District Court (Az.) Says Consumer Report Was Not Inaccurate Because Trade-Line Failed to Report Bankruptcy Discharge When Consumer Report as a Whole Reported the Discharge

In Zemelka v. Trans, No. CV-18-04179-PHX-SMB, 2019 U.S. Dist. LEXIS 91207 (D. Ariz. May 31, 2019), Judge Brnovich dismissed an FCRA claim against a CRA arising from bankruptcy reporting due to the absence of an inaccuracy.

Plaintiff has two claims against Defendant Trans Union. The first is a clam under 15 U.S.C. §1681e(b) and the second under 15 U.S.C. §1681i. Both claims require that Plaintiff allege the existence of an inaccuracy in the consumer report. Defendant argues that there is no violation of the FCRA because there was nothing inaccurate about their reporting. The Trans Union disclosure reports the following relevant information: [photograph omitted]. Each tradeline for the accounts noted it as “included in bankruptcy,” reported as closed, showing no balance due. The report as a whole shows that the bankruptcy was discharged. Plaintiff argues that each tradeline should report as “discharged in bankruptcy” instead of “included in bankruptcy.” Plaintiff argues that the use of the phrase “included in bankruptcy” is materially misleading because a lender reading the report would not understand that the account was discharged. Under the FCRA, an account can be inaccurate on its face or misleading in such a way and to such an extent that it can be expected to have an adverse effect on the consumer. Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415 (4th Cir. 2001) (citing Sepulvado v. CSC Credit Servs., 158 F.3d 890 (5th Cir. 1998)). In isolation, the difference between the two phrases could be significant and could form the basis for a claim. However, Courts have recognized that the alleged misleading information should be read in context of the whole report. See Torian v. JP Morgan Chase Bank, N.A., No. 17-cv-00422-PJH, 2017 WL 2986250, at *6 (N.D. Cal. July 13, 2017). In context, the report is clear that the accounts were included in the bankruptcy, Plaintiff’s bankruptcy was discharged, the accounts are closed, and [*7]  have no balance due. Additionally, there is no past due balance reported. Plaintiff has not cited any authority for the claim that each trade line must report the discharge. The Court finds there is nothing inaccurate about Trans Union’s reporting of Plaintiff’s accounts.