Court Opinion

ID: 4179972
Source: CourtListenerOpinion
Date Created: 2017-06-22 17:03:27.727727+00
Date Added: 2024-06-11T09:21:38.772292
License: Public Domain

NOT PRECEDENTIAL

               UNITED STATES COURT OF APPEALS
                    FOR THE THIRD CIRCUIT
                         ____________

                              No. 16-2963
                             ____________

                          DAWUD HARRIS,
                          a/k/a David Harris

                                   v.

     PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY/
              AMERICAN EDUCATION SERVICES

                             Dawud Harris,
                                Appellant
                    ____________________________

             On Appeal from the United States District Court
                for the Eastern District of Pennsylvania
                     (D.C. Civ. No. 2-16-cv-00693)
              District Judge: Honorable Mark A. Kearney
               __________________________________

             Submitted Pursuant to Third Circuit LAR 34.1(a)
                             June 20, 2017

        Before: SHWARTZ, COWEN and FUENTES, Circuit Judges

                     (Opinion filed: June 22, 2017)
                            ____________

                              OPINION*
                             ____________

PER CURIAM
       Dawud Harris, a/k/a David Harris, appeals from an order of the District Court

dismissing his amended complaint pursuant to Federal Rule of Civil Procedure 12(b)(6).

For the reasons that follow, we will affirm.

       Harris filed an in forma pauperis civil action in the United States District Court for

the Eastern District of Pennsylvania against the Pennsylvania Higher Education

Assistance Agency (“PHEAA”), challenging three student loans made to him in 2005,

2006, and 2007, which were owned and serviced by PHEAA. Harris claimed that

PHEAA exploited him financially, in violation of the Americans with Disabilities Act

(“ADA”), 42 U.S.C. § 12132, by fabricating financial information on his student loan

documents, which then adversely affected his credit score. Harris attached items to his

complaint showing that he was delinquent on his student loans. The District Court

dismissed Harris’s complaint without prejudice, reasoning that, although he alleged that

he suffered from a disability, he did not allege sufficiently that PHEAA denied him

services or discriminated against him because of his disability. The Court held that his

allegation that PHEAA altered his loan documents did not give rise to a plausible ADA

claim of discrimination. The District Court noted Harris’s reference to the Fair Credit

Reporting Act (“FCRA”), 15 U.S.C. § 1681, et seq., and granted him leave to amend.

       Harris then filed an amended complaint, in which he dropped his ADA claim and

attempted to state a claim for relief under § 1681i of the FCRA. Harris alleged that

PHEAA violated the FCRA by negligently and coercively acting to collect a debt. He

explained that he applied for a loan in 2014 from the Philadelphia Federal Credit Union

where he maintained an account, but the Credit Union denied the loan on the basis of his

                                               2
unpaid student loans. Harris explained that he then filed a complaint with the Bureau of

Consumer Financial Protection regarding PHEAA’s collection efforts on his student

loans, alleging that PHEAA was not responding to his telephone calls and letters. In his

amended complaint Harris sought discharge, cancellation, and forgiveness of his loans,

and money damages in the amount of $30,000.00. He attached to his amended complaint

copies of letters to him from American Education Services demanding payment on his

student loans.

       PHEEA moved to dismiss the amended complaint for failure to state a claim upon

which relief may be granted, Fed. R. Civ. P. 12(b)(6), arguing that it is not a consumer

reporting agency under the FCRA, see 15 U.S.C. § 1681i, and therefore cannot be sued.

It noted further that “furnishers” of information may, under the statute, report accurate

information to a consumer reporting agency based on their experiences with a customer.

Furthermore, as established by the letters Harris had attached to his amended complaint,

it had warned Harris in advance that it would report negative information about him to

consumer reporting agencies. PHEEA further argued that, although § 1681s-2(b)

requires a reasonable investigation in response to a credit dispute, Harris did not allege

that he had ever submitted his credit dispute to a consumer reporting agency, as required

by the statute. Harris opposed dismissal of his amended complaint, arguing, among other

things, that PHEEA’s trade name, “American Education Services,” made it more than a

furnisher of information under the FCRA.

