Coulter v. SageStream, LLC

501 F.Supp.3d 298

Ramsey COULTER

v.SAGESTREAM, LLC

CIVIL ACTION NO. 20-1820

United States District Court, E.D. Pennsylvania.

Signed November 17, 2020

Nicholas J. Linker, Zemel Law LLC, Clifton, NJ, for Ramsey Coulter.

Christen Tuttle, Troutman Pepper Hamilton Sanders LLP, Philadelphia, PA, Cindy Hanson, Troutman Sanders LLP, Atlanta, GA, for SageStream, LLC.

MEMORANDUM

McHUGH, United States District Judge

I. Introduction

This is a putative class action arising under the Fair Credit Reporting Act (FCRA). Plaintiff Ramsey Coulter asserts that Defendant SageStream, LLC's, response to a disputed credit report entry was inadequate under the statute. First, Plaintiff alleges that SageStream violated section 1681e(b) of FCRA, which requires that consumer reporting agencies follow reasonable procedures to assure accuracy of information in consumer reports. Second, Plaintiff alleges that Defendant violated section 1681i of FCRA, which outlines Defendant's obligations to conduct a reinvestigation of Plaintiff's file once notified of a consumer's dispute. Finally, Plaintiff alleges various procedural deficits in the letter SageStream sent reporting the results of its reinvestigation, again invoking section 1681i.

Defendant responds with a threshold argument under the Supreme Court's decision in Spokeo , contending that Plaintiff lacks standing to bring this action altogether, due to a failure sufficiently to articulate any cognizable injuries. But as applied by the Third Circuit, Spokeo did not dramatically alter the law on standing, with the result that Coulter's core claims survive. Sagestream further moves to dismiss for failure to state a claim upon which relief can be granted. As to Plaintiff's more inventive claims, the motion will be granted. As to the central allegations of Coulter's complaint, however, the motion will be denied.

II. Factual Background

Plaintiff filed for Chapter 7 bankruptcy in April 2015, and Plaintiff's Lending Club credit card account, along with other accounts, was included in the bankruptcy proceedings. Am. Compl. ¶ 6-7, ECF 4. Three years later, on or around April 24, 2018, Plaintiff asserts he reviewed his credit report from SageStream and found that his now defunct Lending Club account, along with debts purportedly owed on the account, were erroneously still listed. Id. ¶ 8-9. The report incorrectly stated that Plaintiff owed $5,811 on this account in 2016 and $6,067 in 2017, even though the debt had been discharged through the bankruptcy. Id. ¶ 9. Plaintiff sent a dispute letter dated April 24, 2018 to Defendant regarding this alleged mistake. Id. ¶ 10.

Sagestream responded to Plaintiff's dispute in a letter dated July 26, 2018. Id. ¶ 16; Def. Reinvestigation Letter, ECF 6.¹

Plaintiff alleges that this response was untimely under the statute, which requires that a reinvestigation be completed within thirty days. Am. Compl. ¶ 16; 15 U.S.C. § 1681i(a)(1)(A). Plaintiff further alleges that Defendant either did not contact Lending Club in a timely fashion, or upon receiving a response from Lending Club, did not provide the results of the investigation to Plaintiff. Id. ¶ 17. Plaintiff further alleges that Defendant did not delete the inaccurate information from his credit report. Id. ¶ 33.

Plaintiff also asserts that the letter he received from Defendant failed to contain appropriate disclosures required under FCRA, particularly with regard to notifying Plaintiff that he could request further information about the procedures used by Defendant to assess his dispute. Id. ¶¶ 18-25. Moreover, Plaintiff contends that Defendant's letter did not state with the requisite specificity the statutory timelines for furnishing notification of disputed or deleted information to third parties at a disputant's request and did not expressly say that notice could be provided for disputed (as opposed to deleted) information. Id. ¶¶ 26-33.

Finally, Plaintiff asserts an alternative theory of liability based on Defendant operating as a "reseller" of information obtained from another consumer reporting agency, Innovis Data Solutions. Id. ¶¶ 36-38. Once again, Plaintiff maintains that Sagestream did not make the disclosures required under the statute. Id. ¶¶ 39-43. As a result of Defendant's errors, Plaintiff avers that he "suffered actual damages, mental anguish, frustration, humiliation, and embarrassment." Id. ¶ 73.

