U.S. COURT OF APPEALS FOR THE THIRD CIRCUIT No. 24-3317
DR. GUTTI RAO, APPELLANT V.
SLEEP NUMBER BED, INC; SYNCHRONY BANK _____________________________ Appeal from United States District Court for the Western District of Pennsylvania Judge William S. Stickman IV No. 2:23-cv-02150
Before: RESTREPO, BIBAS, AND FISHER, Circuit Judges Submitted Pursuant to Third Circuit L.A.R. 34.1(a) April 20, 2026 Decided May 18, 2026 _____________________________
NONPRECEDENTIAL OPINION*
RESTREPO, Circuit Judge. Appellant Dr. Gutti Rao appeals the District Court’s order
granting appellees’ motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim. For the following reasons, we will affirm the order.
I. BACKGROUND
In December 2021, Rao set out to purchase a bed from Appellee Sleep Number Bed,
Inc. (“Sleep Number”). At the point of sale, he was advised that the bed could be returned
* This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding precedent. within a ninety-day trial period if it did not suit him. A credit line in Rao’s name was then
opened with Appellee Synchrony Bank (“Synchrony”), through which Sleep Number
financed the transaction—without, Rao alleges, his knowledge or authorization. Rao
sampled the bed, determined it was defective, and returned it within ninety days.
In March 2022, Rao received a Notice of Default on the credit account with
Synchrony. He alleges the credit card account was opened without his consent and that he
never executed any documents, signed any forms, or requested any credit line from
Synchrony nor Sleep Number. In July 2022, Rao’s counsel sent correspondence to
Synchrony requesting termination of the credit card; Synchrony responded in August 2022,
maintaining that the account had been properly issued.
Shortly thereafter, counsel submitted notifications of dispute to all three major credit
reporting agencies. Separately, Rao also filed a dispute with the Consumer Financial
Protection Bureau. It was not until October 2023—over a year after Rao’s notices to
Synchrony and the credit reporting agencies—that Synchrony removed the credit
information from Rao’s report and requested that the major credit bureaus delete the
tradeline from his credit file.
Rao sued Sleep Number and Synchrony in the District Court in February 2023. In
response to his complaint, the appellees filed a motion to dismiss pursuant to Rule 12(b)(6).
Rao subsequently withdrew and brought another action in December 2023. After the
appellees again moved to dismiss, Rao filed his operative complaint on March 26, 2024.
The amended complaint pleaded six counts against Synchrony and Sleep Number.
Against Synchrony, Rao alleged violations of the Fair Credit Reporting Act (“FCRA”), 15
2 U.S.C. § 1681 et seq. (Count I), and the Fair Debt Collection Practices Act, 15 U.S.C. §
1692e(8) (Count II). Against Sleep Number, he alleged a violation of Pennsylvania’s
Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201–1 et seq. (Count V).
Against both, he alleged common law credit slander, fraud, and civil conspiracy (Counts
III, IV, and VI). In May 2024, the appellees filed another motion to dismiss once more
under Rule 12(b)(6).
On November 18, 2024, the District Court granted the appellees’ motions, dismissed
all six counts with prejudice, and denied leave to amend. Rao timely appealed, challenging
the dismissal of his FCRA claim (Count I); his common law fraud and civil conspiracy
claims (Counts IV and VI); and the District Court’s alternative holding that both claims
were likely preempted by 15 U.S.C. § 1681t(b)(1)(F) of the FCRA.
II. STANDARD OF REVIEW1
We exercise plenary review of a district court’s order granting a motion to dismiss
under Rule 12(b)(6), and we may affirm on any basis supported by the record. Stringer v.
Cnty. of Bucks, 141 F.4th 76, 84 (3d Cir. 2025). Because our review is de novo, we “accept
all factual allegations as true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading of the complaint, the
plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d
Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).
1 The District Court had jurisdiction over the appellant’s claims pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over his state law claims pursuant to 28 U.S.C. § 1367(a). We have appellate jurisdiction under 28 U.S.C. § 1291.
