Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_16-cv-06375/USCOURTS-cand-4_16-cv-06375-1/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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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

JUAN RAMOS,

Plaintiff,

v.

EXPERIAN INFORMATION 

SOLUTIONS, INC., et al.,

Defendants.

Case No. 16-cv-06375-PJH 

ORDER DENYING MOTION TO 

DISMISS WITH LEAVE TO AMEND

Re: Dkt. No. 22, 43

Defendant Equifax, Inc.’s motion to dismiss came on for hearing before this court 

on March 1, 2017. Plaintiff Juan Ramos appeared through his counsel, Elliot Gale. 

Defendant Equifax, Inc. appeared through its counsel, Thomas Quinn. Non-moving 

defendant Experian Information Solutions, Inc. appeared through its counsel, Ben Lee. 

Defendant Bank of America, N.A. appeared through its counsel, Alice Miller. Having read 

the papers filed by the parties and carefully considered their arguments and the relevant 

legal authority, and good cause appearing, the court hereby rules as follows.

BACKGROUND

A. Chapter 13 Bankruptcy

Chapter 13 bankruptcy allows debtors with regular income to “repay creditors in 

part, or in whole, over the course of a three-to-five-year period.” In re Blendheim, 803 

F.3d 477, 485 (9th Cir. 2015). Under Chapter 13, the debtor proposes a debt repayment 

plan that must comply with a number of statutory requirements. Id. at 485–86. “A 

Chapter 13 debtor seeking a discharge typically proposes a plan in which the discharge 

is granted at the end of the proceeding, after the debtor completes all required payments 

under the plan.” Id. at 486. If the Chapter 13 plan satisfies all of the statutory 

requirements, the bankruptcy court approves or “confirms” the plan. 11 U.S.C. § 1325(a); 

In re Flores, 735 F.3d 855, 857 (9th Cir. 2013).

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If the debtor makes the payments under the confirmed plan, the bankruptcy court 

will grant a discharge of the debts, which “releases debtors from personal liability on 

claims and enjoins creditors from taking any action against the debtor.” Blendheim, 803

F.3d at 486–87. “Many debtors, however, fail to complete a Chapter 13 plan 

successfully.” Harris v. Viegelahn, 135 S. Ct. 1829, 1835 (2015). If the debtor fails to 

make the required payments, he may either “convert [the] Chapter 13 case to a 

[bankruptcy] case under a different chapter,” or dismiss the action. Blendheim, 803 F.3d 

at 487. The effect of dismissal is to restore the legal status quo prior to the Chapter 13 

filing: “dismissal returns to the creditor all the property rights he held at the 

commencement of the Chapter 13 proceeding and renders him free to exercise any 

nonbankruptcy collection remedies.” Id. at 487.

B. The Complaint

The complaint in this case is one of more than two hundred similar actions in this 

district filed by the Sagaria Law, P.C. firm against consumer credit reporting agencies in 

late 2016. All of these cases employ the same form complaint, with about a dozen 

paragraphs individualized for each plaintiff. The remainder of the complaint, including the 

causes of action, is copied nearly verbatim in each case.

Plaintiffs in these cases are individuals who filed for Chapter 13 bankruptcy and 

allege that their debts were reported inaccurately in light of their confirmed Chapter 13 

plan. Experian Information Solutions, Inc. (“Experian”), Equifax, Inc. (“Equifax”), or both 

credit reporting agencies (“CRAs”) are named as defendants. Also named as defendants 

in most of the cases are “furnishers” of credit information, such as Chase Bank USA, N.A. 

(“Chase”) and Bank of America, N.A. (“BANA”).

The complaint accuses CRAs and furnishers of “ignor[ing] credit reporting industry 

standards for accurately reporting bankruptcies.” Compl. ¶ 7. Allegedly, this inaccurate 

reporting is an effort to perpetuate the “myth” that filing for bankruptcy ruins consumers’ 

credit scores for years. Compl. ¶¶ 3–7.

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The complaint explains in some detail how a consumer’s FICO credit score is 

calculated, and how the score derives from information that furnishers report to CRAs. 

Compl. ¶¶ 20–36. Plaintiff then describes the Metro 2 credit reporting standards 

promulgated by the Consumer Data Industry Association (the “Metro 2 standards” or 

“CDIA guidelines”), which plaintiff alleges is the “industry standard for accurate credit 

reporting.” Compl. ¶¶ 37–52. The Metro 2 standards have different “CII indicator” codes 

that are used to note the filing and discharge of Chapter 7 and 13 petitions. Compl. 

¶¶ 55–62. Plaintiff alleges that the CII indictor “D” is used when a Chapter 13 petition has 

been filed, but no discharge yet entered. Compl. ¶ 59.

