Unensaikhan Chuluunbat v. Experian Information Solutions

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 20-2373
UNENSAIKHAN CHULUUNBAT,
Plaintiff-Appellant,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al.,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:20-cv-00164 — Charles P. Kocoras, Judge.
____________________
No. 20-2392
JUAN RODAS,
Plaintiff-Appellant,
v.
TRANSUNION DATA SOLUTIONS LLC,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:19-cv-07706 — Sharon Johnson Coleman, Judge.
_______________________
2 Nos. 20-2373 et al.
No. 20-2775
ANIBAL MOLINA,
Plaintiff-Appellant,
v.
TRANS UNION, LLC,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:19-cv-07538 — John Z. Lee, Judge.
___________________
No. 20-2776
EVERARDO HOYOS,
Plaintiff-Appellant,
v.
EQUIFAX INFORMATION SERVICES, LLC
and TRANSUNION LLC,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:20-cv-00408 — John Z. Lee, Judge.
____________________
Nos. 20-2373 et al. 3
No. 20-3000
OLAMIDE SOYINKA,
Plaintiff-Appellant,
v.
EQUIFAX INFORMATION SERVICES, LLC,
Defendant-Appellee.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:20-cv-01773 — Gary Feinerman, Judge.
____________________
No. 20-3351
ADEL AMORAH,
Plaintiff-Appellant,
v.
EQUIFAX INFORMATION SERVICES, LLC
and TRANSUNION DATA SOLUTIONS LLC,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:19-cv-07534 — Manish S. Shah, Judge.
____________________
4 Nos. 20-2373 et al.
No. 20-3368
EDWARD COWANS,
Plaintiff-Appellant,
v.
EQUIFAX INFORMATION SERVICES, LLC,
and TRANSUNION DATA SOLUTIONS LLC,
Defendants-Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:19-cv-08168 — Andrea R. Wood, Judge.
____________________
ARGUED APRIL 22, 2021 — DECIDED JULY 15, 2021
____________________
Before WOOD, BRENNAN, and ST. EVE, Circuit Judges.
BRENNAN, Circuit Judge. In these consolidated cases, plain-
tiffs owe consumer debts they claim are not owned by the
creditors listed on their credit reports. They approached the
consumer reporting agencies—defendants here—and re-
quested an investigation of their claims. The consumer report-
ing agencies contacted the purported creditors for verification
that they owned the debts, which the creditors confirmed. Alt-
hough informed of these confirmations, plaintiffs did not be-
lieve that the consumer reporting agencies investigated the
claims as thoroughly as 15 U.S.C. § 1681i of the Fair Credit
Reporting Act (FCRA) requires, so they sued. But in each case
the district court either dismissed their claims or granted
judgment on the pleadings to the creditors.
Nos. 20-2373 et al. 5
We are tasked in this FCRA context with discerning the
sometimes-murky boundary between “law” and “fact.” We
hold that plaintiffs’ allegations that the creditors did not own
their debts are not factual inaccuracies that the consumer re-
porting agencies are statutorily required to guard against and
reinvestigate, but primarily legal issues outside their compe-
tency. So we affirm the district court’s decision in each case.
I
In each of these disputes (as well as those pending resolu-
tion on the outcome of this case), the facts present a similar
pattern. Each plaintiff incurred a consumer credit card debt. 1
The debts were purportedly sold and assigned to other com-
panies—creditors—and this change appeared on plaintiffs’
credit reports.2 The creditors then attempted to collect the
debts from the plaintiffs.
Rodas, Molina, and Amorah were sued by Midland, their
alleged new creditor, who demanded payment. They de-
fended those lawsuits by claiming that Midland did not own
their debts, demanding proof of ownership, and requesting
1 Unensaikhan Chuluunbat and Juan Rodas incurred credit card debts
from Citibank. Chuluunbat and Everardo Hoyos incurred debts from
Comenity Capital Bank. Anibal Molina incurred a credit card debt to Syn-
chrony Bank. Hoyos also incurred a debt to Webbank. Olamide Soyinka
and Edward Cowans incurred debts on credit cards issued by Credit One
Bank. Finally, Adel Amorah incurred a credit card debt to Barclays Bank
Delaware.
2 The new creditors were Cavalry SPV 1, LLC for Chuluunbat, Mid-
land Funding, LLC for Rodas, Molina, Hoyos, and Amorah, and LVNV
Funding, LLC for Soyinka and Cowans.
6 Nos. 20-2373 et al.
arbitration. In each case, Midland moved to voluntarily dis-
miss the lawsuit before arbitration was set to commence.
