United States District Court, N.D. Illinois, Eastern Division
September 15, 2005.
NANCY MURRAY, Plaintiff,
SUNRISE CHEVROLET, INC. and TRIAD FINANCIAL CORPORATION, doing business as ROADLOANS, Defendants.
The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Nancy Murray has sued Sunrise Chevrolet, Inc. and Triad
Financial Corporation on behalf of a putative class of consumers
for violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681
et seq. Before this Court are Defendants motions to dismiss.
The facts alleged in the complaint, and taken as true for the
purposes of this motion, are as follows. See Thompson v. Ill.
Dep't of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002).
In June or July 2004, Triad Financial and Sunrise Chevrolet
mailed a promotional flyer to Nancy Murray, notifying her the she
had been pre-approved for an auto loan of up to $19,500. This
"Pre-Approved Notice" stated that the pre-approval was valid on
the purchase of a new or used vehicle at Sunrise Chevrolet,
Murray's "authorized dealer." See Am. Compl. ¶ 9, Ex. A
(Defendant's Promotional Mailing).*fn1 The flyer informed
Murray that in order to take advantage of the offer, she had to appear in person at Sunrise Chevrolet,
her "authorized dealer," no later than July 24, 2004, bringing a
recent pay stub, utility bill in her name, a residential
telephone bill, and a trade-in vehicle. Id. Typewritten in much
smaller print at the bottom of the "Pre-Approved Notice,"
appeared the following text:
"You have been pre-approved for an auto loan by
RoadLoans. . . . This offer is available for 30 days
from the date of this letter, and is conditioned upon
obtaining a first lien security interest in your
vehicle. You received this offer based on information
in your credit report and upon your satisfying
certain predetermined credit criteria used to select
individuals for this offer. This offer is conditioned
upon verification that you continue to meet the
specific criteria used to select you for this offer.
Credit may be refused if you no longer meet those
criteria or other applicable criteria bearing on
creditworthiness or if your vehicle does not meet
collateral guidelines. . . . Specific credit terms
such as APR, length of contract, payment amount, and
amount of credit, are subject to RoadLoans . . .
finance program parameters. You have the right to
prohibit the use of information in your file
maintained by the consumer reporting agencies from
being used in transactions not initiated by
you. . . ." Id.
The small print section provided a toll-free telephone number
and a mailing address to opt-out of future similar mailings.
Murray alleges that Triad Financial (doing business as
RoadLoans . . .) and Sunrise Chevrolet accessed her credit report
without her permission and without a "permissible purpose" as
required by the Fair Credit Reporting Act, 15 U.S.C. § 1681b. She
alleges that the purported offer contained in the flyer is value
and totally lacking in terms; thus, it has "no value beyond a
solicitation for loan business." Am. Compl. ¶ 19a. She further
contends that Triad and Sunrise failed to make certain mandatory
disclosure along with their purported offer in the "clear and
conspicuous" manner required under the FCRA. Id. ¶ 19b-c. Triad
and Sunrise have both moved to dismiss the complaint. II. STANDARD OF REVIEW
The purpose of a motion to dismiss under Rule 12(b)(6) is to
"test the sufficiency of the complaint, not to decide the merits"
of the case. Triad Assocs., Inc. v. Chicago Housing Auth.,
892 F.2d 583, 586 (7th Cir. 1989). When considering a motion to
dismiss, a court must construe all allegations in the complaint
in the light most favorable to the plaintiff and accept all
well-pleaded facts as true. Bontkowski v. First Nat'l Bank of
Cicero, 998 F.2d 459, 461 (7th Cir. 1993). A complaint
should be dismissed only when "it appears beyond a doubt that the
plaintiff can prove no set of facts in support of his claim which
would entitle him to relief." Conley v. Gibson, 355 U.S. 41,
45-46 (1957). If a complaint conforms to the requirements of the
Federal Rules of Civil Procedure, it cannot be dismissed "on the
ground that it is conclusory or fails to allege facts." See
Higgs v. Carver, 286 F.3d 437, 439 (7th Cir. 2002).
In their motions to dismiss, Triad and Sunrise both assert that
Plaintiff fails to state a claim. Triad contends that the flyer
does represent a firm offer of credit and does comply with the
clear and conspicuous disclosure requirements of the FCRA.
Sunrise argues that by attaching the flyer fails to establish
that Sunrise ever accessed Murray's consumer report and
therefore, it is not regulated by the FCRA.
A. FCRA and "Firm Offer of Credit"
Under the FCRA, it is permissible to obtain a consumer's credit
report only with the written consent of the consumer or for
certain "permissible purposes." See 15 U.S.C. § 1681b(f). One
of the designated "permissible purposes" is to make a "firm offer
of credit" to the consumer. 15 U.S.C. § 1681b(c)(1)(B)(i). The
statute defines a "firm offer of credit" as "any offer of credit . . . to a consumer that will be honored if the consumer is
determined, based on information in a consumer report on the
consumer, to meet the specific criteria used to select the
consumer for the offer.: 15 U.S.C. § 1681a(1). The FCRA permits
the offer of credit to be conditioned on the consumer's ability
to meet "specific criteria bearing on credit worthiness or
insurability." 15 U.S.C. § 1681(l)(1).