The complaint alleges that, prior to the confirmation of a Chapter 13 plan, the 

“accepted credit reporting standard” is to “report the outstanding balance amount as of 

the date of filing” of the bankruptcy petition, and to note the bankruptcy filing with CII 

indicator code D. Compl. ¶¶ 73, 75, 76–77. Post-confirmation, however, plaintiff alleges

that the balances should be updated to reflect the confirmed Chapter 13 plan. Reporting 

ongoing past due amounts and late payments, instead of only indicator D, is “not 

generally accepted as accurate by the credit reporting industry.” Compl. ¶ 84. Plaintiff

alleges that the industry standard is to “report the balance owed under the Chapter 13 

plan terms,” which is typically lower than the original amount, and to “report a $0.00 

balance” if the confirmed plan does not call for any payments on that particular debt. 

Compl. ¶¶ 80–81.

Ramos filed for Chapter 13 bankruptcy protection on March 31, 2011. Compl. 

¶ 87. He ordered credit reports from the CRAs on March 19, 2016, and filed a dispute 

letter with the CRAs alleging inaccuracies. Compl. ¶¶ 105, 107–108. On September 6, 

2016, he ordered a second set of credit reports, Compl. ¶ 110, but found that the 

inaccuracies remained. The complaint does not contain any specific allegation regarding 

credit score impact.

Ramos’s Chapter 13 plan was confirmed on April 23, 2012. See No. 11-19115-

LT13 Dkt. 18 (Bankr. S.D. Cal.). Notably, Ramos recently completed his plan and 

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received a discharge on January 11, 2017. Id. Dkt. 68.

Plaintiff asserts two claims, one under the Fair Credit Reporting Act (“FCRA”) and 

one under the California Consumer Credit Reporting Agencies Act (“CCRAA”). The first 

cause of action alleges that the furnisher and CRAs violated FCRA “by failing to conduct 

a reasonable investigation and re-reporting misleading and inaccurate information.” This 

cause of action relies repeatedly on the alleged failure of the CRAs and furnisher to 

“comport with industry standards.” The second cause of action under CCRAA is made 

only against the furnisher, alleging that it “intentionally and knowingly reported misleading 

and inaccurate account information to the CRAs that did not comport with wellestablished industry standards.”

DISCUSSION

A. Legal Standard

A motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) tests for the 

legal sufficiency of the claims alleged in the complaint. Ileto v. Glock, Inc., 349 F.3d 

1191, 1199–1200 (9th Cir. 2003). To survive a motion to dismiss for failure to state a 

claim, a complaint generally must satisfy the requirements of Federal Rule of Civil 

Procedure 8, which requires that a complaint include a “short and plain statement of the 

claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2).

A complaint may be dismissed under Rule 12(b)(6) for failure to state a claim if the 

plaintiff fails to state a cognizable legal theory, or has not alleged sufficient facts to 

support a cognizable legal theory. Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 

(9th Cir. 1990). The court is to “accept all factual allegations in the complaint as true and 

construe the pleadings in the light most favorable to the nonmoving party.” Outdoor 

Media Group, Inc. v. City of Beaumont, 506 F.3d 895, 899–900 (9th Cir. 2007). 

Legally conclusory statements, not supported by actual factual allegations, need 

not be accepted by the court. Ashcroft v. Iqbal, 556 U.S. 662, 678–79 (2009). The 

allegations in the complaint “must be enough to raise a right to relief above the 

speculative level.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007) (citations 

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and quotations omitted). “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 (citation omitted). “[W]here the wellpleaded facts do not permit the court to infer more than the mere possibility of 

misconduct, the complaint has alleged—but it has not ‘show[n]’—‘that the pleader is 

entitled to relief.’” Id. at 679. In the event dismissal is warranted, it is generally without 

prejudice, unless it is clear the complaint cannot be saved by any amendment. See

Sparling v. Daou, 411 F.3d 1006, 1013 (9th Cir. 2005).

B. Legal Analysis

Defendant seeks dismissal on two different grounds. First, it argues that the 

complaint fails to plead an “inaccuracy” in reporting that is actionable under FCRA as a 

matter of law. Second, defendant argues that the complaint fails to sufficiently allege 

either actual or statutory damages because it does not allege that defendant acted 

willfully or negligently. 

1. Actual Inaccuracy under FCRA

Defendant’s primary basis for dismissal is that the complaint fails to allege any 

“inaccuracy” under FCRA. Plaintiff’s FCRA claims are made pursuant to 15 U.S.C. 

§§ 1618s-2(b) and 1618i-a(1). Under § 1618i-a(1), after receiving notice of a dispute 

from a consumer, a CRA must “conduct a reasonable reinvestigation to determine 

whether the disputed information is inaccurate and record the current status of the 

disputed information.” 15 U.S.C. § 1618i-a(1). Under § 1618s-2(b), after receiving a 

notice of dispute from a CRA, a furnisher must conduct a reasonable investigation with 

respect to the disputed information and report the results to the CRA. Gorman v. Wolpoff 

& Abramson, LLP, 584 F.3d 1147, 1154, 1157 (9th Cir. 2009). FCRA creates a private 

right of action for willful or negligent noncompliance with these requirements. Id. at 1154.

