Hoback v. Synchrony Bank, No. 6:2019cv00018 - Document 19 (W.D. Va. 2019)
Court Description: MEMORANDUM OPINION. Signed by Chief Judge Michael F. Urbanski on June 10, 2019. (ca)
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CLERK' S OFFICE U.S.DIST.COURT ATRA OKE,VA FILED IN THE UN ITED STATESDISTRICT COURT JLy 1 I2219 FORTHEWES NIA Bt: u ..DUa.EM LERK LY NTERN CH BU DI R GSTRI D IWCT SIOOF N VIRGI JAM ES H OBACK, Plaintiff, Case N o.:6:19-cv-18 V. SYN CH RO N Y BAN K, By: D efendant. M ichaelF.U rbansld ClaiefUtzited StatesDistrictJudge M EM O M N D U M O PIN ION ThismattercomesbeforethecourtondefendantSynchtonyBank'srrsynchrony') moéontodisrrlissplaintiffJamesHoback'sr<Hoback'')complaintinpart,filedonApril15, 2019.ECF N o.3.H oback responded in opposition on A pril29,2019.ECF N o.11. Synchrony replied on M ay 6,2019,ECF N o.13,and thecourtheard atgam enton M ay 13, 2019,ECF N o.17.Forthereasonsexplained below,the courtwillD EN Y Synchrony's m oton. H oback discovered a discrepancy in hiscreditllistorywhen he applied fora Carnival CreditCard and hisapphcadon wasdenied on thebasisofpoorcredit.ECF N o.1-1,at2. Hoback v. Synchrony Bank The causeofllispoorcreditwasa tradelineon lziscreditreport- a Synchzony Doc. 19 Bank/AAM co co-branded creditcardaccountonwlzich Hobackwaslistedasaco-signer. I. dsHoback hasnevercontractedwith Syncluony forcreditforbim selforanyoneelse.. Lda . 1Allfactsazetaken from Hoback'sCom plaintand areptesllm ed tobetnlefortllepum oseofthism odon.Re ublican PartyofNorthCarolinav.Martin,980F.2dv.943,952(4thCir.1992). Dockets.Justia.com CC zu'. t.X t) j.' , k . - SynchtonyhasKfcontinued to publish andre-publish falseinform aéon that(H obackjis delinquenton thiscreditlineand hasfailed to m aketim ely paym ents.''1d.at3.Synchrony haspublished thisinfo= ation to Equifax,Tzansu nion,and Experian,nm ong othercredit repordng agencies.1d. . Upon discoveting the $ CO creditcard on llisreport,H oback com plained to Equifax,Transunion,and Experian and ffalerted each thatthederpgatoryinform adon being published abouthim wasincorrect.'?ECF N o.1-1,at3.Alltht' eetequested thatSynchrony investkatetheinformadontodete= ineitsaccuracy.Synchtonydidnotdosoand A condnued topublish Hoback'scredithistorywith theSynchtonyBanIV AAM CO cobranded creditcard to third parées.z H oback flled suitin theBedford County CircuitCourton April8,2019.ECF N o.1- 1.Hoback'scomplnintbringssçvencounts,whichfallintotht'eecategodes:(1)CountI blingsaclnim ofdefamaéon;(2)CountsII-V bringthreevioladonsofj1681s-2(b)ofthe FairCreditReportingAct,Failureto Reasonably Invesdgate;(3)CountsVI-W Ibdng l violadonsofj1681b oftheFaitCreditRepordngAct,lmpe= issiblePull.Ld. aat3-6. Synchronyrem oved the case to federalcourton A pril8,2019.ECF N o.1-2. II. A modontodismissundetFederalRuleofCivilProcedtzre129$(1)challengesa court'ssubjectmatterjtuisdiction.Absentsubjectmatterjtuisdicdon,acourtmustdismiss theacdon.Evansv.B.F.PerldnsCo.,aDiv.ofStandex Int'lCorp.,166F.3d 642,653 (4th ' % 2A tthehcaring on thism oHon,H oback'scolm selreported thatSynchrony had recendy stopped reporting the Synchrony BaA /AAMCO co-brandedcreditcardin cormecéonwith Hoback'screditreport. ) 2 . . ( Ciz.1999).W hetheraplainéffhasstaningtobringacauseofacéon Tfisgenerallyassociated wit.hCivilProceduteRule12@ (1)pertainingtosubjectmatterjudsdiction.''CGM,LLC v. BellsouthTelecomms.,Inc.,664F.3d46,52(4thCir.2011).f'ThatisbecausefAtdcle11I givesfederalcourtsjtzrisdicdononlyovercasesandcontroversiesy'andstanlingisTan integralcom ponentofthecaseorcontroversy zequirem ent.'''Ltts(quodngMillerv.Brown, . 