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dismissing NYFCRA claim because the FCRA expressly preempts the NYFCRA pursuant to 15 U.S.C. § 1681t(b)
Summary of this case from Ahmad v. Experian Info. Sols.Opinion
21-CV-8021 (GHW) (RWL)
2022-03-31
Nicholas A. OWOYEMI, Plaintiff, v. CREDIT CORP SOLUTIONS INC. dba Tasman Credit, Defendant.
Nicholas A. Owoyemi, S.I., NY, Pro Se. Hilary Felice Korman, Scott Evan Wortman, Chenxi Jiao, Blank Rome, LLP, New York, NY, for Defendant.
Nicholas A. Owoyemi, S.I., NY, Pro Se.
Hilary Felice Korman, Scott Evan Wortman, Chenxi Jiao, Blank Rome, LLP, New York, NY, for Defendant.
ORDER ADOPTING REPORT & RECOMMENDATION
GREGORY H. WOODS, United States District Judge
Nicholas A. Owoyemi, proceeding pro se, brought this action against Credit Corp Solutions Inc. On March 7, 2022, Judge Robert W. Lehrburger filed a report and recommendation (the "Report") recommending that this Court dismiss Plaintiff's claims. The Plaintiff did not file any objections to Judge Lehrburger's report. Because I find no clear error, I adopt Judge Lehrburger's report in its entirety.
Plaintiff initially filed his complaint in New York state court on August 26, 2021. Dkt. No. 1. Defendant removed the case to federal court on September 27, 2021. Id. Plaintiff alleges that "Defendant wrongfully filed a derogatory credit report with the credit reporting agencies, namely, Experian, Equifax, and Transunion against Plaintiff." Dkt. No. 1, Ex. 1 ("Compl.") ¶ 3. This derogatory report has "damaged Plaintiff's credit worthiness" and led his employer to threaten to "terminate Plaintiff if the credit report remains unresolved." Compl. ¶¶ 5, 9. Because Defendant "has declined to remove such derogatory reports with the credit bureaus" Plaintiff filed this action asking that the court order "Defendant to remove the derogatory credit report from all the three national credit bureaus." Compl. ¶ 4 and at pg. 2.
On November 22, 2021, the defendant moved to dismiss the complaint. Dkt. No. 15. Judge Lehrburger issued his Report on March 7, 2022, recommending the dismissal of Plaintiff's action and denying Plaintiff leave to amend his claims, with the exception of his claim brought under the Fair Credit Reporting Act ("FCRA") § 1681s-2(b). Dkt. No. 26. Plaintiff did not file objections to Judge Lehrburger's Report.
A district court reviewing a magistrate judge's report and recommendation "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate judge." 28 U.S.C. § 636(b)(1). Parties may raise specific, written objections to the report and recommendation within fourteen days of receiving a copy of the report. Id.; see also Fed. R. Civ. P. 72(b)(2). When a party timely objects to a magistrate's report and recommendation, a district court reviews de novo "those portions of the report or specified proposed findings or recommendations to which objection is made." 28 U.S.C. § 636(b)(1)(C). The Court reviews for clear error those parts of the report and recommendation to which no party has timely objected. 28 U.S.C. § 636(b)(1)(A) ; Lewis v. Zon, 573 F. Supp. 2d 804, 811 (S.D.N.Y. 2008).
Because Plaintiff did not file objections to Judge Lehrburger's Report, the Court reviews the Report only for clear error. The Court has reviewed Judge Lehrburger's recommendations for clear error and finds none. Therefore, the Court adopts Judge Lehrburger's report in its entirety. Accordingly, Plaintiff's claims brought pursuant to the New York Fair Credit Reporting Act, the Fair Debt Collection Practices Act, and Section 1681s-2(a)(1) of the FCRA are dismissed with prejudice, as is Plaintiff's request for injunctive relief. In addition, the Court adopts Judge Lehrburger's recommendation that this case not be remanded to state court. Plaintiff's claim pursuant to Section 1681s-2(b) of the FCRA is dismissed without prejudice. Any amended complaint as to Plaintiff's FCRA § 1681s-2(b) claim must be filed no later than fourteen days from the date of this order.
SO ORDERED.
REPORT AND RECOMMENDATION TO HON. GREGORY H. WOODS: MOTION TO DISMISS
ROBERT W. LEHRBURGER, United States Magistrate Judge.
