Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_07-cv-03951/USCOURTS-cand-5_07-cv-03951-0/pdf.json

Nature of Suit Code: 320
Nature of Suit: Assault, Libel, and Slander
Cause of Action: 28:1441 Petition for Removal Libel,Assault,Slander

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS

(JFLC1)

**E-Filed 10/12/2007**

NOT FOR CITATION

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

MOHAMED ABOUELHASSAN,

 Plaintiff,

 v.

CHASE BANK ET AL.,

 Defendants.

Case Number C 07-03951 JF (PVT)

ORDER GRANTING DEFENDANT’S

MOTION TO DISMISS WITH LEAVE

TO AMEND

[doc. nos. 12, 20, 35, 43]

I. BACKGROUND

Plaintiff brought this action in the Santa Clara Superior Court against Defendants Chase

Bank USA, N.A., (“Chase”) Experian Information Solutions, Inc. (“Experian”), Equifax

Information Services, LLC (“Equifax”), Trans Union, LLC (“Trans Union”) and B-Line, LLC

(“B-Line”) stating a simple claim for libel, defamation of character and professional negligence

under California’s Consumer Credit Reporting Agencies Act (“CCRA”) §§ 1785.25, 1785.43,

1785.44 and 1785.45 and under the Fair Credit Reporting Act (“FCRA”). On August 1, 2007 

Defendants removed this case to this Court pursuant to 28 U.S.C. §1441(a). 

Plaintiff alleges that, on or about July 2004, he filed for Chapter 7 Bankruptcy in the U.S.

Case 5:07-cv-03951-JF Document 47 Filed 10/12/07 Page 1 of 9
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 Plaintiff also sought leave to file an amended complaint with a draft attached on August

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27, 2007, after Chase had filed a motion to dismiss but more than two weeks before it filed its

reply brief. On October 5, 2007, Chase filed an opposition to Plaintiff’s motion to amend. 

However, as Chase points out “Plaintiff’s proposed FAC contains virtually the same allegations,”

and does not contain any new legal theories. Given these similarities, the Court will treat the

motion to dismiss as directed to the FAC. 

 It appears that Plaintiff may have intended to allege a date of December 2006 although 2

¶¶ 9 & 16 of the FAC reference the date December 2004. Plaintiff should make any appropriate

corrections in his next amendment.

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

Bankruptcy Court, Northern Alabama District, Eastern Division. Plaintiff claims that he included

his Chase credit card, account number 5435-0515-0160-4307, and that he received a discharge

dated November 5, 2004. First Amended Complaint (“FAC”) at ¶ 9.1

According to the FAC, on or about December 2004, Defendants posted or caused to be 2

posted on the internet and/or in consumer credit reports false, misleading and damaging

information concerning twenty-four months of late payments for the discharged credit card. 

This information reached a large audience, including interested parties, financial institutions,

insurance institutions, employers and potential employers. Id. at ¶ 10. Plaintiff claimsthat upon

contacting Chase he was informed that his account had been sold to Defendant B-Line, and that

in bad faith and in derogation of Plaintiff’s rights, Chase refused to provide Plaintiff with any

information about B-Line. Plaintiff alleges that Chase’s willful communication of false and

misleading statements to the effect that he had late payments affected Plaintiff’s credit score and

in turn impacted Plaintiff’s ability to obtain fair credit, fair interest rates and fair employment

opportunities. Id. at ¶ 16. Specifically, Plaintiff states that, on or about July 16, 2006, Plaintiff

purchased a used 2003 Ford financed by Chase at an interest rate of 25.74%–a rate Plaintiff

accepted, believing it was a result of his bankrupt status, but which he later learned was due to

Chase’s false and misleading reports of the aforementioned late payments. Id. at ¶ 18.

On August 8, 2007, Chase moved to dismiss the Complaint on two grounds: (1)

Plaintiff’s CCRAA claim is preempted by the FCRA; and (2) Plaintiff has no private right of

action under the FCRA. Plaintiff filed his opposition on August 23, 2007. The Court heard oral

argument on September 28, 2007.

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

II. LEGAL STANDARD

For purposes of a motion to dismiss, the plaintiff’s allegations are taken as true, and the

Court must construe the complaint in the light most favorable to the plaintiff. Jenkins v.

