Monday, April 05, 2010

consumer - credit reporting agency - FCRA

Payne v. TransUnion LLC - ED Pa. - March 31, 2010

The court rejected the defendant's argument that it is not a credit reporting agency, pending further discovery and development of the record.

For an entity to be a CRA, (1) it must act in exchange for compensation; (2) it must regularly assemble or evaluate information on consumers; (3) its purpose in evaluating this information must be to furnish consumer reports; and (4) it must utilize interstate commerce in the preparation or furnishing of the consumer report. Knechtel, 2009 WL 4123275, at *3 (citing Lewis v. Ohio Prof’l Elec. Network LLC, 190 F. Supp. 2d 1049, 1056 (S.D. Ohio 2002)). Defendants argue that (1) Plaintiff has not adequately alleged that Defendants assemble and evaluate information on consumers, and that (2) Plaintiff has not adequately alleged that Defendants disseminated a “consumer report.”

Courts have found that the term “assemble or evaluate” “implies a function which involves more than receipt and retransmission of information identifying a particular debt.” ... Merely sending or conveying documents regarding consumer debts to CRAs does not constitute “assembling or evaluating” consumer credit information under the FCRA. Ori v. Fifth Third Bank, 603 F. Supp. 2d 1171, 1175 (E.D. Wis. 2009) (citing DiGianni v. Stern’s, 26 F.3d 346, 349 (2d Cir. 1994)).

In Marricone, Judge Brody of this Court rejected arguments identical to those offered by Defendants here. See Marricone, 2009 WL 3245417, at *1. Judge Brody concluded that

[t]he definition of a consumer reporting agency in 15 U.S.C. § 1681a(f) is fairly broad, and the language of the statute as well as relevant case law demonstrate that whether an entity is acting as a consumer reporting agency in a particular situation is a fact-specific inquiry. While credit bureaus such as Equifax may be the paradigmatic CRAs, the term can extend beyond such entities. See, e.g.,Williams v. LexisNexis Risk Mgmt. Inc., 2007 U.S. Dist. LEXIS 62193, *4 (E.D. Va. 2007); Lewis v. Ohio Prof’l Elec. Network LLC, 190 F. Supp. 2d 1049, 1061 (S.D. Ohio 2002). Thus factual discovery will help determine whether Defendants acted as CRAs in this case. Absent binding case law holding that Lexis and Reed are not CRAs as a matter of law, Plaintiff’s allegations that Defendants operated as CRAs survives a 12(b)(6) motion to dismiss.

Id. Judge Brody denied the motion to dismiss the FCRA claims without prejudice to Defendants to reassert their arguments after the facts had been fleshed out in discovery. In Breslin, Judge McLaughlin of this Court in deciding an identical motion to dismiss agreed with Judge Brody, concluding that her resolution was “thorough and well reasoned.” See Breslin, No. 08-2236 (E.D. Pa. Oct. 21, 2009).

We agree with the approach taken by Judge Brody and Judge McLaughlin. The determination of whether Defendants are CRAs is a fact-specific inquiry. Discovery will be of assistance in reaching the ultimate determination.

Plaintiff's current allegations are sufficient to permit a reasonable inference that in exchange for compensation Defendants assembled and evaluated information on consumers bearing on their creditworthiness for third parties and that they used facilities of interstate commerce to furnish their reports. These allegations are sufficient to permit further discovery on the issue.