Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_05-cv-01207/USCOURTS-caed-2_05-cv-01207-2/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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The state claims that are the subject of this motion are 1

Unfair Business Practices, Cal. Bus. and Prof. Code §§ 17200 et.

(continued...)

1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

DANIEL ROYBAL and VIDA ROYBAL,

NO. CIV. S 05-1207 MCE KLM

Plaintiffs,

v. MEMORANDUM AND ORDER

EQUIFAX, TRANSUNION, EXPERIAN,

RICKENBACKER, MEDAMERICA, CITY

TOWING BODY SHOP, INC., SEARS,

and DOES 1 through 50,

Defendants.

----oo0oo----

Through the present action, Plaintiffs Daniel and Vida

Roybal (“Plaintiffs”) allege that Equifax, Transunion, Experian,

Rickenbacker, Medamerica, City Towing Body Shop, Inc. and Sears

(collectively, “Defendants”) violated both state and federal

consumer protection laws by furnishing and reporting erroneous

credit information on Plaintiffs’ credit report.1

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(...continued) 1

seq. (first cause of action); Consumer Legal Remedies Act, Cal.

Civil Code § 1750 et. seq.(second cause of action); Negligent

Misrepresentation (third cause of action); and, Negligence; Cal.

Civil Code § 1714 (fourth cause of action); Fair Debt Collection

Practices Act, Cal. Civil Code § 1788.17 (eighth cause of

action)("State Claims"). 

The federal claims that are the subject of this motion are

Fair Credit Billing Act; 15 U.S.C. 1666 (fifth cause of action);

Fair Credit Reporting Act, 15 U.S.C. § 1681 et. seq. (sixth cause

of action); Fair Debt Collection Practices Act, 15 U.S.C. § 1692

et. seq. (seventh cause of action)(collectively, "Federal

Claims"). 

Because oral argument will not be of material assistance, 2

the Court orders this matter submitted on the briefs. E.D. Cal.

Local Rule 78-230(h). 

2

Defendant Rickenbacker (“Rickenbacker”) now moves to dismiss

Plaintiffs’ State and Federal Claims pursuant to Federal Rule of

Civil Procedure 12(b)(6) on the ground that Plaintiffs have

failed to state a claim upon which relief can be granted. For

the reasons set for more fully below, Rickenbacker’s motion to

dismiss Plaintiffs’ State and Federal Claims is granted.2

BACKGROUND

Plaintiffs are consumers that discovered, in or around

December 2003, their credit report contained grossly inaccurate

credit information. Plaintiffs contend that they repeatedly

contacted both the credit reporting agencies (“CRAs”) as well as

the furnishers of the credit information to alert them to the

erroneous entries. Plaintiffs allege that neither the CRAs nor

the furnishers of the credit information offered them any relief.

On May 10, 2005, Plaintiffs filed suit against Defendants in

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the California Superior Court alleging that Defendants caused

them injury by falsely furnishing and reporting negative credit

information. Defendants removed the case to this Court based on

federal question jurisdiction. 

STANDARD

On a motion to dismiss for failure to state a claim under

Rule 12(b)(6), all allegations of material fact must be accepted

as true and construed in the light most favorable to the

nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336,

337-38 (9th Cir. 1996). A complaint will not be dismissed for

failure to state a claim “‘unless it appears beyond doubt that

plaintiff can prove no set of facts in support of [his or] her

claim that would entitle [him or] her to relief.’” Yamaguchi v.

Dep’t of the Air Force, 109 F.3d 1475, 1480 (9th Cir. 1997)

(quoting Lewis v. Tel. Employees Credit Union, 87 F.3d 1537, 1545

(9th Cir. 1996)).

If the court grants a motion to dismiss a complaint, it must

then decide whether to grant leave to amend. The Court should

"freely give[]" leave to amend when there is no "undue delay, bad

faith[,] dilatory motive on the part of the movant, . . . undue

prejudice to the opposing party by virtue of . . . the amendment,

[or] futility of the amendment. . . ." Fed. R. Civ. P. 15(a);

Foman v. Davis, 371 U.S. 178, 182 (1962). Generally, leave to

amend is only denied when it is clear that the deficiencies of

the complaint cannot be cured by amendment. DeSoto v. Yellow

Freight Sys., Inc., 957 F.2d 655, 658 (9th Cir. 1992).

