Haynes v. Transunion, LLC

BURNELL HAYNES, Plaintiff, v. TRANSUNION, LLC; EQUIFAX INFORMATION SERVICES, LLC; EXPERIAN INFORMATION SOLUTIONS, INC.; BANK OF AMERICA, N.A.; CHASE BANK USA, N.A.; WELLS FARGO N.A.; DISCOVER FINANCIAL SERVICES; DEPARTMENT STORES NATIONAL BANK; CAPITAL ONE BANK USA, N.A.; CITIBANK NORTH AMERICA, INC.; COMENITY BANK; TD BANK USA, N.A.; MIDLAND FUNDING, LLC; and MIDLAND CREDIT MANAGEMENT INC., Defendants.

No. CV 19-7157 (JS) (ARL)

United States District Court, E.D. New York

February 4, 2021

REPORT AND RECOMMENDATION

ARLENE R. LINDSAY, UNITED STATES MAGISTRATE JUDGE

Plaintiff Burnell Haynes brings this action against TransUnion, LLC Equifax Information Services, LLC; Experian Information Solutions, Inc., Bank of America, N.A., Chase Bank USA, N.A. Wells Fargo N.A., Discover Financial Services, Department Stores National Bank, Capital One Bank USA, N.A., Citibank North America, Inc., Comenity Bank, TD Bank USA, N.A. Midland Funding, LLC, and Midland Credit Management Inc. for alleged violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (“FCRA”) and Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq. ("FDCPA"). Currently before the Court, on referral from District Judge Seybert, is a motion to dismiss pursuant to Federal Rule of Civil Procedure (“Rule”) 12(b)(6) filed by Defendants TD Bank USA, N.A. and Wells Fargo N.A. (the “Moving Defendants”). Joining in the motion are Midland Funding, LLC (“MF”) Equifax Information Services, LLC (“Equifax”) and TransUnion, LLC (“TransUnion” and together with MF and Equifax, “Joining Defendants”). For the reasons set forth below, the undersigned respectfully reports and recommends that the motion to dismiss be denied.

BACKGROUND

A. Factual Background

The following facts are drawn from the Complaint and are accepted as true for purposes of the instant motion. Samuels v. Air Transp. Local 504, 992 F.2d 12, 15 (2d Cir. 1993). These facts, however, do not constitute findings of fact by the Court. See Colvin v. State University College at Farmingdale, No. 13-CV-3595 (SJF)(ARL), 2014 U.S. Dist. LEXIS 85678, 2014 WL 2864224, at *1 n.1 (E.D.N.Y. June 19, 2014).

Plaintiff is a natural person who at all relevant times has resided in Freeport, New York. Compl. ¶ 4.

Plaintiff asserts claims against three groups of defendants, those that provided credit -the furnishers, those that reported on Plaintiff's credit - the credit reporting agencies or “CRAs”, and those who attempted to collect on debts not paid - the debt collectors. Both Moving Defendants were in the first category, and, are named in the complaint as furnishers. Moving Defendant, Wells Fargo is a business entity that regularly conducts business in New York with its principal place of business in San Francisco, California. Wells Fargo regularly and in the ordinary course of business furnishes information to various consumer reporting agencies regarding Wells Fargo's transactions with consumers, and, is as "furnisher" of information as contemplated by FCRA § 1681s-2(a) & (b). Id. at ¶ 10. Moving Defendant, TD Bank is a business entity that regularly conducts business in New York with its principal place of business in Wilmington, Delaware. TD Bank regularly and in the ordinary course of business furnishes information to various consumer reporting agencies regarding TD Bank's transactions with consumers, and, is a "furnisher" of information as contemplated by FCRA § 168Is-2(a) & (b). Id. at ¶ 16.

Joining Defendant MF is named in the action as a furnisher as well as a debt collector. MF is a corporation doing business in the state of New York, with its corporate address in San Diego, California, and is a "debt collector" as the phrase is defined and applied under 15 U.S.C. § 1692(a) of the FDCPA in that they regularly attempt to collect on debts primarily incurred for personal, family or household purposes. Additionally, Defendant MF regularly and in the ordinary course of business furnishes information to various consumer reporting agencies regarding MF's transactions with consumers, and, is a "furnisher" of information as contemplated by FCRA§1681s-2(a)&(b). Id. at ¶ 17.

Joining Defendants Equifax and TransUnion are named in the Complaint as CRAs. Joining Defendant, Equifax, is a business entity that regularly conducts business in New York with its principal place of business in Atlanta, Georgia. Defendant Equifax is a "consumer reporting agency" as defined in 15 U.S.C. § 1681 a(f) and is engaged in the business of assembling, evaluating, and disbursing information concerning consumers for the purpose of furnishing consumer reports, as defined in 15 U.S.C. §1681 a(d), to third parties. Id. at ¶ 5.

