Akay v. MAS Financial Services

Background

Gregory Akay’s claims arose from an automobile loan with MAS Financial Services, Inc. Akay alleged that he settled the loan as of April 10, 2025, but MAS later sent two billing statements indicating that he still owed a balance. He also alleged that the loan was listed as “Open” on his credit report for nearly two months, until July 4, 2025, when the report was corrected.

Akay asserted claims under the federal Fair Credit Reporting Act, the California Rosenthal Fair Debt Collection Practices Act, and the California Consumer Credit Reporting Agencies Act. TransUnion, LLC and Experian Information Solutions, Inc. were also named in the second amended complaint, but Akay voluntarily dismissed his claims against them. MAS was the sole remaining defendant.

In an earlier ruling, Judge Lee dismissed Akay’s amended complaint under Federal Rule of Civil Procedure 12(b)(1) for failing to establish Article III standing, while denying MAS’s motion under Rule 12(b)(6). The court allowed Akay to amend the complaint regarding standing. Akay then filed a second amended complaint, and MAS again moved under Rule 12(b)(1) to dismiss for lack of standing.

Motion to Strike

Akay moved under Rule 12(f) to strike MAS’s reply brief as untimely. The court treated the request as one under Rule 6(b), which allows a court to accept a late filing in appropriate circumstances. MAS’s reply was filed one week late and MAS did not provide a good explanation or seek permission before filing it. Nevertheless, the court found that the late filing did not prejudice Akay: the reply responded to arguments in his opposition, raised no new issues, and Akay had time to review it and respond at the hearing.

The court denied Akay’s motion to strike.

Article III Standing

Article III standing requires a plaintiff to show an injury in fact, a connection between that injury and the defendant’s conduct, and a likelihood that a favorable court decision would remedy the injury. The court rejected MAS’s argument that standing necessarily required both disclosure of an inaccurate credit report to a third party and use of that report in a credit decision. The court explained that an inaccurate report provided to a third party can cause a concrete injury.

The court nevertheless agreed with MAS that Akay’s second amended complaint did not plausibly connect his alleged injuries to the inaccurate information about the MAS loan. Akay alleged that he was deprived of the value of his settlement, but the complaint did not explain why, because it did not allege that the settlement had been rescinded or rejected. He also alleged that he used a less favorable financing option through Affirm for veterinary services, but did not allege when he sought that financing or whether it occurred during the period when the credit report allegedly contained inaccurate information.

The complaint identified companies that allegedly made credit inquiries, but did not explain the context or timing of those inquiries. The court also noted that Akay’s emotional-distress allegations were tied to MAS’s post-settlement billing statements rather than to the allegedly inaccurate credit reporting. The court concluded that the allegations were too vague and conclusory to establish Article III standing.

Disposition

Judge Virginia K. DeMarchi granted MAS’s Rule 12(b)(1) motion to dismiss the second amended complaint for lack of jurisdiction, with leave to amend. The court gave Akay another opportunity to plead facts establishing standing, subject to the requirements of Rule 11. His third amended complaint must not include claims previously asserted against defendants who had been dismissed and was due by October 6, 2026. The court also denied Akay’s motion to strike.