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ANALYSIS

1. Fair Credit Reporting Act Claim

Plaintiffs have instituted this private right of action

against Defendants including Rickenbacker, a furnisher of

consumer credit information, for violations of the Fair Credit

Reporting Act (“FCRA”). Plaintiffs allege that Rickenbacker

proffered inaccurate credit information about Plaintiffs without

properly investigating their complaints or removing erroneous

credit entries. Rickenbacker rebuts that the FCRA provides only

a limited right of private enforcement against furnishers of

credit information and that Plaintiffs do not have standing to

bring this action.

The Ninth Circuit spoke to this precise question in Nelson

v. Chase Manhattan Mortgage Corp. wherein the court discussed

whether a private right of action exists against a furnisher of

credit under the FCRA. There, the Ninth Circuit explained the

issue as follows:

“It can be inferred from the structure of the [FCRA]

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

[owed by furnishers of credit information] to

governmental bodies. But Congress did provide a

filtering mechanism ... by making the disputatious

consumer notify a CRA and setting up the CRA to receive

notice of the investigation by the furnisher. With

this filter in place and opportunity for the furnisher

to save itself from liability by taking the steps

required by § 1681s-2(b), Congress put no limit on

private enforcement under §§ 1681n & o.”

282 F.3d 1057, 1060 (9th Cir. 2002).

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The foregoing makes clear that a private right of action

against a furnisher of credit exists only if the disputatious

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

have an obligation to investigate whether the claim is frivolous

or irrelevant. See 15 U.S.C. § 1681i(a)(3). Once a claim is

deemed viable, the CRAs must contact the furnisher of the credit

information which affords an opportunity to investigate and

rectify erroneous reports. See 15 U.S.C. § 1681s-2(b). 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

directly does not actuate the furnisher’s obligation to

investigate nor does it give rise to a private right of action. 

See Nelson, 282 F.3d at 1060. 

In order for Plaintiffs to state a claim under the FCRA

against a furnisher of credit such as Rickenbacker, Plaintiffs

must allege that they contacted the CRAs who, in turn, determined

the claim was viable and contacted Rickenbacker triggering

Rickenbacker’s duty to investigate. Since Plaintiffs have failed

to allege the foregoing as required, they lack standing to bring

this private right of action against Rickenbacker. Accordingly,

Rickenbacker’s motion to dismiss Plaintiffs’ FCRA claim is

granted with leave to amend.

2. Fair Credit Billing Act Claim

Rickenbacker argues that Plaintiffs have failed to state a

claim under the Fair Credit Billing Act (“FCBA”) because the FCBA

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An open end credit plan is one where the creditor 3

reasonably contemplates repeated transactions, which prescribes

the terms of such transactions, and which provides for a finance

charge which may be computed from time to time on the outstanding

unpaid balance. 15 U.S.C. 1602(I). All credit that is not

characterized as open end is considered closed end. See 12

C.F.R. 226.2(a)(10).

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only applies to open end credit plans. Rickenbacker argues that 3

the transactions underlying Plaintiffs claims are closed end

rather than open end taking them outside the scope of the FCBA. 

Plaintiffs have failed to rebut Rickenbacker’s contention but

instead merely request dismissal of all Federal Claims and remand

of all State Claims to the state court.

By its very terms, the FCBA's billing error section applies

solely to creditors of open end credit plans. Specifically, the

definition of creditor under the FCBA is limited as follows:

"For the purpose of the requirements imposed under

chapter 4 [15 USCS §§ 1666 et seq.] ... the term

"creditor" shall also include card issuers ..., and the

Board shall, by regulation, apply these requirements to

such card issuers, to the extent appropriate, even

though the requirements are by their terms applicable

only to creditors offering open-end credit plans." 

15 U.S.C. § 1602 (emphasis added).

Because the definition of “creditor” as used in section 1666

only applies to creditors offering open end credit plans and

Plaintiffs have not alleged that the transaction underlying this

claim is based on an open end credit plan, this claim must be

dismissed with leave to amend.

3. Fair Debt Collection Practices Act Claim

Next, Rickenbacker seeks to have Plaintiffs’ Fair Debt

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Even assuming, however, that this action accrued as late as 4

the date Plaintiffs learned of the negative credit entries in

December 2003, the statute would have run by December 2004. This

action was commenced on May 10, 2005, well beyond the latest

possible date of accrual. 

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Collection Practices Act ("FDCPA") claim dismissed on the ground

that it was not timely filed. Under the FDCPA, a claim must be

brought within one year of the violation. 15 U.S.C. § 1692k(d). 

