Kim Brown v. Wal-Mart Stores, Inc.

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 12a1257n.06
No. 11-6049
FILED
Dec 06, 2012
UNITED STATES COURT OF APPEALS
DEBORAH S. HUNT, Clerk
FOR THE SIXTH CIRCUIT
KIM BROWN, )
)
Plaintiff-Appellant, )
)
v. )
)
WAL-MART STORES, INC.; EXXON MOBIL )
CORPORATION; EQUIFAX INC.; CITIBANK, )
N.A., dba Citi, dba Citicorp; GE MONEY BANK; )
EXPERIAN INFORMATION SOLUTIONS, INC., ) ON APPEAL FROM THE UNITED
aka Experian plc; LVNV FUNDING, LLC, aka IVNV ) STATES DISTRICT COURT FOR
Funding, LLC; CITIGROUP, INC.; GENERAL ) THE WESTERN DISTRICT OF
ELECTRIC COMPANY, ) TENNESSEE
)
Defendants-Appellees, )
)
and )
)
TRANS UNION, LLC; MIDLAND FUNDING, LLC; )
MIDLAND CREDIT MANAGEMENT, INC.; )
ENCORE CAPITAL GROUP, INC.; AIS )
SERVICES, LLC, )
)
Defendants. )
Before: MERRITT, MARTIN, and GILMAN, Circuit Judges.
PER CURIAM. Kim Brown, a pro se Tennessee resident, appeals a district court judgment
dismissing his complaint filed pursuant to the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681,
et seq., and Tennessee state law.
According to Brown, the events preceding the filing of his complaint began when he received
a letter from Midland Credit Management, Inc. (MCM) in October of 2008, seeking to collect
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payment on a “GE/Wal-Mart account” recently purchased by Midland Funding LLC. Brown
informed MCM that he did not have a Wal-Mart credit card. MCM in turn referred him to Wal-Mart
Stores, Inc. (Wal-Mart), which indicated that an account had been opened in 2005 through its
licensee, GE Money Bank (GEMB). The applicant listed an address where Brown had never lived
and a social security number that partially matched Brown’s number. Brown then checked his credit
report and discovered a delinquent Exxon credit card account which had been issued by Citibank.
Upon contacting the relevant collection agency, LVNV Funding, LLC (LVNV), Brown learned that
the applicant had used the same address and social security number provided for the Wal-Mart
account. Brown was unable to have the inaccurate information removed from his credit file. These
events allegedly caused Brown to suffer emotional distress and resulted in the denial of business loan
applications and a retail credit card application. Consequently, Brown filed the instant lawsuit in
February 2009.
In his complaint, as amended on November 23, 2009, Brown sought monetary damages from
Wal-Mart; Exxon Mobil Corporation (Exxon); GEMB; Citibank (South Dakota), N.A.; Citigroup
Inc.; General Electric Company (GE); Midland Funding LLC; MCM; Encore Capital Group, Inc.
(Encore); LVNV; AIS Services, LLC (AIS); Trans Union LLC; Experian Information Solutions, Inc.
(Experian); and Equifax Inc. Brown alleged that: 1) the defendants intentionally inflicted emotional
distress; 2) the defendants negligently subjected him to emotional distress; 3) the defendants
maliciously published a false consumer report; 4) the defendants cast him in a false light through
their publication of a false consumer report; 5) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup,
Trans Union, Experian, and Equifax violated the FCRA by using flawed methods to verify new
customer information and by failing to investigate and correct inaccuracies in his credit file; 6) Wal-
Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax engaged in
unfair and deceptive business practices in violation of the Tennessee Consumer Protection Act; 7)
Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax committed
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fraud or made false representations by allowing an imposter to obtain credit in his name; 8) Wal-
Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax failed to confirm
his identity; 9) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and
Equifax violated state law by issuing a false consumer report; 10) Wal-Mart, Exxon, GE, GEMB,
Citibank, Citigroup, Trans Union, Experian, and Equifax acted negligently by failing to confirm his
identity; 11) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and
Equifax engaged in negligent enablement of identity fraud; 12) Wal-Mart, Exxon, GE, GEMB,
Citibank, Citigroup, Trans Union, Experian, and Equifax maliciously interfered with a business
relationship; and 13) the defendants defamed him. All of the defendants except Trans Union,
Experian, and Equifax filed motions to dismiss.
