Court Opinion

ID: 9414634
Source: CourtListenerOpinion
Date Created: 2023-08-02 15:00:25.534417+00
Date Added: 2024-06-11T17:17:54.457485
License: Public Domain

22-1000
In re: Kimberly Bruce
                    UNITED STATES COURT OF APPEALS
                        FOR THE SECOND CIRCUIT
                             ______________

                                     August Term 2022

                   (Argued: April 18, 2023 | Decided: August 2, 2023)

                                     Docket No. 22-1000

      KIMBERLY BRUCE, Debtor and Plaintiff on behalf of herself and all others
      similarly situated, AKA Kimberly A. Bruce, AKA Kimberly Antrell Bruce,

                                                Plaintiff-Appellee,

                                               v.

                         CITIGROUP INC. and CITIBANK, N.A.,

                                              Defendants-Appellants. 1
                                       ______________

Before: WESLEY, PARK, and ROBINSON, Circuit Judges:

       Defendants-Appellants Citigroup Inc. and Citibank, N.A. (collectively,
“Citi”) appeal from the bankruptcy court’s order granting in part and denying in
part Citi’s motion, pursuant to Federal Rule of Bankruptcy Procedure 7012, to
dismiss Plaintiff-Appellee Kimberly Bruce’s amended complaint, or, alternatively,
to strike or dismiss the nationwide class action allegations therein.

      On appeal, Citi advances two primary arguments. First, Citi argues that a
bankruptcy court’s civil contempt power is limited to the enforcement of its own
orders, and, therefore, that the Bankruptcy Code does not authorize one
bankruptcy court to adjudicate the claims of a nationwide class of former debtors

1   The Clerk of the Court is directed to amend the official caption as set forth above.
seeking to hold Citi in contempt of discharge orders entered by other bankruptcy
courts across the country. Second, Citi argues that plaintiff’s claim for violation of
her discharge order and injunction under 11 U.S.C. § 524(a)(2) fails to satisfy the
civil contempt standard under Taggart v. Lorenzen, 139 S. Ct. 1795 (2019). We agree
with Citi’s first argument but disagree with the second. Accordingly, we AFFIRM
IN PART and REVERSE IN PART the bankruptcy court’s order and REMAND
the case to the bankruptcy court for further proceedings consistent with this
opinion.
                                 _________________

             GEORGE F. CARPINELLO, Boies Schiller Flexner LLP, Albany, NY
                 (Adam R. Shaw, Jenna C. Smith, Boies Schiller Flexner LLP,
                 Albany, NY; Charles Juntikka, Charles Juntikka & Associates
                 LLP, New York, NY, on the brief), for Plaintiff-Appellee.

             EAMON P. JOYCE (Benjamin R. Nagin, Jonathan W. Muenz, James
                 R. Horner, on the brief), Sidley Austin LLP, New York, NY, for
                 Defendants-Appellants.

             Robert J. Pfister, KTBS Law LLP, Los Angeles, CA, for Amici Curiae
                  National Consumer Bankruptcy Rights Center; National Association
                  of Consumer Bankruptcy Attorneys in Support of Plaintiff-Appellee.
                                 _________________

WESLEY, Circuit Judge:

      Unwelcome as insolvency may be, bankruptcy relief ultimately provides

hope for the debtor that a new financial life awaits. The notion of a fresh start is

at the Bankruptcy Code’s core and is typically achieved through a discharge order,

which, at a bankruptcy proceeding’s conclusion, releases the debtor of

                                          2
pre-bankruptcy debts covered by the order, and acts as an injunction to bar

creditors from further attempts to collect those debts. See 11 U.S.C. § 524(a)(2).

      In this case, a putative nationwide class of former debtors, led by Kimberly

Bruce, claim that Citi violated their respective discharge injunctions. They ask that

Citi be held in contempt, and, in addition to contempt sanctions, ask for

declaratory relief and restitutionary damages.

      As an initial matter, we reject plaintiff’s suggestion that she has asserted

separate and distinct claims for declaratory relief and damages. For one, plaintiff’s

characterization of her complaint is in tension with the complaint itself, which

asserts a single cause of action claiming that “[d]efendants have violated

§ 524(a)(2) and are in contempt of this Court.” App’x 75. Furthermore, as Citi

points out on reply, plaintiff has previously referred to this action as “a proceeding

for contempt,” see Brief of Plaintiffs-Appellees at 3, In re Nyree Belton, Kimberly

Bruce, No. 19-648 (2d Cir. Nov. 11, 2019), ECF No. 105—as has this Court, see In re

Belton v. GE Cap. Retail Bank, 961 F.3d 612, 616 (2d Cir. 2020) (“[T]he Debtors have

pursued this remedy through a contempt proceeding.”).              Accordingly, we

consider only plaintiff’s motion for contempt.