Here, Plaintiffs allege in their complaint that Defendants

violated the FDCPA by “report[ing] false and derogatory

information.” Pl.s’ Compl. ¶ 53. Plaintiffs claim that there

were erroneous entries on their credit report as far back as 1997

and 2001. Id. at ¶ 11. Assuming the alleged violations occurred

at the time the information was reported, Plaintiffs’ action

would have accrued in 1997 and 2001. Using this measure, the

statute of limitations would have run no later than the end of

2002. Consequently, Plaintiffs’ claim under the FDCPA is time 4

barred. This claim is dismissed without leave to amend.

4. Preemption of State Law Claims

In addition to the foregoing Federal Claims, Plaintiff has

alleged violations of California's Unfair Competition Law,

California's Consumer Legal Remedies Act, negligent

misrepresentation, and common law negligence. Rickenbacker seeks

to have these State Claims against it dismissed on the ground

that they are entirely preempted by the FCRA. Plaintiffs do not

rebut Rickenbacker’s contention. Again, Plaintiffs merely urge

the Court to dismiss their Federal Claims and remand their

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While there is an exception to this rule for California 5

Civil Code section 1785.25(a), Plaintiffs have not alleged a

violation of that provision. Even assuming, however, that

Plaintiffs had so alleged, the Court finds that there is no

private right of action under section 1785.25(a). California

Civil Code section 1785.25(a) does not itself provide for a

private right of action. Rather, the language which affords

consumers a private right of action is found in California Civil

Code sections 1785.25(g) and 1785.31. Since only section

1785.25(a) is excepted from preemption but not sections

1785.25(g) or 1785.31, the Court finds that no private right of

action exists under section 1785.25(a). See Lin v. Universal

Card Servs. Corp., 238 F. Supp. 2d 1147, 1152 (D. Cal. 2002). 

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remaining State Claims to the state court. 

The FCRA establishes standards for the collection,

communication and use of consumer information for business

purposes. Through the FCRA, Congress has elected to establish a

scheme of uniform requirements regulating the use, collection and

sharing of consumer credit information. In order to maintain

this uniformity, Congress included express preemption clauses in

the FCRA relating to various aspects of consumer credit

reporting. One area Congress has chosen to preempt is the

regulation of furnishers of credit information. Specifically,

the FCRA provides as follows:

"No requirement or prohibition may be imposed under the

laws of any State with respect to any subject matter

regulated under section 1681s-2, 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...."

15 U.S.C. § 1681t(b)(1)(F)(ii). 

On its face, the FCRA precludes all state statutory or

common law causes of action that would impose any “requirement or

prohibition” on the furnishers of credit. Because Plaintiffs’ 5

State Claims are based on alleged injury arising purely from the

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reporting of credit information by a furnisher of credit, they

are completely preempted. Several courts that have analyzed this

preemption clause concur. See, e.g., Jaramillo v. Experian Info.

Solutions, Inc., 155 F. Supp. 2d 356, 361-62 (E.D. Pa. 2001)("it

is clear ... that Congress wanted to eliminate all state causes

of action relating to the responsibilities of persons who furnish

[credit] information"); Hasvold v. First USA Bank, 194 F. Supp.

2d 1228, 1239 (D. Wyo. 2002)("federal law under the FCRA preempts

plaintiff's claims [for defamation and invasion of privacy]

against the defendant relating to it as a furnisher of

information"); Riley v. Gen. Motors Acceptance Corp., 226 F.

Supp. 2d 1316, 1322 (S.D. Ala. 2002)(finding preemption of state

tort claims for negligence, defamation, invasion of privacy and

outrage). 

Because Plaintiffs State Claims arise solely from the

allegation that Rickenbacker reported erroneous credit

information to the national CRAs as a furnisher of credit, FCRA

preempts Plaintiffs’ State Claims in their entirety. Thus,

Plaintiffs’ State Claims are dismissed without leave to amend.

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CONCLUSION

Defendant Rickenbacker’s motion to dismiss Plaintiffs’ Fair

Credit Reporting Act claim and Fair Credit Billing Act claim is

GRANTED with leave to amend. Plaintiffs may file an amended

complaint not later than twenty (20) days following the date of

this Order. Defendant Rickenbacker’s motion to dismiss

Plaintiffs’ Fair Debt Collection Practices Act claim and State

Claims is GRANTED without leave to amend. 

IT IS SO ORDERED.

October 19, 2005

_____________________________

MORRISON C. ENGLAND, JR

UNITED STATES DISTRICT JUDGE

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