On January 23, the United States Court of Appeals for the Sixth Circuit affirmed the dismissal of the class action complaint filed by plaintiff Muhammad M. Butt against FD Holdings, LLC d/b/a Factual Data in the case styled, Butt v. FD Holdings, LLC, d/b/a Factual Data. A copy of the Court’s opinion can be found here.

Butt previously had filed a petition for Chapter 7 bankruptcy. Butt’s attorney who filed the instant Fair Credit Reporting Act putative class action was the same attorney who represented Butt in the bankruptcy proceedings. Butt’s counsel failed to identify one of Butt’s creditors – Mayflower Auto Transport – as an unsecured creditor in Butt’s bankruptcy schedules, or otherwise identify Mayflower in the bankruptcy documents. Butt subsequently was granted a Chapter 7 discharge, though Mayflower did not receive any certificate of notice of the discharge, given how Mayflower was not specifically identified as one of Butt’s creditors in the bankruptcy proceedings.

After the bankruptcy discharge, Butt applied for a home loan. FD Holdings provided a credit report on Butt to the lender. The credit report listed the judgment filed in the Mayflower action. Butt’s home loan application allegedly was declined based on the Mayflower judgment.

Butt then filed a putative class action alleging that FD Holdings violated Section 1681e(b) of the FCRA by allegedly providing the lender with inaccurate information regarding Butt’s supposed discharged debt to Mayflower. FD Holdings filed a motion to dismiss, arguing that: (1) the credit report provided to the lender was accurate; (2) FD Holdings followed reasonable procedures in producing the report; and (3) Butt did not suffer any injury.

The United States District Court for the Eastern District of Michigan granted FD Holdings’ motion on all three grounds. The Court found that “Plaintiff’s counsel failed in his obligation” to list Mayflower as Butt’s creditor in the bankruptcy documents. “Thus, because of Plaintiff’s counsel’s negligence, there was no listing in the Bankruptcy Court Matrix that the Mayflower debt would have been cancelled – that Mayflower had been discharged as a creditor, prior to his mortgage application to [the lender].” The Court held that “Plaintiff cannot convert his own negligence in the Bankruptcy proceedings into grounds for an individual or class action claim against FD Holdings for not having reasonable procedures…It was Plaintiff’s counsel’s failure to follow the required procedures in the Bankruptcy Court that caused his client’s credit request in this case to be initially denied.” Finally, the Court found that “[a]ny injury suffered by Plaintiff resulted from his attorney’s negligence;” thus, Butt lacked standing to pursue his claim.

Butt then appealed to the Sixth Circuit. The Sixth Circuit affirmed the district court’s judgment, holding that the case should be dismissed on standing grounds. Specifically, the Sixth Circuit held that “[a]ny injury that Butt conceivably suffered was . . . self-inflicted,” and “thus has failed to demonstrate that he has standing to bring this case.”

We will continue to monitor the case for any further appellate proceedings.