1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DARYA KHANKIN, et al., Case No. 3:23-cv-06145-JSC
8 Plaintiffs, ORDER RE: DEFENDANTS’ MOTION 9 v. TO DISMISS
10 JLR SAN JOSE, LLC, et al., Re: Dkt. Nos. 57, 58 Defendants. 11
12 13 Darya Khankin and Eliyahu Khankin sue JP Morgan Chase, Inc. (“Chase”) and JLR San 14 Jose, LLC (“JLR”), alleging Defendants engaged in false credit reporting surrounding Plaintiffs’ 15 lease of a Land Rover. JLR and Chase have filed motions to dismiss. (Dkt. Nos. 57. 58.)1 The 16 deadline for response has passed, and Plaintiffs have failed to respond to either motion. Having 17 carefully considered the briefing, the Court concludes oral argument is not required, see N.D. Cal. 18 Civ. L.R. 7-1(b), GRANTS Defendant’s motions, and DISMISSED the complaint without leave to 19 amend. Plaintiffs fail to plead sufficient facts to state a claim, and the Court finds any amendment 20 would be futile. 21 AMENDED COMPLAINT ALLEGATIONS 22 The Court’s previous order recounted the factual background of this case, and the Court 23 incorporates that description by reference here. (Dkt. No. 55.) Any newly pled facts relevant to 24 the current motions to dismiss are discussed in the analysis below. 25 26 27 1 DISCUSSION 2 I. VIOLATIONS OF FAIR CREDIT REPORTING ACT 3 Plaintiffs’ first cause of action alleges Chase and JLR “willfully and /or negligently 4 violated the Fair Credit Reporting Act” (“FCRA”). (Dkt. No. 56 ¶ 21.) Specifically, Plaintiffs 5 allege both Chase and JLR violated 15 U.S.C. § 1681s-2(a) and (b). (Id. ¶¶ 22-23.) 6 Plaintiffs’ claim under 15 U.S.C. § 1681s-2(a), which instructs “furnishers of information” 7 have a duty “to provide accurate information” to credit reporting agencies, fails as a matter of law 8 because there is no private right of action under 15 U.S.C. § 1681s-2(a). “The FCRA expressly 9 creates a private right of action for willful or negligent noncompliance with its requirements” 10 under 15 U.S.C. §§ 1681n & o. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th 11 Cir. 2009). But, those private right of action sections “do not apply to any violation of” 15 U.S.C. 12 § 1681s-2(a). 15 U.S.C. § 1681s-2(c). Accordingly, the “[d]uties imposed on furnishers under 13 subsection (a) are enforceable only by federal or state agencies.” Gorman, 584 F.3d at 1154; see 14 also § 1681s(c)(1)(B) (authorizing governmental enforcement of 15 U.S.C. § 1681s-2(a)); Nelson 15 v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th Cir. 2002) (“Congress limited the 16 enforcement of the duties imposed by § 1681s–2(a) to governmental bodies.”). Plaintiffs admitted 17 there was no private right of action under 15 U.S.C. § 1681s-2(a) in their previous filings. (Dkt. 18 No. 43 at 5 (“Courts agree, [] there is not private right cause of action under 1681s-2(a).) So, 19 Plaintiffs’ claims under 15 U.S.C. § 1681s-2(a) are dismissed as a matter of law because any 20 attempt at amendment would be futile. 21 15 U.S.C. § 1681s-2(b) provides furnishers of information have a duty to “conduct an 22 investigation” if they receive “notice of a dispute” as to “the completeness or accuracy of any 23 information provided by a person to a consumer reporting agency.” The “obligations” of § 1681s- 24 2(b) “are triggered ‘upon notice of dispute’—that is, when a person who furnished information to 25 a [Credit Reporting Agency] receives notice from the [Credit Reporting Agency] that the 26 consumer disputes the information.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 27 (9th Cir. 2009). But, “[t]hese duties arise only after the furnisher receives notice of dispute from a 1 trigger furnishers’ duties under subsection (b).” Id. 2 A. Chase 3 Plaintiffs allege “Plaintiffs provided notice to Chase via its designated counsel, who had 4 requested to be contacted about this issue, that the Chase credit reporting was materially false 5 and/or inaccurate” but “Chase subsequently refused to correct the information.” (Dkt. No. 56 ¶ 6 22.) While Plaintiffs allege they gave Chase notice of the dispute, Plaintiffs do not allege Chase 7 ever received notice of the dispute from a Credit Reporting Agency. See also Conrad v. Experian 8 Info. Sols., Inc., No. 16-CV-04660 NC, 2017 WL 1739167, at *4 (N.D. Cal. May 4, 2017) 9 (“Consumers have a private right of action against data furnishers for willful or negligent 10 noncompliance with FCRA requirements, but that right of action is limited to claims arising from 11 duties triggered upon notice of a dispute from a [Credit Reporting Agency].”). Nor do Plaintiffs 12 allege they ever complained to the credit reporting agencies to trigger those agencies providing 13 notice to Chase. Plaintiffs also fail to allege any facts indicating Chase failed to investigate or that 14 the investigation it conducted was unreasonable. Gorman, 584 F.3d at 1155-56 (explaining “[t]he 15 text of the FCRA states [] that the creditor shall conduct ‘an investigation with respect to the 16 disputed information,’” § 1681s–2(b)(1)(A), and holding the FCRA also requires investigation be 17 “reasonable”). So, Plaintiffs’ 15 U.S.C. § 1681s-2(b) claim against Chase is DISMISSED. 18 B. JLR 19 Plaintiffs allege JLR violated 15 U.S.C.A. § 1681s-2(b) because:
20 JLR received the “Lemon” vehicle from Plaintiffs . . . , and JLR failed or refused to process the return. As a result, JLR failed to furnish 21 correct information to the credit bureaus and instead furnished information it knew to be false—that Plaintiffs were still in possession 22 or the vehicle and/or that they still had to make lease payments, neither of which was accurate. . . . Plaintiffs have had no opportunity 23 to discover what specific information was exchanged between Defendant and the credit bureaus apart from what is in their reports. 24 25 (Dkt. No. 56 ¶ 23.) Even assuming JLR furnished any information to a credit reporting agency, 26 Plaintiffs have not pled sufficient facts to state a claim because they fail to allege JLR ever 27 received notice of the dispute from a credit reporting agency—indeed, Plaintiffs admit they do not 1 (Id.) Nor have Plaintiffs alleged JLR failed to investigate, or that the investigation JLR conducted 2 was unreasonable. So, Plaintiffs’ 15 U.S.C. § 1681s-2(b) claim against JLR is DISMISSED. 3 II. DEFAMATION 4 Plaintiffs’ second cause of action alleges JLR “willfully defamed Plaintiffs by way of false 5 credit reporting.” (Dkt. No.