                                          3
      Relatedly, plaintiff’s class-wide contempt proceeding hinges on a

bankruptcy court’s authority under the Code to hold a creditor in civil contempt

for violating discharge orders entered by other bankruptcy courts across the

country. The bankruptcy court declined to dismiss plaintiff’s class-wide request

that Citi be held in contempt and sanctioned. It concluded that its contempt power

extends to the enforcement of other bankruptcy courts’ discharge injunctions. We

disagree that a bankruptcy court has the authority to hear and adjudicate a

class-wide contempt proceeding. That leaves only plaintiff’s individual claim

against Citi.

      Accordingly, the final question in this appeal is whether plaintiff’s

allegations that Citi should be held in contempt for violating her discharge order

are sufficient to survive Citi’s Rule 12(b)(6) threshold attack. 2 The bankruptcy

court answered that question in the affirmative. We agree. Accordingly, we affirm

in part and reverse in part, and remand for further proceedings consistent with

this opinion.

2The sufficiency of a complaint in an adversary proceeding is evaluated under Federal
Rule of Civil Procedure 12(b)(6). See Fed. R. Bankr. P. 7012(b).
                                         4
                                BACKGROUND

    I.      Facts

      This dispute began in 2009, when Kimberly Bruce, plaintiff in this action,

stopped making payments on her Citi credit card account.           Eventually, Citi

informed credit reporting agencies that she had a balance due of $1124, which Citi

“charged off”—that is, adjusted from a receivable to a loss in the bank’s internal

accounting books.

      Years later, plaintiff voluntarily filed a Chapter 7 bankruptcy petition in

which she listed Citi as a creditor. Her complaint alleges, without any dispute

from Citi, that she provided Citi notice of her initial bankruptcy filing and her

eventual discharge order, entered in May 2013. That order “released” plaintiff

from “all dischargeable debts,” App’x 29, and enjoined “any attempt to collect

from the debtor a debt that has been discharged,” id. at 30.

      In September 2013, months after her fresh financial start, plaintiff accessed

her credit report and discovered that it still listed her debt with Citi as “charged

off,” without any indication it had been discharged in bankruptcy. She notified

Citi in December 2013 that its description of her Citi account status—also known

                                         5
as a “tradeline”—on her report was incorrect and requested that the bank remove

the charge-off notation. Citi, she says, refused.

      In March 2014, plaintiff successfully moved to reopen her Chapter 7 case

and commenced an adversary proceeding seeking to hold Citi in contempt of her

bankruptcy discharge order. About two weeks after plaintiff moved to reopen,

Citi finally contacted the credit reporting agencies and requested that they remove

the charge-off notation on the tradeline referring to plaintiff’s credit card account.

      Plaintiff alleges that Citi’s refusal to correct her credit report is part of a

“willful policy of attempting to lay a trap for Plaintiff and other Class Members

until the point that they need an accurate credit report, and they cannot obtain

such a credit report without paying on a discharged debt.” App’x 61. Citi lays

this “trap” by “refusing the debtors’ requests to remove ‘charge offs’ and other

similar ‘past due’ notations . . . despite [Citi’s] knowledge that such debts have in

fact been discharged in bankruptcy.” Id. at 69–70. “These notations adversely

affect Plaintiff’s and every Class Member’s ability to obtain credit or employment

and have the inherent coercive effect of inducing Plaintiff and all other Class

Members to make payment on the debt.” Id. at 68–69.

                                          6
        Plaintiff claims that Citi financially benefits from the policy: third-party debt

collection agencies—such as Midland Funding LLC, which, prior to plaintiff’s

bankruptcy, purchased plaintiff’s delinquent debt—will pay a higher price to Citi

if they believe Citi will not update debtors’ credit reports, thereby increasing the

likelihood that, notwithstanding a discharge, confused debtors might nonetheless

pay off their cards.      In essence, plaintiff claims that Citi’s post-bankruptcy

discharge policy increases, in the eyes of the third-party debt collection agencies,

the value of the delinquent debt at the front end, when the agencies purchase that

debt.

        Plaintiff also contends that although Citi sold plaintiff’s debt, it maintains

ties to it in other ways. For example, she alleges that Citi collects the discharged

debt on behalf of the third-party debt collection agencies, and that credit reporting

agencies will not permit those agencies (including Midland) to request changes in

tradelines listed in the original creditor’s name. She adds that Citi remained

identified as the creditor in the tradeline, notwithstanding that it sold plaintiff’s

debt to Midland. Thus, she continues, Citi knows that unless it correctly reports

                                            7
the bankruptcy discharge’s effect on the otherwise delinquent debt, the tradeline

will remain in error.