462F.3d 312,316(4th Cit.2006)).W hen adefendanttaisessubstandvechallengesto a court'sjutisdicéonunderRule12q$(1),thecourtneednotacc' eptthecomplnint'sallegadons astnle and m ay considerfactsoutside the com plnintto dete= ineifitcan properly exercise subjectmatterjurisdicdon.Kernsv.UnitedStates,585F.3d187,192(4thCir.2009).Atall times,rçgtqheplnintiffhastheburdenofprovingthatsubjectmatterjurisclicdon exists.''Evans,166 F.3d at647. M eanwhile,Rule12q$(6)oftheFederalRulesofCivilProcedurepernzitsapartyto m ove fordismissalofa com plaintforfailureto statea clnim upon which teliefcan be granted.TosurviveamotiontodismissunderRule12q$(6),theplaindffmustplead sufficientfactsKfto raise arightto teliefabovethe speculativelevel''and ffstate aclnim to reliefthatisplausibleon itsface.''BellAtl.Co .v.Twombl,550 U.S.544,555,570 (2007). A plaindffestablishesfffacialplausibilitf'bypleading fffactazalcontentthatallowsthecourt to draw thereasonableinference thaythedefendantisliable forthem isconductalleged.'' Ashczoftv.lqbal,556U.S.662,678(2009).In tnxlingon a129$(6)motion,thecourtmust acceptallwell-pleaded allegationsin the com plaintastt' ue and draw al1reasonable facttzal inferencesin the lightm ostfavorable to the plaindff.Ibattav.U nited States,120 F.3d 472, 474 (4th Cir.1997).Howevez,Tfgtlllreadbazezecitalsoftheelementsofacauseofacdon, supportedbymeteconclusorystatem ents,do notsuffice.''Lqbal,556U.S.at678)seeW ag - - MoreDo sLLC v.Cozazt,680F.3d359,365(4thCit.2012)Soldingthecovut<Tneednot acceptlegalconclusionscouched as factsorunwarranted inferences,unreasonable conclusions,orarguments'')(internalquotadonmarksomitted). 111. SynchtonyhasmovedthatCountIofHoback'scomplaint(defamadon)be dismissed,asitispreempted bytheFairCreditReporéngAct,15U.S.C.j1681 rTFCRA''). ECF N o.3 & 4.D eterm ining thevalidityofSynchrony'sazgtzm entrequitestwo different analyses:(1)isHoback'sclnim preemptedbythebroadlanguageofj1681t$)(F);andifnot, (2)hasHobackalleged factsshpwingthatSynchronyacted* t. 1,1malice,thezebyekempdng tllisclnim from preemption underj1681h(e).Thecourtwilladdresseach analysisin tutn. A. Synchrony arguesfltstthatthe state law cbim ofdefam ation ispzeem pted by the FCRA underj1681t$)(F).ECFNo.3& 4.SynchronyarguesthattheFCM setsforthtwo ' j generalrequirem entsfor entitieslike itselfthatprovide inform adon to CreclitRepordng Agencies(enddesknownasfi'trtishers):(1)thedutytoprovideaccurateinfotmationundetj 1681s-2(a);and (2)thedutytoitwesdgatetheaccuracyofreportedinfotmadon upon receivingnodceofadispptefrom acreditreporéngagencyunderj1681s-2(b).15U.S.C.j 1681s-2.Theprivaterightofaction availableto aconsum erundertheFCRA arisesunderj 1681s-2(b)oncethatconsumerdisputesincorrectinformationwit.h aCRA andthatCIRA inform sthe fatnishet.Synchrony teasonsthat,given thattheFCRA setsup a ftam ewotk fot 4 how such cbim sshould progress,itstandsto reason thatotherclnim sarising understatelaw would bepreem pted.ECF N o.4,at4. TheFCRA includestwo specihc pzeempdon provisions.In arguing thatH oback's flrstcountispreempted,Synchronypointsto j1681t(b)(lR),wlùch states N o tequitem entor prohibidon m ay be im posed under the law s ofany State ...with respectto any subjectmatter zegulated undet...section 1681s-2 of this étle, relating to the responsibilidesofpersonswho furnish infozm ation to constzm er êeporting agencies. . 