3 III. FAIR CREDIT REPORTING ACT
The District Court rejected Rao’s claim that Synchrony failed to investigate his
dispute as required by § 1681s-2(b) of the FCRA, finding that he had not adequately alleged
that a consumer reporting agency ever notified Synchrony. Considering the exhibits
attached to the complaint, it declined to infer the credit reporting agencies automatically
notified Synchrony of the credit dispute, thereby triggering a duty to investigate. In so
holding, the District Court erroneously required Rao to produce evidence of furnisher
notification at the pleading stage—information that, by its nature, is within the exclusive
control of the agencies and the credit furnisher. In reality, Rao did all he had to do at this
stage: he alleged (albeit summarily) that the reporting agencies had notified Synchrony of
the dispute.
We nonetheless affirm because Rao’s exhibits directly contradict his claim that
Synchrony failed to conduct a reasonable investigation. See Vorchheimer v. Philadelphian
Owners Ass’n, 903 F.3d 100, 112 (3d Cir. 2018) (“[I]f [a plaintiff’s] own exhibits
contradict [his] allegations in the complaint, the exhibits control.”). The attached exhibits
and Rao’s pleading reveal that Synchrony fulfilled its statutory duty to investigate his credit
dispute: Synchrony maintained its position in response to counsel’s correspondence,
directed that a formal written dispute be submitted, and ultimately—after receiving notice
from the Consumer Financial Protection Bureau—reversed the charges and requested
deletion of the tradeline with all three major credit bureaus. Section 1681s-2(b) requires a
reasonable investigation, and the complaint and its exhibits demonstrate Synchrony
conducted one.
4 IV. COMMON LAW FRAUD AND CIVIL CONSPIRACY
The District Court dismissed Rao’s common law fraud and civil conspiracy claims
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U.S. COURT OF APPEALS FOR THE THIRD CIRCUIT No. 24-3317
DR. GUTTI RAO, APPELLANT V.
SLEEP NUMBER BED, INC; SYNCHRONY BANK _____________________________ Appeal from United States District Court for the Western District of Pennsylvania Judge William S. Stickman IV No. 2:23-cv-02150
Before: RESTREPO, BIBAS, AND FISHER, Circuit Judges Submitted Pursuant to Third Circuit L.A.R. 34.1(a) April 20, 2026 Decided May 18, 2026 _____________________________
NONPRECEDENTIAL OPINION*
RESTREPO, Circuit Judge. Appellant Dr. Gutti Rao appeals the District Court’s order
granting appellees’ motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6)
for failure to state a claim. For the following reasons, we will affirm the order.
I. BACKGROUND
In December 2021, Rao set out to purchase a bed from Appellee Sleep Number Bed,
Inc. (“Sleep Number”). At the point of sale, he was advised that the bed could be returned
* This disposition is not an opinion of the full Court and, under I.O.P. 5.7, is not binding precedent. within a ninety-day trial period if it did not suit him. A credit line in Rao’s name was then
opened with Appellee Synchrony Bank (“Synchrony”), through which Sleep Number
financed the transaction—without, Rao alleges, his knowledge or authorization. Rao
sampled the bed, determined it was defective, and returned it within ninety days.
In March 2022, Rao received a Notice of Default on the credit account with
Synchrony. He alleges the credit card account was opened without his consent and that he
never executed any documents, signed any forms, or requested any credit line from
Synchrony nor Sleep Number. In July 2022, Rao’s counsel sent correspondence to
Synchrony requesting termination of the credit card; Synchrony responded in August 2022,
maintaining that the account had been properly issued.
Shortly thereafter, counsel submitted notifications of dispute to all three major credit
reporting agencies. Separately, Rao also filed a dispute with the Consumer Financial
Protection Bureau. It was not until October 2023—over a year after Rao’s notices to
Synchrony and the credit reporting agencies—that Synchrony removed the credit
information from Rao’s report and requested that the major credit bureaus delete the
tradeline from his credit file.
Rao sued Sleep Number and Synchrony in the District Court in February 2023. In
response to his complaint, the appellees filed a motion to dismiss pursuant to Rule 12(b)(6).
Rao subsequently withdrew and brought another action in December 2023. After the
appellees again moved to dismiss, Rao filed his operative complaint on March 26, 2024.
