Aubert v. Russell Collection Agency, Inc.

Citations: 215 F. Supp. 3d 583; 2016 WL 5430184; 2016 U.S. Dist. LEXIS 134248Docket: Case No. 2:15-cv-10703

Court: District Court, E.D. Michigan; September 29, 2016; Federal District Court

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The Court denied the Plaintiff's motion for reconsideration under Federal Rule of Civil Procedure 60(b)(6) concerning a prior ruling from August 19, 2016, in a case brought under the Fair Credit Reporting Act (FCRA). The trial on August 19 involved the Plaintiff's testimony and evidence, after which the Defendant successfully moved for judgment on partial findings under Rule 52(c). The Court concluded that there is no private cause of action under 15 U.S.C. § 1681s-2(a) and that the Plaintiff did not plead for relief under 15 U.S.C. § 1681s-2(b), nor did she establish a violation of that section. Consequently, judgment was entered in favor of the Defendant. 

In the reconsideration motion filed on August 24, 2016, the Plaintiff sought relief under Rule 60(b)(6), which allows for relief for "any other reason that justifies relief." The Court noted that this subsection is applicable only in exceptional circumstances that are not covered by the first five clauses of Rule 60(b) and is intended to achieve substantial justice when additional compelling reasons are present. The Court ultimately ruled against the Plaintiff's motion without finding such exceptional circumstances.

Plaintiff asserts that the Court overlooked the importance of verification in conducting a reasonable investigation under the Fair Credit Reporting Act (FCRA) and claims this has elevated her burden of proof. She emphasizes that verification is essential for a reasonable investigation, referencing a Senate Report that highlights the FCRA's gap regarding information furnishers and its impact on consumer reporting accuracy. Plaintiff contends that Congress aimed to provide a private remedy against furnishers engaging in irresponsible verification practices under FCRA, not the Fair Debt Collection Practices Act (FDCPA). 

However, the Court notes that Plaintiff's argument lacks citation and conflates the distinct definitions of 'investigation' under the FCRA and 'verification' under the FDCPA. The FCRA mandates a reasonable investigation, which requires more than a cursory review, while the FDCPA imposes specific verification duties on debt collectors when a consumer disputes a debt. The Court references a separate case to clarify that the obligations under the FCRA and FDCPA are not interchangeable, reinforcing that debt collectors’ responsibilities differ based on whether the dispute arises from a credit reporting agency or directly from a consumer.

The Fair Debt Collection Practices Act (FDCPA) does not mandate debt collectors to conduct independent investigations regarding debts sent for collection. Unlike the Fair Credit Reporting Act (FCRA), which requires creditors to investigate upon receiving a consumer's dispute, the FDCPA simply necessitates that a debt collector obtain verification of the debt. A debt collector is not obligated to provide detailed evidence, such as copies of bills, to meet the FDCPA’s verification standard. The duty to investigate under the FCRA is activated only upon receiving a notice of dispute from a credit reporting agency (CRA). The plaintiff failed to demonstrate any communication between the CRAs and the defendant, leaving ambiguity about whether the defendant's letter was in response to a CRA notice. Consequently, the plaintiff has not established that verification is essential for a reasonable investigation under the FDCPA, and the obligations under the FDCPA and FCRA are separate. The defendant's verification duties under a statute not included in the lawsuit are irrelevant to the current case.

Plaintiff's assertion that 'verification' constitutes a lower level of inquiry than 'investigation' is acknowledged, yet her evidence from the trial fails to demonstrate that Defendant Russell Collection Agency did not perform a reasonable investigation in response to a Section 1681i(a)(2) notice from credit reporting agencies (CRAs). The timeline of Plaintiff's exhibits reveals that a letter from Defendant on December 4, 2013, indicated a willingness to verify the debt if disputed within 30 days. An email from Plaintiff dated August 21, 2014, included proof of payment and supporting documents. A subsequent letter from Defendant on September 11, 2014, acknowledged receipt of Plaintiff’s dispute and stated that there was no legal obligation to provide the requested verification materials, although it summarized the charges as an effort to provide verification. Plaintiff argues that this does not meet the verification standards intended by Congress, citing 15 U.S.C. § 1681s-2(b)(1), which mandates creditors to conduct reasonable investigations upon receiving consumer disputes from CRAs. She contends that the adequacy of the investigation is a factual question for the jury. However, the evidence presented does not conclusively indicate that Defendant failed to conduct a reasonable investigation as required under the law.

Plaintiff argues that after receiving an automated consumer dispute verification (ACDV) from a credit reporting agency (CRA), a furnisher must verify disputed information. She cites a September 11, 2014 letter (Exhibit E) from Defendant as evidence of Defendant's actions regarding her dispute over the accuracy of reported information to Equifax. Under the Fair Credit Reporting Act (FCRA), once a furnisher receives ACDV forms, it must investigate and inform the CRAs of any inaccuracies. Although Plaintiff claims her letter indicates Defendant's failure to comply with her verification request, she admits lacking evidence of any communication between Defendant and a CRA. Exhibit E appears to be a response to her request rather than a response to an ACDV.

Even if Plaintiff proves Defendant received a notice under FCRA, she must demonstrate what actions Defendant took or did not take regarding the investigation obligation. Plaintiff's interpretation of the phrase "in an effort to provide verification" as an admission of a failure to conduct a reasonable investigation is not supported; it suggests that some verification action occurred. The burden of proof lies with Plaintiff, who must establish a causal relationship between the alleged unreasonable reinvestigation and the failure to identify inaccuracies. While Plaintiff claims that the account remained reported as unpaid despite being settled, her statements do not constitute sufficient evidence to meet her burden of proof regarding Defendant's investigation actions.

