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Sgouros v. TransUnion Corp.

United States District Court, N.D. Illinois, Eastern Division

August 18, 2016

GARY W. SGOUROS, on behalf of himself and all others similarly situated, Plaintiff,
v.
TRANSUNION CORP.; TRANS UNION LLC; and TRANSUNION INTERACTIVE, INC., Defendants.

          MEMORANDUM OPINION AND ORDER

          James B. Zagel United States District Judge

         Before the Court is Defendants TransUnion Corp., Trans Union LLC, and TransUnion Interactive, Inc.’s Motion to Dismiss Plaintiff’s Complaint pursuant to Fed.R.Civ.P. 12(b)(6). For the following reasons, Defendants’ Motion is granted in part and denied in part.

         I. BACKGROUND

         Plaintiff Gary W. Sgouros (Sgouros) is a Missouri resident who, on or about June 10, 2013, bought a TransUnion Consumer Credit Score for $39.90. Sgouros has sued three separate entities. The first is TransUnion Corp. (TU Corp.), a Delaware limited liability holding company that is headquartered in Illinois and owns Trans Union LLC. The second is Trans Union LLC, another Delaware limited liability company headquartered in Illinois. The third is TransUnion Interactive, Inc. (TUI), a Delaware corporation that is headquartered in California. Together the three entities shall be referred to as Defendants or TransUnion.

         The same day that he made the aforementioned purchase, Sgouros learned from a car dealership lender that the credit score that lender was provided was more than 100 points lower than the number contained in the TransUnion Consumer Credit Score that Sgouros had purchased. The car dealership lender refused to extend Sgouros his desired auto loan based on the lower score. Plaintiff alleges that the mismatch between scores was due to TransUnion’s practice of using an inferior credit score calculation, “VantageScore, ” to produce the TransUnion Consumer Credit Scores sold to consumers such as Sgouros. VantageScore is different from the “FICO” calculation used by the vast majority of American lenders. Plaintiff alleges that Defendants take advantage of widespread consumer ignorance of the divergent scoring systems, selling consumers credit score products that do not meet their needs. Plaintiff claims that had he known that the score he purchased from Defendants would not correspond to that obtained by the car dealer, he would not have purchased the TransUnion Consumer Credit Score.

         Sgouros asserts four distinct causes of action, alleging that Defendants injured him in violation of the Fair Credit Reporting Act (FCRA) and state consumer protection laws of both Illinois and Missouri. On July 7, 2014, Defendants moved to dismiss Plaintiff’s Class Action Complaint for failure to state a claim. Plaintiff responded by filing an Amended Class Action Complaint. Defendants again move for dismissal, claiming that the Amended Class Action Complaint still fails to state a claim.

         II. LEGAL STANDARD FOR MOTION TO DISMISS

         A motion to dismiss under Fed. R. Civ. P. 12(b)(6) does not test the merits of a claim, but rather the sufficiency of the complaint. Gibson v. City of Chicago, 910 F.2d 1510, 1520 (7th Cir. 1990). In deciding a 12(b)(6) motion, the court accepts all well-pleaded facts as true and draws all reasonable inferences in favor of the plaintiff. Id. at 1521. To survive a 12(b)(6) motion, “a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In addition to the complaint, a court may also consider documents attached to or referenced in the complaint. Levenstein v. Salafsky, 164 F.3d 345, 347 (7th Cir.1998) (quoting Wright v. Associated Ins. Cos., Inc., 29 F.3d 1244, 1249 (7th Cir.1994)). “A complaint should not be dismissed for failure to state [a] claim unless it appears beyond doubt that the plaintiff is unable to prove any set of facts which would entitle the plaintiff to relief.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 546 (2007).

         III. DISCUSSION

         A. Count I

         Count I alleges either a willful or negligent violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681g(f)(7)(A). That section of the statute provides that a credit reporting agency that provides credit scores to consumers must:

supply the consumer with a credit score that is derived from a credit scoring model that is widely distributed to users by that consumer reporting agency in connection with residential real property loans or with a credit score that assists the consumer in understanding the credit scoring assessment of the credit behavior of the consumer and predictions about the future credit behavior of the consumer[.]

15 U.S.C. § 1681g(f)(7)(A). Sgouros alleges that Defendants violated the statute by selling him a TransUnion Credit Score that was not “derived from a credit scoring model that is widely distributed to [lenders] by [TransUnion] in connection with residential real property loans” and that did not “assist[] [Sgouros] in understanding the credit scoring assessment of [his] credit behavior…and predictions about [his] future credit behavior.” Plaintiff’s Amended Complaint ¶ 9.

         Plaintiff’s claims against all three Defendant entities are based on his assertion that each is a “consumer reporting agency” under the FCRA. For the purposes of the FCRA, a consumer reporting agency is “any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports.” ...


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