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Armstrong v. Navient Solutions, Inc.

United States District Court, District of Columbia

March 2, 2018

ANWAR ARMSTRONG, et al., Plaintiffs,


          RANDOLPH D. MOSS United States District Judge.

         In 2014, Plaintiff Ann Holiday received a statement from Navient Solutions, Inc. (“NSI”), a loan servicing company, reflecting a balance of $45, 000 for multiple student loans purportedly made to her son, Plaintiff Anwar Armstrong. Asserting that they took out a single student loan for only $9, 000, Plaintiffs allege that they contacted NSI to dispute the account balance and that NSI failed to correct the error. Instead, according to Plaintiffs, NSI reported the incorrect loan balance to consumer reporting agencies, which, in turn, used the faulty information from NSI to generate credit reports that negatively affected Armstrong's ability to secure employment.

         In response, Plaintiffs filed suit in the Superior Court of the District of Columbia, alleging that NSI violated the District of Columbia Consumer Protection Procedures Act (“CPPA”) by making a “misleading statement . . . regarding their credit worthiness and credit balances.” Dkt. 2-2 at 4 (Compl. ¶ 14). They also asserted common law claims for negligence and breach of contract, alleging that NSI “breached its duty of care by failing to safeguard [Plaintiffs'] information, and failing to correct errors in their account balances, ” id. at 6 (Compl. ¶ 26), and breached its contract with Plaintiffs by “not revers[ing] or adjust[ing] erroneous charges . . . and [by] assert[ing] an invalid account balance, ” id. at 5 (Compl. ¶ 20). NSI removed the action to this Court, and now moves to dismiss under Federal Rule of Civil Procedure 12(b)(6). See Dkt. 5. NSI asserts that all three of Plaintiffs' claims are preempted by the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq., and, alternatively, that Plaintiffs have failed to state a claim upon which relief can be granted.

         For the reasons explained below, the Court concludes that the FCRA preempts Plaintiffs' CPPA and negligence claims in part. In addition, the Court concludes that any non-preempted portion of Plaintiffs' negligence claims fails to state a claim, as does Plaintiffs' claim for breach of contract. With respect to the non-preempted portion of Plaintiffs' CPPA claim, it is unclear whether Plaintiffs have alleged facts sufficient to sustain Article III standing. The Court will, accordingly, grant NSI's motion to dismiss in part and deny it in part, and will direct that the parties show cause why the remaining portion of Plaintiffs' CPPA claim should not be dismissed (or remanded) for want of jurisdiction.

         I. BACKGROUND

         For purposes of the pending motion to dismiss, the following facts taken from Plaintiffs' complaint are accepted as true. See Am. Nat'l Ins. Co. v. FDIC, 642 F.3d 1137, 1139 (D.C. Cir. 2011).

         Plaintiffs Holiday and Armstrong allege that they “entered an agreement for student loan credit” with NSI, Dkt. 2-2 at 5 (Compl. ¶ 18) for the amount of $9, 000, id. at 3 (Compl. ¶ 2 (Statement of Facts)). In December 2014, however, Holiday received a statement from NSI reflecting a balance “due [of] over $45, 000” for “multiple private student loans” allegedly made to Armstrong. Id. at 3 (Compl. ¶ 1). Plaintiffs alleged that they requested proof of the claimed loans but that NSI failed to “produce any executed promissory notes evidencing the loans that [it] claimed were owed, ” id. (Compl. ¶¶ 3-4), and that NSI failed to credit $8, 460 in loan payments already made by Plaintiffs, id. at 4 (Compl. ¶ 6). Plaintiffs further allege that NSI failed to correct the erroneous loan balance and “continue[d] to falsely claim that” Plaintiffs “owe[d] amounts that they [did] not owe.” Id. at 3 (Compl. ¶¶ 2, 5). Although the complaint is not a model of clarity, Plaintiffs also appear to allege that NSI reported the incorrect balance-owed to consumer reporting agencies, which, in turn, used the information they received from NSI to generate negative credit reports about Armstrong. Id. at 4 (Compl. ¶ 14) (NSI “misled” Plaintiffs and “others” about the loan balance). “[B]ecause of [those] credit report[s], ” Plaintiffs allege, Armstrong was not offered two jobs that he applied for in 2015. Id. at 4 (Compl. ¶¶ 7- 10).

