Judge Manish S. Shah joined a growing chorus of recent courts finding that under the 7th Circuit’s Denan case (and others), the question of a loan’s validity is not something a Consumer Reporting Agency needs to investigate once a furnisher verifies in response to an ACDV.
It remains to be seen how far this reasoning will be stretched by CRAs. Some attorneys believe that in such a circumstance the plain language of 15 U.S.C. § 1681i(a) requires deletion because the CRA admittedly can’t verify whether the information is accurate or inaccurate. To put it another way, without a judicial determination settling the interpretation of the reported information, why should a CRA verify information?
To state a claim under these sections, a plaintiff must show that an agency included “inaccurate” information in a report. Denan, 959 F.3d at 293. The statute does not define inaccurate or draw a line between factual and legal inaccuracy. Id. But consumer reporting agencies are not courts, and the ability to resolve legal issues around disputed debts “exceeds the competencies of consumer reporting agencies.” Id. at 295. Only a court “can fully and finally resolve the legal question of a loan’s validity.” Id. Put differently, a plaintiff states an FCRA claim only if she plausibly alleges that a consumer report contained a factual inaccuracy, because consumer reporting agencies “are neither qualified nor obligated to resolve legal issues.” Id. at 296. A consumer’s defense to a debt is a question for courts, not consumer reporting agencies. Id.
The Denan Court did not consider whether a dispute over ownership of a debt was factual or legal. But several district courts applying Denan have concluded that investigating the ownership of a debt “is best left to the courts.” Hoyos v. Experian Info. Sols., Inc., 20-cv-408, 2020 WL 4748142, at *3 (N.D. Ill. Aug. 17, 2020); see also Soyinka v. Equifax Info. Servs., LLC, 20-cv-1773, 2020 WL 5530133, at *3 (N.D. Ill. Sept. 15, 2020); Juarez v. Experian Info. Sols., Inc., 19-cv-7705, 2020 WL 5201798, at *4-5 (N.D. Ill. Aug. 31, 2020); Molina v. Experian Info. Sols., Inc., 19-cv-7538, 2020 WL 4748149, at *3 (N.D. Ill. Aug. 17, 2020); Rodas v. Experian Info. Sols., Inc., 19-cv-7706, 2020 WL 4226669, at *2 (N.D. Ill. July 23, 2020); Chuluunbat v. Cavalry Portfolio Servs., LLC, 20-cv-164, 2020 WL 4208106, at *3 (N.D. Ill. July 22, 2010).
Labeling an issue as one of fact, one of law, or a mix of the two is not always simple. See Pullman-Standard v. Swint, 456 U.S. 273, 288 (1982) (noting the “vexing nature of the distinction” between questions of fact and law). Sometimes the distinction turns on a determination that “as a matter of the sound administration of justice, one judicial actor is better positioned than another to decide the issue in question.” Merck Sharp & Dohme Corp. v. Albrecht, 139 S. Ct. 1668, 1680 (2019) (quoting Markman v. Westview Instruments, Inc. 517 U.S. 370, 388 (1996)). And a question that has “both factual and legal elements” is typically a mixed question. Guerrero-Lasprilla v. Barr, 140 S. Ct. 1062, 1069 (2020).
Here, Amorah insists that Midland did not own the debt. And because ownership is a question of fact, she says, her credit report contained a factual inaccuracy. But labeling debt ownership in the abstract as an issue of fact, a mixed question, or a question of law is beside the point. The operative inquiry under the FCRA is whether ownership of the debt was plausibly within the scope of a consumer reporting agency’s ability to check for accuracy, or whether it implicated a legal issue better left to the courts.
Determining if Midland owned the debt was beyond the scope of what a credit agency might reasonably be expected to investigate. That Midland withdrew its small-claims lawsuit doesn’t mean that Midland didn’t own the debt, and Amorah does not plead that a court adjudicated the matter. She argues that Midland offered insufficient evidence to show ownership. But a credit agency is not qualified to assess whether a furnisher provided sufficient evidence of ownership. Amorah’s arguments about Midland’s ownership belong in a lawsuit against Midland, not in an FCRA complaint against the defendants. The better-positioned actor, see Albrecht, 139 S. Ct. at 1680, to resolve the disputed ownership issue is a court, not a credit agency.