The parties consented to have a magistrate judge hear the case. The magistrate judge
construed the federal claims against the moving defendants as brought pursuant to section 1681s-2(a)
and section 1681s-2(b). The magistrate judge observed that Brown had not raised any FCRA claim
against Midland Funding, MCM, LVNV, Encore, or AIS, and that there was no private cause of
action under section 1681s-2(a). With respect to claims brought under section 1681s-2(b), the
magistrate judge permitted them to proceed because no defendants had moved to dismiss those
claims. With respect to the state law claims, the magistrate judge concluded that they were
preempted by the FCRA and/or lacked merit. Thus, the magistrate judge dismissed Brown’s
allegations against Midland Funding, MCM, LVNV, Encore, and AIS.
Brown moved to compel discovery from Trans Union and Experian. Trans Union responded
with its own motion to compel discovery and for attorney fees. The magistrate judge granted Trans
Union’s motion in part, denied Brown’s motions to compel, and granted Trans Union’s and
Experian’s motions for reasonable expenses pursuant to Federal Rule of Civil Procedure 37(a)(5).
The magistrate judge awarded $5,680 to Experian and $2,394 to Trans Union.
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Brown filed a motion for a default judgment against Equifax. The magistrate judge denied
Brown’s motion, and the parties thereafter entered into a stipulation of dismissal. Brown
subsequently entered into a stipulation of dismissal with Trans Union as well.
Experian moved for a protective order to limit discovery and for attorney fees. The
magistrate judge granted the motion and awarded Experian $7,608. On the same day, the magistrate
judge denied Brown’s motion to compel discovery from GEMB and Citibank as moot due to its
withdrawal. The magistrate judge awarded reasonable expenses jointly to these defendants in the
amount of $2,990.50.
Upon consideration of Experian’s summary judgment motion, the magistrate judge construed
the complaint as raising two claims against Experian: 1) that Experian had failed to follow
reasonable procedures to assure the accuracy of consumer reports, in violation of sectoin 1681e(b);
and 2) that Experian had failed to conduct a reasonable reinvestigation to determine the accuracy of
disputed information, in violation of section 1681i(a). The magistrate judge granted summary
judgment to Experian and to all other remaining defendants. Brown then filed a timely notice of
appeal.
Experian, Wal-Mart, Exxon, GEMB, and Citibank subsequently filed bills of costs in the
district court. After a hearing, the district court clerk issued an order awarding costs in the amount
of $1,135.97 to Experian and in the joint amount of $2,508.10 to Wal-Mart, Exxon, GEMB, and
Citibank. See Fed. R. Civ. P. 54(d). Brown appealed to the magistrate judge, who upheld the award.
Brown did not file a second notice of appeal.
In his brief, Brown argues that: 1) Experian violated sections 1681e(b), 1681i(a), 1681c-1,
and 1681(b); 2) GEMB, Citibank, MCM, Midland Funding, and LVNV violated section 1681s-2(b);
3) the magistrate judge erred by holding that he had not raised FCRA claims against Midland
Funding, MCM, LVNV, and AIS in his complaint; 4) the magistrate judge erred by dismissing his
FCRA claims for damages for emotional distress caused by the furnishers of information and
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Experian; 5) his state law claims were not preempted by the FCRA because he had sufficiently
pleaded malice and willful intent to injure; 6) the magistrate judge erred by denying his motion for
default judgment against Equifax; and 7) the magistrate judge was biased against him. Brown has
also filed a motion to stay the post-judgment award of costs. After Brown filed his brief, we granted
joint stipulations to dismiss Midland Funding, MCM, Encore, and AIS from this appeal.
Upon de novo review, we conclude that the magistrate judge properly granted summary
judgment to Experian on the FCRA claims. See Harrow Prods., Inc. v. Liberty Mut. Ins. Co., 64
F.3d 1015, 1019 (6th Cir. 1995). Summary judgment is proper “if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
Brown’s section 1681e(b) claim that Experian failed to use reasonable procedures lacks merit
because Brown presented no evidence that Experian had issued a consumer report about him. See
Nelski v. Trans Union, LLC, 86 F. App’x 840, 844 (6th Cir. 2004). Under the plain language of
section 1681e(b), Brown cannot maintain a claim for allegedly improper procedures unless the
consumer reporting agency actually issued a consumer report about him.
Brown’s section 1681i(a) claim that Experian failed to conduct a reasonable investigation
of disputed credit information fails because Brown did not present evidence that he had given
Experian notice that he was disputing the information concerning the Wal-Mart and Exxon accounts.
