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Phillips v. Trans Union, LLC

United States District Court, W.D. Virginia, Charlottesville Division

September 6, 2017

Lisa Phillips, Plaintiff,
Trans Union, LLC, ET AL., Defendants.



         This case, brought by Plaintiff Lisa Phillips (“Phillips”), concerns information that Defendant Specialized Loan Servicing, LLC (“SLS”) provided to credit reporting agencies, like Defendant Trans Union, LLC (“Trans Union”), and that these agencies publish in credit reports. Phillips now seeks summary judgment against SLS on Counts I and II of the Complaint. (Dkt. 30). Count I alleges a negligent violation of the Fair Credit Reporting Act (“FCRA”), and Count II alleges a willful violation of the FCRA. The two counts allege that SLS provided inaccurate or incomplete information about Phillips to Trans Union. SLS opposes summary judgment, arguing that Phillips lacks Article III standing and ignores evidence that validates the information it furnished. (Dkt. 35 at 4-5).

         As explained below, Phillips has standing under Spokeo v. Robins, 136 S.Ct. 1540 (2016), both because her alleged injury is analogous to common law causes of action (like defamation and libel) and because she allegedly has suffered the type of harm Congress sought to prevent by enacting the FCRA. On the merits, this Court will deny Phillips' motion as to the negligent violation of the FCRA because there is a genuine dispute of material fact over whether SLS's investigation into any inaccuracies was reasonable. This Court will also deny Phillips' motion as to the allegedly willful violation of the FCRA because a reasonable jury need not find that any of the alleged violations were willful.


         Federal Rule of Civil Procedure 56(a) provides that a court should grant summary judgment “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.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it “might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Id. In order to preclude summary judgment, the dispute about that material fact must be “genuine.” Id. A dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Id.; see also JKC Holding Co. v. Washington Sports Ventures, Inc., 264 F.3d 459, 465 (4th Cir. 2001). If, however, the evidence of a genuine issue of material fact “is merely colorable or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 250. In considering a motion for summary judgment under Rule 56, a court must view the record as a whole and draw all reasonable inferences in the light most favorable to the nonmoving party. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322-24 (1986); Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir. 1994).

         II. FACTS

         Lisa Phillips owned a home in Las Vegas, Nevada. (Dkt. 30-1 at 3). In November 2006, Phillips obtained a second mortgage on that home for $77, 764.80. (Dkt. 30-2 at 1). The original servicer of this second mortgage transferred it to SLS for servicing on August 5, 2009. (Dkt. 30-3 at 2). Phillips then defaulted on this loan. (Dkt. 30-8). She made her last payment on August 26, 2009, the same month that the loan was transferred to SLS. (Dkts. 30-5, 30-6, 30-7). Approximately three months later SLS “charged-off” the loan. (Dkt. 30-4 at 7).[1] SLS sold the home in a short sale in January 2011. (Dkt. 30-9). SLS and Phillips negotiated a settlement agreement for the outstanding balance of the loan in May 2011, and Phillips paid $4, 000 to settle her outstanding debt on June 27, 2011. (Dkts. 35-1, 35-2). At this point, SLS confirmed that Phillips no longer owed it any money. (Dkts. 30-4 at 23, 30-3 at 1).

         In the following years, Phillips disagreed with how credit reporting agencies were displaying this now-settled debt on her credit report. She sent Trans Union three letters in 2016 expressing her concerns. (Dkts. 30-10, 30-14, 30-16). Phillips disputed when she had first fallen behind on the loan-specifically she contended that her first delinquency was in September 2009, but that the credit reports wrongly reported that it was in June 2011. (Id.). Trans Union, in turn, contacted SLS to verify the information that Phillips disputed using Automated Consumer Dispute Verification (“ACDV”) forms. (Dkts. 30-5, 30-6, 30-7, 30-11 at 68). These forms are part of the industry standard format for credit reporting developed by the Consumer Data Industry Association (“CDIA”). (Dkt. 30-11 at 15). There is “an industry-wide automated consumer dispute resolution system, ” called e-OSCAR, that allows furnishers and credit reporting agencies the ability to verify consumer disputes using these ACDV forms. (Id. at 17).

