Mader v. Experian Information Soultions, LLC

Background

Michael Mader brought a proposed class action against Experian Information Solutions, LLC. He alleged that Experian negligently and willfully violated the Federal Credit Reporting Act (FCRA) and New York’s credit-reporting law by failing to use reasonable procedures to ensure the maximum possible accuracy of his credit report. Experian moved for summary judgment on both claims.

Mader received a Navient Loan to attend Reformed Theological Seminary. The loan’s promissory note stated that it was an educational loan made under a program that included Stafford Loans and was funded in part by nonprofit organizations, including governmental units. Mader later filed for Chapter 7 bankruptcy. After the bankruptcy proceedings ended, the Navient Loan remained on his credit report.

Legal Standard

The court explained that summary judgment is appropriate when the undisputed record shows that no genuine dispute over an important fact exists and the moving party is entitled to judgment under the law. Under the FCRA, a credit-reporting agency must follow reasonable procedures to ensure the maximum possible accuracy of information in a consumer report. The court stated that New York’s materially similar credit-reporting provision must be interpreted in the same way.

A negligence claim under the FCRA requires inaccuracy, failure to use reasonable procedures, actual damages, and causation. A willfulness claim additionally requires a knowing or reckless failure to use reasonable procedures.

Analysis

The court held that the credit report was not inaccurate because the Navient Loan was not discharged in bankruptcy. Bankruptcy law generally discharges debts that arose before the discharge order, but it excludes certain educational loans unless excluding the debt from discharge would impose an undue hardship. One relevant provision covers an educational loan made under a program funded in whole or in part by a governmental unit or nonprofit institution.

The undisputed evidence showed that the Navient Loan was made under a program that also made Stafford Loans, which were guaranteed or funded by nonprofits, including governmental units, under the Federal Family Education Loan Program. Relying on Second Circuit precedent, the court concluded that the law did not require the nonprofit or governmental unit to fund Mader’s specific private loan. It was enough that the loan was made under a program funded in part by such an entity.

Because Mader made no showing of undue hardship, the court concluded that the Navient Loan remained nondischargeable. Reporting the loan as owing and delinquent therefore was not inaccurate.

The court rejected Mader’s declaration that he understood the loan to be private and not backed or funded by a government or nonprofit. The court said the legal test was objective and did not depend on Mader’s understanding. It also found that Mader offered no evidence countering a Navient employee’s declaration about the loan program. The court further rejected Mader’s argument that Experian had to identify the specific program or specific nonprofit or governmental unit involved.

The court also rejected Mader’s argument that the private nature of the loan prevented application of the bankruptcy exception. Finally, it explained that the loan did not need to qualify under both relevant bankruptcy subsections; qualifying under one subsection, without a showing of undue hardship, was sufficient.

Disposition

Judge Lorna G. Schofield granted Experian’s motion for summary judgment. The court directed the Clerk to close docket numbers 43 and 54 and to close the action.