Chuluunbat, Hoyos, Soyinka, and Cowans—plaintiffs
who were not sued—sent letters to their creditors, contending
that the creditors did not own their debts. These creditors ei-
ther did not respond or replied that they owned the debts but
did not provide any assignment agreement from the previous
creditor.
After dismissal of these lawsuits (or, if the plaintiff was not
sued, after the collection attempts), the plaintiffs contacted the
“Big Three” consumer reporting agencies: Experian,
TransUnion, and Equifax. The plaintiffs requested that the
consumer reporting agencies reinvestigate the accuracy of
their credit reports to determine if the purported creditors
owned these debts. In response, the consumer reporting agen-
cies sent an inquiry to each creditor to verify ownership. The
creditors all confirmed that the reports were correct and that
they owned the plaintiffs’ debts. The creditors did not, how-
ever, produce the original sale or assignment agreement in
any case. After receiving this confirmation, the consumer re-
porting agencies informed the plaintiffs that no further steps
would be taken to investigate.
Plaintiffs then sued the consumer reporting agencies,
claiming that the presence of the allegedly inaccurate debt
ownership information in their credit reports and the con-
sumer reporting agencies’ failure to fully investigate their
claims violated § 1681e(b) and § 1681i of the Fair Credit Re-
porting Act. 15 U.S.C. § 1681, et seq. In each case, the district
court entered judgment on the pleadings or dismissed the
lawsuits. Relying on Denan v. Trans Union LLC, 959 F.3d 290,
296 (7th Cir. 2020)—which held that a consumer’s defense to
Nos. 20-2373 et al. 7
a debt is a legal question to resolve in an action against the
creditor, not a duty imposed on the consumer reporting agen-
cies by the FCRA—each court agreed that the plaintiffs did
not plead the type of inaccuracies in their credit reports that
the consumer reporting agencies can correct.
In each of the consolidated cases the district court rea-
soned differently but came to the same conclusion. As to
Rodas and Cowans, the court determined that whether the
creditors owned the debts was a question of law and therefore
categorically outside of the consumer reporting agencies’ stat-
utory duties. As for Chuluunbat, the court instead decided
that ownership of a debt was a mixed question of law and fact,
but it also concluded that the consumer reporting agencies
were not required to reinvestigate the claim. For Soyinka, Mo-
lina, Hoyos, and Amorah, the court eschewed a rigid distinc-
tion between law and fact and focused on the institutional
competency of the consumer reporting agencies to resolve the
claims. Whether the creditors owned the debts was a question
outside the competencies of the consumer reporting agencies,
the court decided, and not an inaccuracy to correct through
reinvestigation.
Plaintiffs appealed, and we consolidated the cases for re-
view. In some cases, the district court granted judgments on
the pleadings, and in others motions to dismiss, but our re-
view of either disposition is de novo. Gill v. City of Milwaukee,
850 F.3d 335, 339 (7th Cir. 2017).
II
The Fair Credit Reporting Act “imposes duties on con-
sumer reporting agencies and furnishers in a manner con-
sistent with their respective roles in the credit reporting
8 Nos. 20-2373 et al.
market.” Denan, 959 F.3d at 294.3 Furnishers—the creditors
here—provide consumer credit data to the consumer report-
ing agencies, and the consumer reporting agencies reflect that
information on a consumer’s credit report. Id. The statutory
scheme primarily tasks furnishers with providing accurate in-
formation to the consumer reporting agencies, but 15 U.S.C.
§ 1681e(b) also requires that consumer reporting agencies
“follow reasonable procedures to assure maximum possible
accuracy of” information in credit reports. And if a consumer
disputes “the completeness or accuracy of any item of infor-
mation contained in” a credit report, a consumer reporting
agency must “conduct a reasonable reinvestigation to deter-
mine whether the disputed information is inaccurate.” 15
U.S.C. § 1681i(a)(1)(A). A threshold requirement for claims
under both sections is that there must be an inaccuracy in the
consumer’s credit report.
In Denan v. Trans Union LLC, this court held that “inaccu-
rate information under § 1681i … mean[s] factually inaccurate
3 Recently the Supreme Court dismissed some FCRA claims on stand-
ing grounds in TransUnion LLC v. Ramirez, 141 S. Ct. 2190, 2021 WL
2599472, at *3 (U.S. June 25, 2021). After reviewing this opinion and the
plaintiffs’ complaints here, we remain satisfied we have jurisdiction. In
TransUnion, some of the plaintiffs had stipulated that their credit reports
were not disseminated to third-party businesses. Id. The Court concluded
that even if the information on the plaintiffs’ credit reports was mislead-
ing, the plaintiffs could not show a concrete injury because the reports
were not distributed to third parties. Id. By contrast, the plaintiffs in these
cases have all alleged that their credit reports were accessed by third par-
ties. The Court in TransUnion concluded that it “ha[d] no trouble” finding
standing for other plaintiffs who claimed dissemination of allegedly inac-
curate credit reports, analogizing to the tort of defamation. 2021 WL
2599472, at *11. We conclude that the plaintiffs here have similarly alleged
a concrete injury.
