Court Opinion

ID: 813154
Source: CourtListenerOpinion
Date Created: 2012-12-06 15:19:51+00
Date Added: 2024-06-11T18:00:47.395217
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                             File Name: 12a1257n.06

                                          No. 11-6049
                                                                                      FILED
                                                                                  Dec 06, 2012
                           UNITED STATES COURT OF APPEALS
                                                                            DEBORAH S. HUNT, Clerk
                                FOR THE SIXTH CIRCUIT

KIM BROWN,                                    )
                                              )
       Plaintiff-Appellant,                   )
                                              )
v.                                            )
                                              )
WAL-MART STORES, INC.; EXXON MOBIL            )
CORPORATION; EQUIFAX INC.; CITIBANK,          )
N.A., dba Citi, dba Citicorp; GE MONEY BANK;  )
EXPERIAN INFORMATION SOLUTIONS, INC.,         )            ON APPEAL FROM THE UNITED
aka Experian plc; LVNV FUNDING, LLC, aka IVNV )            STATES DISTRICT COURT FOR
Funding, LLC; CITIGROUP, INC.; GENERAL        )            THE WESTERN DISTRICT OF
ELECTRIC COMPANY,                             )            TENNESSEE
                                              )
       Defendants-Appellees,                  )
                                              )
and                                           )
                                              )
TRANS UNION, LLC; MIDLAND FUNDING, LLC; )
MIDLAND CREDIT MANAGEMENT, INC.;              )
ENCORE CAPITAL GROUP, INC.; AIS               )
SERVICES, LLC,                                )
                                              )
       Defendants.                            )

       Before: MERRITT, MARTIN, and GILMAN, Circuit Judges.

       PER CURIAM. Kim Brown, a pro se Tennessee resident, appeals a district court judgment

dismissing his complaint filed pursuant to the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681,

et seq., and Tennessee state law.

       According to Brown, the events preceding the filing of his complaint began when he received

a letter from Midland Credit Management, Inc. (MCM) in October of 2008, seeking to collect
                                            No. 11-6049
                                                -2-

payment on a “GE/Wal-Mart account” recently purchased by Midland Funding LLC. Brown

informed MCM that he did not have a Wal-Mart credit card. MCM in turn referred him to Wal-Mart

Stores, Inc. (Wal-Mart), which indicated that an account had been opened in 2005 through its

licensee, GE Money Bank (GEMB). The applicant listed an address where Brown had never lived

and a social security number that partially matched Brown’s number. Brown then checked his credit

report and discovered a delinquent Exxon credit card account which had been issued by Citibank.

Upon contacting the relevant collection agency, LVNV Funding, LLC (LVNV), Brown learned that
the applicant had used the same address and social security number provided for the Wal-Mart

account. Brown was unable to have the inaccurate information removed from his credit file. These

events allegedly caused Brown to suffer emotional distress and resulted in the denial of business loan

applications and a retail credit card application. Consequently, Brown filed the instant lawsuit in

February 2009.

       In his complaint, as amended on November 23, 2009, Brown sought monetary damages from

Wal-Mart; Exxon Mobil Corporation (Exxon); GEMB; Citibank (South Dakota), N.A.; Citigroup

Inc.; General Electric Company (GE); Midland Funding LLC; MCM; Encore Capital Group, Inc.

(Encore); LVNV; AIS Services, LLC (AIS); Trans Union LLC; Experian Information Solutions, Inc.

(Experian); and Equifax Inc. Brown alleged that: 1) the defendants intentionally inflicted emotional
distress; 2) the defendants negligently subjected him to emotional distress; 3) the defendants

maliciously published a false consumer report; 4) the defendants cast him in a false light through

their publication of a false consumer report; 5) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup,

Trans Union, Experian, and Equifax violated the FCRA by using flawed methods to verify new

customer information and by failing to investigate and correct inaccuracies in his credit file; 6) Wal-

Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax engaged in

unfair and deceptive business practices in violation of the Tennessee Consumer Protection Act; 7)

Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax committed
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                                               -3-

fraud or made false representations by allowing an imposter to obtain credit in his name; 8) Wal-

Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and Equifax failed to confirm

his identity; 9) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and

Equifax violated state law by issuing a false consumer report; 10) Wal-Mart, Exxon, GE, GEMB,

Citibank, Citigroup, Trans Union, Experian, and Equifax acted negligently by failing to confirm his

identity; 11) Wal-Mart, Exxon, GE, GEMB, Citibank, Citigroup, Trans Union, Experian, and

Equifax engaged in negligent enablement of identity fraud; 12) Wal-Mart, Exxon, GE, GEMB,
Citibank, Citigroup, Trans Union, Experian, and Equifax maliciously interfered with a business

relationship; and 13) the defendants defamed him. All of the defendants except Trans Union,

Experian, and Equifax filed motions to dismiss.