McKeithen, 395 U.S. 411, 421 (1969). On a motion to dismiss, the Court’s review is limited to

the face of the complaint and matters judicially noticeable. North Star International v. Arizona

Corporation Commission, 720 F.2d 578, 581 (9th Cir. 1983); MGIC Indemnity Corp. v.

Weisman, 803 F.2d 500, 504 (9th Cir. 1986); Beliveau v. Caras, 873 F.Supp. 1393, 1395 (C.D.

Cal. 1995). Leave to amend must be granted unless it is clear that the complaint’s deficiencies

cannot be cured by amendment. Lucas v. Department of Corrections, 66 F.3d 245, 248 (9th Cir.

1995). When amendment would be futile, however, dismissal may be ordered with prejudice. 

Dumas v. Kipp, 90 F.3d 386, 393 (9th Cir. 1996). Factual allegations must be enough to raise the

right to relief above the speculative level on the assumption that all of the complaint’s allegations

are true. Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). 

III. DISCUSSION

1. Plaintiff’s Private Right of Action Under the FCRA

The FCRA, at 15 U.S.C. § 1681s-2, imposes duties to maintain and provide accurate

information to credit reporting agencies:

(a)(1)(A): A person shall not furnish any information relating to a consumer to

any consumer reporting agency if the person knows or has reasonable cause to

believe that the information is inaccurate.

. . . 

(a)(1)(B): A person shall not furnish information relating to a consumer to any

customer reporting agency if:

(i) the person has been notified by the consumer, at the address specified by the

person for such notices, that specific information is inaccurate; and

(ii) the information is, in fact, inaccurate.

It is not clear from the pleadings whether Plaintiff’s claim is brought pursuant to § 1681s2(a)(1)(A) or (a)(2)(B), as Plaintiff states simply that he is bringing a claim pursuant to the

FCRA. Chase argues that Plaintiff does not have a claim under either provision, contending that:

(1) there is no private right of action under § 1681s-2(a); and (2) Plaintiff has not satisfied the

requirements necessary to bring a claim under § 1681s-2(b). These contentions are addressed in

turn below. 

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

Section 1681s-2 contains a complex framework for enforcement. While subsections

(a)(1)(A) and (a)(1)(B) are themselves silent regarding a private right of action, subsections

1681n and 1681o allow the consumer to bring suit against “[a]ny person who willfully fails to

comply with any requirement imposed under this subchapter with respect to any consumer.”

Additionally, subsection (c) expressly provides that 1681n and 1681o “do not apply to any failure

to comply with subsection (a) of this section, except as provided in section 1681(c)(1)(B) of this

title,” and subsection (d) states that subsection (a) shall be “enforced exclusively under 1681s of

this title by Federal Agencies and officials and the State officials identified in this section.” 

Courts have read these provisions together as creating a private right of action for the willful or

negligent violations of (a)(1)(B), but not (a)(1)(A). See Nelson v. Chase Manhattan Mortgage

Corp., 282 F.3d 1057, (9th Cir. 2002); Pirouzian v. SLM Corp., 396 F. Supp.2d 1124, 1127 (S.D.

Cal. 2005). 

The Ninth Circuit has explained this limited private right of action under the FCRA:

It can be inferred from the structure of the statute that Congress did not want

furnishers of credit information exposed to suit by any and every consumer

dissatisfied with the credit information furnished. Hence, Congress limited the

enforcement of the duties imposed by § 1681s-2(a) to governmental bodes. But

Congress did provide a filtering mechanism in § 1681s-2(b) by making the

disputatious consumer notify a CRA and setting up the CRA to receive notice of

the investigation by the furnisher.

Nelson, 282 F.3d at 1060. Thus, the rule in this jurisdiction is that the individual consumer

cannot state a FCRA claim against a furnisher of his credit information unless he passes through

the “filtering mechanism:” 

“[A] private right of action against a furnisher of credit information exists only if

the disputatious consumer notifies the CRAs in the first instance. The CRA then

have an obligation to investigate whether the claim is frivolous or irrelevant. 

Once a claim is deemed viable, the CRAs must contact the furnisher of the credit

information which afforded an opportunity to investigate and rectify erroneous

reports. The furnisher’s duty to investigate, however, does not arise unless it

receives notice of the dispute from the CRAs directly. Bypassing the filter and

contacting the furnisher of credit information directly does not actuate the

firunisher’s obligation to investigate nor does it give rise to a private right of

action. 

