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Hoback v. Synchrony Bank

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

June 11, 2019

JAMES HOBACK, Plaintiff,
v.
SYNCHRONY BANK, Defendant.

          MEMORANDUM OPINION

          Michael F. Urbanski Chief United States District Judge.

         This matter comes before the court on defendant Synchrony Bank's ("Synchrony") motion to dismiss plaintiff James Hoback's ("Hoback") complaint in part, filed on April 15, 2019. ECF No. 3. Hoback responded in opposition on April 29, 2019. ECF No. 11. Synchrony replied on May 6, 2019, ECF No. 13, and the court heard argument on May 13, 2019, ECF No. 17. For the reasons explained below, the court will DENY Synchrony's motion.

         I.[1]

         Hoback discovered a discrepancy in his credit history when he applied for a Carnival Credit Card and his application was denied on the basis of poor credit. ECF No. 1-1, at 2. The cause of his poor credit was a tradeline on his credit report-a Synchrony Bank/AAMCO co-branded credit card account on which Hoback was listed as a co-signer. Id. Hoback has never contracted with Synchrony for credit for himself or anyone else. Id. Synchrony has "continued to publish and re-publish false information that [Hoback] is delinquent on this credit line and has failed to make timely payments." Id. at 3. Synchrony has published this information to Equifax, TransUnion, and Experian, among other credit . reporting agencies. Id.

         Upon discovering the AAMCO credit card on his report, Hoback complained to Equifax, TransUnion, and Experian and "alerted each that the derogatory information being published about him was incorrect." ECF No. 1-1, at 3. All three requested that Synchrony investigate the information to determine its accuracy. Synchrony did not do so and continued to publish Hoback's credit history with the Synchrony Bank/AAMCO co-branded credit card to third parties.[2]

         Hoback filed suit in the Bedford County Circuit Court on April 8, 2019. ECF No. 1-1. Hoback's complaint brings seven counts, which fall into three categories: (1) Count I brings a claim of defamation; (2) Counts II-V bring three violations of § 1681s-2(b) of the Fair Credit Reporting Act, Failure to Reasonably Investigate; (3) Counts VI-VII bring l violations of §1681b of the Fair Credit Reporting Act, Impermissible Pull. Id. at 3-6. Synchrony removed the case to federal court on April 8, 2019. ECF No. 1-2.

         II.

         A motion to dismiss under Federal Rule of Civil Procedure 12(b)(1) challenges a court's subject matter jurisdiction. Absent subject matter jurisdiction, a court must dismiss the action. Evans v. B.F. Perkins Co., a Div. of Standex Int'l Corp., 166 F.3d 642, 653 (4th Cir. 1999). Whether a plaintiff has standing to bring a cause of action "is generally associated with Civil Procedure Rule 12(b)(1) pertaining to subject matter jurisdiction." CGM. LLC v. BellSouth Telecomms., Inc., 664 F.3d 46, 52 (4th Cir. 2011). "That is because 'Article III gives federal courts jurisdiction only over cases and controversies,' and standing is 'an integral component of the case or controversy requirement.'" Id. (quoting Miller v. "Brown., 462 F.3d 312, 316 (4th Cir. 2006)). When a defendant raises substantive challenges to a court's jurisdiction under Rule 12(b)(1), the court need not accept the complaint's allegations as true and may consider facts outside the complaint to determine if it can properly exercise subject matter jurisdiction. Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009). At all times, "[t]he plaintiff has the burden of proving that subject matter jurisdiction exists." Evans, 166 F.3d at 647.

         Meanwhile, Rule 12(b)(6) of the Federal Rules of Civil Procedure permits a party to move for dismissal of a complaint for failure to state a claim upon which relief can be granted. To survive a motion to dismiss under Rule 12(b)(6), the plaintiff must plead sufficient facts "to raise a right to relief above the speculative level" and "state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 570 (2007). A plaintiff establishes "facial plausibility" by pleading "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In ruling on a 12(b)(6) motion, the court must accept all well-pleaded allegations in the complaint as true and draw all reasonable factual inferences in the light most favorable to the plaintiff. Ibarra v. United States, 120 F.3d 472, 474 (4th Cir. 1997). However, "[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice." Iqbal, 556 U.S. at 678; see Wag More Dogs, LLC v. Cozart, 680 F.3d 359, 365 (4th Cir. 2012) (holding the court "need not accept legal conclusions couched as facts or unwarranted inferences, unreasonable conclusions, or arguments") (internal quotation marks omitted).

         III.

         Synchrony has moved that Count I of Hoback's complaint (defamation) be dismissed, as it is preempted by the Fair Credit Reporting Act, 15 U.S.C. § 1681 ("FCRA"). ECF No. 3 & 4. Determining the validity of Synchrony's argument requires two different analyses: (1) is Hoback's claim preempted by the broad language of § 1681t(b)(F); and if not, (2) has Hoback alleged facts showing that Synchrony acted with malice, thereby exempting this claim from preemption under § 1681h(e). The court will address each analysis in turn.

         A.

         Synchrony argues first that the state law claim of defamation is preempted by the FCRA under § 1681t(b)(F). ECF No. 3 & 4. Synchrony argues that the FCRA sets forth two general requirements for entities like itself that provide information to Credit Reporting Agencies (entities known as furnishers): (1) the duty to provide accurate information under § 1681s-2(a); and (2) the duty to investigate the accuracy of reported information upon receiving notice of a dispute from a credit reporting agency under § 1681 s-2(b). 15 U.S.C. § 1681s-2. The private right of action available to a consumer under the FCRA arises under § 1681s-2(b) once that consumer disputes incorrect information with a CRA and that CRA informs the furnisher. Synchrony reasons that, given that the FCRA sets up a framework for how such claims should progress, it stands to reason that other claims arising under state law would be preempted. ECF No. 4, at 4.

         The FCRA includes two specific preemption provisions. In arguing that Hoback's first count is preempted, Synchrony ...


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