          Plaintiff alleges that by willfully failing to update credit reports, Citi is “in

contempt of this Court,” App’x 75, she “prays that the practices of [Citi] be

declared to be in violation of the rights of Plaintiff and Class Members under the

Bankruptcy Code and a contempt of the statutory injunction set forth in

§ 524(a)(2),” id. at 76, and she asks that the bankruptcy court “order that

defendants be held in contempt of court,” id. She also seeks to certify a nationwide

class of former debtors on the ground that Citi similarly refused numerous

post-discharge requests to correct erroneous tradelines.

    II.         Procedural History

          This case has made its way to this Court once before. At its outset, Citi

moved to compel arbitration based on its credit card agreement with plaintiff.

Relying largely on our decision in In re Anderson, 884 F.3d 382 (2d Cir. 2018), this

Court affirmed the district and bankruptcy courts’ denial of that motion,

reiterating that contempt proceedings for violations of § 524(a)(2) are not

arbitrable, and are instead subject to the bankruptcy court’s exclusive

                                              8
enforcement. See In re Belton, 961 F.3d at 616–17 (citing In re Anderson, 884 F.3d at

389–92).

       On remand, Citi moved to dismiss plaintiff’s complaint, or in the alternative,

to strike or dismiss her class allegations. The bankruptcy court, in the decision Citi

now appeals, largely rejected the bank’s request. Although it dismissed plaintiff’s

request for injunctive relief, it otherwise denied Citi’s motion. 3

       The bankruptcy court purported to resolve two questions: first, whether

plaintiff plausibly pleaded a discharge violation under Federal Rule of Civil

Procedure 12(b)(6), and, second, whether one bankruptcy court has the authority

to determine a creditor in contempt of a discharge order entered by another

bankruptcy court.

       With respect to the 12(b)(6) issue, the bankruptcy court concluded that

plaintiff plausibly stated a claim for relief. It explained that while mere inaccurate

credit reporting without some further act does not violate the discharge, plaintiff

3Regarding plaintiff’s request for injunctive relief, the bankruptcy court held that because
the discharge under § 524 acts as a statutory injunction against further efforts to collect
on discharged debts, there was “already an injunction.” App’x 188. Plaintiff does not
challenge that ruling here.
                                             9
had sufficiently pleaded that Citi’s refusal to correct her (and class members’)

tradeline(s) is pursuant to a willful policy of pressuring former debtors to pay off

discharged debts.     In measuring the adequacy of the complaint, the court

employed the Supreme Court’s decision in Taggart v. Lorenzen, in which the

Supreme Court held that a bankruptcy court may hold a creditor in civil contempt

when there is objectively “no fair ground of doubt” that the alleged violator’s

action did, in fact, violate the discharge. 139 S. Ct. 1795, 1799 (2019).

      The court then turned to the nationwide class issue and rejected Citi’s

motion to strike plaintiff’s class allegations. Although it acknowledged that

whether one bankruptcy court can enforce other bankruptcy courts’ discharge

orders “raise[s] a very close question,” App’x 264, it grounded that authority in

§ 105 of the Bankruptcy Code, which provides that a bankruptcy court “may issue

any order, process, or judgment that is necessary or appropriate to carry out” the

Code. 11 U.S.C. § 105.

      After the district court certified the bankruptcy court’s order for direct

appeal, App’x 291, this Court granted Citi’s request for leave to appeal, id. at 293.

                                          10
                                     DISCUSSION 4

       This appeal principally concerns § 524(a)(2) of the Bankruptcy Code, which

provides that a bankruptcy discharge:

       [O]perates as an injunction against the commencement or
       continuation of an action, the employment of process, or an act, to
       collect, recover or offset any such debt as a personal liability of the
       debtor, whether or not discharge of such debt is waived.

11 U.S.C. § 524(a)(2). The section invokes an injunction that takes effect with the

discharge order. Together the order and injunction aim to prevent debtors from

being “pressured” to repay discharged debts. In re Kalikow, 602 F.3d 82, 96 (2d Cir.

2010) (internal quotation marks omitted). Like many parties aggrieved by the

violation of an injunction outside of the bankruptcy context, aggrieved debtors

have resorted to civil contempt proceedings to vindicate their rights under the

discharge order. See, e.g., In re Belton, 961 F.3d at 616; see also 4 Collier on Bankruptcy

¶ 524.02[2][c] (2023).

4The denial of a motion to dismiss is reviewed de novo. Rothstein v. Balboa Ins. Co., 794
F.3d 256, 261 (2d Cir. 2015). Additionally, as the parties agree, Citi’s motion to strike or
dismiss plaintiff’s class allegations presents a pure question of law; the bankruptcy
court’s decision on that issue therefore constitutes a legal determination likewise meriting
de novo review. See In re Anderson, 884 F.3d at 387.