       In an order entered on June 24, 2016, the District Court granted PHEEA’s motion

and dismissed Harris’s amended complaint with prejudice. The Court held that PHEAA

                                              3
is not a consumer reporting agency, as defined by the FCRA. The Court further held that

there is no private right of action under § 1681s-2(a) against PHEAA as a furnisher of

information, and that Harris had failed to state a claim under § 1681s-2(b) because he

filed his complaint with the Bureau of Consumer Financial Protection, not with a

consumer reporting agency.

       Harris appeals. We have jurisdiction under 28 U.S.C. § 1291. In addition to

submitting his Informal Brief and several supplements, Harris filed a “Motion to Vacate

Trial Court Judgment,” calling this Court’s attention to the issuance of a Form 1099-C to

him showing that his debt has been discharged.

       We will affirm. Review of a District Court’s decision to grant a motion to dismiss

pursuant to Rule 12(b)(6) is plenary. See Jordan v. Fox, Rothschild, O’Brien & Frankel,

20 F.3d 1250, 1261 (3d Cir. 1994). A Rule 12(b)(6) motion tests the sufficiency of the

factual allegations contained in the amended complaint. See Kost v. Kozakiewicz, 1 F.3d

176, 183 (3d Cir. 1993). A motion to dismiss should be granted if the plaintiff is unable

to plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atlantic

Corp. v. Twombly, 550 U.S. 544, 570 (2007). A claim is plausible when the facts alleged

allow the court to draw the inference that the defendant is liable for the misconduct

alleged. See Burtch v. Millberg Factors, Inc., 662 F.3d 212, 220-21 (3d. Cir. 2011).

Although factual averments must be accepted as true, legal conclusions are disregarded.

See Fowler v. UPMC Shadyside, 578 F.3d 203, 210-11 (3d Cir. 2009).

       The FCRA was enacted to protect consumers from the transmission of inaccurate

information about them, and to establish credit reporting practices that use accurate

                                               4
information. Cortez v. Trans Union, LLC, 617 F.3d 688, 706 (3d Cir. 2010). Consumer

reporting agencies must “follow reasonable procedures to assure maximum possible

accuracy of the information concerning the individual about whom the report relates,” 15

U.S.C. § 1681e(b), and they are subject to suit by consumers under § 1681i when they

fail in this regard, see SimmsParris v. Countrywide Financial Corp., 652 F.3d 355, 359

(3d Cir. 2011); 15 U.S.C. §§ 1681n and 1681o. That said, the District Court properly

dismissed Harris’s amended complaint to the extent that he asserted a claim pursuant to §

1681i because PHEAA is not a “consumer reporting agency” under the FCRA. A

consumer reporting agency “regularly engages in whole or in part in gathering or

evaluating information on consumers for the purpose of furnishing consumer reports to

third parties….” 15 U.S.C. § 1681a(f). “As used in the statute the term refers to firms

that are in the business of assembling and evaluating consumer credit information.”

DiGanni v. Stern’s, 26 F.3d 346, 348-49 (2d Cir. 1994). PHEAA does neither of these

things. PHEAA operates nationally, under the name American Education Services,

conducting lending, servicing, and guaranteeing activities in connection with federally-

backed student loans, see United States ex rel. Oberg v. Pa. Higher Education Assistance

Agency, 745 F.3d 131, 138 (4th Cir. 2014). It is not a “consumer reporting agency” as a

matter of law, and its use of a trade name is irrelevant.1

       On the other hand, PHEAA properly acknowledged in the proceedings below that

it was a “furnisher” of information within the meaning of the FCRA in Harris’s case. A

1
 The three major consumer credit reporting agencies are TransUnion, Experian, and
Equifax.
                                              5
“furnisher” of information is an entity, often a creditor, that furnishes information

regarding a consumer to one or more consumer reporting agencies for inclusion in a

consumer report. 16 C.F.R. § 660.2(c). PHEEA’s actions thus are judged under 15

U.S.C. § 1681s-2(b) regarding the duties of furnishers of information.2 Section 1681s-

2(b) imposes certain duties on a furnisher/creditor who has been notified by a consumer

credit reporting agency that a consumer has disputed information furnished by that

furnisher/creditor. See Seamans v. Temple University, 744 F.3d 853, 864-65 (3d Cir.