       The parties consented to have a magistrate judge hear the case. The magistrate judge

construed the federal claims against the moving defendants as brought pursuant to section 1681s-2(a)

and section 1681s-2(b). The magistrate judge observed that Brown had not raised any FCRA claim

against Midland Funding, MCM, LVNV, Encore, or AIS, and that there was no private cause of

action under section 1681s-2(a). With respect to claims brought under section 1681s-2(b), the

magistrate judge permitted them to proceed because no defendants had moved to dismiss those

claims. With respect to the state law claims, the magistrate judge concluded that they were
preempted by the FCRA and/or lacked merit. Thus, the magistrate judge dismissed Brown’s

allegations against Midland Funding, MCM, LVNV, Encore, and AIS.

       Brown moved to compel discovery from Trans Union and Experian. Trans Union responded

with its own motion to compel discovery and for attorney fees. The magistrate judge granted Trans

Union’s motion in part, denied Brown’s motions to compel, and granted Trans Union’s and

Experian’s motions for reasonable expenses pursuant to Federal Rule of Civil Procedure 37(a)(5).

The magistrate judge awarded $5,680 to Experian and $2,394 to Trans Union.
                                             No. 11-6049
                                                 -4-

          Brown filed a motion for a default judgment against Equifax. The magistrate judge denied

Brown’s motion, and the parties thereafter entered into a stipulation of dismissal. Brown

subsequently entered into a stipulation of dismissal with Trans Union as well.

          Experian moved for a protective order to limit discovery and for attorney fees. The

magistrate judge granted the motion and awarded Experian $7,608. On the same day, the magistrate

judge denied Brown’s motion to compel discovery from GEMB and Citibank as moot due to its

withdrawal. The magistrate judge awarded reasonable expenses jointly to these defendants in the
amount of $2,990.50.

          Upon consideration of Experian’s summary judgment motion, the magistrate judge construed

the complaint as raising two claims against Experian: 1) that Experian had failed to follow

reasonable procedures to assure the accuracy of consumer reports, in violation of sectoin 1681e(b);

and 2) that Experian had failed to conduct a reasonable reinvestigation to determine the accuracy of

disputed information, in violation of section 1681i(a). The magistrate judge granted summary

judgment to Experian and to all other remaining defendants. Brown then filed a timely notice of

appeal.

          Experian, Wal-Mart, Exxon, GEMB, and Citibank subsequently filed bills of costs in the

district court. After a hearing, the district court clerk issued an order awarding costs in the amount
of $1,135.97 to Experian and in the joint amount of $2,508.10 to Wal-Mart, Exxon, GEMB, and

Citibank. See Fed. R. Civ. P. 54(d). Brown appealed to the magistrate judge, who upheld the award.

Brown did not file a second notice of appeal.

          In his brief, Brown argues that: 1) Experian violated sections 1681e(b), 1681i(a), 1681c-1,

and 1681(b); 2) GEMB, Citibank, MCM, Midland Funding, and LVNV violated section 1681s-2(b);

3) the magistrate judge erred by holding that he had not raised FCRA claims against Midland

Funding, MCM, LVNV, and AIS in his complaint; 4) the magistrate judge erred by dismissing his

FCRA claims for damages for emotional distress caused by the furnishers of information and
                                            No. 11-6049
                                                -5-

Experian; 5) his state law claims were not preempted by the FCRA because he had sufficiently

pleaded malice and willful intent to injure; 6) the magistrate judge erred by denying his motion for

default judgment against Equifax; and 7) the magistrate judge was biased against him. Brown has

also filed a motion to stay the post-judgment award of costs. After Brown filed his brief, we granted

joint stipulations to dismiss Midland Funding, MCM, Encore, and AIS from this appeal.

       Upon de novo review, we conclude that the magistrate judge properly granted summary

judgment to Experian on the FCRA claims. See Harrow Prods., Inc. v. Liberty Mut. Ins. Co., 64
F.3d 1015, 1019 (6th Cir. 1995). Summary judgment is proper “if the movant shows that there is

no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

       Brown’s section 1681e(b) claim that Experian failed to use reasonable procedures lacks merit

because Brown presented no evidence that Experian had issued a consumer report about him. See

Nelski v. Trans Union, LLC, 86 F. App’x 840, 844 (6th Cir. 2004). Under the plain language of

section 1681e(b), Brown cannot maintain a claim for allegedly improper procedures unless the

consumer reporting agency actually issued a consumer report about him.

       Brown’s section 1681i(a) claim that Experian failed to conduct a reasonable investigation

of disputed credit information fails because Brown did not present evidence that he had given
Experian notice that he was disputing the information concerning the Wal-Mart and Exxon accounts.