To state an FCRA reinvestigation claim, a plaintiff must show that: (1) he found an 

inaccuracy in his credit report; (2) he notified a CRA; (3) the CRA notified the furnisher of 

the information about the dispute; and (4) the furnisher and/or CRA failed to reasonably 

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investigate the inaccuracies. Biggs v. Experian Info. Sols., Inc., No. 5:16-CV-01507-EJD, 

2016 WL 5235043, at *1 (N.D. Cal. Sept. 22, 2016); Gorman, 584 F.3d at 1154–57. 

Although the complaint does not allege specific facts about the furnisher’s and/or CRAs’ 

investigations, plaintiff does allege generally that any reasonable investigation would 

have revealed that the reporting was not in compliance with industry standards.

Inaccuracy is a required element of these FCRA claims. Carvalho v. Equifax Info. 

Servs., LLC, 629 F.3d 876, 890 (9th Cir. 2010) (“Although the FCRA’s reinvestigation 

provision, 15 U.S.C. § 1681i, does not on its face require that an actual inaccuracy exist 

for a plaintiff to state a claim, many courts, including our own, have imposed such a 

requirement.”); Gorman, 584 F.3d at 1163 (“[A] furnisher does not report ‘incomplete or 

inaccurate’ information within the meaning of § 1681s–2(b) simply by failing to report a 

meritless dispute.”). To be inaccurate, information must be either “patently incorrect” or 

“misleading in such a way and to such an extent that it can be expected to adversely 

affect credit decisions.” Gorman, 584 F.3d at 1163.

The complaint alleges several different types of inaccuracies. Plaintiff’s primary 

legal theory is that, after a Chapter 13 plan is confirmed, it is inaccurate to report that an 

account is delinquent or to report the loan balance per the original loan terms. Rather, 

the lower amount owed per the confirmed Chapter 13 plan must be reported instead. 

Second, plaintiff alleges that credit reporting that fails to comply with the Metro 2 

standards is necessarily inaccurate. Finally, plaintiff alleges various other inaccuracies, 

such as failing to report a CII D indicator, reporting a debt as “in collections” or “charged 

off” despite the confirmed plan, and/or the failure to report that an account is being 

disputed.

i. Reporting Pre-confirmation Account Balances and 

Delinquencies During the Pendency of Bankruptcy

Plaintiff’s primary theory of inaccuracy is premised on the effect that the confirmed 

Chapter 13 plan has on plaintiff’s debts. Plaintiff argues that, prior to confirmation, the 

industry standard is to report the outstanding balance on the loan at the time the 

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bankruptcy petition was filed, and to note the bankruptcy filing with the CII D indicator. 

After a Chapter 13 plan is confirmed, however, plaintiff argues that because the 

confirmation order is a binding “final judgment” that modifies the status of the debt, it is 

inaccurate to continue reporting the outstanding balance per the original loan terms. 

Rather, the amount required to be paid to obtain a discharge under the Chapter 13 plan 

must be reported, with a loan balance of $0.00 reported if the confirmed plan does not 

call for any payments on that debt.

Plaintiff’s legal theory of inaccuracy is not a novel issue in this district. The 

unanimous view of the judges in this district that have considered the matter is that, at 

least prior to discharge, reporting a loan balance and delinquent status per the original 

terms—as opposed to the modified terms of the confirmed Chapter 13 plan—is neither 

inaccurate nor misleading under FCRA. See, e.g., Doster v. Experian Info. Sols., Inc., 

No. 16-CV-04629-LHK, 2017 WL 264401, at *4–*5 (N.D. Cal. Jan. 20, 2017) (“[A]lthough 

reporting delinquent payments may be misleading if the debts have been discharged in 

bankruptcy, ‘it is not misleading or inaccurate to report delinquent debts that have not 

been discharged’ . . . . [because] the legal status of a debt does not change until the 

debtor is discharged from bankruptcy.”) (collecting cases); Biggs, 2016 WL 5235043, at 

*2 (“Courts in this district have held that the FCRA does not prohibit the accurate 

reporting of debts that were delinquent during the pendency of a bankruptcy action . . . so 

long as the bankruptcy discharge is also reported if and when it occurs.”); Blakeney v. 

Experian Info. Sols., Inc., No. 15-CV-05544-LHK, 2016 WL 4270244, at *5 (N.D. Cal. 