Nos. 20-2373 et al. 9
information, as consumer reporting agencies are neither qual-
ified nor obligated to resolve legal issues.” 959 F.3d at 296.
Denan recognized a dichotomy between factual inaccuracies
that consumer reporting agencies are statutorily obligated to
reinvestigate, and “legal inaccuracies” which are outside the
competency of the consumer reporting agencies. Id.4 Other
circuits employ this same framework for interpreting § 1681i.
See Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1242 (10th
Cir. 2015); Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876,
892 (9th Cir. 2010). (“We agree that reinvestigation claims are
not the proper vehicle for collaterally attacking the legal va-
lidity of consumer debts.”); DeAndrade v. Trans Union LLC, 523
F.3d 61, 68 (1st Cir. 2008).
The plaintiffs argue that whether the creditors were as-
signed, and now own, their debts is a factual question that
triggers the twin statutory obligations. They rely on Chemetall
GMBH v. ZR Energy, Inc., 320 F.3d 714, 720–21 (7th Cir. 2003),
for the proposition that whether parties intended to assign
something is a question of fact to be decided by a jury in court.
By the plaintiffs’ account, all that the consumer reporting
agencies need to ascertain is whether a purchase and sale
agreement for each of the plaintiffs’ debts exists. If one does
not, the plaintiffs argue, the consumer reporting agencies
4 Plaintiffs failed to cite Denan in their opening brief. This is surprising
given Denan’s recency, its relevance to the present case, and that every
district court opinion under review mentioned the decision. Parties have
an obligation to alert the court to relevant authority, regardless of whether
it supports their positions. See Jackson v. City of Peoria, 825 F.3d 328, 331
(7th Cir. 2016); Mannheim Video, Inc. v. Cnty. of Cook, 884 F.2d 1043, 1047
(7th Cir. 1989) (“counsel may not hide from virtually controlling cases,
only later to argue that the omission was due to a scintilla of difference
between the already decided cases and the one being litigated.”)
10 Nos. 20-2373 et al.
could conclude that the creditor does not own the debt. They
see requesting the purchase and sale agreement as a straight-
forward factual inquiry.
A clear line has not been drawn between legal and factual
inaccuracies in the FCRA context. Decisions of this court and
other circuits do provide helpful guideposts. The paradig-
matic example of a legal dispute is when a consumer argues
that although his debt exists and is reported in the right
amount, it is invalid due to a violation of law. In Denan, for
example, the plaintiff did not dispute whether a debt existed
or its amount, but instead contended he was not required to
pay the debt because it was “legally invalid.” 959 F.3d at 293.
We concluded that the consumer reporting agencies were not
required to determine that the debt was invalid as a matter of
law because “[o]nly a court can fully and finally resolve the
legal question of a loan’s validity,” and therefore, “no rein-
vestigation by Trans Union could have uncovered an inaccu-
racy in [the plaintiff’s] credit report.” Id. at 295, 297. Similarly,
in DeAndrade, a plaintiff-debtor did not dispute that he had
taken out a mortgage to pay for windows or that the mortgage
was in the wrong amount, but instead she argued that the
mortgage did not meet certain legal requirements. 523 F.3d at
68. Like in Denan, the court in DeAndrade concluded that this
question was beyond the scope of the statutory requirements.
Id.; see also Humphrey v. Trans Union LLC, 759 F. App’x 484, 488
(7th Cir. 2019) (unpublished) (holding that consumer report-
ing agencies were not required to reinvestigate a plaintiff’s
claim that disability discharge applications had legally enti-
tled him to stop payments).
In contrast, examples of factual inaccuracies include the
amount a consumer owes, and what day a consumer opened
Nos. 20-2373 et al. 11
an account or incurred a payment. Carvalho, 629 F.3d at 891.