Plaintiff's testimony indicated a lack of knowledge regarding the specific communications between Defendant and its upstream client (Southfield Radiology) or downstream credit reporting agencies (CRAs). The Court noted that targeted discovery could have clarified several issues, including the nature of any investigation conducted by the Defendant furnisher, the timing of debt satisfaction reports, and the reasons behind the CRAs’ decisions to clear credit reports. However, no such evidence was presented, despite sufficient time for discovery. Plaintiff's conjectures about the Defendant's investigation were deemed insufficient as evidence. A legal expert highlighted the challenge of determining responsibility for investigative failures without formal discovery, advising consumers to include claims against both furnishers and CRAs when pursuing litigation. The Court pointed out that the CRAs were not joined in this case, which limited the ability to obtain potentially relevant information regarding their reporting practices and communications with the Defendant.

Sufficient, credible evidence to support the Plaintiff's claim of a Fair Credit Reporting Act (FCRA) violation by the Defendant hinges on whether the Defendant failed to update the Plaintiff's Equifax credit file until June 25, 2016. Under 15 U.S.C. 1681s-2(b)(1), furnishers must modify, delete, or block reporting of any inaccurate or unverifiable information. The Plaintiff alleges that the Defendant knew her account was paid in October 2014 and claims this supports her assertion of FCRA rights violations. However, the Defendant, Russell Collection Agency, is a midstream entity that gathers information from the original creditor, Southfield Radiology, and is not responsible for the inaccuracies reported by downstream Consumer Reporting Agencies (CRAs). The Plaintiff noted discrepancies in reporting dates between CRAs, suggesting potential faults in their reporting systems rather than a failure by the Defendant. Additionally, the Plaintiff has not provided evidence of communications between the Defendant and the CRAs to substantiate her claim that the Defendant was responsible for the delayed update. Consequently, without sufficient proof, the Plaintiff has not demonstrated that the Defendant failed its obligations under the FCRA.

Defendant's compliance with the Fair Credit Reporting Act (FCRA) was questioned regarding whether it willfully failed to conduct a reasonable investigation when it opted for minimal verification efforts. Under 15 U.S.C. § 1681n, willful noncompliance can result in civil liability for any person failing to adhere to FCRA requirements. The court noted that the term "willfully fails to comply" includes reckless violations, citing Safeco Ins. Co. of Am. v. Burr. The Plaintiff argued that Defendant's inadequate verification raised an unjustifiably high risk of violating her FCRA rights. However, the court concluded that the Plaintiff did not meet her burden of proof regarding a violation of 15 U.S.C. § 1681s-2(b)(1)(A), thus rendering further discussion on liability unnecessary. The Plaintiff's claims failed to demonstrate actual injury or a direct link between Defendant's actions and her alleged harm. The court reiterated that the limited evidence provided by the Plaintiff did not adequately detail what actions Defendant took in response to her dispute or the reporting behavior of third-party credit agencies. Consequently, the court found no grounds for relief under Federal Rule of Civil Procedure 60(b)(6) or for reconsideration, as the Plaintiff did not present sufficient evidence to substantiate her claims.

Plaintiff's motion for reconsideration under Fed. R. Civ. P. 60(b)(6) regarding the Court’s August 19, 2016 ruling, subsequent opinion and order, and judgment is denied. The Plaintiff also withdrew requests to admit Exhibit F and Exhibit G. The Court emphasizes that the moving party faces a significant burden to obtain relief under Rule 60(b)(6), referencing case law that denies similar motions to set aside judgments. The Court concludes that the Plaintiff has not demonstrated entitlement to relief from the dismissal order. The ruling incorporates principles of statutory interpretation, stating that courts must interpret legislative language as it stands, even if ambiguous, without delving into legislative history or intent. The Court found that the Plaintiff’s reliance on Exhibit E to infer a lack of proper investigation by the Defendant was unreasonable, noting that references to debt verification processes under the Fair Debt Collection Practices Act (FDCPA) were not relevant to the current case.

The exhibit highlights a distinction between obligations under the Fair Debt Collection Practices Act (FDCPA) and the Fair Credit Reporting Act (FCRA), specifically noting the term 'your demand' as aligned with the FDCPA. In the case of Hawes, the court addressed a motion to dismiss related to Automatic Consumer Dispute Verification (ACDV) forms that triggered the defendant's reinvestigation duties under the FCRA. The June 21, 2016 court order for a settlement conference suggested involving non-party Equifax, though attendance was not mandatory.

In contrast, Smith v. LexisNexis Screening Solutions, Inc. illustrated that the court had evidence regarding the consumer reporting agency's holdings. The Sixth Circuit clarified that negligence does not equate to willfulness under the FCRA; willfulness requires actions exhibiting an unjustifiably high risk of harm. Furthermore, the trial record lacked evidence regarding the alleged inaccuracies in the plaintiff's credit reports and their negative impact, such as hindrances to obtaining credit or mortgage approval.

Cases like Kaplan v. Experian and Castleberry v. Daimler Chrysler Truck Financial demonstrate that courts grant summary judgment when plaintiffs fail to prove actual damages from noncompliance with the FCRA. The court is not obligated to draw special inferences in favor of the nonmoving party in Rule 52 motions and may base its findings on its interpretation of the evidence.