Credit Chequers Information Services, Inc. v. CBA, SD NY

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Credit Chequers Information Services, Inc. v. CBA, SD NY

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Credit Chequers Information Services, Inc. v. CBA, Inc.
Not Reported in F.Supp.2d, 1999 WL 253600
April 29, 1999



*1 Plaintiff Credit Chequers Information Services, Inc. (“CCIS”), a New Jersey corporation, has brought suit against “CBA, Inc., a Tennessee Corporation, doing business as CBA Tennessee and/or CREDIT BUREAU ASSOCIATES Tennessee and/or CBA INFORMATION SERVICES Tennessee, DATAFAX CBA INFORMATION SERVICES, Inc., A New Jersey Corporation and/or CREDIT BUREAU ASSOCIATION, Inc., a New Jersey Corporation, both doing business as CBA Information Services and Credit Bureau Associates [hereinafter collectively referred to as “CBA”], EXPERIAN, CORP., A Delaware Corporation, and/or EXPERIAN INFORMATION SOLUTIONS, Inc, (hereinafter collectively known as EXPERIAN) Delaware Corporations and EQUIFAX, INC., (‘Equifax’) a Georgia Corporation.” Though one issue in the pending motion concerns the proper parties ( see infra at 13, note 7), for the ease of the Court the defendants will be referred to, generally, as “CBA,” “Experian,” and “Equifax,” particularly considering that only three firms have appeared on behalf of defendants, one each for the CBA entities, the Experian entities, and Equifax, Inc.

The Amended Complaint contains 285 allegations and 20 causes of action, pleaded in the following order:

breach of contract against “CBA Tennessee”

breach of contract against “CBA New Jersey”

detrimental reliance (promissory estoppel) against “CBA Tennessee and CBA New Jersey”

fraud against “CBA Tennessee and CBA New Jersey”

nullification of coerced contract against “CBA Tennessee and CBA New Jersey”

”declaratory judgment determining real party in interest among defendants CBA” against “CBA Tennessee” and “CBA New Jersey”

tortious interference with contractual relations against Experian

tortious interference with contract against Equifax

negligence against “CBA Tennessee” and “CBA New Jersey”

negligence against “CBA Tennessee” and “CBA New Jersey”

negligence against “CBA Tennessee” and “CBA New Jersey”

restraint of trade in violation of 15 U.S.C. §§ 1–2 against Equifax and Experian

restraint of trade in violation of 15 U.S.C. §§ 1–2 against Equifax and Experian

aiding and abetting restraint of trade against “CBA New Jersey”

restraint of trade against Equifax and Experian

aiding and abetting restraint of trade against “CBA New Jersey”

restraint of trade in violation of 15 U.S.C. § 13(e) against Experian

restraint of trade in violation of 15 U.S.C. §§ 1, 2, 13 against CBA, Equifax, and Experian

injunctive relief against CBA, Equifax, and Experian

loss of reputation against CBA, Equifax, and Experian.

Each defendant has moved to dismiss those causes of action contained in the Amended Complaint which pertain to it, pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the reasons that follow, all three motions are granted in their entirety.


For the purposes of a 12(b)(6) motion, the allegations in the Amended Complaint are assumed to be true and are viewed in the light most favorable to the plaintiff. Conley v. Gibson, 355 U.S. 41, 45–46 (1957); Easton v. Sundram, 947 F.2d 1011, 1014 (2d Cir.1991), cert. denied, 504 U.S. 911 (1992). Because the Amended Complaint does not allege facts demonstrating diversity jurisdiction, this Opinion will address only those claims based on alleged violations of federal statutes. ( See infra at 26.)

*2 Plaintiff CCIS is a reseller of credit information. Defendants Experian and Equifax are two of the “big three” credit reporting agencies which collect and supply credit information to resellers. (The third such agency, Trans Union, is not a party to this lawsuit.) Defendant CBA is a reseller of credit reporting services. All parties are required to observe the provisions of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq.FN1 On July 1, 1996, the plaintiff and CBA FN2 entered into a contract (Am.Compl.Ex. A), supplemented by a letter agreement dated August 12, 1996. ( Id. Ex. B.) CBA agreed to provide CCIS with consumer credit information in the form of credit reports, including so-called “triple-merge reports.” Triple-merge reports are credit reports which merge the credit information contained in three separate reports generated by the big three credit reporting agencies, Experian, Equifax, and Trans Union. (Am.Compl.¶ 44.) For various reasons, a more complete picture of consumers' credit history can be found in triple-merge reports, which are particularly important because the federal agencies Fannie Mae and Freddie Mac require mortgage lenders whose loans the agencies underwrite to use triple-merge reports in conducting credit checks of potential borrowers. CBA receives credit reports from each of the big three agencies and then creates triple-merge reports.

FN1. The FCRA provides in pertinent part:
1681e. Compliance procedures.

(a) Identity and purposes of credit users.

Every consumer reporting agency shall maintain reasonable procedures designed to avoid violations of section 1681c of this title and to limit the furnishing of consumer reports to the purposes listed under section 1681b of this title. These procedures shall require that prospective users of the information identify themselves, certify the purposes for which the information is sought, and certify that the information will be used for no other purpose. Every consumer reporting agency shall make a reasonable effort to verify the identity of a new prospective user and the uses certified by such prospective user prior to furnishing such user a consumer report. No consumer reporting agency may furnish a consumer report to any person if it has reasonable grounds for believing that the consumer report will not be used for a purpose listed in section 1681b of this title.

15 U.S.C. § 1681e-(a). Section 1681b provides in pertinent part:

1681b. Permissible purposes of consumer reports

(a) In general.—Subject to subsection (c) of this section, any consumer reporting agency may furnish a consumer report under the following circumstances and no other ...

15 U.S.C. § 1681b(a) (emphasis added). The Federal Trade Commission has issued commentaries on the FCRA, which state in relevant part:

Section 607—Compliance Procedures


(b) ...