15U.S.C.j1681t$)(1)(F).SynchronyarguesthislanguagemeansthattheFCRA completely preem ptsa1lstateacdonsrelated to the zeporéng ofcreditinfotmation and theitw eségàéon ofany disputesofthatinform adon çfto avoid apatchwork system ofconflicéng regtzladon,': protecting provision ofcreditreporting orinveségaéonsfrom stateregulatory schem es. Rossv.FDIC,625F.3d808,813(4thCir.2010).Unitsface,j1681t$)(1)@ appearsto pyeem ptany and allstate1aw cllim s,whetherstam tory otatcom m on law,inclucling those based on allegationsofwillfulfalsereporéng.Purcellv.Bank ofAm erica,659 F.3d 622,625 (7th Cir.2011). H oback respondsby poinéng outthe second oftheFCRA'Stwo preem ption provisions,j1681h(e): Exceptasprovided in sections1681n and 16810,no consum er m ay bring any action orproceecling in the nattzre ofdefam adon . . . wi th respectto thereporting ofinfo= ation againstany consum errepordng agency,any userofinform adon,orany person who furnishesinform aéon to a consum erzeporting agency,based on inform ation disclosed putsuantto secdon 1681g,168111,ot 1681m ofthistitle,orbased on inform adon disclosed by auserofa consum erreportto orfora consum er againstwhom tlw userhastaken adverseaction,based in whole orin parton theteportexceptasto falseinfotm adon furnished withmaliceorwillfulintenttoinjuresuchconsumer. Thissecéon seem sto barcertain com m on 1aw acéonsin severalspecificcircllm stances.15 U.S.C.j1681h(e).HobackarguesthatSynchtonyBank'steadingofj1681t(b)(1)(F)asa completepreemption ofstate1aw clnimswouldrenderj1681h(e)useless.ECF No.12,at5- A sH oback explainsin hisresponse to them odon,nqarly every distdctcotutin the Fourth Circuithasadopted whatisknown asthe Tfstatxztoryapproach''to the preem pdon languageoftheFCRA,designed to reconcile the two pteem péon provisionsso ' thatneither isredundant.See e..Davisv.TransUnion,LLC,526F.Supp.2d 577,588(W .D.N.C. 2007)rrrllheg' rowingconsensusindistrictcourtsintheFolzrth Circtétistoadoptthe stattztoryapproach.');Bouchardv.,S nchron Bank C.A.,No.:2:16-cv-1713-PMD,2016EL 3753220,. at*5-6(S.C.Dist.Ct.Jul.14,2016)9Barnhillv.BankofAm.,N.A.,378F.Supp.2d 696,703-704 (S.C.Dist.Ct.2005)tffrlll1iscourtnotesthatthereissupportforthestattztory approach am ong districtcolzrtswithin theUnited StatesCourtofAppealsforthe Folzrth Citcuitand in two unpublished opinionsbytheFourt. h Ci. rcuit.''l.Thestatutoryapproach holdsthatj1681t$)(1)(F)onlyappliestostatestataztorycllimsandthatj1681h(e)only addressesstatecomm on law clnims.SeeBourdelaisv.JpM organ ChaseBank,N . A .,No. 3:10cv670,2012WL 5404084,at*18(E.D.Va.May21,2013)(explainingtlaestatutory approach and nodng thatseven oftherlinedistdctsin the Fotuth Citcuithave adopted this stamtoryapproach).SeealsoBeusterv.E uifaxInfo.Servs.,435F.Supp.2d 471,478 O ist. Ct.M d.2006)(feveraldisttictcourts,includingthosewithintheFourthCircuit,haveuseda Tstataztoryapproach'to reconcilethepre-empdonprovisionsofj1681h(e)andj 1681t$)(1)(1R)).TheW esternDistzictofVirginiahasnotyetappliedthisanalysissimply because thisis,so farasthecotlrtisawate,the fltsttim e ithasbeen presented with the opportunity. The courtagreeswith H oback thatthe statm ory approach isthebestway to read the Fcl1A ' spzeempdonpzovisions.Thecourtwillthusconstruej1681t@ s (1)@ asapplying only to state statutory cbim s.Therefore,itdoesnotpreem ptH oback's defam ation clnim . B. Synchtonynextarguesthat,evenwerethecourttofindthatj1681t$)(1)(F)didnot applyto Hoback'sdefamation claim,j1681h(e)oftheFCRA would stillpreemptCountI because H oback doesnotplausibly allege Synchrony acted TTwith m alicq orwillfulintentto injlzre.''ECF No.13,at5.Bothpardesacknowledgeddutingargumentthat,werethecourt to find thatHobackdoesnotallegesufficientfactsto show maliceotwillftzlintentto injure, Countlwouldbepzeemptedbyj1681h(e).Hoback,however,arguesthatsuffkientfacts have been aEeged to supportan asseréon ofm alice and pointsto sevezalfacttzalallegaéons in thecom plnintin support. Assessing H