UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
CASE NO.: CV 11-10089-SJO (AGRx) DATE: March 19, 2012
TITLE: Plaintiff v. Wells Fargo Dealer Services, Inc., et al.
PRESENT: THE HONORABLE S. JAMES OTERO, UNITED STATES DISTRICT JUDGE
Victor Paul Cruz
COUNSEL PRESENT FOR PLAINTIFF:
COUNSEL PRESENT FOR DEFENDANTS:
PROCEEDINGS (in chambers): ORDER DENYING DEFENDANT PROFESSIONAL
COLLECTION CONSULTANTS, INC.’S MOTION TO DISMISS [Docket No. 60]
This matter is before the Court on Defendant Professional Collection Consultants, Inc.’s (“PCC”)
Motion to Dismiss or, in the Alternative, for More Definite Statement (“Motion”) filed on February 9, 2012. Plaintiff (“Plaintiff”) filed an Opposition to the Motion on February 27, 2012
(“Opposition”), to which PCC filed a Reply on March 5, 2012 (“Reply”). The Court found this
matter appropriate for decision without oral argument and vacated the hearing set for March 19,
2012. See Fed. R. Civ. P. 78(b). For the following reasons, PCC’s Motion to Dismiss is DENIED.
I. FACTUAL AND PROCEDURAL BACKGROUND
Plaintiff’s First Amended Complaint (“FAC”) makes the following allegations. On or around
August 23, 2010, believing that he had been a victim of identity theft, Plaintiff contacted Experian, a consumer reporting agency, to dispute certain accounts that were falsely opened under his name with PCC and Wilshire Credit Corp. (“WCC”). (FAC ¶¶ 7-8, 11, Dec. 20, 2011, ECF No. 53.) Experian then informed PCC and WCC (collectively, “Defendants”) that Plaintiff disputed the accounts they claimed he had opened with them. (FAC ¶ 11.) Plaintiff pointed out that the information used to open these accounts contained errors, such as an incorrect previous address and an incorrect date of birth; notwithstanding these errors, both PCC and WCC once again verified to Experian that the accounts in question belonged to Plaintiff. (FAC ¶¶ 12-13.) Because of the inaccuracies that Defendants have disseminated to consumer reporting agencies regarding these accounts, Plaintiff alleges that he has been denied loans, extensions of consumer credit, and has suffered harm to his credit reputation. (FAC ¶¶ 15-18.)
Plaintiff filed his initial Complaint against Defendants and Wells Fargo Dealer Services, Inc. (“Wells Fargo”), Cashcall, Inc. (“Cashcall”), and Santander Consumer USA, Inc. (“Santander”) on August12, 2011, in the United States District Court for the Eastern District of Pennsylvania. (See generally Compl., ECF No. 1.) The Pennsylvania Court terminated Cashcall and Santander as defendants on Motions to Dismiss. (Order Dismissing Claims Against Cashcall, Nov. 9, 2011,
ECF No. 29; Order Dismissing Claims Against Santander, ECF No. 32.) Plaintiff voluntarily
dismissed the action against WCC on November 29, 2011. (Notice of Voluntary Dismissal, ECF
No. 28.) The action was subsequently transferred to the Central District of California as to PCC
only on December 6, 2011.1 (Notice of Receipt of Case Transferred In, ECF No. 38.)
On December 20, 2011, Plaintiff filed the FAC against PCC, re-adding WCC as a defendant and
alleging one cause of action against Defendants: violation of the Federal Credit Reporting Act
(“FCRA”) for willful and negligent non-compliance with the duties imposed on furnishers of
information outlined in 15 U.S.C. § 1681s-2(b). (FAC ¶¶ 22-24.) Plaintiff seeks actual damages,
statutory damages, punitive damages, costs and attorney’s fees. (FAC, Prayer for Relief.)
On February 9, 2012, PCC filed the instant Motion. WCC did not join in or individually file a similar motion. In its Motion, PCC argues that Plaintiff failed to provide enough detail to satisfy Federal Rule of Civil Procedure 8 and that Plaintiff’s suit is barred because he failed to file an identity theft report prior to commencing the action.
A. Failure to State a Claim
A motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) tests the legal sufficiency of the claims asserted in the complaint. Ileto v. Glock, Inc., 349 F.3d 1191, 1199-200 (9th Cir.2003). A court accepts the plaintiff’s material allegations in the complaint as true and construes them in the light most favorable to the plaintiff. Shwarz v. United States, 234 F.3d 428, 435 (9th Cir. 2000). Dismissal is proper if the complaint lacks a “cognizable legal theory” or “sufficient facts alleged under a cognizable legal theory.” Balistreri v. Pacifica Police Dep’t, 901 F.2d 696, 699 (9th Cir. 1988). In pleading sufficient facts, a plaintiff must proffer “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). Additionally, Rule 12(b)(6) must be read in conjunction with Rule 8(a), which requires “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed. R. Civ. P. 8(a)(2); see Ileto, 349 F.3d at 1200. All that Rule 8(a)(2) requires is that the allegations in the complaint “give the defendant fair notice of what the plaintiff’s claim is and the grounds upon which it rests.”
