Sneed v. Premium Credit Bureau, LLC, No. 3:15-CV-00256, 2016 WL 4217831, at *1–6 (M.D. Tenn. Apr. 29, 2016)

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Sneed v. Premium Credit Bureau, LLC, No. 3:15-CV-00256, 2016 WL 4217831, at *1–6 (M.D. Tenn. Apr. 29, 2016)

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Sneed v. Premium Credit Bureau, LLC, No. 3:15-CV-00256, 2016 WL 4217831, at *1–6 (M.D. Tenn. Apr. 29, 2016), report and recommendation adopted sub nom. Sneed v. Equifax Info. Servs., LLC, No. 3:15-CV-00256, 2016 WL 4191689 (M.D. Tenn. Aug. 9, 2016)

REPORT AND RECOMMENDATION
Joe B. Brown, U.S. Magistrate Judge

*1 To: The Honorable Aleta A. Trauger, United States District Judge.


Pending before the Court are the parties' cross-motions for summary judgment. (Docket Entries 44 and 45). At stake are the Plaintiff's claims arising under the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681, et seq., and the Defendant's request for attorneys' fees and costs.


For the reasons provided below, the Magistrate Judge RECOMMENDS that the Plaintiff's motion for summary judgment (Docket Entry 45) be DENIED and that the Defendant's motion for summary judgment (Docket Entry 44) be GRANTED insofar as it dismisses the case and DENIED insofar as it seeks an award of attorneys' fees.



I. PROCEDURAL BACKGROUND


The Plaintiff, proceeding pro se, brought this action against Equifax Information Services, LLC (“Equifax”) and Premium Credit Bureau, LLC (the “Defendant”) on March 17, 2015. (Docket Entry 1). This action was referred to the Magistrate Judge on March 24, 2015 for case management, decision on all pretrial, nondispositive motions, and report and recommendations on all dispositive motions. (Docket Entry 4).


The Plaintiff later dismissed his claims against Equifax with prejudice. (Docket Entry 17). Without leave of the Court the Plaintiff filed an amended complaint on July 27, 2015. (Docket Entry 28). In the amended complaint, the Plaintiff alleged that the Defendant violated 15 U.S.C. §§ 1681i(a)(1)(A), 1681i(a)(6)(A), 1681b(a), and 1681e(e) when it allegedly (1) provided the Plaintiff's consumer report to Fusion Capital without a permissible purpose, (2) failed to verify the identification, certifications, and purpose for which the Plaintiff's consumer report was to be used, and (3) failed to respond to the Plaintiff's notice of a dispute on multiple occasions. (Docket Entry 28). The Defendant moved to strike the amended complaint. (Docket Entry 31). After the Magistrate Judge allowed the amended complaint to stand (Docket Entry 36), the Defendant answered the amended complaint on August 31, 2015 (Docket Entry 40).


The Defendant filed a motion for summary judgment on November 17, 2015 (Docket Entry 44), and the Plaintiff moved for summary judgment on November 23, 2015 (Docket Entry 45). The Plaintiff later moved to strike the Defendant's reply brief (Docket Entry 60) and moved for sanctions (Docket Entry 63). The Magistrate Judge denied both motions. (Docket Entry 69). The cross-motions for summary judgment are ripe for a recommendation.



II. FACTUAL BACKGROUND1


The events leading up to this lawsuit began on April 22, 2014, when the Plaintiff allegedly applied for a business loan with Fusion Capital. The loan application at issue is dated April 22, 2014, requests approximately $15,000 to $20,000 for the purpose of consolidation, and includes detailed information about the Plaintiff's company Energy Concepts LLC, including bank statements for Energy Concepts and records concerning previous loans. (Docket Entry 49). The Defendant was not involved in the submission of this loan application. (Docket Entry 53 ¶ 24). On April 23, 2014, Fusion Capital initiated a credit inquiry utilizing the Defendant's Meridian Link platform. (Docket Entry 53 ¶ 6) (Docket Entry 53-1). This credit inquiry was reported to the three major credit bureaus: Experian, TransUnion, and Equifax. (Docket Entry 53 ¶ 4). The Plaintiff became aware of this credit inquiry on April 24, 2014. (Docket Entry 53 ¶ 2).