See also, e.g., Peasley v. Verison Wireless LLC, 364 F. Supp.2d 1198 (S.D. Cal. 2005) (holding

that notifying the furnisher did not entitle the plaintiff to a private right of action, rather direct

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 Plaintiff also alleges a claim under § 1785.45, however, the CCRAA does not contain 3

such a provision.

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

notification of the CRA was required); Pirouzian, 396 F. Supp.2d at 1127. 

Here, Plaintiff has not met the pleading requirements for a § 1681s-2(a)(1)(B) claim

against a furnisher. “In order for Plaintiffs to state a claim under the FCRA against a furnisher of

credit information . . . Plaintiffs must allege that they contacted the CRAs who, in turm

determined that the claim was viable and contacted [the furnisher].” Roybal v. Equifax, 405 F.

Supp.2d 1177, 1180 (E. D. Cal. 2005); see also Gonzalez v. Ocwen Fin. Servs., Inc., No. C03-

04529 HRL, 2003 WL 23939563 (N.D. Cal. Dec. 2, 2003). Plaintiff has not alleged that each of

these steps has been taken. Specifically, Plaintiff does not allege that: (1) he notified the CRA

of any inaccuracies; (2) the CRA determined they were viable; and (3) Chase was contacted by

the CRA. Accordingly, the Court will dismiss Plaintiff’s FCRA claim, with leave to amend.

2. FCRA Preemption

a. California Consumer Credit Reporting Agencies Act Claims

Plaintiff’s First Amended Complaint alleges claims pursuant to sections 1785.25, .43, and

.44 of the CCRAA. Seeking dismissal of these claims, Chase argues that they are preempted by 3

the FCRA. The threshold question for a court addressing preemption is whether Congress

intended the enactment of an exclusive body of law:

If Congress decides to exert exclusive authority over a particular area of interstate

commerce, it might choose to invalidate all state laws on the subject matter,

regardless of whether the state law is inconsistent or identical to federal law. 

Where federal preemption is not absolutely reserved for the regulation or

prohibition of Congress, federal and state law may coexist simultaneously to the

extent state law does not stand in conflict with federal law.

Lin v. Universal Card Servs., 283 F. Supp. 2d 1147, 1050-51 (N.D. Cal 2002). The FCRA was

not intended to be an exclusive authority, therefore, under these basic rules of statutory

construction, individual state law claims consistent with § 1681s-2(a)(1)(B)’s narrow private

right of action survived FCRA enactment, while those that are inconsistent did not. Id. at 1151

(“Congress did not enact the FCRA with the goal of vitiating all state laws, but only those that

are inconsistent with federal law.”). Having reviewed CCRAA §§ 1785.25, .43, and .44 the

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 1681t(a)(b)(1)(F) provides: 4

no requirement or prohibition may be imposed under the laws of any state with

respect to any subject matter regulated under 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 with respect to section

1785.25(a) of the California Civil Code.

 Plaintiff states general claim under §1785.43 without specifying the subsection. The 5

Court considers only subsection (b) and (c) because these are the only provisions providing rights

to the consumer. Section 1785.43 provides:

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

Court finds that none of these provisions offers Plaintiff a private right of action against

Defendant consistent with that provided by the FCRA. Accordingly, Plaintiff’s CCRAA claims

will be dismissed.

Plaintiff makes only one argument in defense of his CCRAA claims, directing the Court’s

attention to 15 U.S.C. § 1681t(a)(b)(1)(F), the provision of the FCRA that expressly exempts

CCRA § 1785.25(a) from preemption. While Plaintiff is correct that § 1785.25(a) is exempt, he 4

overlooks the fact that this provision does not provide him with a private right of action. 

CCRAA § 1785.25(a) provides: “[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.” On its face, this provision does not provide a

private right of action. Moreover, to allow a consumer to proceed against furnishers without

requiring notification would be inconsistent with the FCRA. Thus, other courts in this

jurisdiction have held that there is no private right of action under § 1785.25(a). Gorman v.

