Evans v. Trans Union LLC

BETTY A. EVANS, Plaintiff,

v.TRANS UNION LLC, et al. Defendants.

CIVIL ACTION NO. 2:10-cv-00945

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF WEST VIRGINIA

CHARLESTON DIVISION

Dated: February 14 , 2011.

MEMORANDUM OPINION AND ORDER

Before the Court is Defendant Charleston Area Medical Center's (CAMC) motion to dismiss Count Three of the amended complaint [Docket 26]. For the reasons set forth below, the motion is DENIED. In addition, CAMC's motion to dismiss Count Three of the original complaint [Docket 6] is DENIED AS MOOT.

I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY

According to her amended complaint, Plaintiff Betty A. Evans (Plaintiff) first learned of her negative credit report when she was denied a mortgage loan by United Bank on August 26, 2008. (Docket 18 at 2.) The credit report on which United Bank based its decision was allegedly furnished by TransUnion, LLC (TransUnion). That same day, Plaintiff obtained a copy of her credit report from TransUnion. According to Plaintiff, the TransUnion report reflected a collection account from CAMC with a balance of approximately $22,193 from April 2007 and a state tax lien for $310 from October 1998. (Docket 18 at 3.) On September 24, 2008, Plaintiff contacted TransUnion regarding the credit report. In her amended complaint, Plaintiff claims to have informed TransUnion that the $22,193 collection amount was incorrect, explaining that her medical insurance provider had paid in full the medical bill from which that debt arose.

After attempting to settle a number of other debts reflected in her TransUnion credit report, Plaintiff applied for a savings account with Chase Bank in November 2009. Plaintiff's application was denied on November 12, 2009, according to her amended complaint, "due to information received from Trans Union[.]" (Docket 18 at 4.) Plaintiff further states that an investigation into the $22,193 debt conducted by the West Virginia Attorney General's Consumer Protection and Antitrust Division revealed that the debt arose from medical services provided to Plaintiff by CAMC on January 12, 2007. This debt was settled by Plaintiffs insurer, less a $44 co-payment, according to a letter dated November 30, 2009. (Id.) As of December 1, 2009, Plaintiffs TransUnion credit report reflected a collection account with an "Original Amount" of $22,193, a "Balance" of $44, and a "Past Due" amount of $44. (Docket 24 at 2.) Finally, Plaintiff states that CAMC agreed to remove the $22,193 debt from Plaintiff's credit file, per a letter dated February 8, 2010. (Docket 18 at 5.)

On June 22, 2010, Plaintiff filed a complaint against TransUnion and CAMC in the Circuit Court of Kanawha County. West Virginia. The complaint alleges that TransUnion violated multiple provisions of the Federal Credit Reporting Act (FCRA) and that CAMC was negligent in recording and reporting payment on Plaintiffs medical bills. On July 22, 2010, defendants jointly removed the case to this Court, asserting federal question jurisdiction over Plaintiffs claims against TransUnion and supplemental jurisdiction over Plaintiffs common law claim against CAMC. (Docket 1 at 2.) CAMC moved to dismiss the count against it on July 28, 2010, arguing that the FCRA preempts the negligence claim in Count Three. (Docket 6.) In accordance with the Court's Scheduling Order (Docket 15), Plaintiff filed her amended complaint on October 6, 2010. (Docket 18.) Plaintiff's negligence claim against CAMC remained unchanged. On October 20, 2010, CAMC moved to dismiss Count Three of the amended complaint for the same reason. (Docket 26.)

II. LEGAL STANDARD

Defendant's motion to dismiss must be evaluated under the pleading standard set forth in Rule 8(a)(2) of the Federal Rules of Civil Procedure and in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007). Rule 8(a)(2) requires only that a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." The statement must "give the defendant fair notice of what the... claim is and the grounds upon which its rests." Twombly, 550 U.S. at 555 (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)).

Twombly states that a well-pleaded complaint must aver "enough facts to state a claim to relief that is plausible on its face." Id. at 570. A "plausible" claim cannot be supported by mere "labels and conclusions." Id. at 555. Rather, the complaint's "[f]actual allegations must be enough to raise a right to relief above the speculative level, " id., and critical elements of a claim must be, at a minimum, "suggested by the facts, " id. at 569. This "facial plausibility" standard requires the plaintiff to allege facts that add up to "more than a sheer possibility that a defendant has acted unlawfully." Ashcroft v. Iqbal, _U.S. _, 129 S. Ct. 1937, 1949 (2009). In testing the sufficiency of the complaint, the Court must "accept[ ] all well-pleaded allegations in the plaintiff's complaint as true and draw[ ] all reasonable inferences from those facts in the plaintiff's favor." Chao v. Rivendell Woods, Inc., 415 F.3d 342, 346 (4th Cir. 2005); see alsoErickson v. Pardus, 551 U.S. 89, 94 (2007) (all factual allegations in pleadings assumed to be true). A district court may grant a motion to dismiss based on federal preemption if the defense easily can "be determined from the pleadings." Cf. Drake v. Lab. Corp. of Am. Holdings, 458 F.3d 48, 66 (2d Cir. 2006) (denyingmotion to dismiss when "preemption cannot be easily determined from the pleading"); accord Columbia Venture, LLC v. Dewberry & Davis, LLC, 604 F.3d 824, 832 (4th Cir. 2010) (affirming dismissal under 12(b)(6) because state law claims were preempted by FEMA).

