Flores v. Discover Financial Services

Background

Valerie L. Flores, proceeding without a lawyer and without prepaying filing fees, sued Discover Financial Services, “Discover Card,” and the Illinois Human Rights Commission. She alleged discrimination under federal law. Her allegations concerned three events involving Discover: denial of a $35,000 unsecured personal loan; reduction of the credit limit on her Discover Card after she reversed a large payment and made only the minimum payment; and reporting to consumer-reporting agencies that her balance exceeded her credit limit. She also alleged that the Illinois Human Rights Commission had a second person listen to a telephone call because of a perceived mental disability.

Court’s analysis

Because Flores was proceeding without prepaying fees, the court was required to dismiss any claim that was frivolous, failed to state a claim for relief, sought relief from an immune defendant, or fell outside the court’s subject-matter jurisdiction. The court also applied the requirement that a complaint provide enough factual detail to make a claim plausible, while reading a self-represented party’s allegations liberally.

For the loan claim, the court concluded that Flores did not allege facts suggesting that Discover’s decision was based on a nonfinancial factor. A credit score that Flores considered “fairly good” did not require Discover to approve the loan, and she did not identify a federal statute or federal right that Discover violated by denying it.

For the credit-limit claim, the court explained that the Equal Credit Opportunity Act treats a change in an existing credit arrangement as an adverse action and requires certain notices. The statute does not itself prevent a creditor from lowering a credit-card limit. Because Flores did not allege that Discover failed to notify her about the reduction, she did not state a claim based on the reduction itself.

For the credit-reporting claim, the court discussed the Fair Credit Reporting Act (FCRA). The FCRA requires information providers to furnish accurate information, but consumers cannot privately sue for a violation of that duty. Consumers may sue over a provider’s failure to investigate a dispute after receiving notice of the dispute from a consumer-reporting agency. Flores did not allege that she contacted such an agency about the information or that Discover received the required notice. Her allegation that Discover accurately reported that her credit use exceeded her limit therefore did not state an FCRA claim.

As to the Illinois Human Rights Commission, Flores did not allege that the Commission took an adverse action against her or provide facts explaining why she believed it regarded her as having a mental disability. The court found those allegations insufficient under the federal pleading rule. The court further explained that, to the extent Flores intended to bring a civil-rights claim under 42 U.S.C. § 1983, the Commission was an arm of the state protected by the Eleventh Amendment. The court stated that Illinois had not waived that immunity and that Congress had not removed it through § 1983.

Disposition

The court dismissed Flores’s complaint under 28 U.S.C. § 1915(e)(2)(B)(ii), with 30 days’ leave to replead. The court did not state that the dismissal was with prejudice or without prejudice. It directed that judgment would be entered if Flores did not file an amended complaint within the permitted period. The court also certified that an appeal would not be taken in good faith and denied fee-free status for purposes of an appeal. The Clerk of Court was directed to keep the matter open until a civil judgment was entered.