                                            11
      In this case, however, plaintiff sets her sights broadly; she seeks relief on

behalf of herself and a nationwide class, accusing Citi of uniformly flouting the

discharge orders of similarly situated debtors across the country. Citi’s abusive

practices, according to her, are pervasive.

      Plaintiff’s careful, even novel, pleading strategy raises a threshold issue.

The viability of her nationwide pursuit depends on the authority of one

bankruptcy court to enforce the discharge orders and injunctions entered by other

bankruptcy courts from across the country. It is a novel, broad vision of an

injunction’s enforcement mechanism, and raises thorny issues regarding one

bankruptcy court’s ability to hold a party in civil contempt on behalf of other

bankruptcy courts whose separate discharge orders are alleged to have been

violated.

      I.    The Bankruptcy Code does not authorize a bankruptcy court to
            enforce another bankruptcy court’s discharge injunction.

      Plaintiff asks that the bankruptcy court entertain a nationwide class action

contempt proceeding, comprised of the mirroring claims of other discharged

debtors who, like plaintiff, requested to no avail that Citi correct their erroneous

tradelines. Specifically, the putative class invites the bankruptcy court to enforce

                                         12
not just the discharge order it entered in plaintiff’s case, but also those entered for

similarly situated debtors by bankruptcy courts across the country.

       The class-wide relief sought by plaintiff raises a fundamental question: does

the Bankruptcy Code authorize one bankruptcy court to employ its contempt

power on behalf of other bankruptcy courts in a nationwide class action to enforce

those bankruptcy courts’ discharge orders? 5

       Neither this Court nor the Supreme Court has confronted the issue.

However, decisions from both courts, as well as from the courts of appeals that

have weighed in on the matter, help guide the way. In the end, as has long been

the case outside of the bankruptcy context, a particular bankruptcy court’s civil

contempt authority does not extend beyond the enforcement of its own orders.

       For example, although Taggart sets forth the “fair ground of doubt”

standard governing a bankruptcy court’s exercise of its civil contempt authority to

enforce § 524(a)(2)’s discharge injunction—a matter somewhat adjacent to the

5 Plaintiff spends much of her brief defending the bankruptcy court’s subject matter
jurisdiction to adjudicate the nationwide class claims. But “[t]he nature of the relief
available after jurisdiction attaches is, of course, different from the question whether there
is jurisdiction to adjudicate the controversy.” William E. Arnold Co. v. Carpenters Dist.
Council, 417 U.S. 12, 19 (1974).
                                             13
nationwide class issue—the Supreme Court’s analysis is instructive. The Court

has explained that § 524(a)(2)’s injunction, along with the bankruptcy court’s § 105

authority to issue any “order” or “judgment” that is “necessary or appropriate” to

“carry out” other bankruptcy provisions, “bring with them the ‘old soil’ that has

long governed how courts enforce injunctions.” 139 S. Ct. at 1801. From there, the

Court cautioned that although this “old soil” includes “civil contempt,” the

bankruptcy statutes “do not grant courts unlimited authority to hold creditors in

civil contempt.” Id. Instead, they incorporate “traditional standards in equity

practice for determining when a party may be held in civil contempt for violating

an injunction,” and, to pinpoint those standards, looked to “cases outside the

bankruptcy context.” Id.

      Taggart therefore provides a framework for analyzing the limits of a

bankruptcy court’s civil contempt authority. Courts should understand that

authority as coextensive with—not greater than—the civil contempt authority

wielded by courts outside of bankruptcy. In short, well-established equity practice

regarding the judicial exercise of civil contempt authority guides any inquiry into

what that authority looks like in the bankruptcy context.

                                        14
      Emerging from the “‘old soil’ that has long governed how courts enforce

injunctions,” id., is the longstanding equitable principle that “civil contempt

proceedings leave the offended judge solely responsible for identifying, prosecuting,

adjudicating, and sanctioning the contumacious conduct.” Int'l Union, United

Mine Workers of Am. v. Bagwell, 512 U.S. 821, 831 (1994) (emphasis added); see also

In re Debs, 158 U.S. 564, 595 (1895); Waffenschmidt v. MacKay, 763 F.2d 711, 716 (5th

Cir. 1985) (“Enforcement of an injunction through a contempt proceeding must

occur in the issuing jurisdiction because contempt is an affront to the court issuing

the order.”); Fed. R. Civ. P. 4.1 Advisory Committee Notes to 1993 Amendment

(“Contempt proceedings, whether civil or criminal, must be brought in the court

that was allegedly defied by a contumacious act.”); cf. Klett v. Pim, 965 F.2d 587,

591 (8th Cir. 1992) (explaining that the “plain meaning” of the contempt statute, 18

U.S.C. § 401, “prevents a federal court from imposing a sanction for contempt of

another court’s injunction”). This Court has long followed this equitable principle.

