Unensaikhan Chuluunbat v. Experian Information SolutionsUnensaikhan Chuluunbat v. Experian Information Solutions
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division.
No. 1:20-cv-00164 — Charles P. Kocoras, Judge.
No. 1:19-cv-07706 — Sharon Johnson Coleman, Judge.
No. 1:19-cv-07538 — John Z. Lee, Judge.
No. 1:20-cv-00408 — John Z. Lee, Judge.
No. 1:20-cv-01773 — Gary Feinerman, Judge.
No. 1:19-cv-07534 — Manish S. Shah, Judge.
No. 1:19-cv-08168 — Andrea R. Wood, Judge.
We are tasked in this FCRA context with discerning the sometimes-murky boundary between “law” and “fact.” We hold that plaintiffs’ allegations that the creditors did not own their debts are not factual inaccuracies that the consumer reporting agencies are statutorily required to guard against and reinvestigate, but primarily legal issues outside their competency. So we affirm the district court‘s decision in each case.
I
In each of these disputes (as well as those pending resolution on the outcome of this case), the facts present a similar pattern. Each plaintiff incurred a consumer credit card debt.1 The debts were purportedly sold and assigned to other companies—creditors—and this change appeared on plaintiffs’ credit reports.2 The creditors then attempted to collect the debts from the plaintiffs.
Rodas, Molina, and Amorah were sued by Midland, their alleged new creditor, who demanded payment. They defended those lawsuits by claiming that Midland did not own their debts, demanding proof of ownership, and requesting arbitration. In each case, Midland moved to voluntarily dismiss the lawsuit before arbitration was set to commence.
Chuluunbat, Hoyos, Soyinka, and Cowans—plaintiffs who were not sued—sent letters to their creditors, contending that the creditors did not own their debts. These creditors either did not respond or replied that they owned the debts but did not provide any assignment agreement from the previous creditor.
After dismissal of these lawsuits (or, if the plaintiff was not sued, after the collection attempts), the plaintiffs contacted the “Big Three” consumer reporting agencies: Experian, TransUnion, and Equifax. The plaintiffs requested that the consumer reporting agencies reinvestigate the accuracy of their credit reports to determine if the purported creditors owned these debts. In response, the consumer reporting agencies sent an inquiry to each creditor to verify ownership. The creditors all confirmed that the reports were correct and that they owned the plaintiffs’ debts. The creditors did not, however, produce the original sale or assignment agreement in any case. After receiving this confirmation, the consumer reporting agencies informed the plaintiffs that no further steps would be taken to investigate.
In each of the consolidated cases the district court reasoned differently but came to the same conclusion. As to Rodas and Cowans, the court determined that whether the creditors owned the debts was a question of law and therefore categorically outside of the consumer reporting agencies’ statutory duties. As for Chuluunbat, the court instead decided that ownership of a debt was a mixed question of law and fact, but it also concluded that the consumer reporting agencies were not required to reinvestigate the claim. For Soyinka, Molina, Hoyos, and Amorah, the court eschewed a rigid distinction between law and fact and focused on the institutional competency of the consumer reporting agencies to resolve the claims. Whether the creditors owned the debts was a question outside the competencies of the consumer reporting agencies, the court decided, and not an inaccuracy to correct through reinvestigation.
Plaintiffs appealed, and we consolidated the cases for review. In some cases, the district court granted judgments on the pleadings, and in others motions to dismiss, but our review of either disposition is de novo. Gill v. City of Milwaukee, 850 F.3d 335, 339 (7th Cir. 2017).
II
The Fair Credit Reporting Act “imposes duties on consumer reporting agencies and furnishers in a manner consistent with their respective roles in the credit reporting market.” Denan, 959 F.3d at 294.3 Furnishers—the creditors here—provide consumer credit data to the consumer reporting agencies, and the consumer reporting agencies reflect that information on a consumer‘s credit report. Id. The statutory scheme primarily tasks furnishers with providing accurate information to the consumer reporting agencies, but
In Denan v. Trans Union LLC, this court held that “inaccurate information under
The plaintiffs argue that whether the creditors were assigned, and now own, their debts is a factual question that triggers the twin statutory obligations. They rely on Chemetall GMBH v. ZR Energy, Inc., 320 F.3d 714, 720–21 (7th Cir. 2003), for the proposition that whether parties intended to assign something is a question of fact to be decided by a jury in court. By the plaintiffs’ account, all that the consumer reporting agencies need to ascertain is whether a purchase and sale agreement for each of the plaintiffs’ debts exists. If one does not, the plaintiffs argue, the consumer reporting agencies could conclude that the creditor does not own the debt. They see requesting the purchase and sale agreement as a straightforward factual inquiry.