2. Procedures to Avoid Reporting for Impermissible Purposes


B. Required certification by user. A consumer reporting agency should adopt procedures that require prospective report users to identify themselves, certify the purpose for which the information is sought, and certify that the information will be used for no other purpose. A consumer reporting agency should determine initially that users have permissible purposes and ascertain what those purposes are. It should obtain a specific, written certification that the recipient will obtain reports for those purposes and no others. The user's certification that the report will be used for no other purposes should expressly prohibit the user from sharing the report or providing it to anyone else, other than the subject of the report or to a joint user having the same purpose. A consumer reporting agency should refuse to provide reports to those refusing to provide such certification.

15 C.F.R. Pt. 600, App. § 607(b)(2)(B). The Commentary is a guideline only and is without the force or effect of statute or regulation. Id. at Introduction ¶ 1.

FN2. The July 1, 1996, contract is printed on “Credit Bureau Associates of Tennessee” letterhead; the August 1, 1996, letter agreement is on “CBA Tennessee/CBA Information Services” letterhead. According to Walter Wojciechowski, Comptroller and Chief Operating Officer of Credit Bureau Associates, Credit Bureau Associates is a partnership comprised of three corporate partners. The three partners are Suburban Credit Bureau, Inc. and Camden Credit Association, Inc.-both New Jersey corporations with a principal place of business in Cherry Hill, New Jersey-and Credit Information Consultants, Ltd., a Pennsylvania corporation with its principal place of business in West Chester, Pennsylvania. Credit Bureau Associates does business as CBA Information Services and maintains divisions in Tennessee (“CBA Tennessee”) and Florida (“Datafax CBA Information Services”). (Wojciechowski Aff. ¶ 4.)

In its subscriber service agreement with CBA, CCIS identified the nature of its business as “Tenant/Employee/Commercial reporting.” ( Id. Ex. A.) Under the terms of its August 12, 1996 letter agreement with CCIS, CBA provided its “Infogenie” proprietary software to CCIS's customers free of charge. ( Id. Ex. B.) This software enabled CCIS's customers to access directly “Experian reports and CBA automated report delivery systems, making possible the access by plaintiff and its customers to [triple-] merged reports.” (Am.Compl.¶ 96.) CCIS's customers obtained this access by use of an access code and password. The Amended Complaint alleges that in October 1996, two months after its contract with CCIS went into effect, CBA refused to continue to provide plaintiff's new customers with the Infogenie software, access codes, and passwords, such that CCIS's customers could no longer directly access Experian and triple-merge reports on their own. ( Id. ¶ 98.) CCIS was required to manually retrieve and forward reports to its own customers, allegedly causing a loss of goodwill, reputation, and revenue and an increase in its costs ( Id. ¶¶ 98–100.) CCIS then developed and implemented an automated delivery system based on Internet technology, and began to deliver credit reports to its customers on the Internet. ( Id. ¶ 101.) As of October 1996, CBA knew about CCIS's Internet plans and neither raised objections nor investigated whether Experian or Equifax (who supplied their credit reports to CBA) had a policy with respect to Internet delivery of their credit reports. ( Id. ¶¶ 102–05.) With its new Internet system for the delivery of credit reports, CCIS was able to be more competitive and attract major customers. ( Id. ¶ 113.)

*3 In May 1997, “CBA and Experian suspended plaintiff's service (access to credit reports) for the avowed reason that they objected to plaintiff's delivery of reports on the Internet and the advertising Experian found on plaintiff's Internet marketing site describing plaintiff's Internet delivery abilities.” ( Id. ¶ 118.) CCIS had to remove reference to its Internet delivery capabilities before CBA and Experian would resume its service. ( Id . ¶ 119.) Since that time, CCIS has been unable to take full competitive advantage of its Internet delivery capacity. ( Id. ¶ 134.)

Immediately after CCIS's access was restored, “the access codes to defendant [ ] Experian['s] system were reprogrammed resulting in the rejection of numerous reports ordered by the clients of plaintiff,” causing interruption and disruption to CCIS's business and that of its clients. ( Id. ¶ 136.) CCIS then reprogrammed its system, but then received a complaint from CBA with respect to CCIS's use of “type code 31,” which is alleged to be a general catch-all code “which is used widely without objection.” ( Id. ¶ 137.) CCIS alleges that the “code 31” problems were intended by Experian and CBA to disrupt CCIS's business and did disrupt its business. ( Id. ¶ 139.)

“On or about July 1997 service was again suspended without notification, causing further interruption and disruption to plaintiff's business and to the business of plaintiff's clientele.” ( Id. ¶ 140.) CBA allegedly told CCIS that Experian ordered the suspension of service for security concerns. ( Id. ¶ 141.) A CBA representative (who, on information and belief, is alleged also to have acted as an agent of Experian) then conducted a random examination of CCIS's customer files. ( Id. ¶ 142.) “CBA and Experian were satisfied by the examination of plaintiff's customer files that plaintiff was using reasonable procedures to screen applicants for service and restored plaintiff's access to reports.” ( Id.) CBA continued to deliver triple-merge reports and other reports to CCIS and CCIS's customers. ( Id. ¶ 143.)

On or about October 1997, CCIS's access was once again suspended by Experian and CBA. ( Id. ¶ 144.) CBA told CCIS that Experian had ordered the suspension because CCIS had not executed a new contract by Experian's deadline. ( Id. ¶ 145.) “With loss of service and disruption of business, the plaintiff, through its principal, Jonathan Wolf, while suspended from service, was coerced into signing a contract.” ( Id. ¶ 146; Ex. C; emphasis in original.) After signing this contract, CCIS's business expanded, its Internet capability attracting new and substantial clients, “though not at the rate possible had plaintiff not been compelled to remove its advertising from its web site on the Internet.” ( Id . ¶ 152.) In September of 1997 a prospective client contacted CCIS, requesting a substantial volume of triple-merge reports delivered over the Internet. ( Id. ¶ 153.) CCIS had “no reason to believe that CBA would not continue to meet and fulfill plaintiff's business needs and entered into a contract with said new customer to deliver the reports without considering any other source of supply.” ( Id. ¶ 157.)