Triad argues that Cole is inapplicable because the
Triad/Sunrise flyer in no way suggested that Triad would not
guarantee or honor its offer of credit so long as Plaintiff met
the requirements permitted under § 1681a(1). Instead, Triad
contends that a firm offer is "any offer . . . that will be
honored." Sampson v. W. Sierra Acceptance Corp., No. 03 C 1396,
2003 WL 21785912 (N.D. Ill. Aug. 1, 2003), amended by Sampson v.
Ridge Chrysler/Plymouth Corp., 2005 WL 78958 (N.D. Ill. Jan. 13,
2005). Triad's reasoning, however, attempts to narrow the holding
of Cole to meaninglessness. The Seventh Circuit clearly stated
in Cole that "[t]o determine whether the offer of credit
comports with the statutory definition, a court must consider the
entire offer and the effect of all the material conditions
that comprise the credit product in question. If, after examining
the entire context, the court determines that the "offer" was a
guise for solicitation rather than a legitimate credit product,
the communication cannot be considered a firm offer of credit."
Cole v. U.S. Capital, 389 F.3d 719, 728 (7th Cir. 2004). To
make this assessment, courts must evaluate the amount of credit
to be extended, including the terms of an offer. The offer's
terms include the rate of interest charged, the method of
computing interest, the length of the repayment period, and any
other limitations of the offer. Id. at 728. Missing terms may
render it impossible for a court to determine whether an offer
has value. Id. In the present case, Triad's "Pre-Approved
Notice" stated that Murray had been "pre-approved for an auto loan up to $19,500." The next paragraph of the
"Notice" noted "[t]he amount of the loan may vary. For security
reasons, the pre-approved amount is not listed." Finally, at the
very bottom of the "Notice," in type that appears to be half the
size of the body text and a different, narrower font altogether,
the following disclaimer appears: "Specific credit terms such as
APR, length of contract, payment amount, and amount of credit,
are subject to RoadLoans . . . finance program parameters. . . .
Just visit www.roadloans.com and complete the application form."
Without these terms, this Court cannot determine whether this
offer has value. Plaintiff's complaint states facts that
reasonably would support a determination that the "Notice" had no
value and was not a firm offer of credit.
Even assuming, as Triad urges, that because Murray received the
flyer in June or July 2004, before Cole was decided, the flyer
still fails as a firm offer. Contrary to Triad's assertions, the
question of what is a "firm offer" was not settled law in the
Seventh Circuit prior to the Cole decision.*fn2 Judge
Kennelly considered a very similar fact pattern in Tucker v.
Olympia Dodge of Countryside, Inc., No. 03 C 0976, 2003 WL
21230604 (N.D. Ill. May 28, 2003), addressing a promotional flyer
stating that plaintiffs had been pre-approved for an auto loan of
up to $19,500. In Tucker, the fine print on the promotional
flyer stated that the plaintiffs were pre-approved for a minimum
auto loan amount of $1,000, but might qualify for more. Id. at
*1. The court found that the $1,000 minimum loan amount qualified
the promotional flyer as a firm offer. In the present case,
however, the promotional flyer contains no information about a
minimum loan amount; in fact, a reasonable inference is that the recipient
might be denied a loan altogether. Thus, under the current law
and the law at the time Triad and Sunrise mailed the flyer to
Murray, it fails to meet the requirements for a firm offer under
B. FCRA and "Clear and Conspicuous" Disclaimer Requirement
The FCRA provides that any person who uses a consumer report to
make a firm offer of credit "shall provide with each written
solicitation made to the consumer regarding the transaction a
clear and conspicuous statement" disclosing certain statutorily
required information. 15 U.S.C. § 1681m(d). Specifically, the
notice must disclose to the consumer that: (1) consumer credit
reports were used to determine who should receive the credit
offer; (2) the consumer was selected because she satisfied
certain criteria; (3) if the consumer does not continue to meet
the criteria for a finding of creditworthiness or fails to
provide the required collateral, then the offer may not be
extended; (4) the consumer may opt out of future credit offers by
prohibiting the unsolicited use of information contained in her
credit file; and (5) the consumer may exercise that right by
calling a given toll-free number or by contacting the credit
agency at a stated address. See 15 U.S.C. 1681m(d). The FCRA
does not define the term "clear and conspicuous." The Seventh
Circuit, however, has noted that the term is a staple of
commercial law and has defined it by reference to case law
interpreting the Uniform Commercial Code ("UCC") and the Truth in
Lending Act ("TILA"). Cole v. U.S. Capital, 389 F.3d 719, 729
(7th Cir. 2004) (citing Channell v. Citicorp Nat'l Servs.,
Inc., 89 F.3d 379, 382 (7th Cir. 1996) and Stevenson v. TRW
Inc., 987 F.2d 288, 295 (5th Cir. 1993)); see also Tucker
v. New Rogers Pontiac, Inc., No. 03 C 0976, 2003 WL 22078297, at
*4 (N.D. Ill. Sept. 9, 2003); Sampson v. W. Sierra Acceptance
Corp., No. 03 C 1396, 2003 WL 21785612, at *3-4 (N.D. Ill. Aug.
