Recently, a district judge in California granted a defendant’s motion to dismiss in Koeut v. Navient Corp., ruling that the plaintiff failed to specifically allege facts to support an inference that Navient Corporation and Navient Solutions LLC violated the Fair Credit Reporting Act (FCRA) and the California Consumer Credit Reporting Agencies Act (CCRAA). The court held the plaintiff failed to demonstrate how the furnishers failed to properly investigate the dispute or how they failed to consider all relevant information. Moreover, the court held the plaintiff failed to explain how the furnishers should have known the disputed information was incomplete or inaccurate.
The plaintiff filed a complaint against Navient Corporation and Navient Solutions LLC (collectively, “Navient Defendants) and two national consumer reporting agencies (NCRAs). Between 2005 and 2009, the plaintiff took out a federal student loan to pay for a medical degree. He later took out a second unsecured nonfederal loan, which was a private loan and not guaranteed by a government unit. In 2012, the plaintiff filed for bankruptcy, which allegedly discharged that private loan.
In January 2021, the plaintiff learned that the NCRAs were still reporting his federal student loan and the debt despite the ruling from the bankruptcy court. The plaintiff then attempted to dispute the loan with the NCRAs, but both informed him that no changes would be made to his credit report.
In his complaint, the plaintiff alleged two claims under the FCRA and two claims under the CCRAA. Under the FCRA, the plaintiff alleged a negligent and willful failure to properly modify, delete, or block the reporting of inaccurate, unlawful, and false negative information in connection with the reinvestigation. The Navient Defendants filed a motion to dismiss the plaintiff’s complaint, arguing the plaintiff failed to adequately plead (1) the existence of information provided to the Navient Defendants that they failed to consider in their investigation; (2) facts indicating that the defendants failed to consider all relevant information; and (3) the false, negative, or inaccurate information that the defendants allegedly failed to correct or delete after their alleged receipt of the plaintiff’s dispute. They also argued that the plaintiff failed to show his private loan was discharged, which the court stated was a disputed issue of fact that was inappropriate to decide at the pleadings stage. However, for both FCRA claims, the court sided with the Navient Defendants, and stated that the plaintiff merely recited elements, but failed to explain how the defendants failed to properly investigate the dispute or that they failed to consider all relevant information.
Under the CCRAA, the plaintiff alleged that the Navient Defendants failed to comply with the CCRAA by furnishing information on a specific transaction that they knew or should have known was incomplete or inaccurate. The court cited several cases that hold the statutory term, ‘should have known’ imparts a test of reasonableness and proceeded to analyze the plaintiff’s allegations under this standard. The Navient Defendants argued that the plaintiff failed to explain how the companies knew or should have known the furnished information was incomplete or inaccurate. Once again, the court dismissed both claims and stated that the plaintiff’s allegations “are devoid of any factual basis to support an inference that Navient Defendants reported any specific inaccurate information or failed to use reasonable procedures to assert the accuracy of information contained in his credit report.” The court did give the plaintiff leave to amend.
This case, and similar decisions like this, suggest that courts are increasingly scrutinizing claims under the FCRA and CCRAA to ensure plaintiffs allege actual facts and not just the elements of a claim.