Aug. 15, 2016) (“[C]ourts in this district have consistently held that it is not misleading or 

inaccurate to report delinquent debts that have not been discharged.”); Mortimer v. JP 

Morgan Chase Bank, N.A., No. C 12-1936 CW, 2012 WL 3155563, at *3 (N.D. Cal. Aug. 

2, 2012) (“While it might be good policy in light of the goals of bankruptcy protection to 

bar reporting of late payments while a bankruptcy petition is pending, neither the 

bankruptcy code nor the FCRA does so.”); Harrold v. Experian Info. Sols., Inc., 2012 WL 

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4097708, at *4 (N.D. Cal. Sept. 17, 2012) (“[R]eports of delinquencies in payment while 

bankruptcy proceedings are still ongoing is not ‘incomplete or inaccurate’ information.”).

These decisions, of course, are not binding on this court. Nonetheless, the court 

finds their reasoning to be persuasive. Although the Chapter 13 plan and the bankruptcy 

petition may limit the collection activities of creditors, it does not mean that an “individual 

is not obliged to make timely payments on his accounts while his petition for bankruptcy 

is pending.” Mortimer, 2012 WL 3155563 at *3. Because “the debt and its delinquent 

status still exist . . . it is not inaccurate or misleading to report that information to a CRA.” 

Biggs, 2016 WL 5235043 at *2. The court therefore finds that, at least when the 

bankruptcy filing and the account’s disputed nature are noted, reporting balances and 

delinquencies per the original loan terms is neither “patently incorrect” nor “misleading.” 

See Gorman, 584 at 1163.

Plaintiff’s contrary arguments miss the mark. Plaintiff’s repeated themes that the 

confirmed plan is a “final judgment” with “res judicata effect” or a “new contract” obscure 

the issues. To be sure, a confirmed plan may have res judicata effects on some creditor 

claims that could have been brought in the bankruptcy proceeding. See, e.g., In re 

Brawders, 503 F.3d 856, 867 (9th Cir. 2007) (res judicata precludes collateral attack on 

confirmation order). The fact that a confirmed plan may have res judicata effects, 

however, does not imply that reporting the debts per their original terms is therefore 

“misleading” under FCRA. See Jaras v. Experian Info. Sols., Inc., No. 16-CV-03336-

LHK, 2016 WL 7337540, at *4 (N.D. Cal. Dec. 19, 2016) (“[E]ven if a confirmation order 

constitutes a final judgment, it constitutes a final judgment only as to the manner in which 

the debtor will discharge his financial obligations, not the legal validity of the debt.”) 

(quotations omitted). Similarly, although a Ninth Circuit bankruptcy appeals panel has 

analogized a confirmed Chapter 13 plan to a “contract,” In re Than, 215 B.R. 430, 435 

(B.A.P. 9th Cir. 1997), that does not mean that this “contract’s” promises govern how 

credit information must be reported under FCRA. A more natural understanding of the 

terms of the new contract is that it sets the conditions by which debtors may obtain a 

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discharge. Jaras, 2016 WL 7337540, at *4. In short, a confirmed plan does not dictate 

how historical credit information must be reported under FCRA.

Plaintiff also relies on a statutory argument based on the effect of 11 U.S.C. 

sections 1332(b)(2) and 1337(a) and a “critical distinction” between the terms “debt” and 

“claim” as used in the Bankruptcy Code. Section 1332(b)(2) provides that a confirmed 

plan may “modify the rights of . . . holders of unsecured claims,” and section 1137(a) 

establishes that a confirmed plan “bind[s] the debtor and each creditor.” 11 U.S.C. 

§§ 1332(b), 1337(a). Plaintiff asserts, without citation to authority, that “claims” constitute 

a creditor’s calculation of the balance due prior to litigation, whereas a “debt” constitutes 

the balance owed post-litigation. This claim/debt distinction is significant because 

furnishers do not report debts per se, but only claims. And it is the claim, not the debt, 

that is modified in a confirmed Chapter 13 plan by operation of sections 1332(b)(2) and 

1337(a). Thus, because creditors are reporting “claims” and the confirmed plan has 

“modified” those claims, reporting must change post-confirmation.

This argument can be quickly dismissed because it relies so heavily on a 

purported distinction between “claims” and “debts.” However, Congress intended that 

“the meanings of ‘debt’ and ‘claim’ be coextensive.” Penn. Dep’t of Pub. Welfare v. 

Davenport, 495 U.S. 552, 558 (1990); accord In re Davis, 778 F.3d 809, 813 (9th Cir. 

2015). Plaintiff is correct that a Chapter 13 plan may “modify” the claims of creditors, 11 

U.S.C. § 1332(b)(2), and that, upon confirmation, the plan binds debtor and creditor, 11 

U.S.C. § 1327(a). While these sections may prevent creditors from collecting on a loan 

pursuant to the original terms while the bankruptcy petition is pending, it does not follow 

that reporting those terms is necessarily “misleading” under FCRA. “[T]he debt and its 

delinquent status still exist” prior to discharge. Biggs, 2016 WL 5235043 at *2.

