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Joshua L. Folkers v. Pennsylvania Higher Education Assistance Foundation

January 18, 2011

JOSHUA L. FOLKERS, PLAINTIFF,
v.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE FOUNDATION, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Marvin E. Aspen

MEMORANDUM OPINION AND ORDER

Marvin E. Aspen, District Judge:

Plaintiff Joshua L. Folkers filed a four-count complaint against defendants, Pennsylvania Higher Education Assistance Agency ("PHEAA"), TransUnion LLC ("Transunion"), Experian Information Solutions, Inc. ("Experian"), and Equifax Information Services LLC ("Equifax"), alleging violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. Presently before us is PHEAA's motion to dismiss for failure to state a claim. For the reasons below, we grant PHEAA's motion in part and deny it in part.

BACKGROUND

In January 2008, Plaintiff received phone calls and letters from Defendant PHEAA regarding payment due for a student loan. (Compl. ¶ 12.) PHEAA serviced three of Plaintiff's student loans, but only contacted Plaintiff regarding one of them, since PHEAA records showed the others were deferred due to Plaintiff's continuing enrollment in school. (Id. ¶ 13.) On January 31, 2008, Plaintiff began disputing that he owed payment on a loan serviced by PHEAA. (Id. ¶ 14.) Through the rest of 2008 and 2009, Plaintiff continued to contest that he owed money on the disputed loan, which he alleged should have been in deferral, and PHEAA continued to attempt to collect. (Id. ¶¶ 15--45.) Over the course of these interactions, PHEAA requested multiple times that Plaintiff instruct his schools to forward enrollment information in order to update Plaintiff's disputed account. (Id. ¶¶ 16--18, 24--25, 30, 34.) Plaintiff alleges that following these requests, he contacted the schools he was attending and requested they send information verifying his enrollment to PHEAA. (Id. ¶¶ 16, 18, 24, 26, 28, 36.) The date by which Plaintiff alleges that these schools complied with his request was September 18, 2009, when PHEAA confirmed that it had received enrollment verification from Phoenix College. (Id. ¶ 37.)

Upon receiving confirmation from PHEAA that it had received the enrollment verification, Plaintiff learned from a PHEAA representative that his loan status would be updated. (Id.) A few days later, PHEAA notified Plaintiff by letter that "records verify that the unfavorable information was reported accurately in accordance with the Fair Credit Reporting Act." (Id. ¶ 38.) Plaintiff continued to request that the negative items be removed from his account. (Id. ¶¶ 39--42.) On November 19, 2009, Plaintiff wrote a dispute letter to Defendant Experian requesting the negative credit reporting be removed. (Id. ¶ 43.) Experian contacted PHEAA, which verified the negative reports were accurate. (Id. ¶ 49.) In December 2009, Plaintiff contacted Transunion to dispute the negative information from PHEAA and requested it be removed. (Id. ¶ 46.) Transunion contacted PHEAA, which verified the negative reports were accurate. (Id. ¶¶ 55, 95.) In March 2010, Plaintiff wrote dispute letters to Equifax, Experian, and Transunion. These Defendants then contacted PHEAA, which verified his account as accurate to them as well. (Id. ¶¶ 79, 95, 102, 110.) Plaintiff alleges that "[PHEAA] continues to report the negative information even though it has actual knowledge that the loan should have been categorized as deferred . . . ." (Id. ¶ 92.)

On August 9, 2010, Plaintiff filed the instant action against Transunion, Experian, Equifax, ("Credit Reporting Agencies") and PHEAA, alleging violations of the FCRA. In Counts I through III, Folkers alleges that each of the Credit Reporting Agencies violated the FCRA by failing to maintain reasonable procedures to assure the accuracy of his credit report. In Count IV, Plaintiff alleges that PHEAA failed to conduct a reasonable investigation into the accuracy of the disputed credit information that PHEAA provided to Credit Reporting Agencies in violation of 15 U.S.C. § 1681s-2. Plaintiff further alleges that, following PHEAA's reinvestigation of the disputed information, it was aware the information was inaccurate but verified it anyway. Finally, Plaintiff alleges that PHEAA failed to put in place procedures to complete an adequate reinvestigation of the disputed credit information. Defendant PHEAA now moves to dismiss all claims against it.

STANDARD OF REVIEW

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) is meant to test the sufficiency of the complaint, not to decide the merits of the case. Gibson v. City of Chi., 910 F.2d 1510, 1520 (7th Cir. 1990). A court may grant a motion to dismiss under Rule 12(b)(6) only if a complaint lacks "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 1974 (2007); see Ashcroft v. Iqbal, 129 S. Ct. 1937, 1949--50 (2009) (extending Twombly from antitrust to litigation generally and stating that a court's determination "whether a complaint states a plausible claim for relief will . . . be a context-specific task"); Killingsworth v. HSBC Bank Nev., N.A., 507 F.3d 614, 618--19 (7th Cir. 2007); EEOC v. Concentra Health Servs., Inc., 496 F.3d 773, 776--77 (7th Cir. 2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Iqbal, 129 S. Ct. at 1949.

Although a facially plausible complaint need not give "detailed factual allegations," it must allege facts sufficient "to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964--65. "Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 129 S. Ct. at 1949. These requirements ensure that the defendant receives "fair notice of what the . . . claim is and the grounds upon which it rests." Twombly, 550 U.S. at 555, 127 S. Ct. at 1964; see also Fed. R. Civ. P. 8(a). In evaluating a motion to dismiss, we must accept all well-pleaded allegations in the complaint as true and draw all reasonable inferences in the plaintiff's favor. Iqbal, 129 S. Ct. at 1949--50; Thompson v. Ill. Dep't. of Prof'l Regulation, 300 F.3d 750, 753 (7th Cir. 2002).

ANALYSIS

A. Claims Pursuant to § 1681s-2(a)

Plaintiff brings several claims against PHEAA pursuant to 15 U.S.C. § 1681s-2(a). (Compl. ¶¶ 135--37.)*fn1 As PHEAA points out, Congress limited enforcement of § 1681s-2(a) to federal or state government officials. Rollins v. Peoples Gas Light & Coke Co., 379 F. Supp. 2d 964, 967 (N.D. Ill. 2005) ("It is undisputed that there is no private right of action under § 1681s-2(a)."); Powell v. Greentree, No. 08 C 00097, 2009 WL 700650, at *5 (N.D. Ill. Mar. 16, 2009); see also 15 U.S.C. § l681-2(c)--(d); Perry v. First Nat'l Bank, 459 F.3d 816, 822 (7th Cir. 2006). Consequently, even if Plaintiff could prove a violation of § 1681s-2(a), it is not actionable in this private lawsuit. Therefore, we dismiss all of Plaintiff's claims against PHEAA pursuant to § 1681s-2(a) and will focus on Plaintiff's allegations under § 1681s-2(b).

B. Failure to Put in Place Adequate Reinvestigation Procedures Plaintiff alleges that PHEAA negligently and willfully failed to put in place procedures to complete an adequate reinvestigation of disputed credit information in violation of 15 U.S.C. §§ 1681s-2(b), 1681o, and 1681n. (Compl. ¶ 138.) Under these sections, a furnisher of credit information is required to conduct a reasonable investigation. However, there is no separate requirement for a data furnisher to put in place procedures to complete an adequate reinvestigation. See 15 U.S.C. §§ 1681s-2(b), 1681n, 1681o. Therefore, we will not ...


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