Naimi-Yazdi v. Equifax Information Services, LLC

Background

Elizabeth Naimi-Yazdi sued JPMorgan Chase Bank, N.A., under the Fair Credit Reporting Act, a federal law governing the accuracy and handling of consumer-credit information. She alleged that JPMorgan furnished information about her account to consumer reporting agencies showing both a zero balance and that the account was 120 days past due. She alleged that she disputed the information with the agencies, which notified JPMorgan, but JPMorgan continued furnishing the same information and did not conduct a reasonable investigation.

Naimi-Yazdi asserted claims for willful and negligent violations of 15 U.S.C. § 1681s-2(b). She sought actual, statutory, and punitive damages. The opinion states that all other defendants had been dismissed from the case.

Court’s analysis

The court considered JPMorgan’s motion under Federal Rule of Civil Procedure 12(b)(6), which tests whether a complaint alleges enough facts to state a legally valid claim. For a claim involving a furnisher of credit information, the plaintiff must allege an inaccuracy that is either plainly incorrect or materially misleading in a way and to an extent that could be expected to affect credit decisions.

The court held that Naimi-Yazdi had not alleged a plainly incorrect report. She did not allege that the account was open, that it had a balance, or that the 120-days-past-due notation was otherwise factually wrong. Although the information might appear internally inconsistent, the court concluded that it was not plainly incorrect. The court further held that the complaint did not allege facts showing that the information was materially misleading.

The court said it was unnecessary to reach JPMorgan’s remaining challenges because of this pleading deficiency. It nevertheless noted that the complaint lacked sufficient facts to show a willful violation, which requires a knowing or reckless failure to comply with the Act. The court also found that the allegations supporting negligent-violation damages were too general and conclusory. It noted that the claimed loss of credit, emotional distress, chilling effect on future credit applications, and loss of beneficial use of credit did not adequately establish actual damages. The court also questioned whether the alleged reporting by JPMorgan caused damage to the credit score because the complaint identified a past-due notation from an unrelated mortgage-servicing account.

Disposition

The court granted JPMorgan’s motion to dismiss with leave to amend. It stated that there was a possibility, although a slim one, that additional factual allegations could cure the complaint’s deficiencies. Naimi-Yazdi was permitted to file an amended complaint no later than July 29, 2022. Judge Edward J. Davila signed the order.