At a deposition, an Experian representative explained that Brown had added a statement to his credit
file about the Wal-Mart account over the internet and that such a statement is “verified” by the
consumer clicking on an “okay” button. At that point, a pop-up window would let the consumer
know that Experian was only adding a statement and not contacting the creditor. To dispute
information, a consumer must click on a “dispute this item” button next to the account.
Alternatively, a consumer can notify Experian of a dispute by mail, phone, or fax. With respect to
the Exxon account, Brown likewise added a statement in March 2009 that he disputed the account
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information, but did not properly request a reinvestigation. Thus, through this deposition testimony
Experian met its burden of showing a lack of evidence that Brown provided adequate notice of any
dispute. Brown’s statement in his affidavit that he had asked Experian “several times in October of
2008” for a reinvestigation was insufficient to rebut Experian’s well-supported motion. Brown did
not indicate how he had contacted Experian or detail any request for reinvestigation.
Brown fails to identify where he stated claims pursuant to sectoin 1681c-1 and section 1681b
against Experian in his complaint, and we have no duty to scour the record to locate them. Although
pro se pleadings are to be liberally construed, we are not required to conjure up allegations not
pleaded or guess at the nature of an argument. Wells v. Brown, 891 F.2d 591, 594 (6th Cir. 1989).
Upon de novo review, we conclude that the magistrate judge properly held that Brown failed
to state any FCRA claim against LVNV, whether pursuant to section 1681s-2(b) or any other section
of the FCRA. See Fed. R. Civ. P. 12(b)(6); Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 704
(6th Cir. 2009). In determining whether a complaint states a claim, a court must construe the
complaint in a light most favorable to the plaintiff, accept all the factual allegations as true, and
determine whether the complaint contains “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).
Brown does not address the magistrate judge’s holding that Brown failed to raise an FCRA
claim against LVNV in his complaint, and review of the complaint does not reveal any such claim.
Brown waived his section 1681s-2(b) and other FCRA claims with respect to MCM and Midland
Funding because he stipulated to their dismissal with prejudice. See Laczay v. Ross Adhesives, 855
F.2d 351, 354 (6th Cir. 1988).
The magistrate judge properly granted summary judgment to GEMB and Citibank on the
section 1681s-2(b) claims. With respect to the Exxon account, Citibank and GEMB submitted
affidavits that they did not receive any notice of dispute from a consumer reporting agency. Thus,
Citibank and GEMB had no duty under section 1681s-2(b)(1) to conduct an investigation into
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disputed information and to report results to consumer reporting agencies. Brown’s allegations that
he directly informed Citibank and GEMB did not obligate them to investigate. A private cause of
action against a furnisher of information does not arise until a consumer reporting agency provides
proper notice of a dispute. Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 615–16 (6th Cir. 2012).
Directly contacting the furnisher of credit information does not actuate the furnisher’s obligation to
investigate a complaint. See Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th
Cir. 2002).
With respect to the Wal-Mart account, GEMB indicated in its affidavit that it had received
four notices of dispute between December 2009 and March 2010. In each instance, GEMB
responded that it had sold the account on December 27, 2006. Because GEMB did not receive notice
until after Brown had amended his complaint in November 2009, any damages alleged in his
complaint could not have resulted from any action taken by GEMB.
We further conclude that Brown has waived any FCRA claim against AIS because he
stipulated to its dismissal with prejudice from his appeal. See Laczay, 855 F.2d at 354. We decline
to consider his argument that a court may award damages for emotional distress regardless of
whether an FCRA violation led to the denial of credit. Brown’s FCRA claims fail on the merits for
the reasons discussed above with respect to Experian and GEMB, and the magistrate judge did not
reach the issue of emotional distress with respect to any other defendant.
Brown misconstrues the magistrate judge’s ruling concerning preemption. The magistrate
judge did not hold that all state law claims were preempted because Brown insufficiently pleaded
malice. Rather, the magistrate judge held that section 1681h(e) of the FCRA preempted the first,
fourth, and seventh claims as to the consumer reporting agencies because of insufficient pleading
of malice and willful intent.
