On February 28, the U.S. District Court for the Southern District of New York dismissed a case brought against the Consumer Data Industry Association (CDIA) under federal antitrust law. The case alleged that the CDIA — a trade association of which the three competitor national credit bureaus are members — asserted “monopolistic” control over the consumer reporting industry and prevented innovation in credit reporting procedures by instituting credit reporting guidelines and mandating the use of the Metro 2® Format for reporting credit data. The court held that the plaintiff lacked Article III standing to sue the CDIA because she failed to show any injury traceable to the CDIA, and was also ineffective in stating a claim under the Sherman Antitrust Act because she failed to allege the existence of a monopolized market. The deficiencies in her case could not be solved through further amendment of her complaint, therefore the court dismissed the entire suit with prejudice. See Case No. 1:20-cv-04387 (S.D.N.Y. 2022).
The plaintiff alleged in an amended complaint that her student loan debt was discharged in 2013 and therefore should have been removed from her credit report in 2020, seven years after the bankruptcy. Despite the discharge, she alleged that her loan servicer attempted to collect on the debt in 2018. The plaintiff and the loan servicer ultimately entered into a confidential settlement agreement. The plaintiff claimed, however, that the national credit bureaus “re-aged” the student loan debt as of the 2019 settlement, causing the debt to remain on her credit report until 2026 instead of being removed in 2020.
The plaintiff allegedly disputed the continued reporting of her student loan debt with all three credit bureaus, but claimed that they would not remove the information from her reports because the CDIA “has mandated that the Credit Bureaus accept whatever information the Data Furnishers report.” The plaintiff further alleged that the CDIA requires furnishers to use its Metro 2® Format for reporting credit data, and that the CDIA’s influence over the credit reporting industry prevents innovation and investment in new and better credit reporting methodologies. On the basis of these allegations, the plaintiff asserted a claim against the CDIA under Section 2 of the Sherman Act.
In its decision granting the CDIA’s motion to dismiss the plaintiff’s amended complaint, the court first held that the plaintiff lacked Article III standing because her alleged injury was not traceable to any action of the CDIA. Instead, her allegations of injury were directed at the purported conduct of the loan servicer and the national credit bureaus, which allegedly reported inaccurate information regarding her student loan and refused to correct it. The court noted that the Supreme Court and lower courts have consistently held that a plaintiff fails to establish standing where their alleged injuries are caused by third parties’ intervening conduct.
Even assuming that the plaintiff could establish standing, however, the court concluded that she failed to state a claim under Section 2 of the Sherman Act for two reasons: first, she failed to sufficiently allege an antitrust injury to establish antitrust standing, and second, she failed to establish a viable relevant market to support her antitrust claim.
To establish antitrust standing, an antitrust plaintiff must plausibly allege that she suffered an antitrust injury — that is, an injury being the type that the antitrust laws were intended to prevent and which flows from the defendant’s allegedly anticompetitive conduct. Here, the court found that the plaintiff’s alleged injury (the credit bureaus’ re-aging of her student loan debt) did not flow from the CDIA’s alleged anticompetitive conduct (the prevention of competition in credit reporting methodologies). The court found that the plaintiff’s allegations that her injury would have been prevented if the industry had been allowed to establish better guidelines for credit reporting were wholly conclusory and failed to show that “but for” the CDIA’s implementation of the Metro 2® Format, her credit score would not have been harmed.
An antitrust plaintiff must also allege a plausible relevant market in which competition will be impaired, which the court held the plaintiff failed to do. The plaintiff alleged that the monopolized market is the credit reporting market, made up of the three national credit bureaus. The plaintiff conceded, however, that the three credit bureaus are competitors of one another. Noting that “a shared monopoly theory” cannot support a claim under Section 2 of the Sherman Act, the court held that the plaintiff’s claim could not be based on “a theory that three competing firms are conspiring to dominate a single market.” Accordingly, the court held that the plaintiff failed to state a claim for this reason as well.
In a final section of its opinion, the court determined that any amendment by the plaintiff would prove futile, since the plaintiff already had one opportunity to amend and the facts she pleaded precluded any viable claim under Section 2 of the Sherman Act.
The attempt to assert an antitrust claim against the credit reporting industry is a unique theory. Extending beyond credit reporting, the plaintiff’s broad theory of antitrust liability would bear implications for all trade associations that offer guidance, provide certifications, or set standards for their respective industries. As courts have routinely recognized, however, such privately promulgated guidance and industry standards do not establish the “law of the land” to which industry members are legally required to conform. See, e.g., Gibson v. Equifax Information Servs., LLC, 2019 WL 4731957, at *3 (M.D. Ga. July 2, 2019). Even if such a claim were legally viable, this case shows that a plaintiff must meet a significantly high bar to support it, even at the pleading stage. That is something that the plaintiff failed to do.