Mader v. ExperianMader v. Experian
Appeal from the United States District Court for the Southern District of New York No. 19-cv-3787, Lorna G. Schofield, Judge.
Before: LOHIER, CARNEY, and NATHAN, Circuit Judges.
Consolidated appeal from orders entered in the United States District Court for the Southern District of New York (Schofield, J.) granting defendant-appellee‘s motion for summary judgment and denying plaintiff-appellant‘s motion for an indicative ruling on a motion to set aside the judgment. Plaintiff alleges that his private educational loan was discharged in bankruptcy. He sued defendant-appellee under the Fair Credit Reporting Act (FCRA) for reporting the loan was due and owing. The district court concluded the loan was not discharged in bankruptcy and later declined to set aside summary judgment when plaintiff proffered newly discovered evidence. We conclude plaintiff-appellant‘s claim is not cognizable under the FCRA.
AFFIRMED.
ADAM R. SHAW (George F. Carpinello, Jenna C. Smith, on the brief), Boies Schiller Flexner LLP, Albany, NY, for Plaintiff-Appellant.
MEIR FEDER (Kerianne N. Tobitsch, Jack Millman, on the brief), Jones Day, New York, NY, and John A. Vogt, Jones Day, Irvine, CA, for Defendant-Appellee.
The Fair Credit Reporting Act (“FCRA“) requires reporting agencies to “follow reasonable procedures to assure maximum possible accuracy of the information” in a consumer credit report.
We hold that this kind of alleged legal inaccuracy is not cognizable under the FCRA. We therefore affirm the dismissal of Mader‘s complaint, albeit on a different basis than that relied upon by the district court.
BACKGROUND
In March 2008, Mader took out an $18,000 educational loan from Sallie Mae, Inc., a private, for-profit corporation. Mader used this loan to attend the Reformed Theological Seminary in Orlando, Florida. Because the seminary was a non-Title IV school, see
In 2012, Mader filed for bankruptcy in the Southern District of New York and listed his Excel Grad loan in his petition. On April 16, 2013, the bankruptcy court issued a final decree of discharge, which stated that Mader was “released from all dischargeable debts.” App‘x 159. An “explanation of bankruptcy discharge” attached to the order stated that “[m]ost, but not all, types of debts are discharged,” but that “[d]ebts for most student loans” are not discharged. App‘x 160.
The following month, Navient sent Mader a letter asserting that his Excel Grad loan was not discharged and that he “remain[ed] responsible for repaying the entire remaining balance.” App‘x 45. Mader and Navient executed a loan modification agreement and Mader made payments on the loan between 2013 and 2017. The loan modification agreement and these payments were communicated to Experian and reflected in Mader‘s credit report, which in January 2019 indicated that $20,890 was due on the loan, including a past-due balance of $8,519.
Nevertheless, on April 29, 2019, Mader brought this action against Experian in district court in the Southern District of New York under the FCRA and its state analog, the New York Fair Credit Reporting Act (“NYFCRA“), for continuing to include the Excel Grad loan on his credit report. Before commencing this action, Mader did not dispute the debt with Experian, nor did he challenge it with Navient or in the bankruptcy court.
The district court granted summary judgment in favor of Experian. Mader v. Experian Info. Sols., LLC, No. 19-cv-3787, 2020 WL 4273813 (S.D.N.Y. July 24, 2020). Relying primarily on the declaration from the Navient employee, the district court determined that Mader‘s loan was non-dischargeable, and that therefore its inclusion on his credit report was not an inaccuracy. The district court similarly denied Mader‘s motion for reconsideration, at which point Mader filed a notice of appeal. Later, proffering newly discovered evidence, Mader moved for an indicative ruling for relief from judgment, which the district court also denied. Mader then filed a notice of appeal from the indicative ruling and his two appeals were consolidated into the present case.
STANDARD OF REVIEW
“We review a district court‘s decision to grant summary judgment de novo, construing the evidence in the light most favorable to the party against which summary judgment was granted and drawing all reasonable inferences in [his] favor.” Harris v. Miller, 818 F.3d 49, 57 (2d Cir. 2016) (citation omitted). We “affirm a grant of summary judgment only if there is no genuine issue of material fact and the prevailing party was entitled to judgment as a matter of law.” Id. (citation omitted).
DISCUSSION
Mader‘s operative complaint alleges that Experian violated
Mader claims that his Experian credit report is inaccurate because it continues to list his outstanding student debt to Navient following his chapter 7 bankruptcy. He argues that the Excel Grad loan was discharged in bankruptcy because, as a private loan, it is not exempted from discharge under
I. The District Court‘s Analysis
The district court assumed that the kind of inaccuracy alleged by Mader was cognizable under the FCRA and proceeded to engage with the question of whether the Excel Grad loan was non-dischargeable under
We think this conclusion was in error. Competing evidence in the record does raise a genuine and material dispute as to whether Mader‘s Excel Grad loan was made under a program that included governmental funding. While a Navient employee declared, using the same language as contained in the promissory note, that Mader‘s loan was issued “under a program that was funded, in part, by non-profit organizations, including governmental units,” App‘x 41, the prospectus that Mader submitted—which the district court did not address—cut the other way. That document indicated that Excel Grad loans were made under a separate program funded only with private funds.
Furthermore, as we discuss below, determining whether Mader‘s loan was discharged requires interpreting the
While we disagree with the district court‘s assessment of the record and do not endorse its interpretive approach, we “may affirm . . . on any grounds for which there is a record sufficient to permit conclusions of law, including grounds not relied upon by the district court.” CBF Indústria de Gusa S/A v. AMCI Holdings, Inc., 850 F.3d 58, 78 (2d Cir. 2017) (citation omitted). As we explain next, we do so here based on our conclusion, as Experian argued in the alternative below and before us, that the FCRA does not require credit reporting agencies to adjudicate legal disputes such as the post-bankruptcy validity of Mader‘s educational loan debt.
