COULTER v. SAGESTREAM, LLC
2:20-cv-01820
| E.D. Pa. | Nov 17, 2020Background
- Coulter filed Chapter 7 (2015); Lending Club debt was discharged but later appeared on a SageStream consumer report as owing post‑bankruptcy balances.
- On April 24, 2018 Coulter disputed the entries to SageStream; SageStream replied with a July 26, 2018 reinvestigation letter.
- Coulter alleged SageStream violated FCRA §1681e(b) (failure to follow reasonable procedures to ensure maximum accuracy) and §1681i (unreasonable/tardy reinvestigation and deficient notices), and asserted emotional and actual damages.
- Coulter alternatively alleged SageStream acted as a "reseller" of Innovis data and failed to provide required reseller disclosures.
- SageStream moved to dismiss for lack of Article III standing (invoking Spokeo) and for failure to state a claim; the court denied dismissal as to the core §1681e(b) and §1681i claims but dismissed procedural‑notice and reseller claims in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Standing for inaccurate reporting (§1681e(b)) | Coulter: inaccurate post‑bankruptcy reporting itself is a concrete injury Congress intended to prevent. | SageStream: after Spokeo, Coulter hasn’t pleaded a concrete, cognizable injury. | Court: Standing exists — §1681e(b) violations harm concrete interests (analogous to defamation/false light). |
| Standing for reinvestigation timeliness and reasonableness (§1681i) | Coulter: reinvestigation was unreasonable/untimely and therefore caused concrete harm. | SageStream: procedural timing/routine reinvestigation defects are not concrete injury. | Court: Standing exists for unreasonable reinvestigation claims (these protect the same concrete interest in accurate reporting). |
| Deficiencies in SageStream's response letter (disclosure wording) | Coulter: letter language was misleading and deprived him of statutory rights; vague terms (e.g., "recently") violate FCRA. | SageStream: letter included the statutorily required language; any extra wording is harmless. | Court: These alleged procedural defects are "bare" violations divorced from concrete harm — no standing; dismissed without prejudice. |
| Reseller theory and 12(b)(6) challenge | Coulter: alternatively, SageStream was a reseller and failed to provide reseller disclosures. | SageStream: not a reseller; even if it were, resellers are exempt from reinvestigation obligations and the timeline claim alone does not create standing. | Court: Reseller allegations dismissed; core §1681e(b) and §1681i claims survive 12(b)(6). |
Key Cases Cited
- Spokeo v. Robins, 136 S. Ct. 1540 (2016) (Supreme Court clarifying that procedural statutory violations can be concrete injuries but a "bare" procedural breach may not suffice for Article III standing)
- In re Horizon Healthcare Servs. Data Breach Litig., 846 F.3d 625 (3d Cir. 2017) (Third Circuit applying Spokeo and recognizing unauthorized disclosure under FCRA as a concrete injury)
- Long v. SEPTA, 903 F.3d 312 (3d Cir. 2018) (holding FCRA liability when the statutory harm is the very injury Congress sought to prevent; distinguishing bare procedural notice failures)
- Kamal v. J. Crew Grp. Inc., 918 F.3d 102 (3d Cir. 2019) (dismissing claim where statutory violation was a bare procedural defect without concrete harm)
- Cortez v. Trans Union, 617 F.3d 688 (3d Cir. 2010) (standards for reinvestigation and for assessing reasonableness/accuracy under FCRA)
- Robins v. Spokeo, 867 F.3d 1108 (9th Cir. 2017) (on remand finding §1681e(b) protects concrete interests; inaccurate consumer‑reporting injury can be concrete)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (defining willfulness under FCRA and discussing the statute’s accuracy/privacy aims)
- Cushman v. Trans Union Corp., 115 F.3d 220 (3d Cir. 1997) (reinvestigation must be more than parroting furnishers’ reports)
- Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996) (elements for negligent noncompliance with §1681e(b))