Brown has waived his preemption argument as to Equifax and Trans Union because he
stipulated to their dismissal with prejudice and without reservation of the right to appeal claims
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against them. See id. The magistrate judge properly concluded that Brown failed to state a claim
as to Experian. We have not yet decided whether section 1681h(e)’s exception for claims alleging
malice or willful intent has been overridden by section 1681t(b)(1)(F), which was enacted later. See
Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45, 47–48 (2d Cir. 2011), cert. denied, 132
S. Ct. 2113 (2012); Purcell v. Bank of Am., 659 F.3d 622, 625 (7th Cir. 2011). Even if
section 1681h(e)’s exception remains, Brown’s claims still fail because his allegations of malice and
willful intent are too vague and conclusory to state a claim. See Ctr. for Bio-Ethical Reform, Inc.
v. Napolitano, 648 F.3d 365, 377 (6th Cir. 2011), cert. denied, 132 S. Ct. 1583 (2012).
To the extent that Brown seeks to generally appeal the denial of other state-law claims, we
decline to consider them because Brown did not brief them. Issues “adverted to . . . in a perfunctory
manner, unaccompanied by some effort at developed argumentation,” are deemed waived. Langley
v. DaimlerChrysler Corp., 502 F.3d 475, 483 (6th Cir. 2007) (quotation marks and citations
omitted).
We decline to consider whether the magistrate judge should have granted Brown’s motion
for a default judgment against Equifax. Brown waived his right to appeal the decision by later
stipulating to the dismissal of Equifax with prejudice and without reservation of the right to appeal
claims against it. See Laczay, 855 F.2d at 354.
Brown argues that the magistrate judge exhibited bias against him by cryptically commenting
at a scheduling hearing in April of 2010 that Brown had brought “this” on himself and by imposing
monetary sanctions without warning beginning in November of 2010. Brown contends that the bias
is the result of two cases he brought where the magistrate judge’s family members acted as legal
counsel. In the first, the magistrate judge’s husband represented a defendant physician between 2006
and 2008. In the second case, Stephen Vescovo, who allegedly is either a relative or ex-husband of
the magistrate judge, currently represents Christian Brothers University. Furthermore, the magistrate
judge had sent her sons to the possibly affiliated Christian Brothers High School.
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The magistrate judge did not err by failing to recuse herself under 28 U.S.C. § 455. A
magistrate judge must recuse himself or herself only “‘if a reasonable, objective person, knowing
all of the circumstances, would have questioned the judge’s impartiality.’” United States v.
Sammons, 918 F.2d 592, 599 (6th Cir. 1990) (quoting Hughes v. United States, 899 F.2d 1495, 1501
(6th Cir. 1990)). Brown’s allegations are conclusory and do not support an appearance of bias or
conflict of interest. Critical judicial remarks generally “do not support a bias or partiality challenge.”
Liteky v. United States, 510 U.S. 540, 555 (1994). No reasonable person would question the
magistrate judge’s impartiality based on her husband’s representation of a defendant in Brown’s
prior unrelated case. See Hook v. McDade, 89 F.3d 350, 355–56 (7th Cir. 1996). Brown’s beliefs
about Stephen Vescovo’s relationship to the magistrate judge are insufficient to form a basis for the
magistrate judge’s disqualification. See Gen. Aviation, Inc. v. Cessna Aircraft Co., 915 F.2d 1038,
1043 (6th Cir. 1990). Furthermore, judicial rulings, such as the awards of costs, will almost never
serve as a valid basis for recusal and are most often simply grounds for appeal. See Liteky, 510 U.S.
at 555.
Regardless, the magistrate judge did not abuse her discretion by assessing fees against Brown
without warning for discovery violations under Rule 37. See Harmon v. CSX Transp., Inc., 110 F.3d
364, 366 (6th Cir. 1997). Where a party successfully moves to compel discovery, a court generally
“must” require the non-moving party to pay reasonable expenses incurred in making the motion
unless “circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A). Likewise,
where a motion to compel is denied, the court “must” order the movant to pay reasonable expenses
absent special circumstances. Fed. R. Civ. P. 37(a)(5)(B). Although a judge should warn a party
before dismissing a suit due to discovery violations, Harmon, 110 F.3d at 366–67, nothing in the
language of the Rule requires a judge to warn a litigant before awarding fees to the other party.
Furthermore, we decline to review the magistrate judge’s post-judgment award of costs to the
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defendants because Brown did not file a second notice of appeal. See McCarter v. Ret. Plan for Dist.
Managers of Am. Family Ins. Grp., 540 F.3d 649, 652–53 (7th Cir. 2008).
We affirm the district court’s judgment and we deny all pending motions as moot.