II. Cognizability of Mader‘s Claim Under Section 1681e of the FCRA
This appeal ultimately turns on a question of statutory interpretation and therefore we begin “where all such inquiries must begin: with the language of the statute itself.” United States v. Ron Pair Enters., Inc., 489 U.S. 235, 241 (1989). The relevant provision of the FCRA states that when preparing credit reports, credit reporting agencies “shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.”
Because the term “accuracy” is not defined in the FCRA, we look to its ordinary meaning found in “contemporary dictionary definitions” from 1970 when the FCRA was enacted. El Omari v. Int‘l Crim. Police Org., 35 F.4th 83, 88 (2d Cir.), cert. denied, 143 S. Ct. 214 (2022). The word “accuracy” is defined as “freedom from mistake or error” or “conformity to truth or to some standard or model.” Webster‘s Third New International Dictionary 13–14 (1971). This definition requires a focus on objectively and readily verifiable information. This is consistent with our prior holding requiring that an inaccuracy be “patently incorrect or . . . misleading,” Shimon, 994 F.3d at 91 (citation omitted).
The “inaccuracy” Mader alleges does not meet this statutory test because it evades objective verification. There is no bankruptcy order explicitly discharging this debt. Navient continued to treat the debt as outstanding following Mader‘s bankruptcy. And, for that matter, so did Mader.
Instead, the accuracy of Experian‘s reporting that the debt was still owed depends on whether it is “dischargeable,” which itself depends on whether
But these bankruptcy courts also denied summary judgment to the debtors and proceeded to trial on the question of the applicability of
Every other circuit to have considered an analogous question has agreed: inaccuracies that turn on legal disputes are not cognizable under the FCRA. Some circuits have reached this conclusion by holding, as we do, that claims under the FCRA require factual inaccuracies to be actionable. For example, the First Circuit concluded that a debtor‘s claim that his credit report contained an inaccurate report of a legally invalid mortgage “crossed the line between alleging a factual deficiency that [the credit reporting agency] was obliged to investigate pursuant to the FCRA and launching an impermissible collateral attack against a lender by bringing an FCRA claim against a consumer reporting agency.” DeAndrade v. Trans Union LLC, 523 F.3d 61, 68 (1st Cir. 2008). Likewise, the Ninth Circuit held that “collateral attacks on the legal validity of . . . debts” cannot satisfy the “inaccuracy” element of an FCRA claim. Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 891–92 (9th Cir. 2010). The Tenth Circuit reached the same conclusion but based its reasoning on the “reasonable procedures” element, which, the circuit concluded, requires only that credit reporting agencies “look beyond information furnished to them when it is inconsistent with the [credit reporting agency‘s] own records, contains a facial inaccuracy, or comes from an unreliable source.” Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1239 (10th Cir. 2015). In that case, the Tenth Circuit held that, as a matter of law, reasonable procedures do “not require [credit reporting agencies] to resolve legal disputes about the validity of the underlying debts they report.” Id. at 1242. Finally, the Seventh Circuit reached a similar conclusion drawing on both a distinction between factual and legal inaccuracies and an analysis of what the “reasonable procedures” element requires. See Denan v. Trans Union LLC, 959 F.3d 290, 293–96 (7th Cir. 2020).
Consistent with these decisions, we hold that Mader has failed to allege an inaccuracy within the plain meaning of
To be clear, this holding does not mean that credit reporting agencies are never required by the FCRA to accurately report information derived from the readily verifiable and straightforward application of law to facts. For instance, other courts have held that misreporting the clear effect of a bankruptcy discharge order on certain types of debt is a cognizable inaccuracy under the FCRA. See, e.g., Losch v. Nationstar Mortg. LLC, 995 F.3d 937, 944–45 (11th Cir. 2021) (home mortgage); Morris v. Experian Info. Sols., Inc., 478 F. Supp. 3d 765, 769 (D. Minn. 2020) (consumer debt). And as a result of a settled class action lawsuit, Experian agreed to adopt new procedures for tracking and reporting the effects of chapter 7 bankruptcies on various types of consumer debts. See White v. Experian Info. Sols., Inc., No. 05-cv-1070, 2008 WL 11518799, at *7–12 (C.D. Cal. Aug. 19, 2008) (order approving class action settlement).
Of course, “[a] clear line has not been drawn between legal and factual inaccuracies in the FCRA context.” Chuluunbat v. Experian Info. Sols., Inc., 4 F.4th 562, 567–68 (7th Cir. 2021). As cases like Losch and Morris show, if a legal question is sufficiently settled so that the import on a particular debt is readily and objectively verifiable, the FCRA sometimes requires that the implications of that decision be reflected in credit reports. This no doubt “involves some knowledge of the legal impact of court decisions.” Id. at 568. What the FCRA does not require, however, is that credit reporting agencies resolve unsettled legal questions like the one at issue here.
Finally, we note that Mader is not without options to resolve the dispute that forms the basis for the derogatory note on his credit report. Quite the contrary. Mader could dispute the debt directly with Navient, which knows the nature of the loan program better than anyone else and is itself under an FCRA obligation to report accurately to credit reporting agencies. See
CONCLUSION
Because we hold that the kind of legal inaccuracy alleged by Mader is not cognizable as an “inaccuracy” under the FCRA, we AFFIRM, on an alternative ground, the district court‘s order granting summary judgment in favor of Experian. Accordingly, we DISMISS as moot Mader‘s appeal of the denial of his motion for an indicative judgment.