Plaintiff Nicholas A. Owoyemi ("Plaintiff" or "Owoyemi"), proceeding pro se, filed this action against Credit Corp Solutions Inc. d/b/a Tasman Credit ("Defendant" or "Credit Corp") alleging that Credit Corp wrongfully filed a derogatory credit report with credit reporting agencies. Although Owoyemi does not identify the statute or law under which he sues, his allegations implicate federal and state fair credit reporting acts. Credit Corp has moved to dismiss pursuant to Federal Rule Of Civil Procedure 12(b)(6), arguing that Owoyemi's state law claim is pre-empted and that he fails to state a claim under federal law. For the reasons that follow, I recommend that Defendant's motion be GRANTED, that Owoyemi's complaint be dismissed in its entirety, and that, with one exception, Owoyemi's claims be dismissed with prejudice.
PROCEDURAL BACKGROUND
Owoyemi filed his complaint in New York State court on August 26, 2021. Credit Corp removed the case to federal court on September 27, 2021. On November 22, 2021, Credit Corp filed its motion to dismiss. Owoyemi filed his opposition on November 24, 2021. Credit Corp replied on December 22, 2021, at which point the motion was fully briefed. The matter has been referred to me for a report and recommendation.
FACTUAL BACKGROUND
The facts are drawn from Owoyemi's Complaint. ("Compl." (Dkt. 1., Ex. 1).) As required on a motion to dismiss, the Court accepts as true all well-plead allegations of the Complaint and draws all reasonable inferences in favor of Owoyemi as the non-moving party.
The alleged facts are spare. On or about May 1, 2021, Credit Corp filed a derogatory credit report with the credit reporting agencies, Experian, Equifax, and Transunion. (Compl. ¶ 3, Ex. A.) Credit Corp declined to remove the report from the agencies. (Compl. ¶ 4.) As a result, Owoyemi's credit worthiness has been damaged, he has been declined credit, he has had to pay higher interest rates, and his employer, a financial broker-dealer, has threatened to terminate his employment if the credit report remains unresolved. (Compl. ¶¶ 5-9.) Owoyemi seeks injunctive relief requiring Credit Corp to remove the derogatory credit report from the three national credit bureaus. He also asks for costs and any other relief the Court deems just and proper. (Compl. "Wherefore" clause.)
The Complaint does not identify any particular statute or law allegedly violated. Credit Corp asserts that, in substance, Owoyemi alleges violations of two statutes and possibly a third. Construing Owoyemi's Complaint liberally, as the Court must do for a pro se litigant, the Court agrees. Those statutes are the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. ("FRCA"), the New York Fair Credit Reporting Act, NY Gen. Bus. Law Ch. 20, Art. 25 ("NYFCRA"), and the Fair Debt Collection Practices Act, 15 U.S.C. § 1692, et seq. ("FDCPA").
"Pro se complaints ‘must be construed liberally and interpreted to raise the strongest arguments that they suggest.’ " Sykes v. Bank Of America , 723 F.3d 399, 403 (2d Cir. 2013) (quoting Triestman v. Federal Bureau Of Prisons , 470 F.3d 471, 474 (2d Cir. 2006) ).
LEGAL STANDARDS
To survive a Rule 12(b)(6) motion to dismiss for failure to state a claim upon which relief can be granted, a complaint must plead "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic Corp. v. Twombly , 550 U.S. 544, 570, 127 S. Ct. 1955, 1975, 167 L.Ed.2d 929 (2007). A claim is facially plausible when the factual content pleaded allows a court "to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S. Ct. 1937, 1949, 173 L.Ed.2d 868 (2009).
"Where a complaint pleads facts that are ‘merely consistent with’ a defendant's liability, it ‘stops short of the line between possibility and plausibility of entitlement to relief.’ " Id. , 129 S. Ct. at 1949 (quoting Twombly , 550 U.S. at 557, 127 S. Ct. at 1966 ). In considering a motion to dismiss, a district court "accept[s] all factual claims in the complaint as true, and draw[s] all reasonable inferences in the plaintiff's favor." Lotes Co. v. Hon Hai Precision Industry Co. , 753 F.3d 395, 403 (2d Cir. 2014) (internal quotation marks omitted). However, this tenet is "inapplicable to legal conclusions. Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal , 556 U.S. at 678, 129 S. Ct. at 1949. "Rather, the complaint's factual allegations must be enough to raise a right to relief above the speculative level ... i.e. , enough to make the claim plausible." Arista Records, LLC v. Doe 3 , 604 F.3d 110, 120 (2d Cir. 2010) (internal quotation marks and brackets omitted). A complaint is properly dismissed where, as a matter of law, "the allegations in [the] complaint, however true, could not raise a claim of entitlement to relief." Twombly , 550 U.S. at 558, 127 S. Ct at 1966.
