-CV-00648-AC, 2013 WL 6388499, at *8 (D. Or. Dec. 6, 2013) (Chief Judge Mosman’s slip opinion adopting Magistrate Judge Acosta’s Findings and Recommendation, holding that nothing in Section 1681s-2(b) requires the furnisher “to correct information simply because the consumer believes it is erroneous[,]” nor does the statute “create liability for furnishers simply because the consumer continues to disagree with the conclusion reached by a furnisher following [the investigation].”) Here, plaintiff alleges that he “alerted Defendant about this issue through a dispute with the relevant credit bureaus, and Defendant continues to refuse to correct the data[.]” (Compl. ¶ 6.) These allegations do not satisfy the requirements for a private right of action under Section 1681s-2(b), because plaintiff fails to allege (1) that Chase received notice of the dispute from any CRA, (2) that Chase failed to perform a reasonable investigation upon receiving such notice, or (3) that Chase’s failure to investigate was willful or negligent. What plaintiff has alleged is that he disagrees with Chase’s credit reporting, far short of the elements necessary to state an FCRA claim. Plaintiff does not allege the elements required to state a claim under Section 1681s-2(b), but instead, alleges only that Chase’s credit reporting is inaccurate—a claim that arises under Section 1681s-2(a). But as discussed below, the FCRA clearly prevents him from attempting to base a claim on that portion of the FCRA. D. Plaintiff’s Claims Fail Because the FCRA Does Not Provide Consumers a Private Right of Action Under Section 1681s-2(a). In addition to a furnisher’s obligation to investigate and respond to disputes lodged with the CRAs, the FCRA also imposes on furnishers of information the duty to provide accurate information to CRAs. Section 1681s-2(a) requires furnishers of credit information, like Chase, “to Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 5 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 6 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT provide accurate information to credit reporting agencies.” See 15 U.S.C. §§ 1681s-2(a)(1)(A) and (B). Section 1681s-2(a) provides in relevant part: A person shall not furnish information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate. * * * * A person shall not furnish information relating to a consumer to any consumer reporting agency if – The person has been notified by the consumer * * * that [the] specific information is inaccurate * * * and the information is, in fact, inaccurate. 15 U.S.C. §§ 1681s-2(a)(1)(A); 1681s-2(a)(1)(B). Plaintiff’s claims appear to be based solely upon Chase’s alleged violation of Section 1681s-2(a)(1)(A)—that Chase has allegedly reported inaccurate information to the CRAs. (See Compl. ¶ 6.) However, a private consumer is not authorized to maintain an FCRA claim based on alleged violations of Section 1681s-2(a); in fact, it is expressly prohibited. The FCRA unambiguously dictates that the provisions of Section 1681s-2(a) “shall be enforced exclusively * * * by the Federal agencies and officials and the State officials * * *.” See 15 U.S.C. § 1681s-2(d). Accordingly, there is no private right of action for a violation of Section 1681s-2(a). See Nelson, 282 F.3d at 1059 (holding that private enforcement of Sections 1681s-2(a) through the use of 1681n and 1681o is excluded); Johnson v. Franchise Tax Board, 61 Fed. App’x 494, 495 (9th Cir. 2003) (affirming district court’s dismissal of the plaintiff’s FCRA claim because claims under FCRA Section 1681s-2(a) may only be enforced by federal and state officials); Gorman, 584 F.3d at 1162 (holding that consumer has no private right of action under § 1681s-2(a) because claims made under subsection (a) of the FCRA may only be pursued by federal or state officials); Leaper v. JP Morgan Chase, No. 03:15-CV-00037-HZ, 2015 WL 350718, at *3 (D. Or. Jan. 21, 2015) (“Duties imposed on furnishers under subsection (a) are enforceable only by federal or state agencies.”). Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 6 of 7 122006.0133/6744425.3 LANE POWELL PC 601 SW SECOND AVENUE, SUITE 2100 PORTLAND, OREGON 97204-3158 503.778.2100 FAX: 503.778.2200 PAGE 7 - DEFENDANT’S MOTION TO DISMISS PLAINTIFF’S COMPLAINT Congress’s reasoning behind the limitation was explained by the Ninth Circuit as follows: It can be inferred from the structure of the [FCRA] that Congress did not want furnishers of credit information exposed to suit by any and every consumer dissatisfied with the credit information furnished. Hence, Congress limited the enforcement of the duties imposed by §1681s-2(a) to governmental bodies. Nelson, 282 F.3d at 1060. This is one such suit that Congress intended to prevent. Plaintiff’s allegations fall squarely within the provisions of Section 1681s-2(a): “Plaintiff alerted Defendant about this issue through a dispute with the relevant credit bureaus, and Defendant continues to refuse to correct the data (15 U.S.C. § 1681s-2).” (Compl. ¶ 6.) Accordingly, plaintiff cannot maintain his FCRA claims because there is no private right of action under Section 1681s-2(a) as a matter of law. Plaintiff is prevented from attempting to enforce the FCRA through sections 1681n or 1681o. As the statutory text makes clear, only federal and state officials may enforce provisions of those sections. See 15 U.S.C. §§ 1681(c), (d); Nelson, 282 F.3d at 1059 (“private enforcement under §§ 1681n & o is excluded [from the provisions of the FCRA]”). The Court should therefore dismiss plaintiff’s claims with prejudice. IV. CONCLUSION. For the foregoing reasons, defendant’s Motion to Dismiss should be granted. DATED: August 19, 2016 LANE POWELL PC By /s/ Brian T. Kiolbasa Brian T. Kiolbasa, OSB No. 112890 Telephone: 503.778.2103 Facsimile: 503.778.2200 Attorneys for Defendant Case 6:16-cv-00864-MC Document 7 Filed 08/19/16 Page 7 of 7