*2 The next day, on April 25, 2014, the Plaintiff wrote dispute letters to the three credit bureaus and copied the Defendant on these letters. (Docket Entry 44-3 ¶ 5) (Docket Entry 44-5) (Docket Entry 53 ¶ 7). Ms. Juanita Novo, an employee in the Defendant's Compliance Department, promptly initiated a credit inquiry dispute on the Plaintiff's behalf with the three credit bureaus. (Docket Entry 53 ¶¶ 12, 16). In doing so, Ms. Novo presumed it to be true that the Plaintiff had not initiated the credit inquiry and requested that the three bureaus remove the inquiry from the Plaintiff's profile. (Docket Entry 44-6) (Docket Entry 53 ¶ 16). The Equifax communication was submitted through Equifax's online “e-Port,” which Ms. Novo explained was the Defendant's sole means of communication with Equifax concerning third-party consumer disputes on behalf of a customer. (Docket Entry 44-3 ¶ 7) (Docket Entry 53 ¶17).


Though Experian and TransUnion immediately removed the credit inquiry at issue, Equifax did not. (Docket Entry 53 ¶ 9). On May 1, 2014, Equifax sent a letter to the Plaintiff at his Nashville, Tennessee address, explaining the results of Equifax's investigation: “Dear Larry Wayne Sneed: ... The member number submitted on this email dispute is not listed as an inquiry on the consumer file. Please verify the Member number and resubmit your dispute online.” (Docket Entry 44-7). The letter provided Equifax's customer representative phone number and online address for follow-up questions. (Docket Entry 44-7). The Defendant believes this is evidence that the credit inquiry had already been removed by Equifax. (Docket Entry 53 ¶ 19).


On May 22, 2014, the Plaintiff sent a second dispute letter to Equifax without a copy to the Defendant. (Docket Entry 1-3, p. 2).2 The Plaintiff sent a third dispute letter to Experian, copied to the Defendant, on June 9, 2014, and a fourth dispute letter to Experian and the Defendant on July 10, 2014. (Docket Entry 1-3, pp. 3-4). The Plaintiff later contacted the Consumer Financial Protection Bureau (the “CFPB”) on December 22, 2014 in furtherance of his dispute. (Docket Entry 1-4).


The Defendant states it is a “reseller” as that term is defined under the FCRA and has no authority or control over Equifax. (Docket Entry 53 ¶¶ 5, 13-14). The Defendant “does not maintain an independent database of merged and/or assembled information from which consumer reports could be produced.” (Docket Entry 53 ¶ 13). Nor does the Defendant “evaluat[e] consumer information for inclusion or exclusion in a consumer report, and [the Defendant] has no control over such information.” (Docket Entry 53 ¶ 13). To audit end user accounts, the Defendant has implemented written policies. (Docket Entry 44-9) (Docket Entry 53 ¶ 27). Using these policies, the Defendant “verifies that the end user is a bona fide business entity[,] ... vets all potential clients as to active status, licensure as applicable, location, and security[, and] ... typically employ third party firms to conduct site inspections.” (Docket Entry 53 ¶ 28). The Defendant also maintains policies to ensure that end users on the Meridian Link System are using the correct subscriber codes and are using the system for a permissible purpose. (Docket Entry 53 ¶ 29). “Fusion Capital was a properly vetted and approved end user[,] ... was a bona fide business entity[,] ... was set up and configured with the correct subscriber code of ‘FINANCING’ with a permissible purpose code of ‘10’ which stands for ‘business loan.’ ” (Docket Entry 44-10) (Docket Entry 53 ¶ 30).