For the foregoing reasons, the court finds that, as a matter of law, the complaint 

fails to state a claim under FCRA to the extent that the alleged “inaccuracy” is premised 

on either (i) reporting the accurate outstanding balance as per the original terms, instead 

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of the loan balance as modified by a Chapter 13 plan; or (ii) reporting a balance as 

delinquent or past due, if delinquency is factually accurate per the original loan terms.

ii. Whether Noncompliance with Metro 2 Standards Necessarily 

Renders Reporting “Misleading”

Plaintiff also alleges that the reporting is inaccurate because it does not comport 

with the credit reporting industry’s Metro 2 standards. 

Again, this issue is not a novel one in this district. Other courts have found that 

noncompliance with Metro 2 standards, standing alone, does not make otherwise 

factually accurate reporting “misleading.” Giovanni v. Bank of Am., Nat. Ass’n, No. C 12-

02530 LB, 2013 WL 1663335, at *6 (N.D. Cal. Apr. 17, 2013) (failure to comply with 

Metro 2 standards is not misleading because the complaint “does not allege that [the 

furnisher] was required to follow the Metro 2 Format . . . or that deviation from those 

instructions constitutes an inaccurate or misleading statement.”); Mortimer, 2013 WL 

1501452, at *12 (N.D. Cal. Apr. 10, 2013) (“[A]lleged noncompliance with the Metro 2 

Format is an insufficient basis to state a claim under the FCRA.”); cf. Nissou-Rabban v. 

Capital One Bank (USA), N.A., 2016 WL 4508241, at *5 (S.D. Cal. June 6, 2016) 

(“[D]eviation from Metro 2, the industry standard and its chosen method of reporting, may 

be misleading in such a way and to such an extent that it can be expected to adversely 

affect credit decisions.”) (quotation omitted) (emphasis added).

This court finds that noncompliance with Metro 2 standards does not, in and of 

itself, render reporting misleading. FCRA does not mandate compliance with Metro 2 or 

any other particular set of industry standards. Rather, the test is whether a reasonable 

potential creditor would find the reporting “misleading in such a way and to such an 

extent that it can be expected to adversely affect credit decisions.” Gorman, 584 F.3d at 

1163. This requires something more than the mere fact of noncompliance with an 

industry standard, although noncompliance may be relevant to whether reporting is 

“misleading.” The context of the reporting must be considered.

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For example, Judge Chen recently observed that “reporting of the bankruptcy filing 

substantially diminishes the argument that failure to comply with Metro 2 reporting format 

could be misleading.” Mestayer v. Experian Info. Sols., Inc., No. 15-CV-03645-EMC, 

2016 WL 3383961, at *2 (N.D. Cal. June 20, 2016). If the bankruptcy filing is noted on 

the credit report, and it is clear to a reasonable potential creditor that the balances 

reported are the original loan terms (not the balances as modified by the Chapter 13 

plan), then there is nothing inherently misleading about the reporting. See id. Even 

accepting plaintiff’s allegation that Metro 2 is the generally-accepted industry standard, 

noncompliance does not necessarily make reporting “misleading” if a reasonable creditor 

is able to accurately interpret the reporting in context.

Thus, to the extent that the complaint seeks to allege inaccuracies based only on 

the fact of noncompliance with Metro 2, the motion to dismiss must be granted. 

However, because additional allegations could save the Metro 2 theory, the court will 

provide plaintiff leave to amend to plead additional facts that explain why the 

noncompliance with Metro 2 guidelines would be actually misleading in context.

iii. Other Alleged Inaccuracies

Several of plaintiff’s allegations seek to assert inaccuracies that do not fall into 

either of the two categories described above. In particular, plaintiff alleges that 

defendant’s failure to report a CII D indicator, failure to note that an account is being 

disputed, and/or reporting a debt as “in collections”/“charged off” are inaccurate. The 

court finds that several of these inaccuracies may state a claim under FCRA, but that the 

complaint’s allegations are too conclusory as currently pleaded. 

The first issue is whether the failure to report to a CII D indicator, or to otherwise 

note that a bankruptcy petition has been filed, makes reporting “inaccurate” under FCRA. 

The court finds that the complaint could state a claim on this basis. If the fact of the 

bankruptcy is not noted, the reporting may be misleading, because the existence of a 

bankruptcy filing is information that could affect the decision-making of potential creditors. 

