District Court (Pa.) Holds That There Is Almost No SofL for FCRA Claims; Consumer Can Create New Cause of Action for Time-barred Claim by Just Making a New Dispute and, Even Then, Claim is Tolled Until Consumer Discovers that the Furnisher’s Reinvestigation Was Unreasonable

In Escobar v. Pennsylvania Higher Education Assistance Agency Services, Inc., 2018 WL 1740364 (E.D. Pa. 2018), Judge Padova found that a furnisher can almost never close its books on a stale FCRA claim.  First, Judge Padova found that a consumer can renew a stale FCRA claim merely by filing a new dispute with the CRAs.

PHEAA recognizes that, while the United States Court of Appeals for the Third Circuit has not interpreted the FCRA’s statute of limitations, courts in this Circuit have “held that an action is timely if a plaintiff alleges that a furnisher of information ‘continued to report [inaccurate] information to [the credit bureaus] within the statutory period, regardless of whether it had begun reporting prior to the two year statute of limitation.’ ” Van Veen v. AT&T Corp., Civ. A. No. 10-1635, 2011 WL 4001004, at *4 (E.D. Pa. May 25, 2011) (alterations in original) (quoting Jaramillo v. Experion Info. Sols., Inc., 155 F. Supp. 2d 356, 360 (E.D. Pa. 2001)). However, PHEAA argues that we should reject this interpretation of the statute, because it results in “essentially eliminating any statute of limitations by a consumer simply re-submitting a credit dispute at any time in the future.” (Def.’s Mem. at 4.) PHEAA maintains that the limitations period should begin to run when a plaintiff first learns of the mistake on his or her credit report, notwithstanding any subsequent reporting of that mistake. See, e.g. Mack v. Equable Ascent Financial, LLC, Civ. A. No. 11-793, 2013 WL 183646, at *5 (E.D. Tex. Jan. 17, 2013) (stating that the statute of limitations began to run on plaintiff’s FCRA claim when plaintiff received his credit report); Hatten v. Experian Info. Sols., Inc., Civ. A. No. 12-12236, 2013 WL 5179190, at *4 (E.D. Mich. Sept. 12, 2013) (rejecting argument that plaintiff’s “repeated attempts at resolving the issue [with her credit report] tolled the FCRA’s statute of limitation” because, where “the underlying complaint relates to recurring violations stemming from the same original incident, and the alleged violations are triggered every time Plaintiff files a dispute, Plaintiff would be able to extend the statute of limitations indefinitely simply by filing subsequent complaints as the two year period nears its end”). “Federal courts are split on the question of whether each separate notice of dispute triggers a duty to investigate even if the information has been disputed previously.” Vasquez v. Bank of Am., N.A., Civ. A. No. 15-4072, 2015 WL 7075628, at *3 (N.D. Cal. Nov. 13, 2015). “The majority of courts have concluded that ‘each separate notice of dispute triggers a duty to investigate the disputed information, regardless of whether the information has been previously disputed,’ and each time a furnisher fails reasonably to investigate the dispute results in a new FRCA violation.” Id. (quoting Marcinski v. RBS Citizens Bank, N.A., 36 F. Supp. 3d 286, 290 (S.D.N.Y. 2014) (remaining citations omitted)).  We are not persuaded by PHEAA’s argument that we should follow the federal courts that have concluded “that allowing a second dispute letter to trigger a new statute of limitations would permit plaintiffs ‘to indefinitely extend the limitations period by simply sending another complaint letter to the credit reporting agency.’ ” . . .  We conclude, accordingly, that each time a CRA sent an ACDV to PHEAA, PHEAA was obliged anew to investigate the accuracy of its information regarding the disputed student loan, and any failure on its part to reasonably conduct that investigation triggered the running of a new limitations period with respect to that investigation.

The District Court held that not only, therefore, can a consumer create a new cause of action on a stale claim merely by renewing the dispute, it then went on to hold that the claim still does not become ripe until the consumer discovers that the investigation was unreasonable — as opposed to merely when the furnished does not agree with the dispute or if the entry remains on the consumer’s trade-line.

PHEAA argues that, if this action is not entirely time-barred, a portion of Plaintiff’s claim is barred by the statute of limitations because it arose from credit disputes that she filed more than two years prior to filing the instant Complaint. Specifically, PHEAA asks us to dismiss that portion of Plaintiff’s claim that arises from three ACDVs that were sent to PHEAA in 2014. As we discussed earlier, the Complaint alleges that Plaintiff filed a dispute with two CRAs in August 2014. (Compl. ¶ 18.) On August 6, 2014, Equifax issued an identity fraud ACDV to PHEAA and PHEAA responded to that ACDV on August 28, 2014. (Id. ¶ 20.) On August 13, 2014, TransUnion issued an identity theft ACDV to PHEAA and PHEAA responded to that ACDV on September 5, 2014. (Id. ¶¶ 21-22.) On September 9, 2014, Equifax issued another identity theft ACDV to PHEAA and PHEAA responded to that ACDV on September 30, 2014. (Id. ¶¶ 23-24.) PHEAA maintains that Plaintiff’s claim should be dismissed to the extent that it pertains to PHEAA’s investigation of these three ACDVs, because it conducted its investigations in August and September of 2014, more than two years before Plaintiff filed the Complaint on September 20, 2017.  Plaintiff contends that her claim is not untimely as it relates to the 2014 ACDVs because the statute of limitations did not begin to run as to this aspect of her claim until she learned that PHEAA’s investigations of those ACDVs were unreasonable. She maintains that the evidence will demonstrate that she did not know and could not have known what information PHEAA had when it investigated the 2014 ACDVs and, thus, the statute of limitations did not begin to run on that portion of her claim at the time of PHEAA’s investigations in August and September 2014. . . .according to the plain language of the FCRA, the statute of limitations began to run on each portion of her claim when she discovered each allegedly unreasonable investigation conducted by PHEAA. . .  The Complaint does not allege the date of Plaintiff’s discovery that PHEAA had conducted an unreasonable investigation of the 2014 ACDVs. We therefore cannot determine, from the face of the Complaint, whether Plaintiff was aware of PHEAA’s allegedly unreasonable investigations of the 2014 ACDVs more than two years before she filed the instant Complaint on September 20, 2017. We conclude, accordingly, that it would not be appropriate to dismiss the portion of Plaintiff’s claim that arises from the three investigations conducted by PHEAA in August and September 2014 based on the expiration of the applicable statute of limitations. See Budzash, 451 F. App’x at 109 (stating that the statute of limitations normally “cannot serve as a basis for granting relief under Rule 12(b)(6)” and recognizing that an exception to that rule will only be made “ ‘where the complaint facially shows noncompliance with the limitations period’ ” (citing and quoting Oshiver, 38 F.3d at 1384 n.1)). We consequently deny the Motion to Dismiss as to PHEAA’s argument that Plaintiff’s claim is time-barred to the extent that it arises from PHEAA’s August and September 2014 investigations.