Preston Kinsey v. LLC (2010)

RULING ON MOTION TO DISMISS COUNTS ONE AND THREE OF PLAINTIFF'S COMPLAINT

BACKGROUND

On January 25, 2010, the plaintiff, Preston Kinsey, filed a three-count complaint against the defendant, Ford Motor Credit Company, LLC. In Count One, plaintiff alleges that the defendant wrongfully converted funds tendered by the plaintiff in full and final settlement of the dispute between the plaintiff and the defendant regarding a Retail Installment Contract (Contract) between the parties.   The defendant has moved to dismiss Count One, claiming that any disputes arising under the Contract are subject to a mandatory arbitration provision.   Count Two of the Complaint has previously been withdrawn by the plaintiff.   In the third count of his complaint, the plaintiff alleges that the defendant “has falsely and maliciously stated to credit reporting agencies that the plaintiff owes it an unpaid debt and is a poor credit risk” such that the defendant has engaged in unfair trade practices within the meaning of General Statutes § 42-110b.   On October 14, 2010, the defendant filed a motion to dismiss this cause of action on the ground that it has been preempted by the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.   On November 1, 2010, the plaintiff filed an objection to the defendant's motion.   On November 9, 2010, the defendant filed a reply to the plaintiff's objection.

COUNT ONE

The Court denies the defendant's motion to dismiss Count One. When this matter was first set down for argument, defense counsel was made aware that neither the plaintiff nor the Court was able to read the portion of the Contract which allegedly contained the arbitration provision relied upon by the defendant in support of its motion.   The copy submitted to the Court contained print so small that it could not be read, even with the benefit of a magnifying glass.   Defense counsel was then given a continuance to obtain a legible copy from his client.   The copy produced by counsel at the next date for argument was still not legible.   After this date, counsel was afforded another opportunity to produce a “hard copy” which was legible.   Once again, the copy submitted is not legible.   The court is, therefore, forced to deny the defendant's motion to dismiss Count One.

COUNT THREE

“The question of preemption is one of federal law, arising under the supremacy clause of the United States constitution ․ Determining whether Congress has exercised its power to preempt state law is a question of legislative intent ․ [A]bsent an explicit statement that Congress intends to preempt state law, courts should infer such intent where Congress has legislated comprehensively to occupy an entire field of regulation, leaving no room for the States to supplement federal law ․ or where the state law at issue conflicts with federal law, either because it is impossible to comply with both ․ or because the state law stands as an obstacle to the accomplishment and execution of congressional objectives ․” (Internal quotation marks omitted.)  Barbieri v. United Technologies Corp., 255 Conn. 708, 717, 771 A.2d 915 (2001).

Under the FCRA “[n]o requirement or prohibition may be imposed under the laws of any State ․ with respect to any subject matter regulated under ․ [15 U.S.C. § 1681s-2], relating to the responsibilities of persons who furnish information to consumer reporting agencies ․” 15 U.S.C. § 1681t(b)(1)(F).  The language “under the laws of any state” has been interpreted to refer to both the statutory and common law of any state.   See Holtman v. Citifinancial Mortgage Co., United States District Court, Docket No. 3:05 CV 1571 (D.Conn. June 19, 2006).   Therefore, it would operate to preempt claims for defamation of credit and related claims arising under the Connecticut Unfair Trade Practices Act, General Statutes § 42-110a et seq.   See id.   Nevertheless, § 1681t(b)(1)(F) “limits its preemptive effect to the conduct regulated by [§ ]1681s-2 ․ Section 1681s-2(a) ¹ establishes that those who furnish information to consumer reporting agencies must do so accurately ․ Section 1681s-2(b),² on the other hand, addresses the duties of those who furnish information to consumer reporting agencies once they receive notice of a dispute regarding the completeness or accuracy of the information they provide.”  (Citation omitted.)  Id.

A number of federal district courts, however, have addressed whether 15 U.S.C. § 1681h(e) operates to permit recovery, in limited circumstances, regardless of § 1681t.  Section 1681h(e) provides in relevant part:  “[N]o consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to Section 1681g, 1681h, or 1681m of this title, or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report except as to false information furnished with malice or willful intent to injure such consumer.”   In analyzing the operation of § 1681h(e) with regard to § 1681t(b)(1)(F), the federal district courts have adopted one of four approaches.

“The first is the complete or sweeping approach ․ [in which courts] have concluded that Congress repealed § 1681h(e) in amending § 1681t, and that § 1681t preempts all state laws which affect the duties of furnishers of information to credit reporting agencies.”  (Internal quotation marks omitted.)   Lichtenfels v. Crook, Superior Court, judicial district of New Haven, Docket No. CV 06 5007438 (September 26, 2007, Licari, J.) (44 Conn. L. Rptr. 264, 267).   The second is the temporal approach, which dictates that “common-law tort claims may go forward only if they concern acts which occurred before the furnisher had notice of any inaccuracies or a dispute and if malice or willful intent to injure the consumer has been alleged.”  (Emphasis in original;  internal quotation marks omitted.)  Id. “The third approach for preemption is the statutory approach ․ [which] interprets § 1681t as preempting state statutory causes of action and § 1681h(e) as preempting certain state common-law causes of action.”  (Internal quotation marks omitted.)  Id. See also Carocci v. Greenpoint Mortgage Funding, Inc., Superior Court, judicial district of New Haven, Docket No. CV 03 0476223 (September 9, 2008, Robinson, J.) (discussing these three approaches in depth).

The fourth approach highlights that “[t]he analysis of these courts ․ assumes that [§§ ]1681t(b)(1)(F) and 1681h(e) govern identical subject matter ․ As discussed above, on its face [§ ]1681t(b)(1)(F) only applies to persons who provide information to consumer reporting agencies.   The plain language of [§ ]1681h(e), however, applies just to consumer reporting agencies and those who take adverse actions against consumers based on consumer reports.   Specifically, one portion of [§ ]1681h(e) restricts the behavior of those who provide information to consumer reporting agencies pursuant to [§§ ] 1681g, h, and m ․ Sections 1681g and 1681h only govern consumer reporting agencies ․ Section 1681m applies solely to the duties of users taking adverse action on basis of information contained in consumer reports ․ Likewise, the portion of [§ ]1681h(e) following the reference to [§§ ]1681g, h, and m only applies to persons who take adverse action against a consumer based in whole or in part on the [consumer] report.”   (Citations omitted;  emphasis in original;  internal quotation marks omitted.)  Holtman v. Citifinancial Mortgage Co. supra, United States District Court, Docket No. 3:05 CV 1571.

The Court holds that this argument is persuasive and, therefore, the FCRA has preempted all state claims, statutory or otherwise, based on the furnishing of information to consumer reporting agencies, whether it be prior to notice of a dispute or not.   The defendant's motion to dismiss Count Three is, therefore, granted.

Frechette, J.

FOOTNOTES

FN1. Section 1681s-2(a)(1)(A) provides in relevant part:  “A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.”.  FN1. Section 1681s-2(a)(1)(A) provides in relevant part:  “A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.”

FN2. Section 1681s-2(b)(1) provides in relevant part:  “After receiving notice pursuant to Section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall ․”.  FN2. Section 1681s-2(b)(1) provides in relevant part:  “After receiving notice pursuant to Section 1681i(a)(2) of this title of a dispute with regard to the completeness or accuracy of any information provided by a person to a consumer reporting agency, the person shall ․”

Frechette, Matthew E., J.