Fed. R. Civ. P. 8(a)(2). “While legal conclusions can provide the complaint’s framework, they must be supported by factual allegations.” Ashcroft v. Iqbal, 556 U.S. 662, 129 S. Ct. 1937,
1950 (2009). PCC argues that the FAC does not meet the pleading standard set forth in Rule 8. (Mot. 3-5, Feb. 9, 2012, ECF No. 60.) Plaintiff responds that the FAC contains sufficient facts to put Defendants on notice as to what is being alleged against them, thus satisfying the pleading
standard. (Opp’n 3-5, Feb. 27, 2012, ECF No. 64.)
1 Because the case was not transferred as to Wells Fargo, the transfer effectively
terminated Wells Fargo as a defendant in the action.
PCC points to three supposed deficiencies in the FAC to support its argument that Plaintiff has
not complied with Rule 8. First, PCC argues that Plaintiff fails to specify precisely which
information PCC disseminated to consumer reporting agencies that was inaccurate. (Mot. 3.)
Plaintiff responds that the inaccurate information was PCC’s verification to Experian that the
disputed account belonged to Plaintiff. (Opp’n 6.) The FAC clearly alleges that Plaintiff does not
have an account with PCC. (FAC ¶ 8.) Despite the fact that Plaintiff did not open an account with PCC and despite the fact that PCC has been put on notice that the account in question was
opened by someone who used inaccurate information (including an inaccurate former address and inaccurate date of birth), PCC continued to verify to credit reporting agencies that the account belonged to Plaintiff. (FAC ¶ 12.) The FAC alleges that this information – the verification that the account in question belonged to Plaintiff – was inaccurate. (FAC ¶ 8.) The Court finds that these allegations are sufficient to put PCC on notice of what Plaintiff alleges.
Second, PCC argues that the FAC improperly lumps Defendants together, failing to identify which wrongful acts PCCperformed, separate and apart from WCC. (Mot. 4.) Plaintiff counters that where it was important to distinguish the actions of the Defendants, they were referred to
individually. (Opp’n 6.) Indeed, there are portions of the FAC that make allegations solely against PCC or solely against WCC:
Notwithstanding Plaintiff’s disputes, Defendant Professional [PCC]
responded to  Plaintiff’s dispute in the form of an ACDV (“Automated
Consumer Dispute Verification”) which was transmitted to Experian on
or about September 1, 2011 wherein Defendant [PCC] falsely verified
that the account belonged to Plaintiff . . . .
(FAC ¶ 12.)
Defendant Wilshire [WCC] also responded to the Plaintiff’s dispute in
the form of an ACDV (“Automated Consumer Dispute Verification”)
which was transmitted to Experian on or about September 1, 2011
wherein Defendant [WCC] falsely verified that the account belonged
to Plaintiff . . . . (FAC ¶ 13.) It is true that there are a number of other allegations made collectively against “Defendants,” a term that would include both PCC and WCC. As but one example of many: Defendants . . . have failed to conduct timely and reasonable
investigations of Plaintiff’s disputes after being contacted by Experian
concerning Plaintiff’s disputes, have willfully continued to report such
inaccurate information to various credit reporting agencies, have failed
to make the above accounts as disputed and have continued to
attempt to collect monies from the Plaintiff . . . .
(FAC ¶ 14.) However, this “lumping together” of Defendants does not create an ambiguity.
Defendant would have the Court believe that Plaintiff is alleging that only one of the Defendants
engaged in this conduct, but is being vague as to which of the two Defendants. Not so. It is clear
that Plaintiff is alleging that both of the Defendants engaged in this conduct, and thus there is no
ambiguity. PCC is perfectly aware of what it is alleged to have done. Not every allegation needs
to be alleged against PCC and WCC separately, especially where Defendants are claimed to have
committed the same wrongful act.2
Third, PCC argues that Plaintiff fails to clearly articulate the actual harm he suffered. (Mot. 5.)
However, the FAC contains the following language:
Plaintiff has applied for and has been denied various loans and
extensions of consumer credit, and Plaintiff has been informed that
the basis for these denials was the inaccurate information that
appears on Plaintiff’s credit reports . . . . [T]he inaccurate information
has been a substantial factor in precluding Plaintiff from receiving
credit offers and opportunities . . . . As a result of Defendants’
conduct, Plaintiff has suffered actual damages in the form of: lost
credit opportunities, harm to credit reputation and credit score, and
2 PCC’s heavy reliance on Pietrangelo v. NUI Corp., 2005 WL 1703200 (D.N.J. July 20,
2005), is misplaced. Pietrangelo involved a case against a corporation and twelve
individuals. Id. at *1. In Pietrangelo, Plaintiff only alleged that “certain defendants [i.e.,
fewer than all defendants] breached their fiduciary duties,” but the complaint largely failed
to differentiate between the defendants. Id. at *10. The court found that as a result, “the
allegations are so general that they fail to put each defendant on notice of the claims
against them.” Id. Here, by contrast, it is clear from the FAC that the allegations made
against “Defendants” allege that both PCC and WCC engaged in the conduct described.