For the purposes of considering a motion to dismiss pursuant to Rule 12(b)(6), a court generally is confined to the facts alleged in the complaint. Cortec Industries v. Sum Holding L.P. , 949 F.2d 42, 47 (2d Cir. 1991). A court may, however, consider additional materials, including documents attached to the complaint, documents incorporated into the complaint by reference, public records, and documents that the plaintiff either possessed or knew about, and relied upon, in bringing the suit. See Kleinman v. Elan Corp. , 706 F.3d 145, 152 (2d Cir. 2013) (quoting ATSI Communications, Inc. v. Shaar Fund, Ltd. , 493 F.3d 87, 98 (2d Cir. 2007) ). In that regard, if "a document relied on in the complaint contradicts allegations in the complaint, the document, not the allegations, control, and the court need not accept the allegations in the complaint as true." Poindexter v. EMI Record Group Inc. , No. 11-CV-559, 2012 WL 1027639, at *2 (S.D.N.Y. March 27, 2012) (citing Barnum v. Millbrook Care Ltd. Partnership , 850 F. Supp. 1227, 1232-33 (S.D.N.Y. 1994) ).
DISCUSSION
Owoyemi's Complaint does not state a plausible claim under the FRCA, the NYFCRA, or the FDCPA. The Court discusses each statute in turn.
A. No FRCA Claim
The Complaint charges Credit Corp with having furnished false derogatory credit information to the national credit reporting agencies. The FRCA prohibits such conduct. 15 U.S.C. § 1681s-2(a)(1) (prohibiting furnishing false credit information that the furnisher knows or has reason to know is inaccurate, or for which the furnisher has been notified by the consumer that the information is inaccurate). While Section 1681s-2(a) may be enforced by federal and state authorities, however, it does not provide a private right of action to consumers such as Owoyemi. 15 U.S.C. § 1681s-2(d) (providing that subsection (a) "shall be enforced exclusively" by the Federal and State agencies and officials); see Sprague v. Salisbury Bank & Trust Co. , 969 F.3d 95, 98 (2d Cir. 2020) (affirming dismissal of complaint with prejudice where plaintiff sought to assert private right of action under § 1681s-2(d) ); Longman v. Wachovia Bank, N.A. , 702 F.3d 148, 151 (2d Cir. 2012) ("the statute plainly restricts enforcement of that provision to federal and state authorities ... Thus, the district court correctly concluded, as many other courts have held, that there is no private cause of action for violations of § 1681s-2(a)").
The statute does provide a private right of action under another section, which assigns certain duties to furnishers, such as the duty to investigate a consumer dispute with a credit reporting agency. 15 U.S.C. § 1681s-2(b)(1). No such duty arises, however, unless and until the furnisher receives notice of a dispute between a consumer and credit reporting agency as to the completeness or accuracy of information provided. Id. ; see also 15 U.S.C. § 1681i(a)(2) (providing that once a "consumer reporting agency receives notice of a dispute from any consumer ... the agency shall provide notification of the dispute to any person who provided any item of information in dispute"); Sprague , 969 F.3d at 99 ("The statute is clear that the notice triggering these duties must come from a [consumer reporting agency], not the consumer").
The Complaint does not allege that Owoyemi filed a dispute with a credit reporting agency, let alone that Credit Corp received notice of any such dispute from a credit reporting agency. The Complaint therefore fails to state a claim under 15 U.S.C. § 1681s-2(b). See Sprague , 969 F.3d at 99 ("Appellants have alleged no facts indicating that [the furnisher] received notice from a [credit reporting agency] regarding the inaccuracies in the Report. The Amended Complaint alleges only that Appellants notified [the furnisher] about the erroneous information. This alone does not state a valid claim under Section 1681s-2(b)"); Burns v. Bank of America , No. 03-CV-1685, 2003 WL 22990065, at *2 (S.D.N.Y. Dec. 18, 2003), vacated on other grounds , 115 F. App'x 105 (2d Cir. 2004) (granting motion to dismiss complaint alleging claims under FCRA because "Plaintiffs d[id] not allege that Defendants ever received notice from a consumer reporting agency that imposed a duty to investigate").
