Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-2_07-cv-00608/USCOURTS-almd-2_07-cv-00608-0/pdf.json

Nature of Suit Code: 480
Nature of Suit: Consumer Credit
Cause of Action: 15:1681 Fair Credit Reporting Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE MIDDLE DISTRICT OF ALABAMA

NORTHERN DIVISION

BRENT KNUDSON , )

 )

Plaintiff, )

 ) CIVIL ACTION NO. 2:07cv608-WHA

vs. )

 ) (WO)

WACHOVIA BANK; N.A TRANS UNION, )

LLC; EXPERIAN INFORMATION )

SOLUTIONS, INC.; and EQUIFAX )

INFORMATION SERVICES, LLC, )

 )

Defendants. )

MEMORANDUM OPINION AND ORDER

I. INTRODUCTION

This cause is before the court on a Partial Motion to Dismiss (Doc. #10) filed by Trans

Union, a Motion to Dismiss (Doc. #14) filed by Defendant Wachovia Bank (“Wachovia”), and a

Motion to Strike Knudson’s Response to Wachovia’s Reply Brief in Support of its Motion to

Dismiss (Doc. #26) filed by Wachovia Bank.

The Plaintiff, Brent Knudson (“Knudson”), brings claims against Wachovia and Trans

Union and two other credit reporting agencies. The claims against Wachovia are for violation of

§ 1681s-2(b) of the Fair Credit Reporting Act (“FCRA”), defamation, invasion of privacy,

violation of a Consumer Protection Act, and negligence. The claims against Trans Union are for

violation of the FCRA. 

The court issued an Order to show cause why the pending motions to dismiss ought not

be granted. Knudson filed a response to Wachovia’s motion, but not to Trans Union’s motion. 

The court then allowed Knudson time in which to file a response to Wachovia’s Reply, but

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Knudson’s response was untimely filed. As will be discussed further, Trans Union’s unopposed

motion is due to be GRANTED, Wachovia’s motion is due to be GRANTED, but Knudson will

be given leave to file an Amended Complaint as to his FCRA claim, and the Motion to Strike is

due to be DENIED as moot. 

II. STANDARD FOR MOTION TO DISMISS

The court accepts a plaintiff's allegations as true, Hishon v. King & Spalding, 467 U.S.

69, 73 (1984), and construes the complaint in the plaintiff's favor, Duke v. Cleland, 5 F.3d 1399,

1402 (11th Cir.1993). To survive a motion to dismiss, a complaint need not contain “detailed

factual allegations.” Bell Atlantic Corp. v. Twombly, __ U.S. __, 127 S.Ct. 1955 (2007). The

complaint must contain “only enough facts to state a claim to relief that is plausible on its face.”

Id. at 1974. The factual allegations “must be enough to raise a right to relief above the

speculative level.” Id. at 1965. 

III. FACTS

The allegations of the Plaintiff’s Complaint are as follows:

 Knudson alleges that his creditworthiness has been compromised. He states that in

September 2001 he signed a loan agreement with Wachovia to finance an automobile. He

further alleges that he paid the entire amount due and closed the account in July 2005, and that at

the time he closed the account, the debt was 47 days past due. According to Knudson, even

though he filed multiple disputes regarding the account with Wachovia, the Defendants

continued to report his account as being delinquent and over 30 days past due. Knudson states

that Wachovia failed its duty to accurately report his account information. Knudson’s claims for

violation of the FCRA and state law are based on the same set of facts.

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IV. DISCUSSION

Trans Union’s Partial Motion to Dismiss

The court first addresses Trans Union’s partial motion to dismiss in which it contends

that Knudson’s requested declaratory relief is not available to him as a private plaintiff. Trans

Union cites cases including Jones v. Sonic Automotive, Inc., 391 F. Supp. 2d 1064, 1065 (M.D.

Ala. 2005)(Fuller, C.J.). Because, as noted above, Knudson has not opposed this motion and

apparently concedes that it is due to be granted, the request for declaratory relief as to Trans

Union will be DISMISSED. 