The amended complaint pleaded six counts against Synchrony and Sleep Number.
Against Synchrony, Rao alleged violations of the Fair Credit Reporting Act (“FCRA”), 15
2 U.S.C. § 1681 et seq. (Count I), and the Fair Debt Collection Practices Act, 15 U.S.C. §
1692e(8) (Count II). Against Sleep Number, he alleged a violation of Pennsylvania’s
Unfair Trade Practices and Consumer Protection Law, 73 P.S. § 201–1 et seq. (Count V).
Against both, he alleged common law credit slander, fraud, and civil conspiracy (Counts
III, IV, and VI). In May 2024, the appellees filed another motion to dismiss once more
under Rule 12(b)(6).
On November 18, 2024, the District Court granted the appellees’ motions, dismissed
all six counts with prejudice, and denied leave to amend. Rao timely appealed, challenging
the dismissal of his FCRA claim (Count I); his common law fraud and civil conspiracy
claims (Counts IV and VI); and the District Court’s alternative holding that both claims
were likely preempted by 15 U.S.C. § 1681t(b)(1)(F) of the FCRA.
II. STANDARD OF REVIEW1
We exercise plenary review of a district court’s order granting a motion to dismiss
under Rule 12(b)(6), and we may affirm on any basis supported by the record. Stringer v.
Cnty. of Bucks, 141 F.4th 76, 84 (3d Cir. 2025). Because our review is de novo, we “accept
all factual allegations as true, construe the complaint in the light most favorable to the
plaintiff, and determine whether, under any reasonable reading of the complaint, the
plaintiff may be entitled to relief.” Phillips v. Cnty. of Allegheny, 515 F.3d 224, 233 (3d
Cir. 2008) (quoting Pinker v. Roche Holdings Ltd., 292 F.3d 361, 374 n.7 (3d Cir. 2002)).
1 The District Court had jurisdiction over the appellant’s claims pursuant to 28 U.S.C. § 1331 and supplemental jurisdiction over his state law claims pursuant to 28 U.S.C. § 1367(a). We have appellate jurisdiction under 28 U.S.C. § 1291.
3 III. FAIR CREDIT REPORTING ACT
The District Court rejected Rao’s claim that Synchrony failed to investigate his
dispute as required by § 1681s-2(b) of the FCRA, finding that he had not adequately alleged
that a consumer reporting agency ever notified Synchrony. Considering the exhibits
attached to the complaint, it declined to infer the credit reporting agencies automatically
notified Synchrony of the credit dispute, thereby triggering a duty to investigate. In so
holding, the District Court erroneously required Rao to produce evidence of furnisher
notification at the pleading stage—information that, by its nature, is within the exclusive
control of the agencies and the credit furnisher. In reality, Rao did all he had to do at this
stage: he alleged (albeit summarily) that the reporting agencies had notified Synchrony of
the dispute.
We nonetheless affirm because Rao’s exhibits directly contradict his claim that
Synchrony failed to conduct a reasonable investigation. See Vorchheimer v. Philadelphian
Owners Ass’n, 903 F.3d 100, 112 (3d Cir. 2018) (“[I]f [a plaintiff’s] own exhibits
contradict [his] allegations in the complaint, the exhibits control.”). The attached exhibits
and Rao’s pleading reveal that Synchrony fulfilled its statutory duty to investigate his credit
dispute: Synchrony maintained its position in response to counsel’s correspondence,
directed that a formal written dispute be submitted, and ultimately—after receiving notice
from the Consumer Financial Protection Bureau—reversed the charges and requested
deletion of the tradeline with all three major credit bureaus. Section 1681s-2(b) requires a
reasonable investigation, and the complaint and its exhibits demonstrate Synchrony
conducted one.
4 IV. COMMON LAW FRAUD AND CIVIL CONSPIRACY
The District Court dismissed Rao’s common law fraud and civil conspiracy claims
for two independent reasons. It concluded that both claims were likely preempted by 15
U.S.C. § 1681t(b)(1)(F) of the FCRA; alternatively, it held that Rao failed to adequately
plead either claim.
We agree with the District Court that neither claim was pleaded with the
particularity Federal Rule of Civil Procedure 9(b) requires, and will affirm on that basis.