These questions do not require the consumer reporting agen-
cies to make any legal determinations about the facts or legal
judgments. A legal question may also be resolved as a matter
of fact if a tribunal—such as a court or arbitrator—has adjudi-
cated the matter. See Dennis v. BEH–1, LLC, 520 F.3d 1066, 1071
(9th Cir. 2008); Scheel-Baggs v. Bank of Am., 575 F. Supp. 2d
1031, 1042 (W.D. Wis. 2008). Taking notice of a previously re-
solved legal dispute involves some knowledge of the legal im-
pact of court decisions, but it does not require the consumer
reporting agency to make any legal determinations about the
underlying claim.
These examples show that the central question is whether
the alleged inaccuracy turns on applying law to facts or simply
examining the facts alone. Consumer reporting agencies are
competent to make factual determinations, but they do not
reach legal conclusions like courts and other tribunals do.
Denan, 959 F.3d at 295. Courts sometimes employ different ac-
tors to help answer certain questions, but the ultimate result
is a legal determination (e.g., that a party is liable). That
means whether something is considered a factual question in
a court does not resolve whether it is an inaccuracy under the
FCRA. Accordingly, Chemetall—in which this court held, ap-
plying Illinois law, that the intent to enter an assignment is a
question of fact in court—does not decide this case.
The claims here differ from the purely legal disputes at is-
sue in Denan. Although the plaintiffs in Denan were explicitly
attempting to collaterally attack the legality of their debts
through the FCRA’s reinvestigation provision, the plaintiffs
in these consolidated cases contest who owns their debts, not
their legal validity.
12 Nos. 20-2373 et al.
But whether a debt was assigned—absent a previous
decision by a tribunal—is a question that requires a legal de-
termination, placing it outside the competency of a consumer
reporting agency. The plaintiffs in these cases do not contest
their debts’ existence or that the debts are in improper
amounts. Rather, as with a pure challenge to a debt’s legal
validity, the plaintiffs here question the legal relationship of
different parties to these debts, which is a task for a court.
Contrary to the plaintiffs’ assertions, any investigation into
whether the creditors were assigned the debts involves more
than just determining if an assignment agreement exists. It
also involves interpreting the legal validity of any assignment
agreement. An assignment is a creature of law: to have a valid
assignment parties must meet certain legal requirements. See,
e.g., RESTATEMENT (SECOND) OF CONTRACTS § 317 (1981) (defin-
ing assignment). Determining if those requirements are met
requires making a legal judgment, which the consumer re-
porting agencies are not statutorily required to do.
The plaintiffs contend that would create a double stand-
ard: consumer reporting agencies must investigate claims by
debtors that they do not owe a debt but not claims that creditors
do not own a debt. This argument misses differences between
these two situations, however, and reads our conclusion too
broadly.
Sometimes, when a consumer claims a debt is not owed,
that presents a factual question. This could occur if the con-
sumer argues that the furnisher has factually misidentified
him—say with the wrong social security number. But con-
sumer reporting agencies will not be required to reinvestigate
such claims if the investigation primarily requires them to
make a legal judgment or is otherwise outside of their
Nos. 20-2373 et al. 13
competency. See Brill v. TransUnion LLC, 838 F.3d 919, 921 (7th
Cir. 2016) (holding that consumer reporting agency was not
required to hire handwriting expert to determine whether
plaintiff’s signature was forged on loan agreement as plaintiff
claimed).
The alleged inaccuracies here necessarily involve inter-
preting legal rights to a debt and making legal judgments. In
each of these cases, the consumer reporting agencies reached
out to the creditors and asked them to confirm ownership of
the debts. Each creditor did so. If the plaintiffs presented court
judgments to the consumer reporting agencies showing that
the legal ownership of their debts have been adjudicated, the
investigation may have been factual in nature. But their broad
assertion that the creditors do not own their debts necessarily
required the consumer reporting agencies to make a legal de-
termination about whether the plaintiffs or the creditors are
right about the ownership of the debts.
The plaintiffs here are not left without recourse. They
could confront the creditors who are in the best position to
respond to assertions that they do not own the plaintiffs’
debts. See Brill, 838 F.3d at 921. Another avenue for the plain-
tiffs is 15 U.S.C. § 1681i(c), which allows consumers to make
notations of their disputes on their credit reports. The con-
sumers could use this provision to notify future employers or
creditors that they dispute the ownership of these debts. What
these plaintiffs cannot do, though, is place the burden for de-
termining whether their debts were validly assigned onto the
consumer reporting agencies, where it does not belong.
14 Nos. 20-2373 et al.
III
Because the plaintiffs in these cases asked the consumer
reporting agencies to make primarily legal determinations,
they have not stated claims under the Fair Credit Reporting
Act, so the judgment of the district court in each case is
AFFIRMED.