At a deposition, an Experian representative explained that Brown had added a statement to his credit

file about the Wal-Mart account over the internet and that such a statement is “verified” by the

consumer clicking on an “okay” button. At that point, a pop-up window would let the consumer

know that Experian was only adding a statement and not contacting the creditor. To dispute

information, a consumer must click on a “dispute this item” button next to the account.

Alternatively, a consumer can notify Experian of a dispute by mail, phone, or fax. With respect to

the Exxon account, Brown likewise added a statement in March 2009 that he disputed the account
                                            No. 11-6049
                                                -6-

information, but did not properly request a reinvestigation. Thus, through this deposition testimony

Experian met its burden of showing a lack of evidence that Brown provided adequate notice of any

dispute. Brown’s statement in his affidavit that he had asked Experian “several times in October of

2008” for a reinvestigation was insufficient to rebut Experian’s well-supported motion. Brown did

not indicate how he had contacted Experian or detail any request for reinvestigation.

       Brown fails to identify where he stated claims pursuant to sectoin 1681c-1 and section 1681b

against Experian in his complaint, and we have no duty to scour the record to locate them. Although
pro se pleadings are to be liberally construed, we are not required to conjure up allegations not

pleaded or guess at the nature of an argument. Wells v. Brown, 891 F.2d 591, 594 (6th Cir. 1989).

       Upon de novo review, we conclude that the magistrate judge properly held that Brown failed

to state any FCRA claim against LVNV, whether pursuant to section 1681s-2(b) or any other section

of the FCRA. See Fed. R. Civ. P. 12(b)(6); Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 704

(6th Cir. 2009). In determining whether a complaint states a claim, a court must construe the

complaint in a light most favorable to the plaintiff, accept all the factual allegations as true, and

determine whether the complaint contains “enough facts to state a claim to relief that is plausible on

its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007).

       Brown does not address the magistrate judge’s holding that Brown failed to raise an FCRA
claim against LVNV in his complaint, and review of the complaint does not reveal any such claim.

Brown waived his section 1681s-2(b) and other FCRA claims with respect to MCM and Midland

Funding because he stipulated to their dismissal with prejudice. See Laczay v. Ross Adhesives, 855

F.2d 351, 354 (6th Cir. 1988).

       The magistrate judge properly granted summary judgment to GEMB and Citibank on the

section 1681s-2(b) claims. With respect to the Exxon account, Citibank and GEMB submitted

affidavits that they did not receive any notice of dispute from a consumer reporting agency. Thus,

Citibank and GEMB had no duty under section 1681s-2(b)(1) to conduct an investigation into
                                            No. 11-6049
                                                -7-

disputed information and to report results to consumer reporting agencies. Brown’s allegations that

he directly informed Citibank and GEMB did not obligate them to investigate. A private cause of

action against a furnisher of information does not arise until a consumer reporting agency provides

proper notice of a dispute. Boggio v. USAA Fed. Sav. Bank, 696 F.3d 611, 615–16 (6th Cir. 2012).

Directly contacting the furnisher of credit information does not actuate the furnisher’s obligation to

investigate a complaint. See Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th

Cir. 2002).
       With respect to the Wal-Mart account, GEMB indicated in its affidavit that it had received

four notices of dispute between December 2009 and March 2010. In each instance, GEMB

responded that it had sold the account on December 27, 2006. Because GEMB did not receive notice

until after Brown had amended his complaint in November 2009, any damages alleged in his

complaint could not have resulted from any action taken by GEMB.

       We further conclude that Brown has waived any FCRA claim against AIS because he

stipulated to its dismissal with prejudice from his appeal. See Laczay, 855 F.2d at 354. We decline

to consider his argument that a court may award damages for emotional distress regardless of

whether an FCRA violation led to the denial of credit. Brown’s FCRA claims fail on the merits for

the reasons discussed above with respect to Experian and GEMB, and the magistrate judge did not
reach the issue of emotional distress with respect to any other defendant.

       Brown misconstrues the magistrate judge’s ruling concerning preemption. The magistrate

judge did not hold that all state law claims were preempted because Brown insufficiently pleaded

malice. Rather, the magistrate judge held that section 1681h(e) of the FCRA preempted the first,

fourth, and seventh claims as to the consumer reporting agencies because of insufficient pleading

of malice and willful intent.