See, e.g., Doster, 2017 WL 264401, at *6 (granting leave to amend to support allegations 

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that the credit report “contained no indication at all that the debts were the subject of a 

pending bankruptcy”). Moreover, the omission of the bankruptcy filing from a credit 

report may render other aspects of the reporting misleading. For example, if a creditor 

sees that an account is “in collections,” but no bankruptcy filing is noted, the creditor may 

believe that the account is being actively collected upon even though collection efforts 

have been stayed by the bankruptcy. The same is true regarding the alleged failure to 

report that an account is being disputed. This is information that could also adversely 

influence credit decisions if omitted.

As to the allegations that accounts were reported as “in collections” or “charged 

off,” the complaint does not contain enough detail to determine whether this inaccuracy 

could state a claim under FCRA. Without more context, it is not clear whether plaintiff

claims that the furnisher is reporting that the account is currently in collections (which is 

potentially misleading in light of the bankruptcy stay) or simply that the account was in 

collections at some point in the past. The latter would not be misleading, assuming that it 

is factually accurate and that the bankruptcy filing is noted.

In summary, although the court finds that these alleged inaccuracies could state a 

claim under FCRA, the complaint as pleaded is too conclusory to tell. With only a few 

sentences devoted to each disputed account, it is not clear whether a reasonable 

potential creditor could actually be misled. It is not clear, for example, if there is any 

other information in the credit report that discloses the existence of the bankruptcy filing. 

Thus, the court will provide plaintiff leave to amend to plead additional factual detail to 

state a plausible claim that these alleged inaccuracies were misleading in context.

iv. Whether the Effect of Confirmation Is a Nonactionable Dispute 

over the “Legal Validity” of a Debt

In the alternative, defendant argues that FCRA only permits claims based on 

inaccuracies that are factual in nature, but all of plaintiff’s alleged inaccuracies are 

disputes about the “legal status” of the debt. Defendant relies on the Ninth Circuit’s 

decision in Carvalho v. Equifax, which held that “reinvestigation claims are not the proper 

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vehicle for collaterally attacking the legal validity of consumer debts.” Carvalho v. Equifax 

Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010); see also Chiang v. Verizon New 

England Inc., 595 F.3d 26, 38 (1st Cir. 2010) (“[Under FCRA,] a plaintiff’s required 

showing is factual inaccuracy, rather than the existence of disputed legal questions.”). 

Defendant argues that the complaint here relies entirely on the impact that a confirmed 

Chapter 13 plan has upon the legal status of the debt, and that this sort of dispute is not 

actionable as an FCRA reinvestigation claim.

Defendant’s argument appears to be directed primarily at plaintiff’s first theory of 

inaccuracy: the effect of a confirmed Chapter 13 plan upon loan balances and 

delinquencies. Whatever merit this argument might have in that context, the court need 

not reach the issue because it has already held that this alleged “inaccuracy” does not 

state a claim as a matter of law.

To the extent that defendant seeks to characterize other alleged inaccuracies in 

this case as disputes about the “legal validity” of a debt, its argument fails. Carvalho’s 

holding is premised on the idea that CRAs are “not tribunals,” and “are ill equipped to 

adjudicate contract disputes.” 629 F.3d at 891. Reporting that a debtor has filed for 

bankruptcy protection on a credit report does not require furnishers and CRAs to engage 

in a “tribunal”-like legal analysis. Either the debtor has filed for bankruptcy protection, or 

he has not, as a matter of fact. The same logic applies to the alleged failure to note that 

an account was disputed. The court therefore declines to dismiss the complaint on this 

ground.

v. Application to Inaccuracies Alleged in the Complaint

In this case, plaintiff alleges inaccuracies concerning three different BANA 

accounts. On the first account, BANA reported a $1,350 balance, even though the 

amount should be $0 under the confirmed Chapter 13 plan, and BANA fails to note that 

the account is being disputed. Compl. ¶ 111. A different BANA account was reported as 

“in collections” even though $0 is owed under the confirmed Chapter 13 plan, and BANA 

“is not listing the correct CII D indicator.” Compl. ¶ 112. There also is a partially 

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repeated paragraph in the complaint; the court cannot tell whether the complaint seeks to 

allege inaccuracies with a third BANA account, or if the repeated paragraph is simply an 

error. See Compl. ¶ 113. Plaintiff also alleges that the CRAs failed to conduct a 

reasonable investigation and to delete the alleged inaccuracies on these accounts. 

Compl. ¶¶ 127, 129, 136. 

As the court has explained, the alleged inaccuracies concerning the reported 

account balances do not state a claim if these balances are factually accurate per the 

original loan terms. The other alleged inaccuracies may state a claim if supplemented 

with additional detail as to why this reporting was misleading in context. 

2. Whether Damages Have Been Sufficiently Pleaded

Defendant’s final basis for dismissal is that the complaint does not sufficiently 

plead either actual or statutory damages. While the court ultimately agrees with 

defendant on this point, it will provide plaintiff leave to amend to supplement his damages 

allegations.

i. Statutory Damages

Statutory and punitive damages are only available under FCRA when a defendant 

“willfully fails to comply with” the law. 15 U.S.C. § 1681n(a)(1)(A); Syed v. M-I, LLC, No. 