oback'sargum entfustrequiresadetet-m inaéon ofhow courts intem reting theFCRA define ffm alice.''TheFCRA itselfprovidesno defsnidon ofm alice, andcourtshavesplitbetweenappl/ngafederalorstatestandard.Rossv.FDIC,625F.3d 808,8015(4th Cir.2010).Judsdictionsthathaveadoptedafederalstandazd typically im plem entthe ffactualm alice''definidon announced in N ew York Tim esCo.v.SlAllivan,346 U.S.254,280 (1964),which requiresthatastatem entbemadewith ffknowledgethatitwas falseorwith recldessdisregard ofwhetheritwasfalseornot.''H oback arguesin favozofthe statelaw conceptofffm alicey''ratherthan thedehnidon supphed by federallaw,cidng to mchmond News a ers Inc.v.Li scomb,234Va.277,362 S.E.2d32 (1987). ThecourtfindsH oback'sreliancton m chm ond N ews a ers Inc.odd,asthecase noted thatm aliceasdefined by N ew York Tim esCo.differed from Kfcom m on 1aw m alice,'' butdid notidentifywhen com m on 1aw m alice oughtto beapplied and indeed applied the standard supplied by N ew Yotk Tim esCo.m chm ond N ews a ers Inc.,234 V a.at284,362 S.E.2dat35tfffAct'ualmalice'asdescribedinNew YorkTimesnaightbeconfusedw1t.1: common law malice,whichinvolvesfm otivesofpersonalspite,orill-wi1l.'7).In anyevent, m orerecentpzecedentapplying state-law m aliceadoptsa slightly broaderdefinition, describing Tfacttzalm alice''asffsom e sinisterorcorm ptm otive such ashatred,revenge, pçrsonalspite,ill-will,otdesiretoinjuzetheplaindff;orwhat,asamatteroflaw,is equivalentto m alice,thatthe com m unication wasm adewith such grossindifferenceand recklessnessasto am ountto awanton orwillfuldisregard ofthe rightsofthe plainéff.'' Southeastern TidewaterOppozttznityProject,Inc.v.Bade,246Va.273,276,435 S.E.2d 131, $ .. 132-33 (1993). The Fourth Citcuitapplied astatem alice standatd in Bead ev.N adonsCredit FinancialSerdcesCo1 .,69Fed.App'x.585,591 (4t.h Cir.2003).SinceRosswasdecided, six districtsin theFouzth Circuithavedehned mahceundertheFCRA j1681h(e);theclear majorityappliedaFtatelaw definition.See e..,En lertv.N ationstarM ort a e lnc.,N o. 1:15-cv-303-GBL-M SN,2015W L 9275662,at*5 (E.D.Va.D ec.18,2015)(assessingm alice asdefinedbySoutheastern TidewaterOpportaznityProject,Inc.in detet-miningwhethera defam adon cbim ispteemptedbyj1681h(e));Joinerv.RevcoDiscountDrug Centers,Inc., 8 467F.Supp.2d508,514 (W .D.N.C.2006)rv henconsideringthepresenceofmaliceunder theFCRA,theCourtmustadhereto thelocalcommon law definidon ofmalice.');Sanders v.Bank ofAmedca,No.1:16-cw78,2016WL 4998290,at*4 (N.D.W .Va.Sept.19,2016) (definingmaliceunderW estVitginia1aw forpumosesofaj1681h(e)preempéon analysis); Potterv.F1A Card Services,No.2:12->-1722-RMG,2012W L 13005806,at*2 (D.S.C. Sept.28,2012).ButseeStoerv.' VW Credit,Inc.,No.GJH-17-3203,2018W L 3608776,at *2(D.Md.July26,2018)(applyingadisdnctdehllidonofmalice)rfgNfjalicereqllit'es recklessdisregard forthetruf. h orfalsityofthereported debt.');Hayesv.Johnson,No.1:16cv-66,2016WL 3632715,at*3 (N.D.W .Va.lune29,2016)(applying theNew YorkTimes malicedeûnidon).Thecourtwillapplythestatelaw defirtidon ofmalice,taken from SoutheasternTidewaterOpportunityProject,Inc.,246Va.at276,435S.E.2dat132-33. A tthe heazing on the m otion,H oback argued hehasalleged Synchrony'sreckless indifference to thettazth in paragraphseight,nine,and ten ofthecom plaint: 9. 