Rosenberg v. Equifax Information Services, LLC

Background

Shabse Rosenberg brought two claims against LoanDepot, Inc. under the Fair Credit Reporting Act: one for a willful violation and one for a negligent violation. She alleged that she opened a credit account with LoanDepot and that LoanDepot reported information about the account to Equifax Information Services, LLC. According to Rosenberg, the report inaccurately stated that the account was more than 120 days past due even though the account had been transferred to another lender.

The credit report identified the account as closed, showed a zero balance, listed no monthly payment amount, and stated that the consumer disputed the account information. Rosenberg alleged that she disputed the payment-status information with Equifax and that LoanDepot failed to investigate and correct it. She claimed that the reporting caused credit-related and emotional injuries, including a decreased credit score, loss of credit, a chilling effect on future credit applications, and embarrassment from credit denial. Her claims against Equifax had previously been voluntarily dismissed.

Motion and jurisdiction

LoanDepot moved to dismiss under Federal Rule of Civil Procedure 12(b)(1), which permits dismissal when the court lacks authority to hear a case, and Rule 12(b)(6), which permits dismissal when a complaint does not state a legally sufficient claim. The court addressed the Rule 12(b)(1) issue first because a lack of jurisdiction would require dismissal without reaching the other grounds.

To establish standing under Article III of the Constitution, a plaintiff must show a concrete and particularized injury, a connection between that injury and the defendant’s conduct, and a likelihood that a court can remedy the injury. The court explained that an inaccuracy in a credit file, without a concrete resulting harm, is not enough.

Court’s analysis

The court rejected each category of harm Rosenberg identified. First, the credit report contradicted her allegation that hard inquiries had been made: it showed only soft inquiries and stated that soft inquiries do not affect a credit rating or score. Rosenberg did not allege a credit denial, reputational harm, or another concrete adverse consequence from those inquiries.

Second, the court found that Rosenberg had not explained how the report lowered her credit score or caused a loss of credit. She did not identify a lender that reacted adversely to the report or a loan that she was denied. The court also stated that a lower credit score by itself is not a concrete injury. Third, the alleged chilling effect on future credit applications described only a possible future injury, which was insufficient by itself. Fourth, the emotional-harm allegations were conclusory and unsupported by an allegation that Rosenberg was actually denied credit or by additional facts showing that the emotional injury occurred.

Disposition

The court held that Rosenberg had not shown an injury in fact and therefore lacked Article III standing. Because the court lacked subject-matter jurisdiction, it granted LoanDepot’s motion to dismiss. The case was dismissed for lack of subject-matter jurisdiction without prejudice to refiling in state court if appropriate. The court denied as moot the portion of LoanDepot’s motion seeking dismissal under Rule 12(b)(6), and directed the clerk to close the case.