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California District Court Certifies FCRA Class Action Against Experian after Servicer Went out of Business

In a case originally filed in March 2016, and following the successful appeal of a grant of summary judgment in favor of Experian Information Solutions, Inc. (“Experian”), Judge Andrew Guilford of the United States District Court for the Central District of California certified a class of consumers whose reporting by Experian was allegedly “misleading” after a loan servicer went out of business.

Delbert Services Corporation (“Delbert”) was a servicer for internet loans issued by Western Sky Financial, LLC. In January 2015, Delbert went out of business and told Experian that it wanted to “discontinue use of any and all services provided by Experian.”  Experian responded that it had deleted all Delbert loans from its database. In reality, however, Experian continued to report the loans until April 2016.

In the Complaint, plaintiff Demeta Reyes alleged a single claim for relief under the Fair Credit Reporting Act of 1970 (“FCRA”), 15 U.S.C. § 1681 et seq. Specifically, she asserted that Experian willfully failed to “follow reasonable procedures to assure maximum possible accuracy of the information” contained in her credit report. See 15 U.S.C. §§ 1681e(b), 1681n(a).

Experian filed a motion for summary judgment, arguing that it was entitled to summary judgment because (1) its “reporting of [Plaintiff’s] loan was at all times indisputably accurate.”; and (2) even assuming a prima facie case of inaccuracy, there was no evidence of a “willful” violation. Judge Guilford agreed, finding that Experian’s reporting of plaintiff’s loan was “neither patently inaccurate nor unduly misleading.” He granted summary judgment on October 13, 2017

The Ninth Circuit, however, reversed Judge Guilford.  In an unreported opinion, it found that plaintiff raised a genuine issue of material fact as to whether Experian’s continued reporting of plaintiff’s loan was “misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” It found that when Experian was reporting an account from the defunct Delbert, it was reporting an account that was no longer verifiable and that plaintiff could not make current since Delbert was no longer in business.  Also, Experian continued to report plaintiff’s past-due history, but had deleted her positive payment history.  The Ninth Circuit found that a reasonable jury could conclude that Experian’s continued reporting of plaintiff’s account, “either on its own, or coupled with the deletion of portions of [plaintiff]’s positive payment history on the same loan, was materially misleading.”

On remand, plaintiff requested certification of the following class, “All persons whose Experian consumer report contained an account from Delbert Services Corp. reflecting delinquency on a loan originated by Western Sky Financial, LLC after January 21, 2015 . . . .”  Judge Guilford certified the class on October 3, 2019.

The case is Demeta Reyes v. Experian Information Solutions Inc., case number 8:16-cv-00563, in the U.S. District Court for the Central District of California.

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About this Author

John Hawk Attorney Womble Bond Litigator
Partner

John Hawk is a skilled litigator with over a decade of experience serving the complex and diverse litigation needs of Fortune 500 companies and smaller lenders. He focuses his practice on consumer finance, lender liability and insurance.

Specifically, John routinely defends cases brought pursuant to ERISA, FCRA, TCPA and FDCPA. His clients include life and disability insurance companies, banks and other lenders, and mortgage servicers.

John’s experience includes frequent appearances in state and federal courts, including the South Carolina Court of Appeals and the Supreme...

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