       Brown has waived his preemption argument as to Equifax and Trans Union because he

stipulated to their dismissal with prejudice and without reservation of the right to appeal claims
                                           No. 11-6049
                                               -8-

against them. See id. The magistrate judge properly concluded that Brown failed to state a claim

as to Experian. We have not yet decided whether section 1681h(e)’s exception for claims alleging

malice or willful intent has been overridden by section 1681t(b)(1)(F), which was enacted later. See

Macpherson v. JPMorgan Chase Bank, N.A., 665 F.3d 45, 47–48 (2d Cir. 2011), cert. denied, 132

S. Ct. 2113 (2012); Purcell v. Bank of Am., 659 F.3d 622, 625 (7th Cir. 2011). Even if

section 1681h(e)’s exception remains, Brown’s claims still fail because his allegations of malice and

willful intent are too vague and conclusory to state a claim. See Ctr. for Bio-Ethical Reform, Inc.
v. Napolitano, 648 F.3d 365, 377 (6th Cir. 2011), cert. denied, 132 S. Ct. 1583 (2012).

       To the extent that Brown seeks to generally appeal the denial of other state-law claims, we

decline to consider them because Brown did not brief them. Issues “adverted to . . . in a perfunctory

manner, unaccompanied by some effort at developed argumentation,” are deemed waived. Langley

v. DaimlerChrysler Corp., 502 F.3d 475, 483 (6th Cir. 2007) (quotation marks and citations

omitted).

       We decline to consider whether the magistrate judge should have granted Brown’s motion

for a default judgment against Equifax. Brown waived his right to appeal the decision by later

stipulating to the dismissal of Equifax with prejudice and without reservation of the right to appeal

claims against it. See Laczay, 855 F.2d at 354.
       Brown argues that the magistrate judge exhibited bias against him by cryptically commenting

at a scheduling hearing in April of 2010 that Brown had brought “this” on himself and by imposing

monetary sanctions without warning beginning in November of 2010. Brown contends that the bias

is the result of two cases he brought where the magistrate judge’s family members acted as legal

counsel. In the first, the magistrate judge’s husband represented a defendant physician between 2006

and 2008. In the second case, Stephen Vescovo, who allegedly is either a relative or ex-husband of

the magistrate judge, currently represents Christian Brothers University. Furthermore, the magistrate

judge had sent her sons to the possibly affiliated Christian Brothers High School.
                                             No. 11-6049
                                                 -9-

          The magistrate judge did not err by failing to recuse herself under 28 U.S.C. § 455. A

magistrate judge must recuse himself or herself only “‘if a reasonable, objective person, knowing

all of the circumstances, would have questioned the judge’s impartiality.’” United States v.

Sammons, 918 F.2d 592, 599 (6th Cir. 1990) (quoting Hughes v. United States, 899 F.2d 1495, 1501

(6th Cir. 1990)). Brown’s allegations are conclusory and do not support an appearance of bias or

conflict of interest. Critical judicial remarks generally “do not support a bias or partiality challenge.”

Liteky v. United States, 510 U.S. 540, 555 (1994). No reasonable person would question the
magistrate judge’s impartiality based on her husband’s representation of a defendant in Brown’s

prior unrelated case. See Hook v. McDade, 89 F.3d 350, 355–56 (7th Cir. 1996). Brown’s beliefs

about Stephen Vescovo’s relationship to the magistrate judge are insufficient to form a basis for the

magistrate judge’s disqualification. See Gen. Aviation, Inc. v. Cessna Aircraft Co., 915 F.2d 1038,

1043 (6th Cir. 1990). Furthermore, judicial rulings, such as the awards of costs, will almost never

serve as a valid basis for recusal and are most often simply grounds for appeal. See Liteky, 510 U.S.

at 555.

          Regardless, the magistrate judge did not abuse her discretion by assessing fees against Brown

without warning for discovery violations under Rule 37. See Harmon v. CSX Transp., Inc., 110 F.3d

364, 366 (6th Cir. 1997). Where a party successfully moves to compel discovery, a court generally
“must” require the non-moving party to pay reasonable expenses incurred in making the motion

unless “circumstances make an award of expenses unjust.” Fed. R. Civ. P. 37(a)(5)(A). Likewise,

where a motion to compel is denied, the court “must” order the movant to pay reasonable expenses

absent special circumstances. Fed. R. Civ. P. 37(a)(5)(B). Although a judge should warn a party

before dismissing a suit due to discovery violations, Harmon, 110 F.3d at 366–67, nothing in the

language of the Rule requires a judge to warn a litigant before awarding fees to the other party.

Furthermore, we decline to review the magistrate judge’s post-judgment award of costs to the
                                           No. 11-6049
                                              - 10 -

defendants because Brown did not file a second notice of appeal. See McCarter v. Ret. Plan for Dist.

Managers of Am. Family Ins. Grp., 540 F.3d 649, 652–53 (7th Cir. 2008).

       We affirm the district court’s judgment and we deny all pending motions as moot.