III. STANDARD OF REVIEW


“The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). “The party bringing the summary judgment motion has the initial burden of informing the district court of the basis for its motion and identifying portions of the record that demonstrate the absence of a genuine dispute over material facts.” Rodgers v. Banks, 344 F.3d 587, 595 (6th Cir. 2003) (citation omitted). The movant may discharge this duty by showing that the nonmovant lacks the evidence required to support his or her case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has done this, the burden shifts to the nonmovant to establish a genuine issue for trial. Rodgers, 344 F.3d at 595 (citation omitted). “That is, the non-moving party must ‘make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.’ ” Id. (quoting Celotex Corp., 477 U.S. at 322).


*3 When presented with a motion for summary judgment, the presiding court must view the evidence in the light most favorable to the nonmoving party. Jackson v. VHS Detroit Receiving Hosp., Inc., 814 F.3d 769, 775 (6th Cir. 2016) (citations omitted). “The key issue is ‘whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.’ ” Rocheleau v. Elder Living Const., LLC, 814 F.3d 398, 400 (6th Cir. 2016) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1986)). To survive summary judgment, the nonmoving party must go beyond the pleadings to establish a genuine issue for trial. Celotex Corp., 477 U.S. at 324; Clemmer v. Key Bank Nat. Ass'n, 539 F.3d 349, 353 (6th Cir. 2008) (citation omitted).


“The liberal treatment of pro se pleadings does not require lenient treatment of substantive law ..., and the liberal standards that apply at the pleading stage do not apply after a case has progressed to the summary judgment stage.” Johnson v. Stewart, No. 08-1521, 2010 WL 8738105, at *3 (6th Cir. May 5, 2010) (internal citation removed); see also Tucker v. Union of Needletrades, Indus. & Textile Employees, 407 F.3d 784, 788 (6th Cir. 2005). When presented with a motion for summary judgment, the nonmoving party can only raise new claims with a motion to amend the complaint, not in a response to the motion for summary judgment. Tucker, 407 F.3d at 788 (citations omitted); see also Desparois v. Perrysburg Exempted Vill. Sch. Dist., 455 Fed.Appx. 659, 666 (6th Cir. 2012) (“As the district court rightly pointed out, a plaintiff may not expand his claims to assert new theories for the first time in response to a summary judgment motion.”); Bridgeport Music, Inc. v. WM Music Corp., 508 F.3d 394, 400 (6th Cir. 2007) (“To the extent Bridgeport seeks to expand its claims to assert new theories, it may not do so in response to summary judgment or on appeal.”).



IV. ISSUES PRESENTED


The Plaintiff alleged violations of 15 U.S.C. §§ 1681i(a); 1681b(a); and 1681e(e). (Docket Entry 28). Each party moved for summary judgment on the merits of these claims, presenting the Court with the following issues: whether the Plaintiff's claims under § 1681i(a) should be dismissed because the Defendant is a reseller; whether the Defendant had a § 1681b(a) permissible purpose for reselling the Plaintiff's credit report to Fusion Capital; and whether the Defendant failed to verify the identification, certifications, and purpose for which the consumer report was used in violation of § 1681e(e).


As the merits of these claims should be resolved in the Defendant's favor, the Defendant's alternative argument in favor of dismissal, failure to join an indispensable party, is not addressed. Nor will the undersigned address the unpled claims raised by the Plaintiff in the summary judgment briefs. The Plaintiff has not moved to amend his complaint, and unpled claims are not properly before the Court. See Desparois, 455 Fed.Appx. at 666; Bridgeport Music, Inc., 508 F.3d at 400; Tucker, 407 F.3d at 788. The last issue to be discussed is the Defendant's request for attorneys' fees and costs.