Wachovia’s Motion to Dismiss

Wachovia’s motion is directed to all of the claims Knudson brings against it. Wachovia

asserts that Knudson’s § 1681s-2(b) claim is due to be dismissed because there is no allegation in

the Complaint that Wachovia was notified by a consumer reporting agency of a dispute

regarding the completeness or accuracy of the account, and that Knudson’s state law claims are

preempted by the FCRA. The court turns first to the FCRA claim, and then the state law claims.

Section 1681s-2(b) of the FCRA sets out duties owed by a furnisher of information once

the furnisher of information has received notice of a dispute with regard to the completeness or

accuracy of information provided to a consumer reporting agency. The court agrees with

Wachovia that Knudson has not alleged facts to demonstrate that the requisite notice was given. 

Rather than merely dismiss his federal claim with prejudice at this time, however, the court will

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 Should he choose to file an Amended Complaint, Knudson should keep in mind both

that he must make his allegations within the strictures of Rule 11 of the Federal Rules of Civil

Procedure, and that under Bell Atlantic Corp. v. Twombly, __ U.S. __, 127 S.Ct. 1955 (2007), a

“plaintiff's obligation to provide the ‘grounds' of his ‘entitle [ment] to relief’ requires more than

labels and conclusions, and a formulaic recitation of the elements of a cause of action will not

do.” Id. at 1964-65. 

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give Knudson an opportunity to adequately plead a claim for violation of § 1681s-2(b), should he

choose to do so.1

With respect to Knudson’s state law claims, Wachovia urges this court to determine that

Knudson’s tort claims against Wachovia are preempted. 

The issue of preemption by the FCRA of state law claims brought against furnishers of

information has been addressed by several district courts in and outside of this circuit, but has

not been decided by any circuit courts of appeals. See Beyer v. Firstar Bank, N.A., 447 F.3d

1106, 1108 (8th Cir. 2006) (declining to address the preemption issue and noting that “[d]istrict

courts have come to different conclusions about the scope and interplay of the FCRA's

preemption provisions.”). Generally speaking, when district courts are confronted with a claim

of defensive preemption of state law under the FCRA, they attempt to reconcile two statutes

which govern the availability of state law theories of relief against furnishers of information.

The first statute generally examined by courts is 15 U.S.C. § 1681h(e), which provides as

follows:

Except as provided in sections 1681n and 1681o of this title, no consumer may

bring any action or proceeding in the nature of defamation, invasion of privacy, or

negligence with respect to the reporting of information against any consumer

reporting agency, any user of information, or any person who furnishes

information to a consumer reporting agency, based on information disclosed

pursuant to section 1681g, 1681h, or 1681m of this title, or based on information

disclosed by a user of a consumer report to or for a consumer against whom the

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user has taken adverse action, based in whole or in part on the report except as to

false information furnished with malice or willful intent to injure such consumer.

15 U.S.C. § 1681h(e).

The second statute is found at § 1681t, and provides in relevant part as follows:

(a) In general

Except as provided in subsections (b) and (c) of this section, this subchapter does

not annul, alter, affect, or exempt any person subject to the provisions of this

subchapter from complying with the laws of any State with respect to the

collection, distribution, or use of any information on consumers, or for the

prevention or mitigation of identity theft, except to the extent that those laws are

inconsistent with any provision of this subchapter, and then only to the extent of

the inconsistency.

(b) General exceptions

No requirement or prohibition may be imposed under the laws of any State--

(1) with respect to any subject matter regulated under–

* * * 

(F) section 1681s-2 of this title, relating to the responsibilities of persons who

furnish information to consumer reporting agencies, except that this paragraph

shall not apply--

(I) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated

Laws (as in effect on September 30, 1996); or (ii) with respect to section

1785.25(a) of the California Civil Code (as in effect on September 30, 1996);

Many district courts which have examined these two statutes have attempted to resolve a

perceived conflict between them by following one of three lines of reasoning: the view that §

1681t(b)(1)(F) completely subsumes § 1681h, see e.g., Hasvold v. First USA Bank, 194 F. Supp.