10. M r.H oback com plained to Equifax,Tzansunion,and Experian and alerted each thatthe derogatory and defam atoryinform adon being published abouthim w as incozrect. A sa resultofthesecom plaints,Equifax,Transu nion, and Experian each requested Syncluony to investigate the derogatoryinform ation in wasreporéng aboutM t. H oback and afflt'm w hetheritw astrueoznot. Even aftetbeing asked to invesdgate thebasisforits reporO g,Synchrony hascondnued to willftzlly publish derogam ryand defam atory statem entsaboutM r. H oback to thitd patées. EcF N o.1-1,at3.TV cotutmustassesslfcondnuing topublish incorrectinformadon règardingM r.Hoback'sSynchronyBank/AAM CO co-branded creditcard consdmtes m aliceunderVirgirzialaw. Courtsassessing defam adon cbim sbzoughtin thecontextofcreditreporting errors ' and FCRA violaéonstend to pernnitsuch clnim sto pzoceed to discoveryifplsintiffsassert any allegationsbeyond ftm erely teciting thelegalstandard.''Billu sv.Retnin M erchants Ass'n,Inc.,620Fed.App'x211,213(5thCir.2015).See e..,Talorv.ChaseAutoFinancial C-QIQa,850F.Supp,3d637,643(N.D.Miss.2012)(finclingthatplaintiffhadalleged . defamationwasmaliqiousand/orwillfuldueto continued publicadon ofafzaudulently obtnined accountand incurred charges,butexpressing doubtasto theviability ofthe clnim afterthe129$(6)stageofliégation).OfpardcularassistanceisDavisv.E uifaxInformadon ServicesLLC,2019W L 1431215 (W .D.La.March 1,2019).In Davis,plnintiffbmughttwo cllim s,onefordefamation and oneforviolaéon ofj623 oftheFCRA.J.Z at*1.Defendant argued thatplainéff'sdefam aéon clnim waspreem pted by the FCRA.LdaAfterdeciding to . follow thestatutoryapproach and applyingj 1681h(e)to plaindff'sclaim,thecolzrt determ ined that,to prove m alice,plaintiffffm ustshow thatthe defendantsacted knowing thestatementswerefalseo. twitharecklessclisregardofwhethertheywerefalse.(internal citaéonsonnitted).1d.at*2-3.Defendantargued thatfflnjeitherthe 'failureto correctalleged errorsafterreceiving notihcation ofan alleged inaccuracy in a consum er'sflle,notthem ere existence ofinacctzraciesin a consum er'sreportalone,can am ountto willfulness.''Id.at*3. The courtagreed wit.h thelatterproposidon butfound the firstffnnisplaced.''ld.at*4. Plaintiffhadalleged thatthedefendantwasawateofthedispute,thathehimself(plaindffl had provided proofofthe fraudtzlentaccount,and thatthedefendanthad failed to adequately invesdgate.Id.The courtdeem ed tllissuffkientto consdtttem alice.1d. 10 D axisapplied them alice standard ofanotherstate,butboth theLouisianaand the Virgt 'tu'a standard incom orate recldessdisregard orindifference to thetruth.Like the plnindff in D avis,H oback hasalleged m ore than azecitation ofthe standard ofwiIISIIorm alicious conduct.H oback'sazegadonsthathe alerted Equifax,Transu nion,and Experian aboutthe inCOrrectinform adon beingreported,thatthesecom plaintsresulted in thteerequeststo invesdgate,and thatSynchrony continued to publish thecom plained-ofzeportare suffkient toadvancebeyondthe12q$(6)stageofproceedings,thoughdisnaissalofthiscllim may proveappropriatefollowingcliscovery.SeeTaylor,850F.Supp.3d at643 rflkefrqiningto addresswhetherdistnissalofthestatelaw defam adon cbim would beappropriatein a ftzrtherpzocedtzralcontext,theCourtfindsPlaintiffhasplausibly stated a clnim for defamaéonunderMississippi1aw thatwillsurvivetheRule1298(6)stage.').SeealsoEn lert v.NadonstarM orta e Inc.,No.1:15-cv-303-GBL-MSN,2015WL 9275662,at*5(E.D. Va.Dec.18,2015)(grandng summaryJudgmentasto plaindff'sdefnmadon clnim after finding that,whileplaintiffcould show lnisown t'dozens''ofcom plaintsto defendantasto incotrectctedittepotts,discovety had tevealed no cotrespondenceotintetnaldocum ents , Kfdemonsttaéng gdefendant)hadactedv4thm alice'). W . Forthe reasonsexplained above,Synchrony'sm otion isD E N IED . An appropriate Orderwillbe entered. Entezed: &C-?o -Q'& /? 4 / 4a .J /. V chaelF rba s ' Claie nited StatesDisttictludge 11 '
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