         Plaintiffs filed suit against NSI in the Superior Court of the District of Columbia in 2016. Dkt. 2-1 at 2. NSI removed the case to this Court pursuant to 28 U.S.C. §§ 1332, 1441, and 1446, Dkt. 2 at 1-3. On November 14, 2016, NSI moved to dismiss the complaint, arguing that “[a]ll of the Plaintiffs' claims . . . [we]re preempted by the [FCRA], ” and, alternatively, that they “fail[ed] to state a claim upon which relief c[ould] be granted.” Dkt. 5 at 1.


         A motion to dismiss brought under Federal Rule of Civil Procedure 12(b)(6) is designed to “test[] the legal sufficiency of a complaint.” Browning v. Clinton, 292 F.3d 235, 242 (D.C. Cir. 2002). In evaluating such a motion, the Court “must first ‘tak[e] note of the elements a plaintiff must plead to state [the] claim' to relief, and then determine whether the plaintiff has pleaded those elements with adequate factual support to ‘state a claim to relief that is plausible on its face.'” Blue v. District of Columbia, 811 F.3d 14, 20 (D.C. Cir. 2015) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 675, 678 (2009)) (alterations in original) (citation omitted). Although “detailed factual allegations” are not necessary to withstand a Rule 12(b)(6) motion, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007), “a complaint must contain sufficient factual matter, [if] accepted as true, to ‘state a claim to relief that is plausible on its face, '” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570). A plaintiff can survive a Rule 12(b)(6) motion even if “recovery is very remote and unlikely, ” but the facts alleged in the complaint “must be enough to raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555-56 (quotation marks omitted).

         III. ANALYSIS

         A. Preemption

         1. The Fair Credit Reporting Act

         “Congress enacted the FCRA in 1970 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). The FCRA imposes duties on consumer reporting agencies (“CRAs”) and on entities that furnish information about borrowers to CRAs.[1] See 15 U.S.C. § 1681s-2. Although the FCRA does not define “furnisher, ” courts have noted that “[t]he most common . . . furnishers of information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies.” Himmelstein v. Comcast of the Dist., LLC, 931 F.Supp.2d 48, 52 (D.D.C. 2013) (citing Chiang v. Verizon New Eng., Inc., 595 F.3d 26, 35 n.7 (1st Cir. 2010)). Here, NSI is a “furnisher” within the meaning of the FCRA because it allegedly provided information about Plaintiffs' loan balances and “creditworthiness” to CRAs, which then used that information to generate credit reports. See Dkt. 2-2 at 4 (Compl. ¶ 14); Dkt. 5 at 12; Dkt. 9 at 9.

         It is a violation of the FCRA to “furnish any information relating to a consumer to any [CRA] if [the furnisher] knows or has reasonable cause to believe that the information is inaccurate” or to “furnish information relating to a consumer to any [CRA] if (i) the [furnisher] has been notified by the consumer . . . that the specific information is inaccurate[, ] and (ii) the information is, in fact, inaccurate.” 15 U.S.C. § 1681s-2(a)(1). In addition, one who “regularly and in the ordinary course of business furnishes information to one or more [CRAs] about [the furnisher's] transactions or experiences with any consumer” have a duty to correct and to update any credit reporting information that the furnisher “determines is not complete or accurate, ” and, “[i]f the completeness or accuracy of any [such] information . . . is disputed . . . by a consumer, the [furnisher] may not furnish the information to any [CRA] without notice that such information is disputed by the consumer.” Id. § 1681s-2(a)(2) & (3). If a consumer notifies a CRA that she disputes the accuracy of an item, the FCRA requires the CRA to notify the furnisher, who, in turn, must “conduct an investigation with respect to the disputed information;” “report the results of the investigation to the [CRA];” and, “if the investigation finds that the information is incomplete or inaccurate, report those results to all other [CRAs] to which the person furnished the information and that compile and maintain files on consumers on a nationwide basis.” Id. § 1681s-2(b).

         When it was enacted in 1970, the FCRA expressly preempted state common law claims “in the nature of defamation, invasion of privacy, or negligence with respect to reporting of information against any . . . person who furnishes information to a [CRA].” 15 U.S.C. § 1681h(e), Pub. L. 91-508, title VI, § 601, 84 Stat. 1131. The scope of that provision, however, was limited by a proviso, which allowed claims to proceed if the information was “furnished with malice or willful intent to injure [the] consumer.” Id. In 1996, however, Congress returned to the question of preemption under the FCRA. Although Congress did not repeal ...

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