See, e.g., Stiller v. Hardman, 324 F.2d 626, 628 (2d Cir. 1963) (denying enforcement

of an injunction in a New York court that was issued by an Ohio court because

                                         15
“[v]iolation of an injunctive order is cognizable in the court which issued the

injunction”).

       Plaintiff fails to offer a single example of one court exercising its civil

contempt authority on behalf of another court’s injunction. 6 Nor are we aware of

any. As telling as that gap is, it’s of no surprise. The civil contempt power is, at

its core, uniquely personal to each court; by providing a mechanism to mandate

compliance when a court is confronted with disobedience, it is a necessary

corollary to a court’s authority to issue binding orders.            “Courts thus have

embraced an inherent contempt authority . . . as a power necessary to the exercise

6 Indeed, plaintiff has failed to offer any compelling examples of one court enforcing
injunctions entered by another court—even without resorting to its civil contempt
authority. The cases she cites concern statutory grants of power which in specific, limited
cases broaden a court’s power to protect or provide relief from orders entered by other
courts. See, e.g., Smith v. Woosley, 399 F.3d 428, 433–34 (2d Cir. 2005) (construing the
relitigation exception to the Anti-Injunction Act, 28 U.S.C. § 2283); Smith v. New York, No.
12 Civ. 4851, 2014 WL 6783194 (E.D.N.Y. Dec. 2, 2014) (analyzing Fed. R. Civ. P. 60(b)(6),
which authorizes courts to provide relief from final judgments based on extraordinary
circumstances). No doubt, Congress is free to pass laws which provide for departures
from longstanding equity practice. Yet “a major departure from the long tradition of
equity practice should not be lightly implied.” eBay Inc. v. MercExchange, L.L.C., 547 U.S.
388, 391 (2006). These cases hardly establish an across-the-board rule that one court may
enforce another court’s injunction. Accordingly, even if plaintiff’s complaint is construed
as asserting separate and distinct causes of action including, but not limited to, a claim
for contempt—a characterization which, as explained above, we reject—it is far from clear
that her quest for class-wide relief would be any less difficult.
                                            16
of all others.” Bagwell, 512 U.S. at 831 (internal quotation marks omitted); see also

Leman v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 454 (1932) (“[T]he proceeding

for civil contempt for violation of the injunction should be treated as a part of the

main cause.”).     Against this backdrop, plaintiff’s theory of a free-wielding

contempt authority, capable of exercise by one court on behalf of another court,

would “present the anomalous proceeding of one court taking cognizance of an

alleged contempt committed before and against another court, which possessed

ample powers, itself to take care of its own dignity and punish the offender.” Ex

parte Bradley, 74 U.S. 364, 372 (1868); see also Myers v. United States, 264 U.S. 95, 104

(1924) (“By disobeying the order, plaintiffs . . . defied an authority which that

tribunal was required to vindicate.” (emphasis added)).

      Further still, a court’s broad authority to identify, prosecute, adjudicate, and

sanction contumacious conduct makes for a “potent weapon,” Taggart, 139 S. Ct.

at 1801, which, in Taggart, undergirded the Supreme Court’s conclusion that civil

contempt should not be employed where there is a fair ground of doubt as to the

wrongfulness of the defendant’s conduct.             Heeding the Supreme Court’s

cautionary approach, we decline to expand the availability of a bankruptcy court’s

                                           17
civil contempt authority to any similarly aggrieved party, anywhere in the

country, that comes before one court seeking relief from an alleged contemnor’s

comparable affront to a different court. Doing so could “wreak havoc on the

federal courts to leave enforcement of the injunctive order of a bankruptcy court

in one district to the interpretive whims of a bankruptcy court in another district.”

Alderwoods Grp., Inc. v. Garcia, 682 F.3d 958, 970 (11th Cir. 2012).

       Plaintiff’s reasoning is also in tension with our repeated observation that “a

bankruptcy court has ‘unique expertise in interpreting its own injunctions and

determining when they have been violated.’” In re Gravel, 6 F.4th 503, 513 (2d Cir.

2021) (quoting In re Anderson, 884 F.3d at 390–91); see also In re Belton, 961 F.3d at

617.   She acknowledges as much, but contends that, unlike a judge-crafted,

“bespoke” injunction, the generally uniform nature of § 524(a)(2)’s statutory

injunction minimizes the unique insight courts normally have into their own

injunctions. See Appellee Br. at 35–37.

       As an initial matter, we rejected that line of argument in Anderson, and again

in Belton. Specifically, the appellant in Anderson advocated for the arbitrability of

discharge violation claims by arguing that because the discharge injunction under

                                          18
§ 524(a)(2) arises from statute and is executed by a bankruptcy court on a standard

form using boilerplate language, “the unique powers of the bankruptcy court are

not implicated in any meaningful way.” 884 F.3d at 391. We saw it differently,

reasoning that “[n]either the statutory basis of the order nor its similarity—even

uniformity—across bankruptcy cases alters the simple fact that the discharge

injunction is an order issued by the bankruptcy court and that the bankruptcy

court alone possess the power and unique expertise to enforce it.” Id.