Wolpoff & Abramson, LLP, 370 F. Supp.2d 1005, 1011 (N.D. Cal. 2005) (“Although §

1785.25(a) of the California Civil Code is not preempted and, therefore, MBNA can be held

liable if it violated that statute, the proper parties to pursue such liability are Federal and State

officials.”); Lin, 283 F. Supp.2d at 1152 (“Only § 1785(a) of the CCRAA, which does not

provide a private right of action is excluded from preemption.” (emphasis added)).

It is equally clear that the remaining CCRAA provisions on which Plaintiff relies do not

provide him with a private right of action against Chase. Sections 1785.43(b) & (c) place a duty

on the CRA to respond to the subject of a credit report who identifies inaccuracies. Section 5

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(b) Upon the request of a representative of the subject of a report, the commercial

credit reporting agency shall provide one printed copy of the subject’s commercial

credit report in a format routinely made available to third parties, at a cost no

greater than the cost usually charged to third parties.

(c) In the even that the subject of a commercial credit report believes the report

contains an inaccurate statement of fact, a representative of the subject of the

report may, within 30 days of receipt of the report pursuant to subdivision (b), file

with the commercial credit reporting agency a written summary statement not

more than50 words identifying the particular statement of fact that is disputed, and

indicating the nature of the disagreement with the statement in the report, or

include in the report an indication that the subject’s summary statement of

disagreement will be provided upon request.

 Section 1785.44 provides: “Any waiver of the provisions of this title is contrary to 6

public policy, and is void and unenforceable.”

 Chase cites Davis v. Maryland Bank, No. 00–4191, 2002 WL 32713429 (N.D. Cal. 7

June 19, 2002), which held that general preemption provision §1681t(b)(1)(F) preempts all state

claims falling within the coverage of § 1681s-2, including those involving malicious and willful

tortious conduct. The Court finds that reasoning of Gorman v. Wolpoff & Abramson, LLP, 370

F. Supp.2d 1005 (N.D. Cal. 1005), to be more persuasive. The Gorman Court explained: “The

Court is not persuaded by the logic of Davis because it violates a canon of statutory construction

by allowing a general statute to trump a specific statute.” 370 F. Supp. 2d at 1010. This Court

agrees that § 1681h(e) should govern preemption of common law defamation and negligence

claims, and therefore rejects Chase’s blanket preemption argument based on the Davis holding.

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

1785.44 prohibits waiver of any CRAA provision. None of these provisions provides Plaintiff 6

with a claim against Chase.

b. Common Law Defamation Claims

The FCRA expressly addresses preemption of common law defamation claims,

specifying that “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 to a consumer

reporting agency . . . except as to false information furnished with malice or willful intent to

injure such consumer.” 15 U.S.C. § 1681h(e) (emphasis added). “Subsection 1681h(e) preempts

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only defamation actions that do not allege malice or willful intent to injure.” Gorman v. Wolpoff

& Abramson, LLP, 370 F. Supp.2d 1005, 1010 (N.D. Cal. 1005). 

To satisfy the pleading requirement of a common law defamation claim permissible under

§ 1681h(e), a plaintiff must offer more than conclusory, non-descriptive phrases. Id. Instead,

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

the plaintiff must allege facts sufficient to support a claim that the defendant was acting with

“reckless disregard for the truth.” McGary v. Univ. of San Diego, 64 Cal. Reptr.3d 467 (Cal. Ct.

App. 4th Dist. 2007). Plaintiff alleges that Chase “willfully,” and “without justification”

furnished “false and misleading” statements. FAC at ¶¶ 10, 13. These general statements do not

support a claim that Cahse acted with reckless disregard for the truth. Accordingly, Plaintiff’s

common law defamation claims will be dismissed, with leave to amend.

IV. ORDER

Good cause therefor appearing, IT IS HEREBY ORDERED that the motion to dismiss is

GRANTED WITH LEAVE TO AMEND.

DATED: October 12, 2007.

 

JEREMY FOGEL

United States District Judge

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Case No. C 07-03951

ORDER GRANTING DEFENDANT’S MOTION TO DISMISS WITH LEAVE TO AMEND

(JFLC1)

This Order has been served upon the following persons:

George G. Weickhardt gweickhardt@ropers.com

Mohamed Abouelhassan

805 Borden Rae Ct.

San Jose, CA

95117

Case 5:07-cv-03951-JF Document 47 Filed 10/12/07 Page 9 of 9