Vaughn v. Transit Emps. Fed. Credit Union

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CAREY VAUGHN, Plaintiff, v. TRANSIT EMPLOYEES FEDERAL CREDIT UNION, et al., Defendants.

Civil Action No. 22-cv-45 (BAH)

United States District Court, District of Columbia

January 24, 2023

MEMORANDUM OPINION AND ORDER

BERYL A. HOWELL CHIEF JUDGE

Plaintiff Carey Vaughn has identified a host of alleged errors in his credit report and brings the instant suit against various credit reporting agencies (CRAs) and the furnishers of the credit information containing those errors for violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., and Fair Debt Collection Practices Act (FDCPA), 15 U.S.C. § 1692 et seq., and for defamation. Second Amended Compl. (SAC) ¶¶ 3-7, 8 90-151, ECF 46. One of those furnishers is defendant CommonWealth One Federal Credit Union (“CommonWealth”), which has moved, under Federal Rule of Civil Procedure 12(b)(6), to dismiss the two claims asserted against it, arguing that plaintiff has failed to state a claim upon which relief may be granted. Def.'s Mot. Dismiss (“Def.'s Mot.”), ECF 51. For the reasons explained below, defendant's motion will be granted in part, as to plaintiff's defamation claim, and denied in part, as to plaintiff's FCRA claim.

I. BACKGROUND

According to plaintiff, his credit report is riddled with factual inaccuracies, which artificially lowers his credit score and harms him when CRAs furnish or sell his report to third parties, who may be making decisions based on the erroneous information. SAC ¶¶ 8, 17-18, 31, 48, 66, 80, 89, 98.

As relevant here, one of these alleged inaccuracies is that plaintiff's payment status on a debt to CommonWealth was past due, when in fact plaintiff's account with CommonWealth “was paid and in good standing when the account was closed.” Id. ¶¶ 4, 32-35. As with the other alleged inaccuracies, plaintiff sent dispute letters to CRAs, and the CRAs in turn forwarded notice of plaintiff's dispute for CommonWealth to investigate. Id. ¶¶ 36-38. Plaintiff alleges that “[t]he CRAs forwarded Plaintiff's dispute by way of an [Automated Credit Dispute Verification form (“ACDV”)] that summarized the dispute in an insufficient manner that failed to fully and accurately convey Plaintiff's dispute,” and although they also attached the original dispute letter, “the CRAs know [CommonWealth] relies on the information in the ACDV and does not view the dispute letter.” Id. ¶¶ 39-40. CommonWealth “received the ACDV and merely confirmed that the disputed information was being reported consistently to the CRAs,” but “did not investigate whether the disputed information was accurate or not” and “did not report that the account was disputed.” Id. ¶¶ 43-45. The CRAs accepted this response and continued to include the erroneous information regarding the CommonWealth account in plaintiff's credit report. Id. ¶ 46.

Plaintiff brought suit in the Superior Court of the District of Columbia against Transit Employees Federal Credit Union, which is allegedly responsible for another inaccurate item on plaintiff's credit report, and three CRAs for three violations of the FCRA. See Compl. ¶¶ 3-6, 20-57, ECF No. 1-2. Defendants removed the action to this court on the basis of federal question jurisdiction. Defs.' Notice of Removal ¶¶ 4-5, ECF No. 1. Plaintiff then amended his complaint following one defendant's motion to dismiss, as permitted as a matter of course by Federal Rule of Civil Procedure 15(a)(1)(B). See Def. TEFCU's Mot. to Dismiss, ECF 19; First Amended Compl. (FAC), ECF No. 24. That first amended complaint introduced two new defendants, including CommonWealth, substantially expanded upon the original factual allegations, and added two additional counts under the FCRA and the FDCPA. See FAC Redline, ECF No. 24-1.

CommonWealth moved to dismiss the FAC. Def. CommonWealth's Mot. to Dismiss, ECF 43. Once again, plaintiff responded by amending his complaint. See SAC;^[1]Min. Order (July 21, 2022); Min. Order (August 11, 2022); Min. Order (August 22, 2022) (allowing the second amended complaint to stand). The Second Amended Complaint elaborated upon the factual allegations as they related to CommonWealth's liability and added a sixth claim, this time for defamation. See SAC Redline, ECF No. 46-1.

As before, CommonWealth moved to dismiss the new complaint for failure to state a claim, under Federal Rule of Civil Procedure 12(b)(6), which motion is now ripe for review. See Def.'s Reply Supp. Mot. Dismiss (“Def.'s Reply”), ECF No. 56.