      Similarly, upon Citi’s request in Belton to reconsider our holding in

Anderson, we reaffirmed the non-arbitrability of § 524(a)(2) discharge violations,

explaining—at plaintiff’s urging—that the “issuing court is uniquely positioned to

assess” the various considerations at play in contempt proceedings. In re Belton,

961 F.3d at 617.

      True, discharge orders, which might often be issued on standard forms, 7

trigger a statutory, rather than a judge-crafted, injunction. Yet, beyond the mere

7 Citi points out that the discharge order form utilized by the bankruptcy court below
differed from the standard form available on the federal government’s website. See
Appellant      Br.    at   65    (comparing    App’x     29    with   Form     B     18
[https://www.uscourts.gov/forms/bankruptcy-forms/discharge-debtor]).
                                          19
determination whether a discharge order has been violated, the appropriateness

of civil contempt sanctions, and in what form, are considerations that can still

benefit from the unique insight a bankruptcy court can gain in presiding over a

proceeding. Taggart makes that much clear; the Court provided that “a party’s

record of continuing and persistent violations and persistent contumacy,” on the

one hand, and, on the other hand, “a party’s good faith, even where it does not bar

civil contempt, may help to determine an appropriate sanction.” 139 S. Ct. at 1802

(internal citations and quotation marks omitted). Plainly, the bankruptcy court’s

familiarity with the matter remains important.

      In any event, Taggart does not suggest that the statutory basis of the

discharge injunction is of any significance in determining its manner of operation

or how it might be enforced. To the contrary, the Supreme Court made clear that

“traditional civil contempt principles apply straightforwardly to the bankruptcy

discharge context,” id., and as explained above, a straightforward application of

longstanding civil contempt principles suggests that only the issuing court may

exercise its civil contempt powers to enforce its discharge order, and the injunction

which springs from it.

                                         20
      At bottom, plaintiff seeks a bankruptcy-specific expansion of the civil

contempt power beyond its longstanding limits at equity. Congress is capable of

intervening to guide the exercise of a bankruptcy court’s civil contempt power.

But “a major departure from the long tradition of equity practice should not be

lightly implied.” eBay Inc. v. MercExchange, L.L.C., 547 U.S. 388, 391 (2006); see also

Zuckerman v. Metro. Museum of Art, 928 F.3d 186, 196 (2d Cir. 2019). Nothing in the

Code suggests that Congress intended to displace well-established principles

regarding the exercise of the civil contempt power.

      Although the bankruptcy court grounded its authority in §§ 524 and 105,

Taggart examined those provisions and concluded they incorporate traditional

standards of equity practice, see Taggart, 139 S. Ct. at 1801, which, as provided

above, includes the principle that a court cannot exercise its civil contempt

authority to enforce another court’s injunction. Moreover, as the Fifth Circuit

explained in Crocker, the Bankruptcy Code, at one time, provided that an order of

discharge could be registered in another district and “enforced in like manner” in

the new district as in the issuing district. See In re Crocker, 941 F.3d 206, 213 (5th

Cir. 2019) (quoting Pub. L. No. 91-467, § 3, 84. Stat. 990, 991). However, upon the

                                          21
adoption of the Bankruptcy Code in 1978, that provision was revised to remove

that language. See id. Current Federal Rule of Bankruptcy Procedure 4004(f)

“guides registration but does not authorize ‘like manner’ enforcement as did its

predecessor.” In re Crocker, 941 F.3d at 214. We presume that Congress’s removal

of this language “entail[ed] a change in meaning.” See Yu v. Hasaki Rest., Inc., 944

F.3d 395, 418 (2d Cir. 2019) (quoting Antonin Scalia & Bryan A. Garner, Reading

Law: The Interpretation of Legal Texts 256 (2012)); see also id. (“Statutory history is

. . . an accepted and uncontroversial tool in the interpretation of statutory texts.”