III. DISCUSSION

CAMC's only contention in its motion to dismiss¹ is that Count Three of Plaintiff's complaint, which alleges common law negligence by Defendant CAMC, is preempted by the FCRA and therefore fails to state a claim upon which relief can be granted. According to CAMC, 15 U.S.C. § 1681h(e) precludes the common law negligence claim against CAMC because Plaintiff has failed to allege that CAMC acted with malice or willful intent to injure Plaintiff.

A. The Fair Credit Reporting Act

The FCRA is a comprehensive statutory scheme designed to regulate and promote fairness in the consumer reporting industry. 15 U.S.C. § 1681(a); Ross v. FDIC, 625 F.3d 808, 812 (4th Cir. 2010). Recognizing the importance of impartiality and protecting the privacy rights of consumers regarding personal credit information, Congress devised a "comprehensive series of restrictions on the disclosure and use of credit information assembled by consumer credit reporting agencies." FTC v. Manager, Retail Credit Co., 515 F.2d 988, 989 (D.C. Cir. 1975). "The FCRA 'has been drawn with extreme care, reflecting the tug of the competing interests [between consumers and creditors], ' and courts must respect the balance struck by Congress when interpreting its provisions." Ross, 625 F.3d at 812 (quoting Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1060 (9th Cir. 2002)).

The FCRA imposes various obligations on three types of entities: consumer reporting agencies (CRAs), users of consumer credit reports, and entities that furnish debt information to CRAs, or "furnishers." See 15 U.S.C. §§ 1681-1681x; Wenner v. Bank of America, N.A., 637 F. Supp. 2d 944, 951 (D. Kan. 2009). Defendant CAMC is a furnisher of credit information, and Defendant TransUnion is a CRA. See 15 U.S.C. § 1681a(f) (definition of CRA); Ross, 625 F.3d at 813 (describing the duties of "those who report credit information to CRAs"); 12 C.F.R. § 41.41(c) ("Furnisher means an entity that furnishes information relating to consumers to one or more consumer reporting agencies for inclusion in a consumer report."). With regard to the duties of furnishers, the FCRA generally requires that furnishers report only accurate information to CRAs, and it imposes a further duty on furnishers to verify the sufficiency and accuracy of reported information once they are notified of a possible error by a CRA or consumer. See generally 15 U.S.C. § 1681s-2. Importantly, however, the FCRA does not impose upon furnishers a duty to report credit information at all; instead, the FCRA dictates how and under what circumstances information may be reported, if a furnisher so chooses. Cf. 12 C.F.R. pt. 41, app. E ("The OCC encourages voluntary furnishing of information to consumer reporting agencies. Section 41.42 of this part requires each furnisher to establish and implement reasonable written policies and procedures concerning the accuracy and integrity of the information it furnishes to consumer reporting agencies."); see also 15 U.S.C. § 1681s-2(a)(1)(A) (framing the duty as a prohibition on reporting information known to be inaccurate, rather than an affirmative duty to report any information).

B. Preemption of State Law Causes of Action Pursuant to the FCRA

As originally enacted, the FCRA permitted state regulation of the consumer reporting industry. The original preemption provision, 15 U.S.C. § 1681t(a), preempts state laws only "to the extent that those laws are inconsistent with any provision of [the FCRA]." In 1996, Congress amended the FCRA with the Consumer Credit Reporting Reform Act of 1996 ("CCRRA"). See generally Consumer Credit Reporting Reform Act of 1996, Pub. L. No. 104-208, 110 Stat. 3009, 3009-426. The CCRRA added a stronger preemption provision, 15 U.S.C. § 1681t(b), which provides in pertinent part:

No requirement or prohibition may be imposed under the laws of any State (1) with respect to any subject matter regulated under... (F) section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies....

15 U.S.C. § 1681t(b)(1)(F). By its very language, this subsection preempts state laws concerning any matter covered in 15 U.S.C. § 1681s-2. Section 1681s-2(a), in turn, prohibits furnishers from providing information known...