14-17186, 2017 WL 242559, at *7 (9th Cir. Jan. 20, 2017). If a defendant’s 

noncompliance is merely negligent, plaintiff is entitled only to “any actual damages 

sustained by the consumer as a result [of noncompliance].” 15 U.S.C. § 1681o(a)(1).

To support his claim for statutory damages, plaintiff alleges that the furnisher

“intentionally and knowingly reported misleading and inaccurate account information to 

the CRAs that did not comport with well-established industry standards.” Both the CRAs 

and furnisher “failed to conduct a reasonable investigation” and “would have known” that 

their reporting did not comport with industry standards.

In Safeco Insurance Company of America v. Burr, 551 U.S. 47 (2007), the 

Supreme Court held that “willfully,” as used in FCRA, encompasses knowing violations or 

a “reckless disregard of statutory duty.” Id. at 57. However, Safeco further held that a 

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violation of FCRA was neither willful nor reckless when it relied on an interpretation of law 

that “albeit erroneous, was not objectively unreasonable.” Id. at 69. Defendant claims

that this “safe harbor” precludes statutory damages here, arguing that its understanding 

of what FCRA required in this context is objectively reasonable and has been 

unanimously adopted by courts in this district.

Plaintiff appears to concede that statutory damages are not available by not 

responding to the defendant’s “willfulness” argument in the briefing. The court finds that 

statutory damages are not available as to plaintiff’s first theory of inaccuracy—the effect 

of the confirmed Chapter 13 plan on account balances and delinquencies. Given the 

body of law in this district against plaintiff’s primary theory of liability, defendant’s

understanding of its FCRA obligations was not “objectively unreasonable” on this point. 

Safeco, 551 U.S. at 69. 

Plaintiff’s willfulness allegations appear to derive from the noncompliance with 

Metro 2 standards. The ostensible argument is that statutory damages are available 

because defendant knew about the industry standards and intentionally chose not to 

follow them. However, the fact that defendant was aware of the industry standards does 

not mean that it was aware that compliance with industry standards was mandated by 

FCRA (indeed, it is not). Thus, defendant could be knowledgeable about Metro 2 

standards, but choose not follow them, which would not render its violations willful. 

The court therefore concludes that the complaint as pleaded does not sufficiently 

allege statutory damages. It is not clear to the court, however, that amendment would be 

futile, especially with respect to the inaccuracies that this court has found are potentially 

actionable. The court will therefore provide plaintiff leave to amend to attempt to plead 

facts showing that defendant acted “willfully” as to these inaccuracies.

ii. Actual Damages

FCRA does not require allegations of a “denial of credit or transmission of the 

report to third parties” to establish actual damages. Guimond v. Trans Union Credit Info. 

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Co., 45 F.3d 1329, 1333 (9th Cir. 1995). However, the law does require that plaintiff

suffered some actual harm as a result of defendant’s alleged FCRA violations.

Here, plaintiff alleges that as “a direct and proximate result of Defendants’ willful 

and untrue communications,” he “suffered actual damage including but not limited to 

inability to properly reorganize under Chapter 13, reviewing credit reports from all three 

consumer reporting agencies, time reviewing reports with counsel, sending demand 

letters, diminished credit score, and such further expenses in an amount later to be 

determined at trial.” It is not clear what plaintiff means by “inability to property reorganize 

under Chapter 13.” Plaintiff does not allege that defendant’s reporting somehow 

interfered with the bankruptcy process. Thus, whether actual damages have been 

pleaded hinges on whether a “diminished credit score,” prelitigation attorneys’ fees, or 

costs in reviewing credit reports and sending demand letters are recoverable as “actual 

damages.”

There is persuasive authority suggesting that a diminished credit score, standing 

alone, does not represent actual damages. King v. Bank of Am., N.A., No. C-12-04168 

JCS, 2012 WL 4685993, at *6 (N.D. Cal. Oct. 1, 2012) (“[A] mere drop in Plaintiff’s credit 

score without any damages actually incurred would likely not satisfy the actual damages 

requirement.”) (citations omitted); Duarte v. J.P. Morgan Chase Bank, No. 

CV131105GHKMANX, 2014 WL 12561052, at *4 (C.D. Cal. Apr. 7, 2014) (“Plaintiff 

asserts that . . . the inevitable consequence of Defendant’s alleged negative reporting—

impaired credit—constitutes actual damage for purposes of the CCRAA. This is 

incorrect.”). This is logical because, absent an allegation that plaintiff “was denied credit, 

lost credit, had his credit limits lowered, or was required to pay a higher interest rate for 

credit,” the negative effects of a lowered credit score did not cause “actual” harm. See

Young v. Harbor Motor Works, Inc., No. 2:07CV0031JVB, 2009 WL 187793, at *5 (N.D. 