Joining Defendant TransUnion is a business entity that regularly conducts business in New York with its principal place of business in Chicago, Illinois. TransUnion is a "consumer reporting agency" as defined in 15 U.S.C. § 1681a(f) and is engaged in the business of assembling, evaluating, and disbursing information concerning consumers for the purpose of furnishing consumer reports, as defined in 15 U.S.C. §1681 a(d), to third parties. Id. at ¶ 6.

Plaintiff alleges that in 2012 her home was damaged by Superstorm Sandy. Id. at ¶ 19. According to Plaintiff, she was not living at her residence in the aftermath of the storm and started to notice that parcels of her mail were being stolen. Id. Around the same time, Plaintiff began receiving collection letters for debts that did not belong to her. Id. at ¶ 20. Six years later, in 2018, Plaintiff alleges that she realized that she had been the victim of identity theft and she went to the police and reported what had happened. Id. at ¶ 21. Plaintiff also started disputing with the CRAs a number of credit card accounts which, according to Plaintiff, did not belong to her, informing the CRAs these accounts were opened or used by an identity theft. Id. at ¶ 21, 23. According to Plaintiff, despite the police report, the CRAs verified these accounts as belonging to Plaintiff. Id. at ¶ 24. Plaintiff alleges that the CRAs forwarded Plaintiff's disputes to the furnishers and that the Defendant furnishers, including the Moving Defendants and MF, failed to conduct a reasonable investigation and verified the accounts as accurately belonging to Plaintiff. Id. at ¶ 25. According to Plaintiff, over time, these fraudulent debts were then sold to debt collectors, like MF, that began collection attempts against Plaintiff, making negative reportings on her credit report. Id. at ¶ 26. Plaintiff claims that as a result, she suffered emotional and actual damages, including severe anxiety and limited credit opportunities. Id. at ¶ 27.

Based upon the foregoing set of facts Plaintiff has asserted three claims. Count One of the Complaint asserts claims against Joining Defendants, TransUnion and Equifax, among other non-moving defendants alleging that each of these defendants prepared, compiled, issued, assembled, transferred, published, and otherwise reproduced consumer reports regarding Plaintiff as that term is used and defined under 15 U.S.C. § 168la. Id. at ¶ 29. According to Plaintiff, these reports contained information about Plaintiff that was false, misleading, and inaccurate in violation of the FCRA. Id. at ¶ 30.

Count Two of the Complaint assets claims against the Moving Defendants, as well as MF, among other non-moving defendants, alleging that each of these defendants willfully and negligently supplied Equifax, Experian and TransUnion with negative consumer report information about Plaintiff that was false and misleading in violation of the FCRA. Id. at ¶ 38. Plaintiff alleges that each of these defendants willfully and negligently failed to conduct a reasonable investigation of the dated trade lines that Plaintiff disputed, and certain furnishers failed to mark the trade lines as in dispute after notified by the CRAs in 2018 that Plaintiff disputed the trade lines. Id. at ¶ 39.

Count Three of the Complaint alleges that MF and Midland Credit Management both engaged in separate collection activity against Plaintiff, each of which was false and deceptive in violation of the FDCA. Id. at ¶¶ 44-47.

B. Procedural Background

Plaintiff filed her complaint on December 6, 2019 in Supreme Court of the State Of New York, Nassau County. On December 20, 2019, TransUnion removed the action to this Court. ECF No. 1. The Moving Defendants filed this motion to dismiss Plaintiff's claims asserted against them in Count Two of the Complaint pursuant to Rule 12 (b)(6) on May 29, 2020. ECF No. 68. In support of their motion to dismiss the Moving Defendants rely upon their Memorandum of Law in Support of Motion to Dismiss (“Moving Def. Mem.”). On the same day, Defendants MF and Equifax joined in the motion, despite having filed answers on February 7, 2020 and February 3, 2020, respectively.^[1] Defendant TransUnion also joined in the motion to dismiss, despite having answered the complaint, on June 8, 2020 arguing that dismissal is nonetheless appropriate under Rule 12(c).^[2] See TransUnion, LLC'S Notice of Joinder in TD Bank, N.A. and Wells Fargo's Joint Motion To Dismiss Plaintiff's Complaint (“TransUnion Op. Mem.”). Plaintiff opposed the motions. In support of her opposition, Plaintiff relies upon, Plaintiff Burnell Haynes's Memorandum In Opposition To The Motion To Dismiss Filed By Defendant's Wells Fargo And TD Bank And Joined By Equifax Information Services, LLC, Transunion LLC And Midland Funding (“Pl. Mem.”). The Moving Defendants, TransUnion, MF and Equifax have each filed reply memorandum responding to the arguments set forth in Plaintiff's response. By Order dated October 26, 2020, these motions were referred to the undersigned by Judge Seybert.

DISCUSSION

A. Standard of Review

The Supreme...