A clear line has not been drawn between legal and factual inaccuracies in the FCRA context. Decisions of this court and other circuits do provide helpful guideposts. The paradigmatic example of a legal dispute is when a consumer argues that although his debt exists and is reported in the right amount, it is invalid due to a violation of law. In Denan, for example, the plaintiff did not dispute whether a debt existed or its amount, but instead contended he was not required to pay the debt because it was “legally invalid.” 959 F.3d at 293. We concluded that the consumer reporting agencies were not required to determine that the debt was invalid as a matter of law because “[o]nly a court can fully and finally resolve the legal question of a loan‘s validity,” and therefore, “no reinvestigation by Trans Union could have uncovered an inaccuracy in [the plaintiff‘s] credit report.” Id. at 295, 297. Similarly, in DeAndrade, a plaintiff-debtor did not dispute that he had taken out a mortgage to pay for windows or that the mortgage was in the wrong amount, but instead she argued that the mortgage did not meet certain legal requirements. 523 F.3d at 68. Like in Denan, the court in DeAndrade concluded that this question was beyond the scope of the statutory requirements. Id.; see also Humphrey v. Trans Union LLC, 759 F. App‘x 484, 488 (7th Cir. 2019) (unpublished) (holding that consumer reporting agencies were not required to reinvestigate a plaintiff‘s claim that disability discharge applications had legally entitled him to stop payments).
In contrast, examples of factual inaccuracies include the amount a consumer owes, and what day a consumer opened an account or incurred a payment. Carvalho, 629 F.3d at 891. These questions do not require the consumer reporting agencies to make any legal determinations about the facts or legal judgments. A legal question may also be resolved as a matter of fact if a tribunal—such as a court or arbitrator—has adjudicated the matter. See Dennis v. BEH-1, LLC, 520 F.3d 1066, 1071 (9th Cir. 2008); Scheel-Baggs v. Bank of Am., 575 F. Supp. 2d 1031, 1042 (W.D. Wis. 2008). Taking notice of a previously resolved legal dispute involves some knowledge of the legal impact of court decisions, but it does not require the consumer reporting agency to make any legal determinations about the underlying claim.
These examples show that the central question is whether the alleged inaccuracy turns on applying law to facts or simply examining the facts alone. Consumer reporting agencies are competent to make factual determinations, but they do not reach legal conclusions like courts and other tribunals do. Denan, 959 F.3d at 295. Courts sometimes employ different actors to help answer certain questions, but the ultimate result is a legal determination (e.g., that a party is liable). That means whether something is considered a factual question in a court does not resolve whether it is an inaccuracy under the FCRA. Accordingly, Chemetall—in which this court held, applying Illinois law, that the intent to enter an assignment is a question of fact in court—does not decide this case.
The claims here differ from the purely legal disputes at issue in Denan. Although the plaintiffs in Denan were explicitly attempting to collaterally attack the legality of their debts through the FCRA‘s reinvestigation provision, the plaintiffs in these consolidated cases contest who owns their debts, not their legal validity.
But whether a debt was assigned—absent a previous decision by a tribunal—is a question that requires a legal determination, placing it outside the competency of a consumer reporting agency. The plaintiffs in these cases do not contest their debts’ existence or that the debts are in improper amounts. Rather, as with a pure challenge to a debt‘s legal validity, the plaintiffs here question the legal relationship of different parties to these debts, which is a task for a court. Contrary to the plaintiffs’ assertions, any investigation into whether the creditors were assigned the debts involves more than just determining if an assignment agreement exists. It also involves interpreting the legal validity of any assignment agreement. An assignment is a creature of law: to have a valid assignment parties must meet certain legal requirements. See, e.g., RESTATEMENT (SECOND) OF CONTRACTS § 317 (1981) (defining assignment). Determining if those requirements are met requires making a legal judgment, which the consumer reporting agencies are not statutorily required to do.
The plaintiffs contend that would create a double standard: consumer reporting agencies must investigate claims by debtors that they do not owe a debt but not claims that creditors do not own a debt. This argument misses differences between these two situations, however, and reads our conclusion too broadly.
The alleged inaccuracies here necessarily involve interpreting legal rights to a debt and making legal judgments. In each of these cases, the consumer reporting agencies reached out to the creditors and asked them to confirm ownership of the debts. Each creditor did so. If the plaintiffs presented court judgments to the consumer reporting agencies showing that the legal ownership of their debts have been adjudicated, the investigation may have been factual in nature. But their broad assertion that the creditors do not own their debts necessarily required the consumer reporting agencies to make a legal determination about whether the plaintiffs or the creditors are right about the ownership of the debts.
The plaintiffs here are not left without recourse. They could confront the creditors who are in the best position to respond to assertions that they do not own the plaintiffs’ debts. See Brill, 838 F.3d at 921. Another avenue for the plaintiffs is
III
Because the plaintiffs in these cases asked the consumer reporting agencies to make primarily legal determinations, they have not stated claims under the Fair Credit Reporting Act, so the judgment of the district court in each case is AFFIRMED.