Ind. Jan. 27, 2009). 

Moreover, plaintiff appears to concede that the costs associated with requesting a 

credit report, discovering the alleged inaccuracies, and sending a dispute letter are not 

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recoverable. The Ninth Circuit has not addressed this issue, but the Second Circuit has 

held that “actual damages” may include “out-of-pocket expenses for attorney’s fees 

incurred by a plaintiff prior to litigation of his FCRA claims.” Casella v. Equifax Credit 

Info. Servs., 56 F.3d 469, 474 (2d Cir. 1995). However, “expenses incurred merely to 

notify [CRAs] of inaccurate credit information, and not to force their compliance with any 

specific provision of the statute, cannot be compensable as ‘actual damages’ for a 

violation of the FCRA.” Id. Applying this distinction, plaintiff’s current damages 

allegations amount to no more than expenses to notify furnishers and CRAs of the 

alleged inaccuracies. This is a process that FCRA contemplates, 15 U.S.C. § 1681s2(a)(1)(B)(i), and is thus not itself a source of damages resulting from an FCRA violation.

The court therefore finds that the complaint as pleaded does not sufficiently allege 

actual damages. However, although the complaint currently does not allege emotional 

distress damages, plaintiff’s counsel represented at the hearing that he intended to 

amend the complaint to add allegations of emotional distress. Damages for “emotional 

distress and humiliation” as a result of an FCRA violation are recoverable as actual 

damages in the Ninth Circuit. Guimond, 45 F.3d at 1333. Thus, the court will grant 

plaintiff leave to amend to plead facts showing actual damages.

3. The CCRAA Claim

California Civil Code § 1785.25(a) provides that “[a] person shall not furnish 

information on a specific transaction or experience to any consumer credit reporting 

agency if the person knows or should know the information is incomplete or inaccurate.” 

Just as in FCRA, inaccuracy is a required element as the statutory language explicitly 

requires that “the information is incomplete or inaccurate.” Cal. Civ. Code § 1785.25(a). 

In general, CCRAA “mirrors” FCRA, such that the CCRAA claim survives only to the 

extent that the FCRA claim survives. Guimond, 45 F.3d at 1335; Olson v. Six Rivers 

Nat’l Bank, 111 Cal. App. 4th 1, 12 (2003) (“Because [CCRAA] is substantially based on 

[FCRA], judicial interpretation of the federal provisions is persuasive authority and entitled 

to substantial weight when interpreting the California provisions.”). Because the court 

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concludes that the FCRA claim must be dismissed for failure to sufficiently plead an 

actual inaccuracy and damages, the CCRAA claim must be dismissed as well, for the 

same reasons.

However, it is not clear whether the CCRAA claim remains live in this case, in light 

of the reported settlement between plaintiff and BANA. Dkt. 41. The CCRAA claim is 

brought only against BANA. Should the parties stipulate to the dismissal of BANA, as 

expected, the CCRAA claim shall not be reasserted in any amended complaint.

Finally, in light of the discharge received by Ramos shortly after the filing of the 

complaint in this case, plaintiff shall be permitted leave to amend to allege post-discharge 

inaccuracies, should he choose to do so.

CONCLUSION

For the foregoing reasons, defendant’s motion to dismiss is GRANTED. Plaintiff is

granted leave to file an amended complaint within 21 days of the date of this order. The 

amended complaint must sufficiently plead actual inaccuracies based upon, e.g., (i) a 

failure to report the fact of the bankruptcy filing or to use the correct CII D indicator; or (ii) 

a failure to report that an account is being disputed. Plaintiff may not rely on a failure to 

update account balances to reflect the confirmed Chapter 13 plan, and may not rely on 

the failure to comply with Metro 2 standards—except as those standards pertain to actual 

inaccuracies, such as a failure to note the bankruptcy filing or the disputed nature of the 

account. The amended complaint must also sufficiently allege either statutory or actual 

damages. The amended complaint may not add new claims or parties without leave of 

court or the consent of defendants.

Following the hearing, Experian also filed a motion to dismiss the complaint 

making the same arguments, among others, as the moving defendant. See Dkt. 43. 

Should this motion be fully briefed, the court would undoubtedly rule the same way on the 

same issues. In order to avoid the expenditure of resources by the parties and the court, 

the court administratively TERMINATES Experian’s motion and VACATES the May 10, 

2017 hearing date. After the amended complaint is filed, Experian may file a new motion 

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to dismiss directed to the amended factual allegations, or it may notify the court that it 

wishes to reactivate its administratively terminated motion.

IT IS SO ORDERED.

Dated: March 20, 2017

__________________________________

PHYLLIS J. HAMILTON

United States District Judge

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