In Vandonzel v. JP Morgan Chase Bank, et. al., No. 17-CV-01819-LHK, 2017 WL 3267571 (N.D. Cal., July 31, 2017), Judge Koh denied a furnisher’s FRCP 12b6 Motion in an FCRA case.
However, Gorman does not support Chase’s argument that an investigation of disputed information is narrowly limited to the exact wording of the dispute letter. In Gorman, the Ninth Circuit found on a motion for summary judgment that a furnisher’s investigation was reasonable in part because the plaintiff’s dispute letter and the notice sent to the furnisher “provided no suggestion of the nature of Gorman’s dispute….” Id. at 1158 (emphasis added). Thus, Gorman stands for the proposition that a furnisher need not conduct a detailed investigation if the dispute letter provides no indication about the nature of the consumer’s dispute. However, nothing in the Gorman opinion suggests that in evaluating “whether the furnisher’s procedures were reasonable in light of what it learned about the nature of the dispute,” a Court should narrowly limit the “nature of the dispute” to the precise wording of the dispute letter. Id. at 1157. Indeed, the Gorman panel specifically amended its opinion to add a footnote to the sentence quoted above, which stated that “[i]n deciding that the notice determines the nature of the dispute to be investigated, we do not suggest that it also cabins the scope of the investigation once undertaken.” Gorman, 584 F.3d at 1157 n.11; see also Gorman v. Wolpoff & Abramson, LLP, 552 F.3d 1008, 1017 (9th Cir.), opinion amended and superseded, 584 F.3d 1147 (9th Cir. 2009). This footnote makes clear that as long as a consumer provides reasonable notice of the nature of a dispute, a furnisher’s investigation cannot be “cabin[ed]” to the exact wording of the dispute notice. Id.1 Instead, the furnisher’s duty to investigate depends on what is “reasonable,” which often cannot be determined based on the complaint alone. Id. at 1157. In the instant case, Plaintiff alleges that he mentioned the bankruptcy in his dispute letter and that “[b]ased on Plaintiff’s dispute, Chase should have known their accounts were included and discharged in Plaintiff’s Chapter 13 plan of reorganization.” FAC ¶ 124. In other words, Plaintiff alleges that a reasonable investigation triggered by the mention of a bankruptcy would have revealed the discharge of Plaintiff’s debts. Chase disagrees with this allegation and argues that a reasonable investigation of Plaintiff’s dispute would not have revealed the fact that Plaintiff’s debts, including the debt to Chase, had been discharged in bankruptcy. However, this is a dispute that the Court cannot resolve on a motion to dismiss. Although in some cases the Court can determine as a matter of law whether a consumer’s dispute letter provides adequate notice, see, e.g., DeVincenzi v. Experian Info. Sols., Inc., 2017 WL 86131 (N.D. Cal. Jan. 10, 2017), the Court cannot do so in the instant case. Without evidence regarding the information that Chase received from CRAs and the procedures that Chase uses to investigate disputes, which can only be gained through discovery, the Court cannot determine whether the investigation triggered by a dispute mentioning a bankruptcy would reasonably reveal that the bankruptcy had been discharged. Thus, “accept[ing] factual allegations in the complaint as true and constru[ing] the pleadings in the light most favorable to the nonmoving party,” the Court cannot determine that Chase’s investigation or failure to investigate was reasonable as a matter of law. Manzarek, 519 F.3d at 1031. Indeed, Chase’s citation to Gorman underscores the importance of discovery in determining whether an investigation was reasonable. Gorman was decided on a motion for summary judgment. Thus, the Gorman court held that the furnisher had conducted a reasonable investigation only after reviewing evidence regarding the information that the furnisher received and what the furnisher did to investigate the dispute. Gorman, 584 F.3d at 1158. Similarly, two other cases that Chase cites, Jackson v. Experian Info. Sols., Inc., 2017 WL 635148 (N.D. Ill. Feb. 16, 2017), and Webb v. Experian Info. Servs., Inc., 2017 WL 1022012 (N.D. Ill. Mar. 16, 2017), were decided on motions for summary judgment. In both cases the court reviewed the evidence regarding the information the defendants received and how the defendants responded to that information. In short, the Court cannot resolve on a motion to dismiss whether Chase’s investigation was reasonable. It may be that any reasonable investigation of Plaintiff’s dispute would have revealed that Plaintiff’s debt had been discharged. See Gorman, 584 F.3d at 1155 (“a ‘superficial, un reasonable inquir[y]’ would hardly satisfy Congress’ objective.”) (quoting Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 430–31 (4th Cir.2004)). Indeed, it may be that the information forwarded to Chase in the ACDV did not distinguish between filing for bankruptcy and receiving a discharge in bankruptcy. See Opp. at 5 n.2 (“[A]n ACDV when sent does not verbatim recapitulate a consumer’s dispute. Instead the dispute is truncated into series of phrases and or codes[,] e.g. [,] consumer disputes present past history verify CII verify status.”). However, Plaintiff has alleged that Plaintiff’s dispute letter mentioned Plaintiff’s bankruptcy and that a reasonable investigation of this dispute would have revealed that Plaintiff’s debts had been discharged. The Court must “accept [these] factual allegations in the complaint as true….” Manzarek, 519 F.3d at 1031.