Independent of the standard applicable to Rule 12(b)(6) motions, Rule 9(b) imposes a
heightened pleading requirement of particularity with respect to allegations of fraud. Fed.
R. Civ. P. 9(b). Particularity requires specifics; plaintiffs must “state the circumstances of
the alleged fraud with sufficient particularity to place the defendant on notice of the ‘precise
misconduct with which [it is] charged’ and ‘plead or allege the date, time and place of the
alleged fraud or otherwise inject precision or some measure of substantiation into a fraud
allegation.” Alpizar-Fallas v. Favero, 908 F.3d 910, 919 (3d Cir. 2018) (quoting Frederico
v. Home Depot, 507 F.3d 188, 200 (3d Cir. 2007) (internal citations omitted)).
A. FRAUD
We first address Rao’s contention that Sleep Number and Synchrony jointly
engaged in a scheme to defraud him by concealing that his purchase would involve a
Synchrony credit card agreement. The District Court found these allegations to be “nothing
more than general, legal conclusions.” App. 330. We agree.
A claim of fraud under Pennsylvania law “consists of six elements: (1)(a) [a]
misrepresentation or (b) [a] concealment; (2) [w]hich is material to the transaction at hand;
5 (3) (a) [m]ade with knowledge of its falsity or recklessness as to whether it is true or false
(for a misrepresentation), or (b) [c]alculated to deceive (for a concealment); (4) [w]ith the
intent of misleading another into relying on it; (5) [j]ustifiable reliance on the
misrepresentation; and (6) [a] resulting injury proximately caused by such reliance.”
SodexoMAGIC, LLC v. Drexel Univ., 24 F.4th 183, 205 (3d Cir. 2022)
Averments of fraud must be made with particularity under both the Pennsylvania
and Federal Rules of Civil Procedure. See Pa. R. Civ. P. 1019(b); Fed. R. Civ. P. 9(b).
We agree with the District Court that Rao’s fraud claim does not meet the
heightened pleading standard under Rule 9(b). Rao does not state who at Sleep Number
or Synchrony made any misrepresentation, what was said, nor how either appellee induced
his belief that the transaction did not require a credit card agreement. As the District Court
correctly observed, he “provided no detail concerning how Synchrony nor Sleep Number
‘tricked’ him, the ‘fraudulent utterance’ they allegedly made, or the distinct roles of
Synchrony and Sleep Number in the alleged scheme.” App. 330. Thus, the District Court
did not err in concluding that the complaint failed to state a claim for common law fraud.
B. CIVIL CONSPIRACY
The District Court also properly dismissed Rao’s allegations of civil conspiracy as
“vague legal conclusions.” App. 331. A claim of civil conspiracy under Pennsylvania law
must allege “(1) a combination of two or more persons acting with a common purpose to
do an illegal act or to do a lawful act by unlawful means or for an unlawful purpose; (2) an
overt act done in pursuance of the common purpose; and (3) actual legal damage.” Estate
of Werner ex rel. Werner v. Werner, 781 A.2d 188, 191 (Pa. Super. 2001). And when that
6 unlawful purpose is fraud, the heightened pleading standard of Rule 9(b) governs. See Fed.
R. Civ. P. 9(b) (“In alleging fraud or mistake, a party must state with particularity the
circumstances constituting fraud or mistake.”); see also Borsellino v. Goldman Sachs Grp.,
Inc., 477 F.3d 502, 507 (7th Cir. 2007) (“A claim that . . . is premised upon a course of
fraudulent conduct . . . can implicate Rule 9(b)’s heightened pleading requirements.”).
Rao’s conspiracy claim is his fraud claim dressed in the language of common
purpose; having failed to plead the underlying fraud with particularity, he has likewise
failed to adequately plead the requisite elements for a conspiracy to commit it.
Additionally, as the District Court correctly observed, Rao “pled no facts demonstrating
that any agreement between Synchrony and Sleep Number to register customers for credit
cards qualified as illegal or unlawful activity.” App. 331. We find no error in the District
Court’s dismissal of Rao’s common-law civil conspiracy claim.
*****
For the foregoing reasons, we will AFFIRM.