         SLS responded, also using these forms, that it was reporting the disputed information correctly, contrary to Phillips' protestations. (Dkts. 30-5, 30-6, 30-7). Trans Union communicated at least two of SLS's responses back to Phillips. (Dkts. 30-15, 30-16). Unsatisfied, Phillips filed this lawsuit. (Dkt. 1).


         A. Phillips has Article III standing.

         SLS suggests that Phillips lacks Article III standing. (Dkt. 35 at 6). In particular, SLS notes that Phillips has not put forward evidence specifying what monetary or emotional distress damages she has incurred. (Id. at 7). SLS has not formally brought a motion to dismiss or a cross-motion for summary judgment based on a lack of standing, but if jurisdiction “ceases to exist, the only function remaining to the court is that of announcing the fact and dismissing the cause.” Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 94 (1998) (quoting Ex parte McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)). Accordingly, a discussion of standing and the Court's jurisdiction follows.

         “Standing ‘is a threshold jurisdictional question' that ensures a suit is ‘appropriate for the exercise of the [federal] courts' judicial powers.'” Dreher v. Experian Info. Sols., Inc., 856 F.3d 337, 343 (4th Cir. 2017) (quoting Pye v. United States, 269 F.3d 459, 466 (4th Cir. 2001)) (alteration in Dreher). To have standing a “plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), as revised (May 24, 2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)). An injury in fact must be both “concrete” and “particularized.” Id. “A ‘concrete' injury must be ‘de facto'; that is, it must actually exist.” Id. (citing Black's Law Dictionary 479 (9th ed. 2009)). And “[f]or an injury to be ‘particularized, ' it ‘must affect the plaintiff in a personal and individual way.'” Id. (quoting Lujan, 504 U.S. at 560).

         Concerns about the concreteness of injuries arising from statutory violations are heightened in the FCRA context. Last year, in Spokeo, the Supreme Court observed that “[a] violation of one of the FCRA's procedural requirements may result in no harm” and so a mere procedural violation of the FCRA that produces no “concrete and particular” injury will not be justiciable. Id. at 1548, 1550. However, the Supreme Court reiterated that “intangible injuries can nevertheless be concrete, ” id. at 1549 (citing injuries to free speech and free exercise rights), and has provided two tests to guide the concreteness analysis. Id.; In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 637 (3d Cir. 2017) (“There are thus two tests for whether an intangible injury can (despite the obvious linguistic contradiction) be ‘concrete.'”).

         First, “it is instructive to consider whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.” Spokeo, 136 S.Ct. at 1549. If the “alleged intangible harm” does have a close relationship to a traditionally recognized harm, “it is likely to be sufficient to satisfy the injury-in-fact element of standing.” In re Horizon, 846 F.3d at 637. This analogy to the past makes sense “[b]ecause the doctrine of standing derives from the case-or-controversy requirement, and because that requirement in turn is grounded in historical practice.” Spokeo, 136 S.Ct. at 1549.

         If the “alleged intangible harm” does not have a close relationship to a traditionally recognized harm, we move to the second test. This inquiry asks whether, even in the absence of a traditional harm, Congress has sought to “identify[] and elevat[e] [this] intangible harm[]” and make it redressable. Spokeo, 136 S.Ct. at 1549 (“[B]ecause Congress is well positioned to identify intangible harms that meet minimum Article III requirements, its judgment is also instructive and important.”). Of course, Congress cannot outflank Article III's requirements. See Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009) (“[D]eprivation of a procedural right without some concrete interest that is affected by the deprivation-a procedural right in vacuo-is insufficient to create Article III standing.”); Dreher v. Experian Info. Sols., Inc., 856 F.3d 337, 344 (4th Cir. 2017) (“[A] plaintiff cannot automatically satisfy the injury in fact requirement just because ‘a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.'”). But Congress may, and frequently does, “accord[] a procedural right to protect [a plaintiff's] concrete interests.” Lujan v. Defs. of Wildlife, 504 U.S. 555, 572 n.7 (1992). The recipient of such a procedural right can “assert that right without meeting all the normal standards for redressability and immediacy.” Id.; see also Strubel v. Comenity Bank, 842 F.3d ...

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