V. ANALYSIS


In enacting the FCRA, Congress acknowledged the growing importance of accurate credit reporting on our banking system. 15 U.S.C. § 1681(a)(1). As consumer reporting agencies play a “vital role” in assessing consumer credit, “[t]here is a need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy.” Id. § 1681(a)(3)-(4). The FCRA is intended to ensure this goal is accomplished. Id. § 1681(b). Though the Federal Trade Commission generally enforces the FCRA, a private right of action exists for a consumer reporting agency's or user's negligent or willful noncompliance with the FCRA. Id. §§ 1681n(a), 1681o(a), 1681s.



A. Reinvestigation and Reporting Claims Under 15 U.S.C. § 1681i(a)


*4 At issue is whether the Defendant's failure to respond to the Plaintiff's dispute letters and an inquiry from the CFPB violated the reinvestigation and reporting requirements in 15 U.S.C. § 1681i(a)(1)(A), (6)(A). Pursuant to these sections, a consumer reporting agency is required to conduct a reasonable reinvestigation of a consumer report if the consumer disputes the completeness or accuracy of information contained therein. 15 U.S.C. § 1681i(a)(1)(A). The consumer reporting agency must also provide the results of the reinvestigation to the consumer in writing. Id. § 1681i(a)(6)(A). Resellers of credit information are exempt from these reinvestigation and reporting requirements and must instead complete the duties set forth in subsection (f)(2). Id. § 1681i(f)(1). The FCRA defines a “reseller” as a consumer reporting agency which:


(1) assembles and merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies concerning any consumer for purposes of furnishing such information to any third party, to the extent of such activities; and


(2) does not maintain a database of the assembled or merged information from which new consumer reports are produced.

Id. § 1681a (u).


The Defendant maintains that it is a reseller, and the Plaintiff had not presented evidence suggesting otherwise. By affidavit, Ms. Novo stated that the Defendant “assembles and/or merges information contained in the database of another consumer reporting agency or multiple consumer reporting agencies (the three Bureaus Experian, TransUnion and Equifax) concerning any consumer for the purposes of furnishing such information to a third party, for example, Fusion Capital.” (Docket Entry 44-3 ¶ 3) (Docket Entry 53 ¶ 5). The Defendant “does not maintain an independent database of merged and/or assembled information from which consumer reports could be produced.” (Docket Entry 53 ¶ 13). As a reseller, the Defendant was not required to comply with § 1681i(a)(1)(A), (6)(A). Rather, § 1681i(f)(2) imposed duties on the Defendant. See 15 U.S.C. § 1681i(f)(1). For this reason, the Plaintiff's reinvestigation and reporting claims against the Defendant under 15 U.S.C. § 1681i(a)(1)(A), (6)(A) should be DISMISSED.



B. Remaining FCRA Claims


The Plaintiff alleged that the Defendant provided his consumer report without a permissible purpose in violation of § 1681b(a) and failed to verify the identification, certifications, and purpose for which the consumer report was used in violation of § 1681e(e). (Docket Entry 28, pp. 3-4). Moving for summary judgment, the Defendant argued that a permissible purpose existed under § 1681b(a)(3)(A)3 and that the Defendant took extensive measures to ensure the report was submitted in accordance with this purpose. (Docket Entry 44-1, pp. 12-13).


It is a violation of the FCRA for a person to use or obtain a consumer report for an impermissible purpose.



15 U.S.C. § 1681b(f). To establish a claim for improper use of a credit report, the plaintiff must establish each of the following four elements: (1) the defendant used or obtained (2) a consumer report (3) without a permissible statutory purpose (4) either negligently or willfully. Bickley v. Dish Network, LLC, 751 F.3d 724, 728 (6th Cir. 2014) (citations omitted); Kertesz v. TD Auto Fin. LLC, No. 1:13 CV 1496, 2014 WL 1238549, at *2 (N.D. Ohio Mar. 25, 2014); 15 U.S.C. §§ 1681n(a), 1681o(a).