II. LEGAL STANDARD

To survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), “[a] plaintiff need not make ‘detailed factual allegations,'” but the “complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” VoteVets Action Fund v. United States Dep't of Veterans Affs, 992 F.3d 1097, 1104 (D.C. Cir. 2021) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)). A facially plausible claim pleads facts that are not “‘merely consistent with' a defendant's liability” but that “allow[] the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678 (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556-57 (2007)). See also Rudder v. Williams, 666 F.3d 790, 794 (D.C. Cir. 2012).

In deciding a motion under Rule 12(b)(6), the court must consider the whole complaint, accepting all factual allegations as true, “even if doubtful in fact.” Twombly, 550 U.S. at 555; see also Atchley, v. AstraZeneca UK Ltd., 22 F.4th 204, 210 (D.C. Cir. 2022). Courts do not, however, “assume the truth of legal conclusions, nor do [they] ‘accept inferences that are unsupported by the facts set out in the complaint.'” Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015) (citation omitted) (quoting Islamic Am. Relief Agency v. Gonzales, 477 F.3d 728, 732 (D.C. Cir. 2007)).

III. DISCUSSION

Plaintiff's Second Amended Complaint brings six counts, SAC ¶¶ 90-151, two of which are asserted against defendant CommonWealth. See id. ¶¶ 116-30, 144-51. As discussed in turn below, the factual allegations in the complaint, accepted as true, plausibly establish plaintiff's entitlement to relief on his FCRA claim against CommonWealth, but fall short as to his defamation claim, and as such only the latter claim will be dismissed under Rule 12(b)(6).

A. Count III: Violation of the Fair Credit Reporting Act

The FCRA is meant 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) (citations omitted). Pursuant to 15 U.S.C. § 1681s-2(b), which provides for a private right of action for violations of that section, Mazza v. Verizon Washington DC, Inc., 852 F.Supp.2d 28, 34 (D.D.C. 2012), “upon being notified by a credit reporting agency of a dispute as to the accuracy of its information, the furnisher of information to a credit reporting agency has duties under [the FCRA] to investigate the disputed information and correct it as necessary,” Renford v. Cap. One Auto Fin., No. 21-cv-2382 (RC), 2022 WL 1211193, at *4 (D.D.C. Apr. 25, 2022) (quoting Haynes v. Navy Fed. Credit Union, 52 F.Supp.3d 13, 19 (D.D.C. 2014)). Plaintiff alleges that CommonWealth failed to conduct a reasonable investigation and modify the inaccurate information after being notified of plaintiff's dispute, in violation of its duties under that section. SAC ¶¶ 116-30.

“To make out a § 1681s-2(b) claim against a furnisher,” like CommonWealth, “a plaintiff must establish that: (1) he notified a CRA of a dispute related to his credit information; (2) the CRA then notified the furnisher of the information about the dispute; and (3) the furnisher failed to fulfill the obligations enumerated in § 1681s-2(b)(1),” including, as most relevant here, to perform a reasonable investigation into plaintiff's dispute. Mosley v. Bank of Am., N.A., No. 20-cv-3065 (CKK), 2021 WL 4243406, at *3 (D.D.C. Sept. 17, 2021) (citing Mazza, 852 F.Supp.2d at 35). Only the third element is at issue here. See Def.'s Mem. Supp. Mot. Dismiss (“Def.'s Mem.”) at 3, ECF 51-1.

Plaintiff argues, first, that his allegations are sufficient to establish that CommonWealth's investigation into plaintiff's disputed account after they received the ACDV forwarded by the CRAs fell short of “reasonable” as required under § 1681s-2(b)(1)(A) and (B). Pl.'s Opp'n Mot. Dismiss (“Pl.'s Opp'n”) at 2, ECF 55. In particular, the SAC alleges that “[h]ad [CommonWealth] reviewed-and not ignored-Plaintiff's dispute letter, which was attached to the ACDV that [CommonWealth] received, then [CommonWealth] could have gained a better understanding and a clearer picture of Plaintiff's dispute,” but that CommonWealth, by relying on the ACDV exclusively, “deliberately chose not to review or consider Plaintiff's dispute” because it “did not want to invest more time and resources into investigation.” SAC ¶¶ 40-42. He bolsters his claim with allegations “[o]n information and belief” that CommonWealth “rarely, if ever, consider[s] the merits of the dispute and never actually investigate[s] the matters complained of.” Id. ¶ 123.

Some of these allegations-notably, those made “on information and belief” regarding CommonWealth's general policy of “never actually investigat[ing]” disputes see id. ¶¶ 123, 126-amount to inferences that cannot be credited at this stage without supporting factual allegations that would allow them to be reasonably drawn. See Kareem v. Haspel, 986 F.3d 859, 866 (D.C. Cir. 2021). Leaving these allegations aside, those that remain nonetheless sufficiently allege that CommonWealth failed to conduct a reasonable investigation into plaintiff's particular dispute, and as such survive...