District Court (Cal.) Finds FCRA Bankruptcy-reporting Case Not Adequately Pleaded as to “Inaccuracy”

In Hughes v. Experian Information Solutions, Inc., 2016 WL 3670051, at *2-3 (N.D.Cal., 2016), Judge Freeman found that a FCRA plaintiff had not adequately pleaded an “inaccuracy” to sustain an FCRA claim.

IQ Data contends that the FAC does not allege facts showing a credit reporting inaccuracy. The Court agrees. Plaintiff alleges that IQ Data reported Plaintiff’s account as being “open” and did not reference Plaintiff’s Chapter 7 discharge. FAC ¶ 9. However, she does not allege facts showing why that report was misleading or inaccurate. In her opposition brief, Plaintiff argues that her allegations that IQ Data “reported Plaintiffs [sic] account open and in collections while also failing to report that Plaintiff had filed a chapter 7 bankruptcy” are adequate to state a claim. Pl.’s Opp. at 5, ECF 40. Plaintiff misstates her FAC. The FAC does not allege that IQ Data reported that her account was “in collections.” See FAC ¶ 9. The FAC does not even allege that IQ Data reported a balance owing on the account. See id. Accordingly, Plaintiff has failed to state a claim under the FCRA.  *3 IQ Data also asserts a separate legal argument that Plaintiff’s theory of liability against it simply is not viable. IQ Data explains in its briefing that Plaintiff’s claims against it relate to a delinquent residential rental account that was placed with IQ Data for collection, and reported to consumer reporting agencies, before Plaintiff’s Chapter 7 bankruptcy. See Def.’s Mot. at 3-4, ECF 36. IQ Data contends that, as a matter of law, a company that furnishes a CRA with accurate information regarding a debt has no “affirmative duty to go back and update pre-petition, historically-accurate reporting after the debtor obtains discharge.” Id. at 5. In support of that argument, IQ Data relies primarily upon Mortimer v. Bank of America and similar cases holding that a furnisher does not violate the FCRA when it accurately reports, post-discharge, that a debt was delinquent during the pendency of the bankruptcy action. See Mortimer v. Bank of Am., N.A., No. C-12-01959 JCS, 2013 WL 1501452 (N.D. Cal. Apr. 10, 2013). In Mortimer, however, the furnisher updated its reporting post-discharge to reflect that the debt in question had been discharged and had a balance of $0. Id. at *4. It was in that context that the district court held that the furnisher’s reporting that the debt had been delinquent during the pendency of the bankruptcy was historically accurate and thus not actionable under the FCRA. Id. at *9. The Mortimer court did not squarely address the question presented by IQ Data’s motion, whether a furnisher that accurately reports a debt prior to the consumer’s bankruptcy has a duty to update its reporting once the debt has been discharged.  While IQ Data’s motion presents an interesting legal question regarding the precise scope of a furnisher’s duty to update its pre-bankruptcy reporting, consideration of that question would be premature at this time. It is not clear from the face of the FAC what IQ Data reported, or when. IQ Data’s briefing makes extensive reference to Plaintiff’s bankruptcy schedules, and IQ Data apparently wishes the Court to take judicial notice of those schedules, but IQ Data has neither filed a request for judicial notice nor submitted copies of Plaintiff’s bankruptcy schedules for the Court’s review. Accordingly, IQ Data’s request for judicial notice is DENIED.  IQ Data’s motion to dismiss Plaintiff’s FCRA claim is GRANTED WITH LEAVE TO AMEND. IQ Data requests that leave to amend be denied on the basis that Plaintiff’s theory of liability is unsupported by the law. However, as discussed above, IQ Data’s argument is premature absent factual development of the record.