*5 Resellers are subject to specific disclosure and investigation requirements. 15 U.S.C. § 1681e(e). If a consumer report is procured for the purpose of reselling the report, the reseller must disclose the following information to the consumer reporting agency: (1) the end-user's identity and (2) each § 1681b permissible purpose for which the report is furnished. Id. § 1681e(e)(1). The reseller is also responsible for making and following “reasonable procedures” to ensure that the report is resold for permissible purposes. Id. § 1681e(e)(2). As with other FCRA violations, to maintain a claim under § 1681e(e), the plaintiff must establish that the violation was willful or negligent. Id. §§ 1681n(a), 1681o(a).


“A willful violation is one committed either intentionally or in reckless disregard for the duties imposed under the FCRA.” Scharf v. Trans Union, LLC, No. 14-14322, 2015 WL 6387501, at *2 (E.D. Mich. Oct. 22, 2015) (citing Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007)); see also Khoury v. Ford Motor Credit Co., LLC, No. 13-11149, 2013 WL 6631471, at *5 (E.D. Mich. Dec. 17, 2013) (finding no need to determine whether the defendant obtained the plaintiff's credit report for a permissible purpose where the evidence only showed the defendants made an unintentional mistake). “Negligent is accorded its ordinary meaning – a failure to exercise reasonable care.” Miller v. Trans Union LLC, No. 06 C 2883, 2007 WL 641559, at *4 (N.D. Ill. Feb. 28, 2007) (quoting Crabill v. Trans Union, L.L.C., 259 F.3d 662, 664 (7th Cir. 2001)) (internal quotations removed).


The Plaintiff bears the burden of proving these claims. As the case stands, the Plaintiff has neither alleged nor submitted evidence suggesting – let alone establishing – that the Defendant violated the FCRA either willfully or negligently. The Defendant has established a series of written policies to audit end user accounts. (Docket Entry 44-3 ¶ 15) (Docket Entry 44-9). The Defendant “verifies that the end user is a bona fide business entity [,] ... vets all potential clients as to active status, licensure as applicable, location, and security even to the extent that before credentialing [sic] [, and the Defendant] ... typically employ[s] third party firms to conduct site inspections.” (Docket Entry 44-3 ¶ 16). The Defendant has also established “specific policies to set up end users on the [Defendant's] Meridian Link System with correct subscriber codes and with permissible purpose (E.g., Mortgage, Auto, Finance).” (Docket Entry 44-3 ¶ 17). The entity that requested the Plaintiff's consumer report, Fusion Capital, “was a properly vetted and approved end user[,] ... was a bona fide business entity[,] ... was set up and configured with the correct subscriber code of ‘FINANCING’ with a permissible purpose code of ‘10’ which stands for ‘business loan.’ ” (Docket Entry 44-3 ¶ 18) (Docket Entry 44-10). The Plaintiff has not rebutted these statements of fact or otherwise established a basis for finding a willful or negligence violation of the FCRA. (Docket Entry 53 ¶¶ 27-31). As an individual may not maintain a strict liability claim under the FCRA, the Magistrate Judge recommends that the Plaintiff's claims under §§ 1681b and 1681e be DISMISSED.



C. Attorneys' Fees and Costs


Pursuant to 15 U.S.C. § 1681n(c), the Defendant seeks an award of attorneys' fees and costs incurred in defending this lawsuit. (Docket Entry 44-1, p. 13). That section requires the court to award attorneys' fees to the prevailing party upon finding that the other party's pleading, motion, or other paper was filed in bad faith or for the purpose of harassment. 15 U.S.C. § 1681n(c); see also id. § 1681o(b).


*6 The Defendant believes this standard is met by the following points: (1) the Plaintiff sued the Defendant even though the Plaintiff acknowledged that the Defendant had no control over Equifax's decision to remove the credit inquiry; (2) the Plaintiff copied the Defendant on letters to Equifax even after Equifax had given the Plaintiff instructions to deal directly with Equifax; (3) the Plaintiff deliberately misquoted § 1681i(a) and omitted the section explaining the exemption for resellers; and (4) the Defendant believes the Plaintiff actually initiated the business loan request on behalf of his company. (Docket Entry 44-1, p. 14). The Plaintiff opposes this request, arguing that the Defendant's motion for summary judgment is not supported by the record and questioning the validity of the Defendant's evidence. (Docket Entry 54, pp. 6-7).


