Sokol v. TransUnion, LLC ( 2022 )

United States District Court for the Southern District of Florida Alexander Sokol, Plaintiff, ) ) v. ) Civil Action No. 21-23535-Civ-Scola ) TransUnion, LLC, and others, ) Defendants. ) Order Granting in Part and Denying in Part Motion to Dismiss Plaintiff Alexander Sokol claims Defendants Trans Union, LLC, Equifax Information Services, LLC, and Self Financial, Inc., doing business as Lead Bank, violated the Fair Credit Reporting Act by incorrectly labeling his account at Lead Bank as 60 days past due.1 (Compl., ECF No. 1.) Equifax and Lead Bank have answered the complaint, but TransUnion seeks dismissal, under Federal Rule of Civil Procedure 12(b)(6), arguing, primarily, that Sokol’s allegations fail to show that TransUnion’s reporting was in any way inaccurate. (Def.’s Mot., ECF No. 23.) According to TransUnion, the report is accurate because the past-due status indicates only the account’s historical delinquency, not that the account was delinquent at the time the report was issued. (Id. at 1.) TransUnion also contends Sokol has failed to plead the required elements of willfulness. (Id. at 19–21.) In response, Sokol insists a reasonable interpretation of the report could lead one to believe the account was delinquent as of the printing of the report, even several months after the account’s closing. (Pl.’s Resp., ECF No. 27.) Sokol also maintains he has alleged enough to survive dismissal regarding his willfulness claims. (Id. at 16–19.) TransUnion has timely replied, and the motion is ripe for review. After careful review of the briefing, the record, and the relevant legal authorities, the Court disagrees with TransUnion and denies its motion to dismiss, in part, with respect to TransUnion’s inaccuracy arguments but grants the motion, in part, with respect to Sokol’s willfulness claims. (ECF No. 23). 1. Legal Standard When considering a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), the Court must accept all the complaint’s allegations as 1 In his complaint, Sokol says the account was identified as being 90 days past due. But it appears this was a typographical error, as TransUnion points out in its motion and which Sokol does not dispute in response (Pl.’s Resp. at 9, 14, 15). Because the parties appear to agree on this point, the Court deems the complaint amended, by interlineation, to reflect a pay status of 60, rather than 90, days past due. true, construing them in the light most favorable to the plaintiff. Pielage v. McConnell, 516 F.3d 1282, 1284 (11th Cir. 2008). A pleading need only contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2). “[T]he pleading standard Rule 8 announces does not require detailed factual allegations, but it demands more than an unadorned, the-defendant-unlawfully-harmed-me accusation.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (cleaned up). A plaintiff must articulate “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (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, 556 U.S. at 678. “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. Thus, a pleading that offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action” will not survive dismissal. See Twombly, 550 U.S. at 555. “Rule 8 marks a notable and generous departure from the hyper-technical, code-pleading regime of a prior era, but it does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions.” Iqbal, 556 U.S. at 679. Yet, where the allegations “possess enough heft” to suggest a plausible entitlement to relief, the case may proceed. See Twombly, 550 U.S. at 557. “[T]he standard simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of the required element.” Rivell v. Private Health Care Sys., Inc., 520 F.3d 1308, 1309 (11th Cir. 2008) (cleaned up). “And, of course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of those facts is improbable, and that a recovery is very remote and unlikely.” Twombly, 550 U.S. at 556 (cleaned up). 2. Background TransUnion is a consumer reporting agency as defined by the FCRA. (Compl. ¶ 6.) Based on information supplied by Lead Bank, TransUnion displayed data about Sokol’s account in his credit report. (Id. ¶14–15, 21.) TransUnion reported the information as follows:2 2 TransUnion introduced a full copy of Sokol’s credit report, attached to its motion to dismiss, without any objection from Sokol. Because the authenticity of the document is not challenged and it is also central to Sokol’s claims, the Court takes the report into consideration without converting this motion to dismiss into a motion for summary judgment. Day v. Taylor, 400 F.3d 1272, 1276 (11th Cir. 2005) (“[T]he court may consider a document attached to a motion to SELF FINANCIAL INC / LEAD BANK □□ (515 CONGRESS AVE, SUITE 2200, AUSTIN, TX 78701, (266) 845-9545) Date Opened: 09/17/2019 Date Updated: 01/31/2020 Pay Statue: »Accoun! 60 Days Past Due Da Responsibility: Individual Account Payment Received: $1,535 Tems: Monthly for 12 months Account Type: Installment Account Last Payment Made: 01/31/2020 Date Closed: 01/71/2020 Loan Type: SECURED Waximum Delinquency of 60 days in 01/20 High Batance: High balance of $1,700 from 09/2019 to 01/2020 Remarks: CLOSED Estimated month and year that this item will be removed: 11/2076 | | es AmountPaid | $1,538 0 $7q_ SSS | _—*i sd-———ssd—S— Rating | Ceo)| □□□ Com)| Cox) Lox) (Def.’s Mot., Ex. A-1, Cr. Rep., ECF No. 23-2, 12.) Summarizing, the report indicates Sokol opened the Lead Bank account—a secured installment loan—in September 2019, with a balance of $1700. Sokol made his first scheduled payment of $150 in October 2019. He missed the November payment entirely but then submitted $70 in December, at which point the account reflected a past due amount of $80, with a total remaining balance of $1509. By the following month, January 2020, his account was sixty-days past due. On January 31, 2020, however, the entire remaining balance of, at that point, $1,538 was paid off and the account