To the contrary, Owoyemi's opposition suggests that he never contacted the credit reporting agencies; instead, "[t]he first point of action by Plaintiff was to contact Defendants and enjoin them to remove him from the national credit bureaus voluntarily." (Plaintiff's Opposition To Motion To Dismiss ("Opp.") (Dkt. 20) at 2.)
Additionally, Owoyemi requests injunctive relief. The FCRA, however, does not provide for injunctive relief to consumers. See 15 U.S.C. §§ 1681n, 1681o ; Arnold v. Navient Solutions, LLC , No. 17-CV-1277, 2018 WL 6671542, at *3 n.6 (N.D.N.Y. Dec. 19, 2018) (dismissing FCRA claim and noting that "Plaintiff seeks only injunctive relief in this action. Although the FCRA explicitly provides for money damages in private actions, it does not provide for injunctive relief"); White v. First America Registry, Inc. , 378 F. Supp.2d 419, 424 (S.D.N.Y. 2005) ("the absence of any express provision for injunctive relief in Sections 1681n and 1681o, coupled with the express authorization of such relief on behalf of federal and state agencies, leads to the unmistakable conclusion that Congress intended to limit injunctive relief to those instances in which it expressly authorized it").
Accordingly, the Complaint fails to state an actionable claim under the FRCA.
B. No NYFCRA Claim
Like the FCRA, the NYFCRA delineates certain obligations of credit report furnishers. N.Y. Gen. Bus. Law § 380-o. The Complaint fails to state a claim under that statute, however, because the FCRA expressly preempts the NYFCRA pursuant to 15 U.S.C. § 1681t(b). Galper v. JP Morgan Chase Bank, N.A. , 802 F.3d 437, 449 (2d Cir. 2015) (holding that § 1681t(b)(1)(F) preempts "those claims that concern a defendant's responsibilities as a furnisher of information under the FCRA"); Ritchie v. North Leasing Systems, Inc. , No. 12-CV-4992, 2016 WL 1241531, at *18 (S.D.N.Y. March 28, 2016), aff'd sub nom., Ritchie v. Taylor , 701 F. App'x 45 (2d Cir. 2017) ("Since section 380-o of the NYFCRA squarely addresses a furnisher's responsibilities, it is therefore preempted by the federal statute").
Because the NYFCRA is preempted by the FCRA with respect to furnisher obligations, and because the Complaint fails to state a claim under the FCRA, the Complaint also fails to state a claim under the NYFCRA.
C. No FDCPA Claim
The FDCPA is directed to debt collection practices and therefore does not appear to encompass the subject of Owoyemi's allegations. Credit Corp aptly points out that the closest potentially applicable provision would be 15 U.S.C. § 1692e(8), which addresses communicating "credit information which is known or which should be known to be false." The Complaint, however, fails to plausibly allege a claim under the statute.
To plausibly assert a claim under the FDCPA, a plaintiff "must allege that: 1) she is a ‘consumer’ who allegedly owes the debt, or a person who has been the object of efforts to collect a consumer debt; 2) that the defendant collecting the debt is a ‘debt collector;’ and 3) that the defendant has engaged in an act or omission in violation of FDCPA requirements." Keswani v. Athwal , No. 20-CV-10578, 2021 WL 4198235, at *3 (S.D.N.Y. Sept. 14, 2021). The Complaint does not allege the required elements. In particular, it does not allege that Owoyemi owes a debt or has been the object of efforts to collect a debt, and it does not allege that Credit Corp is a debt collector. Accordingly, to the extent the Complaint can be read to assert an FDCPA claim, it fails to plausibly do so.
And, as with Owoyemi's FCRA claim, injunctive relief is not an available remedy. Allen v. United Student Aid Funds, Inc. , No. 17-CV-8192, 2018 WL 4680023, at *6 (S.D.N.Y. Sept. 28, 2018), reconsideration denied , 2019 WL 4686529 (S.D.N.Y. Sept. 26, 2019) ; Sparkman v. Zwicker And Associates, P.C. , 374 F. Supp.2d 293, 298 (E.D.N.Y. 2005) (collecting cases and explaining that the FDCPA "contains no express provision for injunctive or declaratory relief in private actions").