Equifax's 1998 Actions

*4 On March 9, 1998, CBA notified CCIS that CBA would no longer be able to supply CCIS with information from Equifax reports because Equifax prohibits resale of its reports directly to consumers and delivery over the Internet. Also, CCIS would no longer be able to obtain triple-merge reports from CBA but could only obtain “2 bureau” reports consisting of Experian and Trans Union information, not Equifax information. ( Id. ¶ 158; Ex. E.) On March 11, 1998, Equifax wrote CCIS and stated:

A re-seller of Equifax information (i.e. Credit Bureau Associates, Cherry Hill, N.J. or Credit Data Reporting Services, Kingston, N.Y.) can only sell Equifax data directly to the decision maker or end user of the data who is making the lending decision. This is Equifax policy. Equifax has consistently communicated this policy to its subscribers. Additionally, Equifax has made a business decision not to provide information to resellers who sell to consumers or to allow it's [sic] information to be delivered through the Internet. We have determined that Credit Chequers is in violation of both Equifax policy and agreements for service both under the current situation with Credit Bureau Associates as well as in August of last year with Credit Data of Kingston, N.Y. (your former account number 405FM14459.)

( Id. Ex. E; emphasis in original.)

Experian's 1998 Actions

One month later, on April 14, 1998, CBA notified “plaintiff that it had been required by defendant[ ] Experian to provide documentation concerning several reports obtained from plaintiff and certain ‘end users' of plaintiff.” ( Id. ¶ 163.) FN3 CCIS complied with Experian's request and showed “that no reports were taken by plaintiff's customers in violation of the FCRA, all reports were taken for a ‘permissible purpose’, and that said clients of the plaintiff represented that said clients had, in turn, ordered reports, only for permissible purposes as required under the law.” ( Id. ¶ 165.) But on April 23, 1998, plaintiff's service was suspended by Experian and CBA without notice and has not been restored. ( Id. ¶ 166–67.) CBA suggested that since possible FCRA violations were the issue that CCIS “apply directly to Experian for service as [CBA] had instructed [CCIS] to do for many months prior to the final suspension.” (Decl. of Jonathan Wolf, dated 8/8/98, ¶ 6.) FN4

FN3. This paragraph is somewhat illustrative of the problems in this Amended Complaint, leading to some evident confusion among the defendants as well as the Court. It is not clear to whom the “it” refers; nor is it clear who obtained the reports from the plaintiff and which end users were affected. Additionally, the paragraph goes on to state. “A copy of said notification is annexed hereto and made a part hereof, as exhibit F,” but there is no such exhibit appended to the Amended Complaint. Exhibit E is the last exhibit.

FN4. Mr. Wolf filed two declarations dated August 8, 1998. The one cited here has 32 numbered paragraphs. (The other one consists of 44 numbered paragraphs.)

At an evidentiary hearing for a preliminary injunction on June 17, 1998, Mr. Wolf testified he would not sign Experian's request for a release for inspection of CCIS's compliance with FCRA requirements because in his opinion Experian does not have the right to grant or withhold permission to sell over the Internet. He also testified that he had not completed the application to become an Equifax customer. (Tr. at 44–45, 53.)

The gist of plaintiff's antitrust claims appears to be that Experian and Equifax wanted to control the delivery of their products on the Internet and, with their customer CBA, conspired to prevent reseller CCIS from offering triple-merge reports over the Internet. The Amended Complaint alleges that on July 31, 1996, Experian filed an S–1/A form with the Securities and Exchange Commission in which it stated that part of its operating strategy was to “exploit new delivery systems for its products, including client-server networks, CD–ROM, and the Internet.” ( Id. ¶ 116 .) It is further alleged that on October 30, 1996, Experian filed an S–1 form stating that the company “plans to expand its distribution methods as new technologies emerge.” ( Id. ¶ 116.)

*5 The Amended Complaint alleges that for approximately a year before CCIS's service was suspended in May 1997, Experian had been “assisting” an Internet service provider named Qspace and a mortgage originator named TrueLink to develop Internet delivery of credit report information. ( Id. ¶¶ 121–22.) FN5 CCIS concludes that

FN5. Qspace apparently provides consumers with copies of their own credit reports, as opposed to other parties. (Am. Compl. Ex. D (Qspace press release).)

Experian['s] “licensing” and assistance of these two companies, with no prior credit reporting experience, and apparently no clients, while interrupting plaintiff's service just prior to the aforementioned companies['] coming to market, a company with established credit reporting experiences, and major clients, is indication that Experian['s] real interest is to control and regulate the delivery of its products on the Internet.
( Id. ¶ 123.) CCIS alleges that on June 16, 1997 an announcement was made that Experian had “given permission to a company known as Qspace to deliver reports utilizing the technology of the Internet, and that they had begun to deliver reports a week prior,” which was one week after CCIS's service had been suspended. ( Id. ¶ 135; Ex. D.) “A few weeks subsequent” TrueLink also began to deliver reports on the Internet with Experian's assistance. ( Id.)

The connection between the suspension of CCIS's access to triple-merge reports on the one hand, and the “permission” of Qspace and TrueLink to deliver Experian credit reports on the Internet is alleged to be the following:

During the course of the next several months [following the May 1997 suspension], plaintiff regularly contacted defendant CBA (Tennessee/NJ) to inquire as to the status of defendant[ ] Experian['s] policy and procedure regarding Internet delivery and was not provided with information until defendants CBA sent a partial copy of Experian policy and procedure via fax on July 24, 1997, after the aforementioned Experian handpicked companies had made their market debut.

On information and belief, defendant[ ] Experian had clearly announced its policies to its affiliates, including defendant CBA, and to a very few distributors, while CBA, Experian and its affiliates FN6 continued to publicly avow a policy prohibiting the use of the Internet for delivery of their data.