2d 1228, 1239 (D. Wyo. 2002); the view that § 1681(b)(1)(F) only preempts claims arising after

the furnisher of information has been provided notice, see e.g., Riley v. General Motors

Acceptance Corp., 226 F. Supp. 2d 1316, 1324 (S.D. Ala. 2002); and the view that § 1681h

applies to common law tort claims and § 1681t(b)(1)(F) to state statutory claims, see, e.g.,

McCloud v. Homeside Lending, 309 F. Supp. 2d 1335 (N.D. Ala. 2004). Another judge of this

court, however, has determined that those three approaches need not be followed to resolve the

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 Knudson was given a chance to respond to Wachovia’s argument on this point.

Knudson’s response is the subject of the pending Motion to Strike because it was filed outside of

the time allowed by the court’s Order. Knudson’s response, however, does not address the

argument that 1681h(e) applies only to particular types of information disclosures, so the court

has not considered the response and the Motion to Strike will be DENIED as moot. 

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issue of preemption and that the plain language of § 1681t(b)(1)(F) controls. Abbett v. Bank of

America, No. 3:04cv1102-WKW, 2006 WL 581193 (M.D. Ala. March 8, 2006) (Watkins, J.). 

In construing a statute, the court must first look to the plain language of the statute. See

Albernaz v. United States, 450 U.S. 333, 336 (1981). Knudson argues that the language of §

1681h(e) and § 1681t(b)(1)(F) conflict, and that this court should resolve that conflict and

determine that his tort claims are not preempted because he alleges malice and willful intent,

consistent with the exception in § 1681h(e). 

The court finds there is no ambiguity in § 1681t(b)(1)(F) on its face. It does not allow for

state law prohibitions or requirements which relate to the responsibilities of furnishers of

information to consumer reporting agencies. It appears to this court that § 1681h(e) should only

be looked to to determine whether it conflicts with the plain language of § 1681t(b)(1)(F) if §

1681h(e) is otherwise applicable in the case. That is, this court should not undertake to resolve a

theoretical conflict between statutes unless the statute which allegedly causes the conflict with

the other, unambiguous, statute applies in the case.

Wachovia has argued that § 1681h(e) has no applicability in this case because Knudson’s

claims do not fall within the categories of actions identified in § 1681h(e).2

 As set out above, §

1681h(e) limits, with exceptions, the scope of the immunity it provides to particular kinds of

claims “based on information disclosed pursuant to section 1681g, 1681h, or 1681m of this title,

or based on information disclosed by a user of a consumer report to or for a consumer against

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 The court notes that another district court within this circuit has used similar analysis

but reached a different conclusion. In Pickney v. SLM Financial Corp., 433 F. Supp. 2d 1316

(N.D.Ga. 2005), the court reasoned that because the tort claims at issue did not arise from

disclosures made pursuant to the statutes enumerated in § 1681h(e), or by a user of a consumer

report to or for a consumer against whom the user had taken adverse action, “the malice and

willful intent requirement is not applicable and § 1681h(e) does not preempt Plaintiff’s state law

tort claims.” Id. at 1322. This court does not agree with this interpretation of the FCRA for the

reasons discussed above.

4

 The court expresses no opinion as to the interaction of § 1681t(b)(1)(F) and § 1681h(e)

in cases in which § 1681h(e) applies.

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whom the user has taken adverse action, based in whole or in part on the report . . . .” Sections

1681g and 1681h of the FCRA set out requirements of consumer reporting agencies in their

disclosures to consumers. Section 1681m, as well as the remaining language of 1681h(e), apply

to users of information which take adverse action against the consumer. Knudson has not

alleged that Wachovia is a consumer reporting agency or that it took adverse action against him. 

