Burrell v. DFS SERVICES, LLC
2010 U.S. Dist. LEXIS 128214
| D.N.J. | 2010Background
- Burrell was the victim of identity theft; the thief used his Discover card to incur about $9,706.68 of charges and used his identity to open a Helio wireless account for about $1,010.16.
- Burrell repeatedly informed Discover and Helio that his identity was stolen, but both companies did not stop or correct the fraudulent charges and instead reported him as delinquent to credit reporting agencies.
- Burrell first noticed the theft in April 2008 when he did not receive Discover’s bill and later learned of fraudulent charges in September 2008; Discover failed to resolve the issue despite multiple inquiries.
- Helio opened a separate fraudulent account in Burrell’s name; Burrell learned of this on May 7, 2009 and Helio demanded payment by September 2009.
- On March 17, 2010, Burrell disputed the debts with major credit bureaus (Experian, Equifax, TransUnion), after which Burrell’s credit rating deteriorated due to reported delinquencies.
- Burrell filed suit on May 17, 2010 asserting FCRA and FCBA claims against Discover and Helio, plus state-law claims; defendants moved to dismiss under Rule 12(b)(6).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether FCRA §1681s-2(a) supports a private right of action. | Burrell seeks private relief for furnishers’ inaccurate reporting. | §1681s-2(a) provides no private right of action; enforcement lies with agencies. | FCRA §1681s-2(a) creates no private right of action; claims dismissed with prejudice. |
| Whether FCRA preempts Burrell’s state-law claims. | State-law claims should access protections not overridden by FCRA. | FCRA §1681t(b)(1)(F) preempts state-law claims against furnishers. | State-law claims preempted; dismissed with prejudice. |
| Whether Burrell’s §1681s-2(b) claim is viable given notice requirements. | Burrell notified agencies and sought correction; duties attach after notice. | Private action under §1681s-2(b) is constrained by notice mechanics via CRAs. | §1681s-2(b) claims dismissed; leave to amend within 30 days to address post-March 17, 2010 notices. |
| Whether Burrell’s FCBA claim survives and scope of relief. | FCBA requires investigation and correction for timely disputes. | Dispute not properly written or timely; limitations apply. | FCBA claim survives to the extent notice and timing allow recovery for charges within 60 days before Discover’s receipt of May 18, 2009 Affidavit; limited accordingly. |
| Whether amendment should be allowed for the FCRA/FCBA claims. | Amendment could fix pleading deficiencies. | Dismissal should be with prejudice given preemption and private-right limitations. | Plaintiff may amend the §1681s-2(b) claim within 30 days; other claims remain dismissed. |
Key Cases Cited
- Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court 2009) (plausibility standard for pleading sufficiency)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (Supreme Court 2007) (documents must plead plausible claims)
- Dodd v. United States, 545 U.S. 353 (Supreme Court 2005) (court not free to rewrite statute)
- Morse v. Lower Merion Sch. Dist., 132 F.3d 902 (3d Cir.1997) (21st-century pleading standard guidance)
- In re Rockefeller Ctr. Prop., Inc., 311 F.3d 198 (3d Cir.2002) (pleading standards and discovery context)
- Chiang v. Verizon N.E., Inc., 595 F.3d 26 (1st Cir. 2010) (private rights under §1681s-2(a) limitations)
- Young v. Equifax Credit Info. Servs., Inc., 294 F.3d 631 (5th Cir.2002) (notice to a credit reporting agency triggers §1681s-2(b) duties)
- Ross v. F.D.I.C., 625 F.3d 808 (4th Cir.2010) (preemption interpretation under FCRA §1681h(e)/(t)(b))