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Pedro v. Equifax, Inc.

United States Court of Appeals, Eleventh Circuit

August 24, 2017

KATHLEEN N. PEDRO, on behalf of herself and all others similarly situated., Plaintiff - Appellant,
v.
EQUIFAX, INC., Defendant, TRANSUNION LLC, Defendant-Appellee.

         Appeal from the United States District Court for the Northern District of Georgia D.C. Docket No. 1:15-cv-03735-TWT

          Before WILLIAM PRYOR, MARTIN and ROSENBAUM, Circuit Judges.

          WILLIAM PRYOR, CIRCUIT JUDGE.

         This appeal requires us to decide whether a consumer reporting agency adopted an objectively unreasonable interpretation of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., when it stated on a consumer's credit report that she was an authorized user of her parents' credit card account. Kathleen Pedro's parents listed her as an authorized user on their credit card account, which later went into default. A consumer reporting agency, TransUnion LLC, listed the delinquent account on Pedro's credit report with a notation that she was an authorized user of the account. TransUnion also included the account when calculating Pedro's credit score, which caused her credit score to fall. Pedro then filed a complaint that TransUnion willfully violated a provision of the Act that requires that a consumer reporting agency "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 15 U.S.C. §§ 1681e(b), 1681n. The district court dismissed the complaint for failing to allege a plausible claim for relief. Because it was not objectively unreasonable for TransUnion to interpret section 1681e(b) to permit it to report an account for which a consumer is an authorized user, we affirm.

         I. BACKGROUND

         When Kathleen Pedro's parents fell ill, they designated her as an authorized user on their credit card account with Capital One. Pedro used the card to help her parents make purchases and to purchase airline tickets that she used to visit her parents. She alleged that, as an authorized user, "she never assumed and had no financial responsibility for any debts on that card."

         When Pedro's parents died in 2014, their account with Capital One went into default. On January 25, 2015, Pedro received an alert from a credit monitoring service that informed her that her credit score had dropped more than 100 points on her Equifax credit report. Pedro also discovered that her credit score had dropped on her TransUnion credit report, and she determined that the default on her parents' Capital One account caused the credit drop.

         After Pedro complained that the delinquency on her parents' account had affected her credit, Capital One removed Pedro from the account. But TransUnion did not remove the account from Pedro's credit report. TransUnion instead listed the account on her credit report with the notation account relationship terminated. Capital One eventually requested that TransUnion and Equifax delete the account from Pedro's credit reports, and the agencies complied. Pedro alleged that her credit score then "returned to its prior excellent level."

         Pedro filed a complaint in the district court that Equifax and TransUnion had willfully violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., by failing to "follow reasonable procedures to assure maximum possible accuracy" of the credit reports of authorized users of credit card accounts, id. §§ 1681e(b), 1681n. She alleged that the procedures used by Equifax and TransUnion that led them to report her parents' account on her credit report caused her credit reports to reflect a debt she did not owe, which in turn caused her credit report and score to be inaccurate. The gravamen of Pedro's complaint was that it was inaccurate to list her parents' credit card account on her credit report because it implied that she was liable on the account when she was not. She sought statutory damages, punitive damages, attorney's fees, and the certification of a class action.

         Equifax moved to dismiss Pedro's complaint, Fed.R.Civ.P. 12(b)(6), and TransUnion joined the motion. The agencies argued that Pedro could not establish a willful violation of the Act because the agencies followed an objectively reasonable interpretation of the Act. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007). The district court granted the motion to dismiss. It determined that Pedro failed to allege a willful violation of section 1681e(b) because it was not objectively unreasonable for the consumer reporting agencies to read section 1681e(b) to permit them to report information about accounts for which the consumer is an authorized user. Pedro appealed, and at her request, we dismissed her appeal as to Equifax.

         II. STANDARD OF REVIEW

         "We review de novo the dismissal of a complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim and construe all the allegations as true." Feldman v. Am. Dawn, Inc., 849 F.3d 1333, 1339 (11th Cir. 2017). "A plaintiff must plausibly allege all the elements of the claim for relief. Conclusory allegations and legal conclusions are not sufficient; the plaintiff[] must state a claim to relief that is plausible on its face." Id. at 1339-40 (citations and internal quotation marks omitted). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).

         III. DISCUSSION

         We divide our discussion in two parts. First, we explain that Pedro has standing because she alleged that she suffered an injury in fact. Second, we explain that the district court correctly dismissed Pedro's complaint because TransUnion could not have willfully violated the Fair Credit Reporting Act.

         A. Pedro Alleged That She ...


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