FN6. Affiliates are defined elsewhere in the Amended Complaint as “local credit bureaus.” (Am.Compl.¶ 33.)

By utilizing the World Wide Web, a subset of the Internet, plaintiff Credit Chequers was able to reduce the cost of access to customers, and charge rates for reports which were competitive to or below what defendant[ ] Experian and its affiliates charge to many customers of similar nature.

As a result of its Internet capability, plaintiff Credit Chequers has been able to attract business away from Experian affiliates. On information and belief, said affiliates have complained to defendant[ ] Experian regarding plaintiff's Internet delivery.

During the first quarter of 1998, prior to defendants' final suspension of plaintiff's access to credit reports in May of 1998, plaintiff, with the combination of Internet delivery and competitive pricing, and in spite of the defendant[ ] Experian and defendant CBA['s] illegal restraint of plaintiff[']s advertising efforts, concluded three significant agreements for credit reporting services which would have the effect of significantly increasing plaintiff's revenue, winning additional business away from Experian, its affiliates and partners.

*6 On information and belief, the conclusion of the agreements aforesaid by plaintiff, of these major contracts for credit reporting services was, inter alia a reason for plaintiff's ultimate and final suspension by the defendants from access to credit reports.


On information and belief, in order to protect its interest in [its] affiliates, all of whom substantially compete in the mortgage reporting industry, and its own competitive interests in First American RES, Experian has interfered with Credit Chequers' business in order to remove significant competition with itself and its affiliates in the mortgage reporting business.

Defendant[ ] Experian, on information and belief, has a significant interest in the success of its 36 affiliates. If any one affiliate should fail, that affiliate's data collecting ability would be lost to Experian significantly diminishing its competitive advantage.

On information and belief, defendant Experian, with respect to its new partner Inter American, was counting on Internet delivery through Qspace and TrueLink, unfettered by competition such as plaintiff's and plaintiff's clients.

On information and belief, defendant Equifax has acted in concert with the defendant[ ] Experian in order to protect its competitive interests in the mortgage service market.

On information and belief, in order to protect its interest in its new venture into the mortgage credit reporting market, and other mortgage industry service markets, defendant[ ] Experian, an essential facility, has unfairly withheld its data, and wrongfully interfered in the relationship between defendant CBA and plaintiff.

( Id. ¶¶ 125–30; 169–73.)

The fact that Equifax and Experian each suspended CCIS's access within a matter of four weeks is alleged to be “concerted action” between Equifax and Experian ( Id. ¶ 252) and “a naked and coercive boycott” by Equifax and Experian. ( Id. ¶ 257.) CBA is alleged to have conspired with Equifax and Experian ( Id. ¶ 276) and to have aided and abetted Equifax and Experian in furtherance of the conspiracies. ( Id. ¶ 262.)


I. Federal Claims

The Federal Rules of Civil Procedure require that all pleadings for relief contain a statement, indicating that the pleader is entitled to relief, which is “short and plain.” Fed. R. Civ. Pro. 8(a)(2). CCIS's complaint is neither. Claims 12 through 18 of the Amended Complaint are for restraint of trade, and aiding and abetting restraint of trade. Claim 12 alleges a per se violation of sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1–2, against Equifax and Experian, alleging that they “have monopoly power with respect to ‘triple-merge’ reports, and are essential facilities for their respective contributions to the ‘triple-merge’ report.” (Am.Compl.¶ 251.) Claim 13 alleges a per se violation by Equifax and Experian “of title 15 of the United States Code in that defendants did successfully exercise their power, monopoly or otherwise, to prevent the plaintiff from delivering triple-merge and other reports .” ( Id. ¶ 259.) Claim 14 alleges that CBA New Jersey FN7 aided and abetted Equifax and Experian “in furtherance of the conspiracies aforesaid” ( id. ¶ 262), presumably the conspiracies charged in claims 12 and 13.

FN7. CBA argues that CCIS has misstated its names and corporate status. Equifax argues that CCIS has sued the wrong entity. As the Amended Complaint is dismissed for other reasons, these arguments need not be addressed.

*7 Claim 15 alleges that Equifax and Experian “have attempted to monopolize and utilized monopoly control of the credit industry to deny plaintiff access to and use of the Internet to deliver credit reports” ( id. ¶ 264) and that Equifax's and Experian's “policies in addition to being anti-competitive with regard to the over-all market, was and is particularly anti-competitive to plaintiff.” ( Id. ¶ 265.) Claim 16 alleges that CBA aided and abetted Equifax and Experian “in furtherance of the monopolistic and anti-competitive practices aforesaid even against its own apparent interest” ( id. ¶ 268), presumably referring to the charges in claim 15.

Experian alone is charged in claim 17 with violating 15 U.S.C. § 13(e) for “favor[ing] certain purchasers of its product by providing unequal services and predatory conduct by ‘licensing’ and assisting TrueLink and Qspace for Internet delivery, companies with no prior credit-reporting experience while restricting plaintiff from the same access to the detriment of plaintiff.” ( Id. ¶ 271.)

Claim 18 is brought against Equifax, Experian, and CBA and alleges a violation of 15 U.S.C. §§ 1, 2, and 13 in that “CBA, Experian and Equifax have conspired in an attempt to reserve that market exclusively for themselves and chosen distributors, and that their avowed policy against delivery of distribution via the Internet is pretextual.” ( Id. ¶ 276.) FN8

FN8. “That market” is not defined in claim 18. (Am.Comp.¶¶ 272–280.) “That market” appears to be the market for triple-merge reports, ( id. ¶ 43), but the Amended Complaint also mentions without defining “the Mortgage Credit Reporting Market” ( id. ¶¶ 51–52), and “the market for mortgage reporting services, including residential mortgage credit reports.” ( Id. ¶ 74.) See also infra at 19, note 15.

