District Court (Cal.) Says Furnisher’s Post-Bankruptcy Reporting Was Not Inaccurate, Despite Inconsistent with METRO-2

In Mestayer v. Experian Information Solutions, Inc, 2016 WL 7188015, at *3 (N.D.Cal., 2016), Judge Chen dismissed an FCRA case based on a furnisher’s post-bankruptcy reporting.

Even assuming that deviating from Metro 2 could be misleading (and hence actionable, see Gorman, 584 F.3d at 1163) when the underlying information is accurate, the TAC fails to adequately allege that CapOne’s reporting is in fact misleading. This Court, in its order dismissing the SAC, specifically instructed Mestayer that to survive another motion to dismiss, her TAC had to make two changes. First, she had to allege either that Metro 2 was the industry standard, such that CapOne was required to follow it, or that reasonable entities would have expected CapOne to report in compliance with Metro 2. Order dismissing SAC at 4. Second, Mestayer had to explain why any creditor would be misled where CapOne reported the fact of the bankruptcy along with the date of the account balance/delinquency. Order dismissing SAC at 4.    In her TAC, Mestayer alleges the following: (1) the Metro 2 format is the credit industry’s standard format for reporting consumer credit information, such that reasonable entities would have expected CapOne to report in compliance; and (2) potential creditors would be misled by CapOne’s failure to follow Metro 2 guidelines in reporting debt during a pending bankruptcy. TAC ¶¶ 45-61. The TAC fails, however, to provide specific allegations as to how CapOne’s failure to follow Metro 2 would be misleading when the fact of her bankruptcy was reported. Mot. at 12-13. The disclosure of the bankruptcy substantially diminishes the risk that the report was misleading even if it otherwise did not fully comply with Metro 2. Disclosing the bankruptcy filing provides notice to creditors of the potential consequences thereof (e.g., automatic stay, potential discharge of the debt). See Order dismissing SAC at 4. Accordingly, Mestayer has failed sufficiently to plead an inaccuracy as required by the FCRA and the CCRA.   Mestayer relies upon Nissou-Rabban to support her contention it is sufficient to merely allege that CapOne’s deviation from Metro 2, the industry standard, was misleading, but that case does not address the facts here. Opp. at 11. As noted above, Nissou-Rabban held only that a complaint survived a motion to dismiss where a lender’s failure to comply with Metro 2 could “prompt those making credit decisions to draw a more negative inference from [the bank’s] reporting.” Nissou-Rabban, 2016 WL 4508241, at *5. Importantly, there is no indication that the credit report at issue in Nissou-Rabban reported a bankruptcy. In contrast, Ms. Mestayer’s credit report reporting her bankruptcy is a critical fact to this Court’s conclusion that the report was not misleading. Order dismissing SAC at 4.   Because the disclosure of the bankruptcy filing vitiates the risk that any deviation from Metro 2 could be misleading, in dismissing the SAC with leave to amend this Court explicitly required Mestayer to “substantiate her Metro-2 based claims with much more specific allegations.” Order dismissing SAC at 4. She has failed to do so. The TAC does not, for instance, identify any aspect of the layout or the contents of the credit report, or the manner in which the reporting was done, that could be misleading—there is no showing that the fact of the bankruptcy reporting was hidden or inconspicuous. In fact, despite repeated requests from this Court, Mestayer has not still produced the actual credit report to which she objects. Mestayer did not comply with this Court’s directive to substantiate her claim with more specific allegations. The TAC therefore fails to state a plausible claim that the report was misleading.