III. Standing

Federal courts are courts of limited jurisdiction, and the plaintiff bears the burden of establishing that subject-matter jurisdiction exists. See Lujan v. Defenders of Wildlife , 504 U.S. 555, 561, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). In order to establish jurisdiction, a plaintiff must show that she has standing, such that a "case or controversy" exists, as is required by Article III of the U.S. Constitution. Id. at 559, 112 S.Ct. 2130. There are three elements of Article III standing: "First, an injury in fact, or an invasion of a legally protected interest that is concrete and particularized. Second, a causal connection between the injury and the conduct complained of. And third, a likelihood that the injury will be redressed by a favorable decision." In re Horizon Healthcare Servs. Data Breach Litig. , 846 F.3d 625, 633 (3d Cir. 2017) (hereafter "Horizon") (citing Lujan , 504 U.S. at 560-61, 112 S.Ct. 2130 ). These requirements do not change in the class action context; rather, one of the named plaintiffs must establish Article III standing. Id. at 634.

Defendant argues that Plaintiff has not established standing, and that I am thus deprived of subject-matter jurisdiction over this case. Def. Motion to Dismiss at 2, ECF 9-1.² Defendant argues that Plaintiff has not shown the first element of standing—an injury in fact. Id. Defendant's challenge is a facial attack (rather than a factual one) because Defendant does not contest the facts alleged in the complaint, but rather argues that the facts, as presented, are not sufficient to confer standing as a matter of law. See Hartig Drug Co. v. Senju Pharm. Co. , 836 F.3d 261, 268 (3d Cir. 2016).

Intangible injuries may suffice to confer standing, as long as they are particularized and concrete. See Spokeo v. Robins , ––– U.S. ––––, 136 S. Ct. 1540, 1548, 194 L.Ed.2d 635 (2016). In Spokeo, the Supreme Court clarified that in analyzing whether a plaintiff has shown an "injury in fact," courts must not confuse the distinct requirements that the injury must be both particularized and concrete. Id. An injury is particularized if it "affect[s] the plaintiff in a personal and individual way." Id. (internal quotations omitted). "A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist." Id. But a concrete injury need not be "tangible." Id. at 1549. In deciding whether an intangible injury is concrete, courts should look at whether Congress has elevated the harm to be legally cognizable through statute, and at whether the harm "has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts." Id. Under this analysis, "the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact. In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified." Id. However, the Court cautioned that the congressional power to elevate intangible harms into concrete injuries is not without limits, and that a "bare procedural violation, divorced from any concrete harm" cannot "satisfy the injury-in-fact requirement of Article III." Id.

In the context of FCRA, the Court in Spokeo provided two examples of procedural violations that "probably" would not result in any concrete harm and are not sufficient to cause an injury-in-fact: (1) when an agency fails to provide notice to a user of the agency's consumer information, but the information is entirely accurate, or (2) incorrect reporting by an agency of a consumer's zip code, without more. Id. at 1550. Beyond those two examples, however, the Court warned that it "express[ed] no view about any other types of false information that may merit similar treatment." Id. n.8. The Court remanded for the Ninth Circuit to consider whether the statutory violations alleged in that case, namely the publication of inaccurate biographical information about the plaintiff, created a concrete injury. Id. at 1550.

As noted by both Plaintiff and Defendant, district courts around the country since Spokeo have grappled with the question of when certain violations of FCRA or other consumer protection statutes create concrete injuries such that plaintiffs have standing, and the results have not always been consistent. In the Third Circuit, however, there are several precedential decisions since Spokeo that define the contours of the injury-in-fact requirement.

The Third Circuit has repeatedly held that Spokeo did not "intend to change the traditional standard for the establishment of standing" and "did not alter" the court's approach to the analysis. Horizon , 846 F.3d at 638 (3d Cir. 2017) (citing In re Nickelodeon Consumer Privacy Litig. , 827 F.3d 262, 273 (3d Cir. 2016) ) (hereinafter "Nickelodeon"). These cases have been summarized at length by Third Circuit decisions and in my own previous decisions, and so I will not belabor their history here. See Kamal v. J. Crew Grp. Inc. , 918 F.3d 102, 111-12 (3d Cir. 2019) ; Tonge v. Fundamental Labor Strategies, Inc. , 277 F. Supp. 3d 809, 817-19 (E.D. Pa. 2017) (McHugh, J.). It is enough to say that the Circuit has repeatedly examined consumer protection statutes, and the majority of these cases³ "have been decidedly in favor of allowing individuals to sue to remedy violations of their statutory rights, even without additional injury." Long v. Septa , 903 F.3d 312, 322 (3d Cir. 2018). The court has instructed that the "[w]hen one sues under a statute alleging ‘the very injury [the statute] is intended to...