D. No Remand To State Court
In opposition to Credit Corp's motion, Owoyemi does not counter any of Credit Corp's legal arguments. Instead, he essentially repleads his case (Opp. at 1-2) and offers conclusory statements (e.g. , Opp. at 3 ("Defendant, who knows it has the burden of proof to prevail, also knows it has no evidence to back its wrongful claim ... [and] continues to make a legal mumbo jumbo of this case ...").)
Owoyemi also contends that the case should be remanded to state court. He argues that he "did not choose to litigate this case in federal court" and that "the state statutes relating to this case must apply instead of the federal laws." (Opp. at 3; see also Opp. at 5 (stating that Credit Corp invoked "national statutes" and urging that the Court should send the case back to state court rather than "reward" such tactics).) In many instances, Owoyemi's remand argument would be viable. Here, however, it is not because the NYFCRA is preempted by the FCRA. Under the "complete pre-emption" doctrine, "[o]nce an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law." Caterpillar, Inc. v. Williams , 482 U.S. 386, 393, 107 S. Ct. 2425, 2430, 96 L.Ed.2d 318 (1987). Arnold v. Navient Solutions is squarely on point. There, the plaintiff expressly invoked only the NYFCRA in his complaint. The defendant removed the case, and the plaintiff moved to remand. The court denied the motion to remand, explaining in words no less apt here: "Plaintiff's allegations concern Defendant's responsibilities as a furnisher, including both reporting accurate information and complying with obligations to investigate disputed debts; therefore, the FCRA preempts these claims. Accordingly, the Court denies Plaintiff's motion to remand." 2018 WL 6671542 at *3 (internal citation omitted).
"If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
Accordingly, this case should not be remanded to state court.
E. Dismissal With Or Without Prejudice
Credit Corp asks the Court to dismiss Owoyemi's claims with prejudice. Generally, before a court dismisses a pro se complaint with prejudice, the court should afford the plaintiff the opportunity to amend "at least once when a liberal reading of the complaint gives any indication that a valid claim might be stated." Nielsen v. Rabin , 746 F.3d 58, 62 (2d Cir. 2014) (internal quotation marks omitted). Dismissal with prejudice is appropriate; however, where "[t]he problem with [plaintiff's] causes of action is substantive" such that amendment would be futile. Cuoco v. Moritsugu , 222 F.3d 99, 112 (2d Cir. 2000).
Here, certain of Owoyemi's claims cannot be cured by amendment. Those include a claim under the FRCA § 1681s-2(a)(1) (as there is no private right of action); the NYFCRA, N.Y. Gen. Bus. Law § 380-o (due to pre-emption); the FDCPA (the claim involves credit reporting not efforts to collect a debt); and injunctive relief (which is not available under either the FCRA or the NYFCRA). Accordingly, those claims should be dismissed with prejudice.
A claim under FRCA § 1681s-2(b), however, potentially could be cured by amendment – if facts to support it can be pled in good faith. To do that, Owoyemi would have to seek damages, not injunctive relief, and plead that Credit Corp received notice from one of the credit agencies of a dispute with Owoyemi. See Sprague , 969 F.3d at 98, 100 (requiring "proper chain of notice"). It is doubtful that Owoyemi will be able to make such an allegation; as noted earlier, he states in opposition that he went directly to Credit Corp rather than first raising his dispute with the reporting agencies. (Opp. at 2.) But the Court cannot say there is no indication whatsoever of a potentially valid claim. Accordingly, Owoyemi's claim should be dismissed without prejudice to the extent it falls under FCRA § 1681s-2(b).
CONCLUSION
For the foregoing reasons, I recommend that the Court GRANT Defendant's motion to dismiss and that Plaintiff's claims be dismissed with prejudice, except insofar as he seeks to assert a damages claim pursuant to FRCA § 1681s-2(b), which should be dismissed without prejudice.
DEADLINE FOR OBJECTIONS AND APPELLATE REVIEW
Pursuant to 28 U.S.C. § 636(b)(1) and Rules 72, 6(a), and 6(d) of the Federal Rules Of Civil Procedure, the parties have fourteen (14) days to file written objections to this Report and Recommendation. Such objections shall be filed with the Clerk of Court, with extra copies delivered to the Chambers of the Gregory H. Woods, United States Courthouse, 500 Pearl Street, New York, New York 10007, and to the Chambers of the undersigned, 500 Pearl Street, New York, New York 1007. Failure to file timely objections will result in waiver of objections and preclude appellate review.