(citation omitted)). Plaintiff’s version of a more robust civil contempt power may

have once found, but no longer finds, support in the Code.8

       In sum, there may be policy considerations that counsel in favor of a

nationwide mechanism for a class of former debtors to enforce their respective

discharge orders against a common creditor’s systemic disruption of their new

8The bankruptcy court minimized the significance of this statutory history, pointing to
Rule 4004(f)’s language that “the order of discharge shall have the same effect as an order
of the Court of the district where registered.” App’x 266 (quoting Fed. R. Bankr. P.
4004(f)). Yet whether an injunction has force beyond where it was originally issued is a
different question than the nature and availability of the means to enforce that injunction.
Rule 4004(f) simply makes clear that, upon registration, a party’s legal duty to comply
with the injunction extends to the district of registration. It does not speak to how an
aggrieved debtor might remedy violations that occur in the new district.
                                            22
financial lives. Indeed, given the “fresh start” philosophy underlying the Code,

establishing a broad enforcement mechanism for § 524, or expanding a bankruptcy

court’s civil contempt powers with respect to discharge orders, may likely be good

policy. But courts must take statutes as they find them, and, as written, the Code

leaves intact the longstanding equitable principles regarding the enforcement of

injunctions. A bankruptcy court’s civil contempt authority does not extend to

other bankruptcy courts’ discharge orders in a nationwide class action. The

class-wide relief sought by plaintiff is therefore unavailable under the Bankruptcy

Code.

     II.    Plaintiff has stated a claim for civil contempt under Taggart’s “fair
            ground of doubt” standard.

        Only plaintiff’s individual contempt claim remains. Taggart provides the

yardstick to measure her claim: a bankruptcy court may hold a creditor in civil

contempt for violation of the discharge order only if, as an objective matter, “there

is no fair ground of doubt as to whether the order barred the creditor’s conduct.”

139 S. Ct. at 1799 (emphasis omitted).

                                         23
       That standard is satisfied here. 9 As provided above, plaintiff alleges that,

post-bankruptcy, the credit report’s tradeline for her Citi credit card listed Citi as

a creditor and incorrectly listed her balance as “charged off” instead of discharged

in bankruptcy. App’x 62. She claims that she asked Citi to update the tradeline,

but the bank refused. Id. at 63. That refusal, she continues, is part of a deliberate

policy of coercing debtors to pay off discharged debts. Plaintiff explains that Citi

is fully aware that its behavior is coercive because Citi mails “collection letters” to

debtors before their bankruptcy filings “stating that ‘charge offs’ will ruin their

ability to obtain credit and conversely promising to remove the ’charge off’ if they

pay the delinquent debt in full.” Id. at 71. After the bankruptcy filing and

discharge order, Citi “know[s] that the existence of such inaccurate information”

in the credit reports will “damage . . . credit ratings,” and that debtors will “often

9Seeking to chart a path to relief in the event that her contempt claim fails, plaintiff argues
that Taggart’s “fair ground of doubt” standard “does not speak at all” to whether she (and
her proposed fellow class members) are entitled to declaratory relief and damages.
Appellee Br. at 24. That is an issue we need not decide given that plaintiff has cleared
Taggart’s high bar; a successful contempt claim is necessarily accompanied by a
determination that the creditor violated the discharge order, and opens the door to
recovery of damages, including restitution. Whether and to what extent relief short of
contempt sanctions is available in the case of a discharge violation for which a fair ground
of doubt remains is a question for another day.
                                              24
feel it necessary to pay off the debt despite [the] discharge in order to remove the

inaccurate information from their credit reports.” Id. at 70.

      She also explains, in a nonconclusory fashion, the way Citi financially

benefits from the practice: third-party debt collection agencies “are willing to pay

more” for Citi’s delinquent receivables given that, due to the confusion created by

Citi’s policy, the agencies “know they can collect on discharged debts.” Id. at 64.

Accepting these allegations as true, plaintiff has plausibly alleged that Citi

employs a policy and practice of refusing to correct erroneous tradelines to coerce

payment of discharged debts. In short, plaintiff plausibly alleges that Citi’s refusal

to correct her tradeline was objectively, and purposively, coercive. See In re Pratt,

462 F.3d 14, 19 (1st Cir. 2006).

      Citi offers various arguments as to why plaintiff’s allegations fall short.

None persuade.       Citi claims, for example, that § 524(a)(2) applies only to

affirmative efforts to collect a discharged debt, but that plaintiff alleges, at best,

that Citi merely failed to ask credit reporting agencies to update a tradeline on an

account Citi had sold years earlier. See Appellant Br. at 33–34. Failing to act, the

bank says, cannot amount to a discharge violation.

                                         25
      Faithfully read, the complaint describes a course of conduct by Citi which

includes, but is not limited to, Citi’s refusal to correct post-discharge tradeline

errors. As detailed above, plaintiff explains (a) how and why the post-discharge

“charged off” notation pressures former debtors; (b) how Citi takes advantage of,

and financially benefits from that fear; and (c) how Citi’s post-discharge control of

the tradeline, despite selling the debt to third-party debt collection agencies, plays

an important part in Citi’s scheme.

      Taken together, plaintiff plausibly claims that Citi’s refusal to correct the

tradeline at plaintiff’s request was part of a systematic effort to pressure or coerce

plaintiff (and similarly situated debtors) to pay off her (and their) discharged debt.

