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Michael Todd, As Assignee of Jesse Babauta v. Chase Bank Usa

February 13, 2012


The opinion of the court was delivered by: Matthew F. Kennelly, District Judge:


Michael Todd, as assignee of Jesse Babauta, has sued Chase Bank USA (Chase) and GE Money Bank (GEMB) for claims arising out of their alleged failure to update Babauta's credit report. Specifically, Todd claims that under the Fair Credit Reporting Act, 15 U.S.C. § 1681s-2(a), (FCRA), both Chase and GEMB had a duty to update Babauta's credit report, which they failed to meet. The defendants have moved to dismiss the complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). For the reasons stated below, the Court dismisses the complaint pursuant to Rule 12(b)(6).


Todd brings these claims as the assignee of Babauta. On March 23, 2010, Babauta filed for Chapter 7 bankruptcy. He received an order of discharge on June 16, 2010. Todd claims that Babauta assigned him certain legal claims, including those stated here against the defendants.

Todd alleges that the defendants received a copy of the discharge order but that despite that order, they refused to update Babauta's account to reflect the discharge. Rather, Todd alleges, the defendants maintained the status of "charge off" on Babauta's accounts, which was incorrect and false. Todd claims that as a result of defendants' failure to correct the status of Babauta's accounts, Babauta was caused past and future monetary loss, past and future damage to his credit worthiness, and other injuries.

Todd alleges that the defendants negligently violated their duties to Babauta under section 1681s-2(a) of the FCRA and state law. Todd further claims that by willfully failing to update Babauta's accounts, defendants exhibited gross negligence, again in violation of section 1681s-2(a) and state law.


In considering a motion to dismiss, the Court accepts the plaintiff's allegations as true and draws reasonable inferences in the plaintiff's favor. Parish v. City of Elkhart, 614 F.3d 677, 679 (7th Cir. 2010). To survive the motion, the plaintiff must provide "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible on its face when "the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937, 1949 (2009).

Defendants argue that Todd fails to state a claim because there is no private right of action under Section 1681s-2(a) and any common law negligence claims arising out of the conduct giving rise to the alleged FCRA violations are preempted. Defendants also contend that Todd lacks standing to assert the claims because they are not legally assignable.

1. FCRA § 1681s-2(a)

Todd alleges that by failing to update the status of the pertinent accounts on Babauta's credit report, defendants violated FCRA section 1681s-2(a) and state common law. Defendants contend that section 1681s-2(a) contains no private right of action and that Todd's state law claims are preempted by the FCRA.

The FCRA was enacted, in large part, to protect consumers by ensuring "fair and accurate credit reporting." 15 U.S.C. § 1681(a)(1). Section 1681s-2 deals with the duties of companies, such as Chase and GEMB, that furnish information to credit reporting agencies. Id. § 1681s-2. Subparagraph (a), upon which Todd bases hisFCRA claims, imposes requirements on furnishers regarding the accuracy of information, the production of certain types of information, and the correction of erroneous information. Id. § 1681s-2(a).

No private right of action exists, however, for violations of section 1681s-2(a). Id. § 1681s-2(c); Purcell v. Bank of America, 659 F.3d 622, 623 (7th Cir. 2011); 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).") (citations omitted). Accordingly, the violations that Todd alleges under section 1681s-2(a), even if proven, are not actionable in this lawsuit.

Todd has not asserted any section 1681s-2(b) claims in his current complaint, so the Court need not address the defendants' arguments ...

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