PCC is on notice of what it is alleged to have done: anywhere an allegation is made
against “Defendants,” Plaintiff makes that allegation against PCC (and also makes the
same allegation against WCC). Indeed, in Pietrangelo, the court cited with approval to In
re CMS Energy ERISA Litigation, 213 F.Supp.2d 898, 904 (E.D. Mich. 2004), where the
“breach of fiduciary duty allegations were sufficiently pled under Rule 8(a) where the
complaint divided the named defendants into ‘fiduciary categories’ and ‘each count
identifies the defendants it makes allegations against’ and ‘the heading of each cause of
action describes the defendants against whom that count is asserted’.” Pietrangelo, 2005
WL 1703200, at *11. Thus, even the Pietrangelo court found that referring to defendants
collectively was permissible so long as the allegation truly is that each of the defendants
(or the subgroup of defendants) engaged in the conduct described in a particular section
or paragraph of the complaint. Indeed, it defies logic to suggest that a plaintiff can never
refer to defendants collectively in a complaint, the result PCC seems to be advocating.
(FAC ¶¶ 16-18.) While Plaintiff could have provided more detailed allegations – such as by listing specific loans that were denied or credit opportunities that were lost, specificity regarding how many and what opportunities were lost is not required at this stage of the litigation. PCC is free to seek such information during the discovery process.
There is enough information in the FAC to put PCC on fair notice as to what is being alleged
against it. Accordingly, Plaintiff has met the pleading standard set forth in Rule 8.
B. Failure to Meet FCRA Statutory Prerequisites
In 1970, Congress enacted the FCRA to “ensure fair and accurate credit reporting, promote
efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr,
551 U.S. 47, 52 (2007). To ensure that credit reports are fair and accurate, the FCRA imposes
certain duties on sources or “furnishers” that provide credit information to consumer reporting
agencies. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1153 (9th Cir. 2009). Section
1681 outlines such duties imposed on furnishers such as PCC. Once furnishers receive a notice
of dispute regarding accuracy of credit information, they shall:
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the consumer reporting
agency pursuant to . . . [15 U.S.C. § 1681i(a)(2)];
(C) report the results of the investigation to the consumer reporting
(D) if the investigation finds that the information is incomplete or
inaccurate, report those results to all other consumer reporting
agencies . . .;
(E) if an item of information disputed by a consumer is found to be
inaccurate or incomplete . . . for purposes of reporting to a consumer
reporting agency . . . 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. § 1681s-2(b) (2006). If furnishers are willfully or negligently non-compliant with the
duties outlined above, then consumers have a private right of action against them under § 1681n
and § 1681o. See §§ 1681n-o.
PCC argues that if Plaintiff is a victim of identity theft as he claims to be, Plaintiff is required to file
an Identity Theft Report before taking legal action against PCC. (Mot. 7.) PCC asserts that this
requirement is outlined under § 1681c-1(b)(1), wherein consumers must first file an Identity Theft
Report before requesting that a consumer reporting agency initiate an extended fraud alert in their credit files. (Mot. 7.) PCC contends that because Plaintiff did not file an Identity Theft Report prior to bringing this action, the action must be dismissed. (Mot. 7.)
While § 1681c-1 requires the filing of a report, that requirement bears no relation to the cause of
action being asserted against PCC for willful and negligent non-compliance with the duties
imposed on it under § 1681s-2(b), a completely different section. Plaintiff does not claim that PCC violated the FCRA for failure to initiate an extended fraud alert. Nowhere in § 1681s-2(b) – the section that PCC allegedly violated – is there a requirement that a consumer file an identity theft report before he can pursue legal action against a furnisher. While the furnisher of information (here, PCC) may have additional legal duties if an Identity Theft Report is proffered, see 15 U.S.C. § 1681s-2(a)(6)(B), this does not mean that the furnisher has no legal duties in the absence of an Identity Theft Report. The FCRA does not provide that filing an Identity Theft Report is a pre-requisite to bringing suit against a furnisher of information for violation of the FCRA. Accordingly, Plaintiff’s failure to file an Identity Theft Report is not grounds for dismissal.
Many of the claims asserted by Defendant in this Motion were of little merit. The Court’s scarce
resources were needlessly wasted. Defendant is reminded that credibility is like currency – easily
lost and hard to gain.
For the foregoing reasons, the Court DENIES PCC’s Motion to Dismiss and DENIES PCC’s
Motion for a More Definite Statement. Defendant is ordered to file an Answer within five days from
the date of this Order.
IT IS SO ORDERED.