was closed. Also, in the report, issued almost a year after Sokol paid off his balance, there is a field labeled “Pay Status.” Next to that field, the report reads, “>Account 60 Days Past Due Date Maximum Delinquency of 60 days in 01/2020 Account 60 Days Past Due Date Maximum Delinquency of 60 days in 01/2020 < indicates that this remark is considered adverse.” (Id. at 4.) Taking into account these additional factors, the Court finds it would not be objectively unreasonable to interpret the pay-status field here to reflect negatively on Sokol’s credit worthiness. First, Sokol’s historical delinquency is recorded in the remark describing his maximum delinquency of 60 days in January 2020. It would, therefore, not be unreasonable for a reviewer to infer that the delinquency noted in the pay- status field indicates something independent from and in some way supplementary to Sokol’s historical delinquency. And if it’s not a historical assessment, then, certainly, a reasonable inference would be that it is in some way a current assessment of Sokol’s account status or the status in which he left the account upon closing it. TransUnion insists that such an interpretation would be unreasonable in light of the notations in the report showing that the account is closed with a zero balance. But that is part of the problem: even TransUnion acknowledges that the pay status field is confusing, if not inaccurate, unless one reads into it an understanding that it refers to Sokol’s account’s historical status. But to interpret the pay-status field this way, the Court would have to look beyond the report and the complaint in this case. Furthermore, interpreting the pay-status field as commenting on the present condition of the account is not necessarily unreasonable. For example, many of the cases TransUnion relies on depict consumers who settled their accounts for less than the full amount owed. While it might make sense for that consumer’s pay status to be frozen as perpetually past due, it seems unfair for the consumer who paid in full, like Sokol, to suffer the same fate. But that is exactly what the TransUnion’s purported use of the pay-status field implies: two unequally situated consumers’ reports would be, ultimately, indistinguishable.3 Ultimately, the Court finds the report “so misleading that it is objectively likely to cause the intended user to take adverse action against its subject”—especially when reading the facts in the light most favorable to Sokol. Erickson, 981 F.3d at 1252. Because the Court finds, at a minimum, that the way TransUnion reported information about Sokol, in the pay-status field, is objectively likely to mislead its intended user, it declines to address TransUnion’s arguments about (1) Sokol’s algorithm theory; (2) the propriety of reporting accurate but derogatory information about a consumer; or (3) Sokol’s subjective beliefs. Further, the Court is not persuaded by TransUnion’s reliance on what it calls “payment terms” cases—the Court does not find those cases to be sufficiently analogous to the facts here to be compelling. 3 Similarly, the Court contemplates what would have happened had Sokol paid off his balance in January but, for whatever reason, kept the account open until February and then closed it. Presumably, once Sokol paid up his balance, in January, his pay status would reflect he was current. So, by the time he then closed the account, in February, his report would no longer indicate that he was 60 days past due. And, so, despite no material difference in the account’s activity, Sokol would no longer have a derogatory remark in the pay-status field. C. Sokol has failed to state a claim for willfulness. “Under 15 U.S.C. § 1681n(a), any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer for actual, statutory, or punitive damages.” Collins v. Experian Info. Sols., Inc., 775 F.3d 1330, 1336 (11th Cir. 2015), on reh’g sub nom. Collins v. Equable Ascent Fin., LLC, 781 F.3d 1270 (11th Cir. 2015) (cleaned up). “A violation is ‘willful’ for the purposes of the FCRA if the defendant violates the terms of the Act with knowledge or reckless disregard for the law.” Id. (cleaned up). “A company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute’s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Id. (cleaned up). Sokol seeks damages based on willful conduct in count one, labeled, “Willful Violation of the FCRA as to TransUnion,” as well as in paragraph 44 of count two, labeled, “Negligent Violation of the FCRA as to TransUnion.” (Compl. ¶¶ 34, 36–37, 44.) But Sokol alleges only in the most conclusory of terms that TransUnion’s FCRA violations were willful and reckless. (Compl. ¶ 34 (“Transunion has willfully and recklessly failed to comply with the Act.”).). Without a single fact, however, from which the Court could infer actual knowledge or recklessness, Sokol’s allegations are wholly insufficient to show that TransUnion’s error went beyond mere carelessness or negligence. Accordingly, the Court agrees with TransUnion that Sokol’s claims hinging on willfulness should be dismissed. 4. Conclusion As set forth above, the Court grants in part and denies in part TransUnion’s motion to dismiss. (ECF No. 23). To that end, the Court, dismisses count one (and any aspect of count two that relies on willfulness) against TransUnion for a failure to state a claim. Conversely, the Court is not persuaded by TransUnion’s argument that, based solely on the complaint and the report, the only reasonable reading of Sokol’s Lead Bank tradeline is that the pay-status field accurately reflects only upon Sokol’s historical, and not current, account status. Accordingly, Sokol’s claim against TransUnion for a negligent violation of the FCRA, as set forth in count two, survives. TransUnion must file its answer to what remains of Sokol’s claims against it on or before March 23, 2022. Done and ordered, in Miami, Florida, 7): 16, (f 7 Robert N. Scola, Jr. United States District Judge