In Trim v. CMRE Fin. Servs., No. 20-cv-451-AJB-LL, 2021 U.S. Dist. LEXIS 48060, at *1-3 (S.D. Cal. Mar. 12, 2021), Judge Battaglia denied a motion to dismiss an FCRA permissible purpose class action.
Around May 4, 2018, Plaintiff incurred a financial obligation (“Debt”) to a third party, Rady Children’s Hospital San Diego (“Rady”). (Doc. No. 1 at 5.) On September 20, 2018, Plaintiff filed for Chapter 7 Bankruptcy. ( Id. at 6.) In December 2018, Plaintiff’s debts, including his Debt to Rady, were discharged pursuant to a bankruptcy court order. (Id.) The bankruptcy court mailed the order to Plaintiff’s creditors, advising them of the discharge. (Id.) As a result, Plaintiff no longer had an account with Rady after December 2018. (Id.) Around January 28, 2019, Rady placed the Debt with CMRE, a debt collection company for the healthcare industry, for collection purposes. (Id.) Although the Debt had been ordered discharged, CMRE submitted a “hard” credit report inquiry to Experian on February 19, 2019. (Doc. No. 1 at 6.) Plaintiff discovered the inquiry upon review of his Experian credit report on February 27, 2019. (Id.) Plaintiff alleges that CMRE had notice and knowledge of the bankruptcy discharge and was therefore aware that Plaintiff no longer had the Debt and knew it was unlawful to pull Plaintiff’s credit report at that time. (Id.) Additionally, Plaintiff asserts that at no point prior to or after February 19, 2019, did Plaintiff have an account with CMRE, and at no point has Plaintiff ever inquired about CMRE’s services. (Id. at 5.) Plaintiff claims that CMRE’s submission of a credit report inquiry, without his consent, falls outside the scope of any permissible use or access under the Fair Credit Reporting Act (“FCRA“). (Id. at 6-7.)
Judge Battaglia held that Plaintiff stated a claim.
Plaintiff has pleaded facts sufficient to give rise to a reasonable inference that CMRE obtained his credit report for an unauthorized purpose. See Nayab, 942 F.3d at 487. Specifically, Plaintiff alleged that he has no account with CMRE, has never inquired about any of its services, and did not consent to the inquiry. (Doc. No. 1 at 5, 6.) These facts reasonably imply that because Plaintiff had no relationship whatsoever with CMRE, it had no authorized reason to pull his credit report. The Court acknowledges that Plaintiff alleged that Rady placed the Debt with CMRE for collection purposes and that collecting a debt is a permissible purpose under the statute. See 15 U.S.C. 1681b(a)(3)(A). However, Plaintiff also particularly alleged that CMRE “had actual or constructive notice and knowledge of Plaintiff’s [bankruptcy] discharge and thus, was aware there was no longer a Debt and knew it was unlawful to pull Plaintiff’s credit report at that point.” (Doc. No. 1 at 6.) From these facts, the Court reasonably infers that CMRE obtained Plaintiff’s report despite being aware that the Debt it sought to collect no longer existed. These circumstances illustrate that CMRE pulled Plaintiff’s credit report “for a purpose not authorized by the statute,” and is therefore facially liable under the FCRA. Nayab, 942 F.3d at 487. Thus, assuming the factual allegations in the Complaint to be true and construing the inferences therefrom in the light most favorable to Plaintiff, the Court finds that Plaintiff has sufficiently pleaded a § 1681b(f) claim. Accordingly, the Court DENIES Defendant’s motion to dismiss.
Judge Battaglia also held that it was premature to address the Defendant’s claim that the lawsuit could not proceed as a class action.
Lastly, Defendant moves to strike Plaintiff’s class action allegations, arguing that the proposed class lacks predominance because it presents too many individualized inquiries regarding when class members discovered the violation and the propriety of each credit inquiry. (Doc. No. 10 at 9-11.) Although Defendant’s arguments may ultimately prevail, the Court declines to address issues of class certification at this time. See In re Jamster Mktg. Litig., No. 05CV0819 JM (CAB), 2009 U.S. Dist. LEXIS 43592, 2009 WL 1456632, *7 (S.D.Cal. May 22, 2009) (“Even though the arguments of [the defendant] may ultimately prove persuasive, the court declines to address issues of class certification at the present time. Piece-meal resolution of issues related to the prerequisites for maintaining a class action do not serve the best interests of the court or parties.”). Rather, the Court agrees with Plaintiff that he should be permitted at least some discovery to ascertain the propriety and scope of the class definition. See In re Wal-Mart Stores, Inc., 505 F. Supp. 2d 609, 615 (N.D. Cal. 2007) (“[T]he granting of motions to dismiss class allegations before discovery has commenced is rare.”); Hibbs-Rines v. Seagate Techs., LLC, No. C 08-05430 SI, 2009 U.S. Dist. LEXIS 19283, 2009 WL 513496, at *3 (N.D. Cal. Mar. 2, 2009) (“Discovery is integral to developing the ‘shape and form of a class action.'”) (citation omitted). Accordingly, the Court DENIES Defendant’s motion to strike Plaintiff’s class allegations as premature and without prejudice.