As may be apparent from the discussion thus far, the Amended Complaint does not provide much guidance in terms of setting forth the specific legal theories on which each cause of action relies. The Court interprets the Amended Complaint as setting forth four broad legal theories brought pursuant to federal law: conspiracy to restrain trade (15 U.S.C. § 1); monopolization (15 U.S.C. § 2); violation of the Robinson–Patman Act (15 U.S.C. § 13(e)); and aiding and abetting restraint of trade. Each theory will be considered in turn.

A. Conspiracy to Restrain Trade Claims

Section 1 of the Sherman Act states in relevant part, “Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.” 15 U.S.C. § 1. To state properly a claim for relief under this statute, a complaint must provide some minimal factual basis. A “bare bones statement of conspiracy or of injury under the antitrust laws without any supporting facts permits dismissal.” Heart Disease Research Foundation v. General Motors Corp., 463 F .2d 98, 100 (2d Cir.1972). “A mere allegation that defendants violated the antitrust laws as to a particular plaintiff and commodity no more complies with Rule 8 than an allegation which says only that a defendant made an undescribed contract with the plaintiff and breached it, or that a defendant owns a car and injured plaintiff by driving it negligently.” Klebanow v. New York Produce Exchange, 344 F.2d 294, 299 (2d Cir.1965). CCIS cites Oreck Corp. v. Whirlpool Corp., 579 F.2d 126, 138 (2d Cir.) (en banc), cert. denied, 439 U.S. 946 (1978), which stated that it is a per se antitrust violation “where two or more competitors agree to cut off supplies to a third.” CCIS argues that “this will prove to be the case at bar, whether one considers the combination to be between Experian and Equifax, Experian and CBA, or all three defendants.” (Pl. Mem. Opp. Experian at 14.) FN9 Though CCIS does offer some factual allegations, even taken together and viewed in the light most favorable to plaintiff they do not state a claim under section 1 of the Sherman Act against any of the defendants or in any of the combinations plaintiff has suggested.

FN9. “Pl. Mem. Opp. Experian” refers to CCIS's memorandum of law submitted in opposition to Experian's motion to dismiss. CCIS submitted a separate opposition brief to each of the defendants' motions.

1. Equifax and Experian/Equifax and CBA

*8 There are insufficient allegations to support a claim that Equifax engaged in a group boycott or otherwise conspired to restrain trade in violation of § 1. The bulk of the factual allegations in the Amended Complaint are directed towards the actions of CBA and Experian. CCIS first experienced problems with access to CBA's triple merge reports approximately two months after it signed the August 12, 1996 letter agreement with CBA, when CBA allegedly refused to continue providing CCIS's new clients with its Infogenie software and access codes and passwords for direct access to CBA's and Experian's delivery systems. (Am.Compl.¶¶ 97–98.) The Amended Complaint then describes several other cutoffs and renewals of services CCIS experienced because of the actions of CBA and Experian during 1997. It was not until March 9, 1998, that Equifax is first alleged to have caused its reseller CBA to halt CCIS's access to its information, apparently because CCIS was not a direct customer or reseller of the Equifax information and because it delivered the Equifax information on the Internet. ( Id. ¶ 158; Ex. E.) Over a month later, on April 14, 1998, CBA notified CCIS that it had been required by Experian to provide documentation concerning several reports obtained from plaintiffs and certain end users of plaintiffs. ( Id. ¶¶ 163–64.) After plaintiff showed that no reports were taken by its customers in violation of the FCRA and indicated that information about its end users would be forthcoming, on April 23, 1998 CBA and Experian suspended plaintiff's access to Experian's information for the final time. ( Id. ¶¶ 165–66.) Plaintiff argues that the “suspension of plaintiff by both Equifax and Experian within a few weeks of one another constitute[s] a concerted refusal to deal i.e. an illegal boycott.” (Pl. Mem. Opp. Experian at 14.) However, there are no other factual allegations in the Amended Complaint that lead to the inference that the actions of Equifax and Experian and/or the actions of Equifax and CBA were pursuant to a joint agreement; these actions were sufficiently disparate in time and nature and do not suggest a concerted refusal to deal. Moreover, Mr. Wolf declined to apply directly to Equifax and Experian to become a customer. See supra at 9, note 4.

The only other factual allegations in the Amended Complaint that mention Equifax state that (1) Equifax and Experian “have allowed CDB Infotek, a recently divested interest of the defendant Equifax, to deliver consumer data for more than two years on the Internet, without encryption of sensitive consumer data” (Am.Compl.¶ 22); (2) “On or about July of 1997, plaintiff's CEO (Wolf) discovered a business plan written by Computer Security Corporation, (CSC) a major Equifax affiliate, holding, on information and belief, territorial contracts with defendant Equifax in 15 states. Said business plan describes in detail the competitive advantage of utilizing the Internet” ( id. ¶ 115); and (3) “Lexis Nexus' [sic] P–TRAK service, is by their own statement to the FTC, comprised of data collected from credit header information, which is in part or total purchased from defendants Experian and Equifax and CBA.” ( Id. ¶ 274.) Taken together and viewed in the light most favorable to plaintiff, these allegations do not suggest that Equifax was involved in any unlawful conspiracy in violation of 15 U .S.C. § 1.

2. Experian and CBA

*9 Though the Amended Complaint contains some factual allegations with respect to Experian and CBA, these likewise are insufficient to support a claim that those two defendants conspired to restrain trade in violation of 15 U.S.C. § 1. The Amended Complaint alleges that in May, July, and October, 1997, CBA suspended plaintiff's access to credit reports on Experian's orders. ( Id. ¶¶ 118, 141, 145.) In each instance, plaintiff's access was eventually restored, until April 1998, when CBA and Experian again suspended its access, which has not been restored since. ( Id. ¶ 166.) Read in the light most favorable to plaintiff, these allegations raise no inference that CBA and Experian colluded to restrain trade. The Amended Complaint alleges that Experian ordered its reseller CBA to suspend CCIS's access to Experian's information, but it does not allege anything more nefarious than that Experian's stated FCRA security policy was a pretext.FN10 There is no allegation that CBA did any more than implement Experian's policy; in other words; there is no showing other than that Experian took unilateral action restricting CBA's reselling of Experian reports. Even a “mere showing of close relations or frequent meetings between the alleged conspirators [ ] will not sustain a plaintiff's burden absent evidence which would permit the inference that those close ties led to an illegal agreement.” Oreck Corp. v. Whirlpool Corp., 639 F .2d 75, 79 (2d Cir.1980), cert. denied 454 U.S. 1083 (1981). FN11

FN10. The allegation that “defendants CBA, Experian and Equifax are aware that CDB Infotek has used and has continued to use the Internet to deliver their data and have permitted it in contradiction to their stated policies” ( id. ¶ 278) is conclusory, is based on information and belief, and is insufficiently supported by substantive factual allegations.