2014); Johnson v. MBNA America Bank, NA, 357 F.3d 428, 429-30 (4th Cir. 2004).

After receiving such notice, the furnisher/creditor must conduct a reasonable

investigation and follow the procedures prescribed by § 1681s-2(b)(l)(A) through (E).3

2
 As explained by the District Court, there is no private right of action against a furnisher
of information under § 1681s-2(a); only federal or state authorities may enforce this
subsection. 15 U.S.C. § 1681s-2(d); Seamans v. Temple University, 744 F.3d 853, 864
(3d Cir. 2014).
3
    Section 1681-2(b)(1)(A)-(E) provides as follows:

         (1) In general
         After receiving notice pursuant to section 1681i(a)(2) of this title of a dispute with
         regard to the completeness or accuracy of any information provided by a person to
         a consumer reporting agency, the person shall--
                 (A) conduct an investigation with respect to the disputed information;
                 (B) review all relevant information provided by the consumer reporting
                 agency pursuant to section 1681i(a)(2) of this title;
                 (C) report the results of the investigation to the consumer reporting agency;
                 (D) if the investigation finds that the information is incomplete or
                 inaccurate, report those results to all other consumer reporting agencies to
                 which the person furnished the information and that compile and maintain
                 files on consumers on a nationwide basis; and
                 (E) if an item of information disputed by a consumer is found to be
                 inaccurate or incomplete or cannot be verified after any reinvestigation
                 under paragraph (1), for purposes of reporting to a consumer reporting
                                                6
Id. Harris, however, cannot state a claim under § 1681s-2(b) because he did not allege,

nor could he have alleged, that PHEAA failed to conduct a reasonable investigation in

response to a credit dispute he submitted to a consumer reporting agency. Under the

FCRA, consumers notify consumer credit reporting agencies about inaccuracies in their

credit reports. The duties imposed under § 1681s-2(b)(1)(A)-(E) are triggered only after

a furnisher of information receives notice from a consumer reporting agency about a

dispute. See SimmsParris, 652 F.3d at 358 (notice “must be given by a credit reporting

agency, and cannot come directly from the consumer”). See also Chiang v. Verizon New

England Inc., 595 F.3d 26, 35 & n.8 (1st Cir. 2010) (same); Gorman v. Wolpoff &

Abramson, LLP, 584 F.3d 1147, 1154 (9th Cir. 2009) (same). A consumer may certainly

notify a furnisher/creditor directly about his dispute but there is no private cause of action

under § 1681s-2(b) for a furnisher’s failure to properly investigate such a dispute. Id.

       Harris never submitted his credit dispute regarding his PHEAA student loans to a

consumer reporting agency. His Informal Brief makes clear that he contacted the Bureau

of Consumer Financial Protection for assistance with his credit dispute, but the Bureau is

not in the business of assembling and evaluating consumer credit information, and is thus

not a “consumer reporting agency” under the FCRA. It is instead an Executive agency

established within the Federal Reserve System to “regulate the offering and provision of

              agency only, as appropriate, based on the results of the reinvestigation
              promptly--
                    (i) modify that item of information;
                    (ii) delete that item of information; or
                    (iii) permanently block the reporting of that item of information.

15 U.S.C. § 1681-2(b)(1)(A)-(E).
                                              7
consumer financial products or services under the Federal consumer financial laws” 12

U.S.C. § 5491(a). Accordingly, the District Court also properly dismissed Harris’s

amended complaint to the extent that he attempted to state a claim under § 1681s-2(b).

      For the foregoing reasons, we will affirm the order of the District Court dismissing

Harris’s amended complaint. We decline to consider any new arguments raised by Harris

for the first time in his many supplemental briefs, see Fed. R. App. P. 28(a). His “Motion

to Vacate Trial Court Judgment” is denied.4

4
  In February, 2016, PHEAA notified Harris that it would be writing off his delinquent
loans and would issue a Form 1099-C reflecting the cancellation of all sums due because
of non-payment. Form 1099-C notifies the Internal Revenue Service of the discharged
amount because it may be considered income for federal tax purposes. Contrary to
Harris’s assertion, the Form 1099-C does not constitute an admission of wrongdoing by
PHEAA, although it would moot his demand for the relief of cancellation and discharge.
                                              8