Harold Holmes v. Nco Financial Services, Inc
538 F. App'x 765
9th Cir.2013Background
- Holmes filed a class action alleging NCO reported his debt to a credit reporting agency without noting it was disputed, violating the FDCPA and California CCRAA.
- The FDCPA bars a debt collector from reporting credit information known or that should be known to be false, including failing to note a disputed debt; CCRAA bars furnishing information to credit agencies that is incomplete or inaccurate.
- Holmes disputed the debt while it was with an earlier collector; that dispute was recorded in the shared web portal (Oasis) used by successive collectors.
- NCO was the fourth collector on the account but, due to a coding/access error, did not see the dispute information on Oasis when it reported the account; NCO later discovered and fixed the access problem after suit was filed.
- The district court granted summary judgment for NCO; Holmes appealed. The Ninth Circuit reviewed whether a reasonable debt collector in NCO’s position should have known the debt was disputed and whether any preemption argument was preserved.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether a reasonable debt collector "should have known" the debt was disputed under FDCPA and CCRAA | Holmes: NCO had access to Oasis and thus should have known the account was disputed; its failure to see the dispute was unreasonable and creates a triable issue | NCO: It did not have access due to a coding error and did not know of the lack of access until after suit; summary judgment appropriate | Reversed summary judgment — material fact dispute exists whether a reasonable collector in NCO’s position should have known the debt was disputed; remanded for further proceedings |
| Whether Holmes’s CCRAA claims are preempted by the FCRA (15 U.S.C. §1681s-2) | Holmes: CCRAA claim stands; statutory protections apply | NCO: CCRAA claim should be viewed under §1785.25(c) and is preempted by FCRA (argument first raised on appeal) | Waived — NCO raised preemption for first time on appeal, so the court declined to consider it |
Key Cases Cited
- Schultz v. Dep’t of Army, 886 F.2d 1157 (9th Cir. 1989) ("should have known" test implies reasonableness standard)
- Rost v. United States, 803 F.2d 448 (9th Cir. 1986) (constructive knowledge measured by what a reasonable person would have known)
- Brannon v. United Student Aid Funds, Inc., 94 F.3d 1260 (9th Cir. 1997) (preemption arguments affecting jurisdiction may be raised on appeal; others waived)
- Williams v. Gerber Products Co., 552 F.3d 934 (9th Cir. 2008) (declining to address preemption arguments raised for the first time in an answering brief)
REVERSED; REMANDED.