FN11. Oreck involved a directed verdict following trial. But its holding may be applied to a motion to dismiss. Mere allegations of close relations or frequent meetings between the alleged conspirators cannot state a claim under § 1 absent allegations that could permit an inference that those close ties led to an illegal agreement.

It is well settled that a supplier's restriction of its sales to those resellers who meet its specifications is not a per se restraint of trade and will be analyzed under the rule of reason. See Continental T.V., Inc. v. GTE Sylvania, Inc., 433 U.S. 36 (1977). Until Equifax's prohibition of distribution of its reports to CCIS in March of 1998, CBA did provide CCIS with triple merge-reports. CBA obtained some, but not all, of the information which contributed to those reports from Experian FN12; thus, any restraints between CBA and its supplier Experian were vertical in nature. There is no allegation that Experian participated in the triple-merge report market in any way other than as a supplier of credit information to distributors and resellers like CBA, who created the triple-merge (“Pyramid”) reports. (Am.Compl.Ex. B.) The Amended Complaint does allege that Experian has “competitive interests” in an entity known as First American RES and also has 36 affiliates ( id. ¶ 169) FN13 , but it does not elucidate what that interest is or the nature of its relationship with First American RES or those affiliates.FN14 The Amended Complaint also alleges, “On information and belief, defendant Experian, with respect to its new partner Inter American, was counting on Internet delivery through Qspace and TrueLink, unfettered by competition such as plaintiff's and plaintiff's clients.” ( Id. ¶ 171.) But these allegations at most establish that Experian was choosing, for self-interested business purposes, with what other distributors or resellers of credit information it should do business. As no horizontal restraint is alleged, the plaintiff must plead facts sufficient to sustain a claim under the rule of reason analysis, i.e ., an examination of the specific practices and their impact on competition in the marketplace. Continental T.V., 433 U.S. at 49, 57–59.FN15 Only “manifestly anticompetitive” conduct is appropriately designated per se illegal; the majority of allegedly anticompetitive conduct continues to be examined under the rule of reason. Bogan v. Hodgkins, 166 F.3d 509, 514 (2d Cir.1999) (citations omitted). In at least one cause of action, claim 12, CCIS conclusorily alleges a per se violation of the antitrust laws (Am.Compl.¶ 254), but the Amended Complaint fails to allege an impermissible vertical restraint or other facts that suggest a per se violation.

FN12. The remainder came from TransUnion and Equifax.

FN13. Affiliates are defined in the Amended Complaint as “local credit bureaus.” (Am.Compl.¶ 33.)

FN14. The Amended Complaint does state, “On information and belief, First American Credco, part of First American Real Estate Solutions, LLC, (First American RES) which was formed by defendants Experian in December, 1997, is the nation's largest provider of mortgage credit information and a large Experian consumer credit customer” (Am.Compl.¶ 11), but the relevance of First American RES to plaintiff's claims remains murky.

FN15. Plaintiff cites ¶ 40 for the contention that “ all the parties involved compete with one another in that they supply credit reports for a price in the downstream market.” (Pl. Mem. Opp. Experian at 16; emphasis in original.) That paragraph states: “By virtue of plaintiff's Internet capability, plaintiff was able, and did compete, along with defendants, attracting clients heretofore those of defendants or its affiliates, in the national market until defendants illegally extinguished plaintiff's access to the essential product of defendants Experian and defendant Equifax, as will be more fully alleged below.” (Am.Compl.¶ 40.) However, nowhere else in the Amended Complaint does the plaintiff state the name of any client it attracted away from the defendants or their affiliates. As noted above, the relationship between Experian and its “affiliates” is not explicated.

Moreover, plaintiff's argument on this point highlights another deficiency in the Amended Complaint: its failure to define the relevant market with specificity. At times it refers to the market for triple-merge reports ( id. ¶ 43) and at other times the “Mortgage Credit Reporting Market.” ( Id. ¶ 51.) Neither is defined with enough particularity or specificity to satisfy Rule 8(a)(2) and to assist the defendants (and the Court) in determining what the plaintiff is talking about and how competition is restrained in that market.

*10 The Amended Complaint's allegations are insufficient to sustain a claim under the rule of reason. A necessary element to any case brought pursuant to the rule of reason is that the defendant's practices have an adverse impact on competition in the defined marketplace-not just on the ability of the plaintiff to compete. The antitrust injury requirement obligates a plaintiff to demonstrate, as a threshold matter, “that the challenged action has had an actual adverse effect on competition as a whole in the relevant market; to prove it has been harmed as an individual competitor will not suffice.” Haug v. Rolls Royce Motor Cars, Inc., 148 F.3d 136, 139 (2d Cir.1998) (quoting Capital Imaging v. Mohawk Valley Medical Associates, 996 F.2d 537, 543 (2d Cir.), cert. denied, 510 U.S. 947 (1993)). Since plaintiff has failed to plead an adverse impact on competition in the relevant product and geographic market, it has failed to plead the requirements of a rule of reason claim. Id. The Amended Complaint does allege that the “cost of credit reporting services for mortgage transactions is generally passed on to the consumer to which the report relates. Consequently, the matter now being litigated directly affects commerce to the level of the millions of individual consumers that apply for loans secured in real estate each year and consumers are directly affected by the anti-competitive practices alleged herein.” (Am.Compl.¶ 53.) This is conclusory. The Amended Complaint also alleges that there “is no cross-elasticity of supply with respect to triple merge-reports and that it is not possible to purchase a ‘triple-merge’ report if the consumer credit reporting agency can not obtain data from one of the requisite ‘big three’.” ( Id. ¶ 46.) But there is no factual allegation that CBA is no longer able to produce triple-merge reports for mortgage finance companies or other customers, and CCIS does not allege that prices for consumers have increased as a result of the events described in the Amended Complaint. Nor does it allege that its share of the distribution market for triple-merge reports (or other credit reports) was so large that its being forced out of the market has resulted in higher prices for consumers. Nor does it allege that any other entity has been forced out of the relevant market or is in danger thereof.

