In Holland v. Chase Bank United States, 2020 U.S. Dist. LEXIS 133642 (S.D.N.Y. July 28, 2020), Judge Engelmayer dismissed an FCRA claim against a Furnisher for absence of an “inaccuracy”, holding that Plaintiff’s claim that the debt was extinguished by the statute of limitations did not render the reporting of the debt inaccurate.
Here, Holland asserts that Chase’s furnishing of information regarding his unpaid debts represents such a factual inaccuracy because, he contends, the debts were legally discharged under Mississippi law due to the running of the relevant statute of limitations. See AC ¶¶ 37-41. Holland argues that the running of the statute of limitations means that he owed no debt to Chase, and that Chase’s view that Holland owed a debt is inaccurate. See Pl. Opp’n at 4-5. Chase, in turn, notes that the charges were, in fact, unpaid. It emphasizes that Holland, rather than claiming that he had paid the debt, asserts only a legal challenge to the debt’s enforceability. Def. Mem. at 10. Chase argues that such a legal challenge cannot alone form the basis of a claim of inaccurate reporting to a consumer reporting agency under § 1681s-2(b). See id. at 11-12. The Second Circuit has not squarely addressed whether a legal dispute as to the validity of a debt, such as Holland’s here, can suffice to show a “factual inaccuracy” under § 1681s-2(b). But, the federal courts of appeals and district courts that have addressed this question are in widespread agreement that a plaintiff’s legal challenge to the validity of a debt is alone insufficient to make a report of that debt factually inaccurate. See, e.g., Chiang v. Verizon New Eng. Inc., 595 F.3d 26, 38 (1st Cir. 2010) (“[A] plaintiff’s required showing is factual inaccuracy, rather than the existence of disputed legal questions . . . . Like [consumer reporting agencies], furnishers are ‘neither qualified nor obligated’ to resolve matters that ‘turn[ ] on questions that can only be resolved by a court of law.'” (citing DeAndrade, 523 F.3d 61 at 68)); Okocha v. Trans Union LLC, No. 08 Civ. 3107 (DLI), 2011 WL 2837594, at *5 (E.D.N.Y. Mar. 31, 2011) (“Plaintiff’s argument that he did not agree to the terms of the overdraft line of credit is a collateral legal attack on the validity of the debt . . . not a factual inaccuracy, and, thus, is insufficient to withstand summary judgment.”), aff’d, 488 F. App’x 535 (2d Cir. 2012); Padgett v. Clarity Serv., 18 Civ. 1918 (JSM), 2018 WL 6628274, at *3 (M.D. Fla. Dec. 13, 2018) (collecting cases from the First, Ninth, and Tenth Circuits for the proposition that “FCRA does not require a [consumer reporting agency] . . . to adjudicate [legally] disputed debts”). These cases establish that the obligation of furnishers of information (like Chase) and consumer reporting agencies to ensure an accurate factual report of debts incurred does not include an obligation to ensure that debts they report would survive any and all legal challenges. See Chiang, 595 F.3d at 38-39; Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1242 (10th Cir. 2015) (“A reasonable reinvestigation, however, does not require [consumer reporting agencies] to resolve legal disputes about the validity of the underlying debts they report.” (internal citations omitted)). Here, Holland’s claim of “factual inaccuracy” relies entirely on his legal conclusion that his debts had been discharged due to the purported running of the relevant state’s statute of limitations. See AC ¶ 39 at 7. Such a dispute is a legal, not factual, challenge, and, under the above authority, plainly insufficient to support Holland’s FCRA claim. See, e.g., Herrell v. Chase Bank USA, N.A., 218 F. Supp. 3d 788, 793 (E.D. Wis. 2016) (concluding that plaintiff’s allegation that bank’s furnishing information about debt discharged by statute of limitations was not a “factual inaccuracy” sufficient to support a claim under § 1681s-2(b)); Viecelli v. Seacoast Nat’l Bank, No. 15 Civ. 682 (CEM), 2017 WL 1426628, at *5 (M.D. Fla. Apr. 21, 2017) (same). Nothing in the AC suggests that the debt was reported inaccurately, or that Holland did not incur the charges described. Without a “factual inaccuracy,” Holland cannot state a claim under § 1681s-2(b). Holland argues that because his debts were “outright extinguished” by the statute of limitations, Chase’s furnishing of information to the consumer reporting agencies was therefore based on factual inaccuracies. See Pl. Opp’n at 5. This argument is easily put to one side. As the Court has noted, based on the pleadings, whether Chase had lost its right to collect on Holland’s debt presents a legal question, not a fact about the debt itself. See, e.g., Saylor v. Pinnacle Credit Servs., LLC, 118 F. Supp. 3d 881, 886 (E.D. Va. 2015) (statute of limitations does not bear on a debt’s existence; it merely extinguishes defendant’s legal right to collect, which is not a factual inaccuracy for FCRA purposes), aff’d, 667 F. App’x 829 (4th Cir. 2016); Walker v. Cash Flow Consultants, Inc., 200 F.R.D. 613, 616 (N.D. Ill. 2001) (“[T]he statute of limitations bars a specific remedy; it does not extinguish the indebtedness.”). Here, Holland’s statute-of-limitations-based dispute challenges only Chase’s ability to obtain a judicial remedy for the outstanding debt, not the factual accuracy of the size or existence of the debt itself. Thus, because the AC does not properly allege a factual inaccuracy, it fails to state a claim upon which relief can be granted.