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Kelly v. Business Information Group, Inc.

United States District Court, E.D. Pennsylvania

December 22, 2016

MICHAEL KELLY, on behalf of himself and all others similarly situated, Plaintiff,
v.
BUSINESS INFORMATION GROUP, INC., Defendant

          MEMORANDUM OPINION

          DAVID R. STRAWBRIDGE UNITED STATES MAGISTRATE JUDGE.

         Before the Court is Defendant's Motion for Partial Judgment on the Pleadings filed by Business Information Group, Inc. (“BIG”). (Doc. 38.) Plaintiff Michael Kelly seeks relief under two provisions of the Fair Credit Reporting Act (“FCRA”) with respect to a consumer report sold to his employer about him. BIG's motion seeks the dismissal of Count Two of the complaint, brought under 15 U.S.C. § 1681k, as to which Kelly asserted both an individual claim and a potential class claim. For the reasons set forth below, we find Kelly's complaint legally insufficient to support his individual claim under § 1681k.

         I. BACKGROUND

         Kelly filed a “Class Complaint” against BIG on December 17, 2015 on behalf of himself and others similarly situated in relation to consumer report background checks furnished by BIG for employment purposes. (Doc. 1.) Kelly alleges he was denied employment opportunities due to adverse public record information in a consumer report that BIG furnished to his employer in December 2013. He characterizes the report as having contained materially false information inasmuch as it stated that a court case had been filed against him for an unpaid debt that did not, in fact, belong to him. (Compl. ¶¶ 2, 9, 10.) He was not given notice by BIG that a credit report with this adverse public record item was being produced to his employer. (Id. ¶ 16.)

         BIG answered the complaint on April 1, 2016. (Doc. 13.) Thereafter the parties consented to magistrate judge jurisdiction. Following an agreed-upon informal stay of proceedings for several months during the pendency of a case in the United States Supreme Court, we convened a Rule 16 conference and, on September 15, 2016, entered a scheduling order providing for fact discovery to be completed by February 28, 2017, with expert discovery and class certification briefing to follow. On October 3, 2016, the deadline set by the scheduling order, BIG filed this motion. It is now fully briefed. (Docs. 38, 42, 44.) At the same time, BIG filed a Motion to Strike Class Allegations in the complaint, which is also now fully briefed. (Doc. 39, 41, 45.) We will resolve that motion in a separate order following upon the opportunity for the parties to submit further briefing.

         II. LEGAL STANDARDS

         Rule 12(c) provides that “[a]fter the pleadings are closed-but early enough not to delay trial-a party may move for judgment on the pleadings.” Fed.R.Civ.P. 12(c). Judgment on the pleadings is appropriate only if the moving party “clearly establishes that no material issue of fact remains to be resolved and that [it] is entitled to judgment as a matter of law.” Rosenau v. Unifund Corp., 539 F.3d 218, 221 (3d Cir. 2008). A court reviewing a Rule 12(c) motion “must view the facts presented in the pleadings and the inferences to be drawn therefrom in the light most favorable to the nonmoving party.” Id. (citations omitted).

         Where the moving party's Rule 12(c) motion presents the court with a legal question based on the theory that the plaintiff failed to state a claim, we review the motion under the same standards that apply to a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6). Caprio v. Healthcare Revenue Recovery Grp., LLC, 709 F.3d 142, 146-47 (3d Cir. 2013). In that posture, we accept as true all allegations in the complaint and all reasonable inferences that can be drawn from them. We also view the allegations in the light most favorable to the non-moving party, here, the plaintiff. DeBenedictis v. Merrill Lynch & Co., 492 F.3d 209, 215 (3d Cir. 2007). As the Supreme Court explained in the context of a Rule 12(b)(6) motion to dismiss, while the complaint “does not need detailed factual allegations, ” the plaintiff's “obligation to provide the ‘grounds' of his ‘entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do[.]” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). The complaint's “[f]actual allegations must be enough to raise a right to relief above the speculative level.” Id. Although a plaintiff is entitled to all reasonable inferences from the facts alleged, a plaintiff's legal conclusions are not entitled to deference and we are “not bound to accept as true a legal conclusion couched as a factual allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). The pleadings must contain sufficient factual matter as to state a facially plausible claim for relief. “A claim has facial plausibility when the plaintiff pleads 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).

         III. DISCUSSION

         Kelly asserts at Count One an individual claim that BIG violated 15 U.S.C. § 1681e(b), the FCRA provision that requires credit reporting agencies (“CRAs”) to “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates” whenever they issue a consumer report. In Count Two, he asserts a claim, upon which he also intends to seek class certification, that BIG violated 15 U.S.C. § 1681k when, without providing him notice or employing strict procedures to ensure the completeness and currency of public records that it reported, BIG sold a consumer report to Kelly's employer which resulted in a limitation of his ability to be assigned certain work given the adverse public record information contained in the report. Kelly alleges that BIG erroneously reported that a judgment had been taken against him when the public record cited by BIG actually did not pertain to him but rather to his son. While Defendant does not here challenge that Kelly has properly set out a violation of Section 1681e as to the production of a report with allegedly “inaccurate” information, it contends that Kelly has not plausibly pled a violation of Section 1681k because the public record item included in the consumer report to Kelly's employer was not, as a matter of law, incomplete or out of date.

         A. The requirements of Section 1681k

         Section 1681k concerns matters of public record gathered and included in a consumer report for employment purposes. It provides in relevant part that:

(a) A consumer reporting agency which furnishes a consumer report for employment purposes and which for that purpose compiles and reports items of information on consumers which are matters of public record and are likely to have an adverse effect upon a consumer's ability to obtain employment shall-
(1) at the time such public record information is reported to the user of such consumer report, notify the consumer of the fact that public record information is being reported by the consumer reporting agency, together with the name and address of the person to whom such information is being reported; or
(2) maintain strict procedures designed to insure that whenever public record information which is likely to have an adverse effect on a consumer's ability to obtain employment is reported it is complete and up to date. For purposes of this paragraph, items of public record relating to arrests, indictments, convictions, suits, tax liens, and outstanding judgments shall be considered up to date if the current public record status of the item at the time of the report is reported.

15 U.S.C. § 1681k.

         The other provision of the FCRA under which Kelly sues in the count not subject to this motion, § 1681e, addresses compliance with § 1681c, the provision that sets out requirements relating to information contained in consumer reports generally. Section 1681e provides in relevant part that:

(b) Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assume maximum possible accuracy of the information concerning the individual about whom the report relates.

15 U.S.C. § 1681e.

         B. The allegations of Plaintiff's complaint

         Inasmuch as Kelly brings claims under both Section 1681e, in Count One, and Section 1681k, in Count Two, his complaint includes averments using terminology found in both sections. As pertinent to the issues presented by BIG's motion for judgment as to Count Two, Kelly asserts:

2. Plaintiff was denied employment opportunities due to inaccuracies in a consumer report from the Defendant, Business Information Group, Inc. (“Defendant”). At least one consume[r] report furnished by Defendant to Mr. Kelly's employer contained materially false and derogatory information. Accordingly, Plaintiff alleges an individual claim against Defendant for violating § 1681e(b) of the FCRA, which requires CRAs to follow reasonable procedures to assure maximum possible accuracy when furnishing credit reports.
3. Additionally, Plaintiff also alleges a class action claim against Defendant pursuant to ยง 1681k, which is an important requirement intended to provide consumers immediate notice of the furnishing of a consumer report for employment purposes and the details necessary to preemptively contact the reporting ...

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