Accordingly, § 1681h(e) is not applicable to the facts of this case and the liability limitation, and

exceptions thereto, likewise are not applicable.3

 Because those provisions do not apply, the

court finds no conflict to be resolved with the plain language of § 1681t(b)(1)(F). The court,

therefore, turns to the application of the plain language of the preemption provision in §

1681t(b)(1)(F) in this case.4

Knudson argues that § 1681t does not preempt his state tort claims because that section

only preempts state laws which are inconsistent with the FCRA, and that a state law which

merely gives consumers more protection than the FCRA is not inconsistent with the FCRA. 

Knudson, however, cites only to § 1681t(a) and a decision applying that provision, Davenport v.

Farmers Ins. Group, 378 F.3d 839, 842 (8th Cir. 2004), and does not cite any cases which

analyze preemption under § 1681t(b)(1)(F). 

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As stated above, § 1681t(b)(1)(F) provides that no requirement or prohibition may be

imposed under the laws of any State with respect to any subject matter regulated under section

1681s-2, with two exceptions not applicable in the instant case. Section 1681s-2(a) sets out the

duty of furnishers of information to provide accurate information, and § 1681s-2(b) sets out the

duties of furnishers of information upon notice of a dispute. 

Knudson has alleged that Wachovia has failed a duty to accurately report his account

information, and refused to correct its reporting error, as the bases of his FCRA and state law

claims. The violations of state law which he has alleged concern conduct which is regulated by

§1681s-2. Under the plain language of § 1681t(b)(1)(F), therefore, Knudson’s state law claims

are preempted. See, e.g., Drew v. Equifax Information Services, No. C 07-00726, 2007 WL

2028745, *5 (N.D. Cal. July 11, 2007) (state law claims based on facts which are also alleged to

be a violation of 1681s-2(b) are preempted); Lofton-Taylor v. Verizon Wireless, No.

05-0532-CG-B, 2006 WL 3333759, *8 (S.D. Ala. November 14, 2006) (state law claims based

on facts which are also alleged to be a violation of 1681s-2(a) are preempted). 

In addition, there is preemption under the provision cited by Knudson, namely, 

§1681t(a). Although Knudson has alleged a violation of § 1681s-2(b) in his Complaint, his

factual allegations are actually of a failure to report accurate information and to correct reported

information, which are duties regulated by § 1681s-2(a). There is no private right of action for

violations of § 1681s-2(a). Yelder v. Credit Bureau of Montgomery, 131 F. Supp. 2d 1275, 1283

(M.D. Ala. 2001)(Albritton, J.). Allowing a private right of action under state law for conduct

regulated by § 1681s-2(a) is, therefore, inconsistent with the FCRA, and preempted under §

1681t(a). See Abbett, 2006 WL 581193 at *5. 

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Because they are preempted by the FCRA, Knudson’s state law claims against Wachovia

are due to be DISMISSED.

V. CONCLUSION

For the reasons discussed above it is hereby ORDERED as follows:

1. Trans Union LLC’s Partial Motion to Dismiss (Doc. #10) is GRANTED and the

request for declaratory relief against Trans Union LLC under the FCRA is DISMISSED.

2. Wachovia Bank’s Motion to Dismiss (Doc. #13) is GRANTED to the following

extent:

a. The Plaintiff’s claim for violation of 15 U.S.C. § 1681s-2(b) against Wachovia is

DISMISSED without prejudice. Knudson is given until October 17, 2007, to file a new

Amended Complaint, which must be complete unto itself, should he choose to do so, and if he

can allege in good faith facts to support an allegation that the requisite notice was provided to

Wachovia Bank. In the absence of such an Amended Complaint being filed, the claim will be

dismissed with prejudice at that time.

b. The Plaintiff’s state law claims as against Wachovia Bank are DISMISSED with

prejudice.

3. Wachovia Bank’s Motion to Strike (Doc. #26) is DENIED as moot.

 Done this 4th day of October. 

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/s/ W. Harold Albritton 

W. HAROLD ALBRITTON

SENIOR UNITED STATES DISTRICT JUDGE

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