1, 2003). According to the Seventh Circuit, no one aspect of a notice
necessarily renders it "clear and conspicuous" for the purposes
of the FCRA; a court must consider the notice in context and as a
whole. "In short, there must be something about the way that the
notice is presented in the document such that the consumer's
attention will be drawn to it." Cole, 389 F.3d at 731.
Plaintiff does not argue that Defendants failed to include the
required statements but rather that they are not clear and
In this case, as in Cole, the notice appears in a single
paragraph at the bottom of the flyer, in nine lines of text that
take up little more than one inch of space.*fn3 The text is
printed in the smallest type on the page, in a different font
than the body of the flyer.*fn4 Defendant Triad contends
that the notice is printed in bold face type, but the smallness
of the type size renders it nearly impossible to determine
whether that is the case. In addition, any font emphasis is
diminished by the difference between the font in the body of the
flyer and that in the notice. The font is so small that this
Court finds it virtually impossible to distinguish any alleged
bolding. By contrast, the remainder of the flyer is printed in
larger, readable type, and uses all caps, bolding, underlining,
and contrasting graphical elements to draw the reader's attention
to other information. This Court determines that the notice fails
any reasonable test of conspicuousness. The type in the notice is
so small as to be almost unreadable and the alleged boldface is indistinguishable in the replicas presented to this Court. Unlike
the remainder of the flyer, it is reasonable to find that the
notice was designed to discourage the reader's attention.
C. FCRA and Willful Noncompliance
Defendant Triad argues that Plaintiff fails to demonstrate that
it willfully failed to comply with any requirement of the FCRA.
15 U.S.C. § 1681n(a). Plaintiff correctly notes that this
argument is inappropriate for the dismissal stage of the
proceedings. All Plaintiff needs to show at this stage of the
litigation is that she has stated a legal claim for which relief
can be granted. "Such a claim may fail on the facts, but
assessing factual support is not the office of Rule 12(b)(6)."
Johnson v. Revenue Mgmt. Corp., 169 F.3d 1057, 1060 (7th Cir.
1999). Plaintiff's complaint alleges that Defendants sent her an
unsolicited "Pre-Approved Notice" flyer. This flyer states that
"[i]nformation contained in [recipient's] credit bureau report,
obtained from a consumer reporting agency, was used in
conjunction [sic] with selecting [recipient] for this offer."
Plaintiff further alleges that she had no authorized anyone to
access her consumer report. Finally, she alleges that the flyer
does not constitute a firm offer of credit under the FCRA and
that it fails to provide the required terms of the credit offer
in a clear and conspicuous manner as required by statute. Am.
Compl. ¶¶ 10-12, 15-19. This Court finds that this is not a
situation in which Plaintiff can prove no set of facts that would
entitle her to relief. Thus, Triad's argument is inappropriate
and this Court denies Triad's motion to dismiss on this ground.
D. FCRA Liability
Defendant Sunrise also argues that the FCRA does not impose
liability on entities that do not meet the FCRA's definition of a
consumer reporting agency. Indeed, Sunrise contends that they
merely accessed the Plaintiff's credit report, for which
liability cannot attach. See Castro v. Union Nissan, Inc., No. 01 C 4996, 2002 WL 1466810, *3 (N.D.
Ill. July 8, 2002). In Castro, Judge Kennelly declined to hold
the defendant car dealership liable for multiple credit report
requests that occurred after plaintiffs had notified the dealer
they no longer wished to pursue the sale. Stating that the
language of the statute is directed only at those who "use or
obtain a consumer report," 15 U.S.C. § 1681b(f), Judge Kennelly
"decline[d] to interpret the statute so as to hold [defendant]
Union Nissan liable for the actions of the third party lenders."
Id. at *3. This Court notes, however, that Castro dealt with
a motion for summary judgment, where the court must address the
merits of the case. The instant case, however, deals with a
motion to dismiss, which tests the sufficiency of the complaint
and does not go to the merits. After reviewing the pleadings,
this Court finds that it does not appear beyond a doubt that
Murray can prove a set of facts that would entitle her to relief
against Sunrise under the FCRA. Thus, Sunrise's motion to dismiss
For the foregoing reasons, this Court denies Defendants'
motions to dismiss.
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