Upon review of the amended complaint and the summary judgment briefing, the undersigned does not find that the suit was pursued in bad faith or for the purpose of harassing the Defendant. It is more likely that the first three items complained of were a function of the Plaintiff's pro se status and unfamiliarity with the FCRA and the Defendant's status as a reseller. With respect to the last complaint, there is a genuine dispute as to the identity of the loan applicant. The Defendant believes the Plaintiff submitted the loan application on behalf of his company and is committing fraud by claiming otherwise. This point of view is supported by a copy of the loan application which was filed with the Court and appears to contain the Plaintiff's personal and business information. (Docket Entry 44-8). The Plaintiff, however, previously denied requesting funding from Fusion Capital (Docket Entry 53-4 ¶ 10) and stated that the loan application contained false information (Docket Entry 53-4 ¶ 16). For instance, the Plaintiff claimed the banking information is incorrect, seemed to suggest that the length of ownership was incorrectly calculated, and challenged the handwriting on the application. (Docket Entry 53-4 ¶ 16).4 The Magistrate Judge does not find that the Plaintiff acted in bad faith or for the purpose of harassing the Defendant and recommends that the Defendant's request for attorneys' fees be DENIED.



VI. RECOMMENDATION


In accordance with the findings and analysis made herein, the Magistrate Judge RECOMMENDS that the Plaintiff's motion for summary judgment (Docket Entry 45) be DENIED and that the Defendant's motion for summary judgment (Docket Entry 44) be GRANTED insofar as it dismisses the case and DENIED insofar as it seeks an award of attorneys' fees.


Under Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen days, after being served with a copy of this Report and Recommendation to serve and file written objections to the findings and recommendation proposed herein. A party shall respond to the objecting party's objections to this report and recommendation within fourteen days after being served with a copy thereof. Failure to file specific objections within fourteen days of receipt of this report and recommendation may constitute a waiver of further appeal. 28 U.S.C. § 636(b)(1); Thomas v. Arn, 474 U.S. 140, 155 (1985).


ENTERED this 29th day of April, 2016.


All Citations
Not Reported in F.Supp.3d, 2016 WL 4217831

Footnotes


1
The factual background includes the statements of material fact that are supported by specific citations to the record. See Fed. R. Civ. P. 56(c)(1); Local Rule 56.01(b)-(c).


2
It is noted that the Plaintiff's exhibits contain the Plaintiff's Social Security number. To prevent identity theft, the Plaintiff is encouraged to keep this personally identifiable information out of public court filings.


3
The exhaustive list of permissible purposes of consumer reports is codified at 15 U.S.C. § 1681b. In his complaint, the Plaintiff failed to specify which purpose he deemed impermissible. Moving for summary judgment, the Defendant assumed the Plaintiff was referring to the following statutory provision under which a consumer reporting agency may furnish a consumer report:
(3) To a person which it has reason to believe –
(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer ....
15 U.S.C. § 1681b(a)(3)(A) (Docket Entry 44-1, p. 12).


4
For purposes of resolving the motions for summary judgment, the Court may consider responses to interrogatories, including the Plaintiff's responses. Fed. R. Civ. P. 56(c)(1)(A); Bokhari v. Metro. Gov't of Nashville & Davidson Cty., No. 3:11-00088, 2012 WL 6018710, at *6 n.3 (M.D. Tenn. Dec. 3, 2012) (quoting Johnson v. Holder, 700 F.3d 979, 982 (7th Cir. 2012)).
David A. Szwak
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416 Travis Street, Suite 1404, Mid South Tower
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