In fact, the Amended Complaint does not even state facts alleging that the defendants are preventing plaintiff from selling triple-merge reports at all. At the June 17, 1998, injunction hearing, Jonathan Wolf, CCIS's president, testified that he refused to provide a release to Experian for an inspection by examiners to assess the security of CCIS's Internet program in exchange for permission to distribute Experian information over the Internet. (Tr. at 44–48.) He also testified that CCIS refused to apply to become an Equifax customer because CCIS had to promise not to deliver Equifax information over the Internet as a condition. ( Id. at 53 .) Mr. Wolf may not have been happy about the conditions Experian and Equifax attached to his becoming a customer, but it does not appear that CCIS is being prevented from participating in the market for triple-merge reports, and it has failed to allege adequately that anything the defendants may have done has produced adverse anti-competitive injury in a relevant product market. Brunswick Corp. v. Pueblo Bowl–O–Mat, Inc., 429 U.S. 477, 489 (1977).

*11 The section 1 claims in the Amended Complaint fail to state a claim for which relief may be granted. Thus, plaintiff's claims with respect to violations of 15 U.S.C. § 1 are dismissed.

B. Monopolization Claims

The various antitrust causes of action do not clearly set forth the monopolization legal theories on which they rely, but reading those claims together it appears that plaintiff alleges that Experian and Equifax have monopoly power and unlawfully maintained that monopoly power FN16; that Equifax and Experian are essential facilities; that Equifax, Experian, and CBA conspired to monopolize; and that CBA aided and abetted Equifax's and Experian's restraint of trade practices.

FN16. CCIS concedes that it is not alleging attempted monopolization. (Pl. Mem Opp. Experian at 16; Pl. Mem Opp. Equifax at 19.)

To state a claim for monopolization in violation of section 2 of the Sherman Act, the plaintiff must allege facts showing “(1) the possession of monopoly power in the relevant market and (2) the willful acquisition or maintenance of that power as distinguished from growth or development as a consequence of a superior product, business acumen, or historical accident.” U.S. v. Grinnell Corp., 384 U.S. 563, 570–71 (1966). The monopoly power must be alleged to be in a relevant market. Discon v. NYNEX Corp., 93 F.3d 1055, 1061–62 (2d Cir.1996), vacated on other grounds, 119 S.Ct. 493 (1998). As noted above, supra note 15, the Amended Complaint does not define the precise nature of the relevant product market alleged here, which is stated to be the “triple-merge market .” (Am.Compl.¶ 43.) Based on the Amended Complaint, it seems to be the case that a triple-merge report consists of credit history information from each of Experian, Equifax, and TransUnion. Thus, if any one of those three entities withheld its information, a triple-merge report could not be generated. In this way, it could be construed that each of those three entities has total control over the triple-merge market, in the sense that if any of the three were to refuse to sell its proprietary information to a creator and distributor of triple-merge reports, that creator and distributor would be unable to create and distribute those reports.FN17

FN17. It seems apparent that CBA does distribute triple merge reports as Pyramid Reports. (Am.Compl.Ex. B.)

Whether this means that Experian and Equifax have “monopoly power” for that reason is an academic question, as even assuming that they do have monopoly power as suppliers in the triple-merge report market, there is no allegation that they came into that power through any fault of their own or that they have unlawfully maintained that power. Instead, the market came into being by the demand of consumers for an amalgam of the three reports. The Amended Complaint states:

A “triple-merge” report, as referred to in this complaint, is a report consisting of data from Equifax, Transunion, and Experian, (‘big three’) merged in one report, required by certain business to make sure that a complete credit profile is available before a credit decision is made. This report is so widely used in the mortgage lending business that defendant CBA refers to its merged report product as a Pyramid Report. In the crucial secondary market for mortgage loans, Fannie Mae, who alone expects to underwrite more than twelve million mortgages during the 1990's, and Freddie Mac among others, require a “triple-merge” report as part of their underwriting requirements.

*12 (Am.Compl.¶ 44.) Thus, by the terms of its own Amended Complaint, CCIS concedes that forces external to Experian and Equifax created any monopoly power they have in the triple-merge report market.

As for maintenance of monopoly power, CCIS argues that Experian maintained its monopoly power through “its predatory destruction of plaintiff's relationship with CBA, together with its willingness at the point of a bottleneck, to prohibit delivery of reports on the Web unless the entrant becomes licensed” (Pl. Mem. Opp. Experian at 18) and that its licensing policy was unevenly applied and therefore a pretext and a “naked abuse of monopoly power.” ( Id.) However, the allegations in the Amended Complaint do not add up to anything other than Experian's and Equifax's refusal to deal with CCIS. As noted above, both Equifax and Experian appeared open to having CCIS as a customer, but Mr. Wolf has refused to abide by their security guidelines. The Amended Complaint alleges that Experian favored Qspace and TrueLink and helped those entities develop the capacity to deliver credit reports on the Internet. (Am.Compl.¶ 121–22.) There is no allegation that Experian has a financial interest in Qspace and TrueLink, and an exhibit attached to the Amended Complaint notes that both met Experian's security requirements ( id. Ex. D), which CCIS by its president's own admission did not. Thus, plaintiff's section 2 claims against Equifax and Experian must be dismissed.FN18

FN18. Plaintiff also alleges that Experian and Equifax are essential facilities. The essential facility doctrine is only available to competitors, not to customers. Twin Laboratories, Inc. v. Weider Health and Fitness, 900 F.2d 566, 568–69 (2d Cir.1990). The Amended Complaint states:
Plaintiff, Credit Chequers Information Services, Inc., is a Consumer Reporting Agency (CRA) and Individual Reference Service, as defined by the Fair Credit Reporting Act and the Federal Trade Commission, engaged in the business of reselling consumer credit information purchased from other sources on a “value-added” basis. Plaintiff maintains high standards of compliance with Federal, State, and local code applicable to its industry.