Plaintiff pleads facts which, taken as true, establish an intentional course of

conduct aimed at collecting discharged debts. In other words, although the

“failure of a furnisher of credit information to take affirmative steps to update the

information that it has reported on a consumer’s account is not, standing alone, a

violation of [§] 524(a)(2),” In re Ho, 624 B.R. 748, 755 (Bankr. E.D.N.Y. 2021),

plaintiff’s allegations are not so limited.

                                          26
      Consequently, there is no § 524 “affirmative act” deficiency here.           An

intentional and systematic refusal to update the credit report upon the debtor’s

request constitutes “an act to collect” under § 524(a)(2) where, objectively, it has

the practical effect of improperly coercing the debtor into paying off a discharged

debt. See Roth v. Nationstar Mortg., LLC (In re Roth), 935 F.3d 1270, 1276 (11th Cir.

2019); Venture Bank v. Lapides, 800 F.3d 442, 448 (8th Cir. 2015); In re Paul, 534 F.3d

1303, 1308 (10th Cir. 2008); In re Pratt, 462 F.3d at 19. As provided above, the

connection between Citi’s course of conduct—including its refusal—and its

objective, coercive effect on discharged debtors is obvious.

      Citi also suggests that having sold plaintiff’s debt to Midland

pre-bankruptcy, it was no longer her creditor, and therefore is beyond § 524(a)(2)’s

reach. Not true. As an initial matter, the bankruptcy court’s discharge order

explained that it “prohibits any attempt to collect from the debtor a debt that has

been discharged.” App’x 30. Although the order provided elsewhere that all

“creditors” are enjoined from “engaging in any act to collect [] debts . . . of the

debtor,” id. at 29, it also made clear that its reach applied more broadly, that is, to

all efforts to collect a discharged debt. See also 11 U.S.C. § 524(a)(2) (enjoining “an

                                          27
act to collect, recover, or offset any such debt” without specifying that only current

creditors are enjoined).

      Moreover, plaintiff alleges that despite the sale to Midland, Citi continued

to appear as the sole creditor on the tradeline, and that, by collecting discharged

debts and forwarding those payments to Midland, Citi acted as Midland’s agent

and remained involved in the collection of discharged debt—and the value of that

involvement generally was reflected in the premium Midland paid Citi for

plaintiff’s debt. App’x 71. Indeed, plaintiff alleges that under the terms of Citi and

Midland’s agreement, only Citi may “report the sold debts as sold or transferred”

and “Midland will not be responsible for correcting or updating information on

any debts listed in” Citi’s name. Id. at 64. The complaint thus plausibly alleges

that Citi is “fully aware that [its] deliberate failure to update a discharged debtor’s

. . . account coerces the debtor to pay said account.” Id. at 71. We decline to impose

a rule whereby creditors can avoid their obligations under a discharge order by

                                          28
covertly passing their debt off to third parties. Citi remained within § 524(a)(2)’s

reach. 10

       Throughout its brief, Citi relies on this Court’s decision in In re Kalikow, 602

F.3d 82 (2d Cir. 2010). That case makes clear that discharge orders are not so

limitless to extend to debts incurred post discharge, or to third parties who have

“no relation to the reorganization proceedings,” id. at 95, no interest, either

indirectly or indirectly, against the debtor, and who did nothing to pressure the

debtor into paying a discharged debt. Id. at 95–96. That’s not this case. Far from

having no relation to the reorganization proceeding, plaintiff alleges that she listed

her debt with Citi in her bankruptcy petition and provided Citi notice both of that

fact, as well as of her eventual discharge. Plaintiff also explains how Citi maintains

an interest against the debtor; she describes in detail the way Citi retains control

over the tradeline, as well as why its policy of refusing to correct the tradeline is

designed to coerce discharged debtors into paying off discharged debts.

10Citi also seeks to draw on its obligations under the Fair Credit Reporting Act (“FCRA”),
which, it argues, places the burden of substantively responding to bankruptcy-related
credit reports requests on the credit reporting agencies, rather than the furnishers of that
information. Citi’s obligations under the FCRA are not determinative of its obligations
under the Bankruptcy Code.
                                            29
      At bottom, accepting her nonconclusory allegations as true and drawing

reasonable inferences in her favor, plaintiff has plausibly alleged that Citi’s refusal

to correct her tradeline stems from a policy of coercing unwitting debtors to pay

off discharged debts. There is no fair ground of doubt that, if true, Citi’s conduct

amounts to a violation of the discharge. See Taggart, 139 S. Ct at 1799. We therefore

affirm the bankruptcy court’s denial of Citi’s motion to dismiss plaintiff’s

individual contempt claim.

                                  CONCLUSION

      Accordingly, we AFFIRM IN PART and REVERSE IN PART the

bankruptcy court’s order and REMAND for further proceedings consistent with

this opinion.

                                          30