(Am.Compl.¶ 88.) Nowhere does the Amended Complaint allege that Experian or Equifax sells triple-merge reports. It alleges instead that their reports are available through “local credit bureaus, (termed affiliates).” ( Id. ¶ 33.) It does allege that Experian “has become a direct competitor in the Mortgage Credit Reporting Market” ( id. ¶ 52), but this is a conclusory allegation and the market is undefined. As the triple-merge report market is the relevant market at issue, supra at 19, note 15, CCIS's allegations with respect to Experian's and Equifax's “affiliates” are immaterial and do not help state a claim for relief.

Plaintiff's conspiracy to monopolize claim against Equifax, Experian, and CBA must also be dismissed. As explained supra, section I.A., the Amended Complaint's allegations, taken together and viewed in the light most favorable to plaintiff, do not state a claim for relief for conspiracy to restrain trade in violation of section 1 because none of the pleaded facts leads to an inference that the defendants, or any of them, acted conspiratorily. The section 2 conspiracy to monopolize claims fail for the same reason that plaintiff's section 1 claims fail, and accordingly they must be dismissed. See H.L. Hayden Co. v. Siemens Medical Systems, 672 F .Supp. 724, 742 n. 21 (S.D.N.Y.1987) (citing P. Areeda & D. Turner, 3 Antitrust Law ¶ 839 at 358 (1978)).

C. Robinson–Patman Act Claim

In cause of action 17, CCIS alleges that Experian violated 15 U.S .C. § 13(e) which states:

It shall be unlawful for any person to discriminate in favor of one purchaser against another purchaser or purchasers of a commodity bought for resale, with or without processing, by contracting to furnish or furnishing, or by contributing to the furnishing of, any services or facilities connected with the processing, handling, sale, or offering for sale of such commodity so purchased upon terms not accorded to all purchasers on proportionally equal terms.

15 U.S.C. § 13(e). CCIS alleges that Experian “favored certain purchasers of its product by providing unequal services and predatory conduct by ‘licensing’ and assisting TrueLink and Qspace for Internet delivery, companies with no prior credit-reporting experience while restricting plaintiff from the same access to the detriment of plaintiff.” (Am.Compl.¶ 271.) However, 15 U.S.C. § 13(e) by its terms applies only to commodities, not services. The Court is aware of only one decision analyzing whether a credit report is a commodity or a service, National Information Services, Inc. v. TRW, Inc., No. 90–863–PA, 1992 WL 715632, at *11–*12 (D.Or. Sept. 9, 1992), aff'd, 52 F.3d 334 (9th Cir.1995), which held that it is a service. Plaintiff cites no authority to the contrary and offers no rebuttal to Experian's other arguments for why CCIS's Amended Complaint fails to state a Robinson–Patman claim. Even if credit reports were deemed commodities, plaintiff still would not have a Robinson–Patman claim because “nothing [in that Act] shall prevent persons engaged in selling goods, wares, or merchandise in commerce from selecting their own customers in bona fide transactions and not in restraint of trade.” 15 U.S.C. § 13(a); Naifeh v. Ronson Art Metal Works, Inc., 218 F.2d 202, 206 (10th Cir.1954). Thus, cause of action 17 is dismissed.

D. Aiding and Abetting Claims

*13 As a matter of logic, one cannot state a claim for aiding and abetting unlawful activity if one cannot state a claim for the underlying unlawful activity. A necessary element in a cause of action for aiding and abetting is that the party whom the defendant aids must perform a wrongful act that causes an injury. See, e.g., Halberstam v. Welch, 705 F.2d 472, 477 (D.C.Cir.1983); Dreieck Finanz AG v. Sun, No. 89 Civ. 4347, 1990 WL 11537, at *6 (S.D.N.Y. Feb. 2, 1990). As claims 12, 13, 15, 17, and 18 are dismissed for failure to state a claim, so too must claims 14 and 16 be dismissed.

II State Law Claims

The remaining claims are based on state law.FN19 The Court lacks diversity jurisdiction pursuant to 28 U.S.C. § 1332(a) over these claims as there is incomplete diversity. Plaintiff is a New Jersey corporation. (Am.Compl.¶ 80.) Setting aside the dispute over whether the proper entities have been sued and accepting the allegations of the Amended Complaint as true, at least one of the defendants, Credit Bureau Association, Inc., is also a New Jersey corporation. ( Id. ¶ 82.) For diversity jurisdiction to be available, all the adverse parties in a suit must be completely diverse with respect to citizenship. E.R. Squibb & Sons, Inc. v. Accident & Casualty Insurance Co., 160 F.3d 925, 930 (2d Cir.1998).

FN19. Claim 19 is a claim for injunctive relief. As none of the other claims on which a claim for injunctive relief could be based survives the motion to dismiss, claim 19 is also dismissed.

The Court thus lacks original jurisdiction over the state law claims, and it declines to exercise its supplemental jurisdiction over them. 28 U.S.C. § 1367(c)(3).


For the foregoing reasons, the Amended Complaint is dismissed in its entirety.


Credit Chequers Information Services, Inc. v. CBA, Inc.
Not Reported in F.Supp.2d, 1999 WL 253600 (S.D.N.Y.), 1999-1 Trade Cases P 72,518
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

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