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1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 DARYA KHANKIN, et al., Case No. 3:23-cv-06145-JSC
8 Plaintiffs, ORDER RE: DEFENDANTS’ MOTION 9 v. TO DISMISS
10 JLR SAN JOSE, LLC, et al., Re: Dkt. Nos. 57, 58 Defendants. 11
12 13 Darya Khankin and Eliyahu Khankin sue JP Morgan Chase, Inc. (“Chase”) and JLR San 14 Jose, LLC (“JLR”), alleging Defendants engaged in false credit reporting surrounding Plaintiffs’ 15 lease of a Land Rover. JLR and Chase have filed motions to dismiss. (Dkt. Nos. 57. 58.)1 The 16 deadline for response has passed, and Plaintiffs have failed to respond to either motion. Having 17 carefully considered the briefing, the Court concludes oral argument is not required, see N.D. Cal. 18 Civ. L.R. 7-1(b), GRANTS Defendant’s motions, and DISMISSED the complaint without leave to 19 amend. Plaintiffs fail to plead sufficient facts to state a claim, and the Court finds any amendment 20 would be futile. 21 AMENDED COMPLAINT ALLEGATIONS 22 The Court’s previous order recounted the factual background of this case, and the Court 23 incorporates that description by reference here. (Dkt. No. 55.) Any newly pled facts relevant to 24 the current motions to dismiss are discussed in the analysis below. 25 26 27 1 DISCUSSION 2 I. VIOLATIONS OF FAIR CREDIT REPORTING ACT 3 Plaintiffs’ first cause of action alleges Chase and JLR “willfully and /or negligently 4 violated the Fair Credit Reporting Act” (“FCRA”). (Dkt. No. 56 ¶ 21.) Specifically, Plaintiffs 5 allege both Chase and JLR violated 15 U.S.C. § 1681s-2(a) and (b). (Id. ¶¶ 22-23.) 6 Plaintiffs’ claim under 15 U.S.C. § 1681s-2(a), which instructs “furnishers of information” 7 have a duty “to provide accurate information” to credit reporting agencies, fails as a matter of law 8 because there is no private right of action under 15 U.S.C. § 1681s-2(a). “The FCRA expressly 9 creates a private right of action for willful or negligent noncompliance with its requirements” 10 under 15 U.S.C. §§ 1681n & o. Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 (9th 11 Cir. 2009). But, those private right of action sections “do not apply to any violation of” 15 U.S.C. 12 § 1681s-2(a). 15 U.S.C. § 1681s-2(c). Accordingly, the “[d]uties imposed on furnishers under 13 subsection (a) are enforceable only by federal or state agencies.” Gorman, 584 F.3d at 1154; see 14 also § 1681s(c)(1)(B) (authorizing governmental enforcement of 15 U.S.C. § 1681s-2(a)); Nelson 15 v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1060 (9th Cir. 2002) (“Congress limited the 16 enforcement of the duties imposed by § 1681s–2(a) to governmental bodies.”). Plaintiffs admitted 17 there was no private right of action under 15 U.S.C. § 1681s-2(a) in their previous filings. (Dkt. 18 No. 43 at 5 (“Courts agree, [] there is not private right cause of action under 1681s-2(a).) So, 19 Plaintiffs’ claims under 15 U.S.C. § 1681s-2(a) are dismissed as a matter of law because any 20 attempt at amendment would be futile. 21 15 U.S.C. § 1681s-2(b) provides furnishers of information have a duty to “conduct an 22 investigation” if they receive “notice of a dispute” as to “the completeness or accuracy of any 23 information provided by a person to a consumer reporting agency.” The “obligations” of § 1681s- 24 2(b) “are triggered ‘upon notice of dispute’—that is, when a person who furnished information to 25 a [Credit Reporting Agency] receives notice from the [Credit Reporting Agency] that the 26 consumer disputes the information.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1154 27 (9th Cir. 2009). But, “[t]hese duties arise only after the furnisher receives notice of dispute from a 1 trigger furnishers’ duties under subsection (b).” Id. 2 A. Chase 3 Plaintiffs allege “Plaintiffs provided notice to Chase via its designated counsel, who had 4 requested to be contacted about this issue, that the Chase credit reporting was materially false 5 and/or inaccurate” but “Chase subsequently refused to correct the information.” (Dkt. No. 56 ¶ 6 22.) While Plaintiffs allege they gave Chase notice of the dispute, Plaintiffs do not allege Chase 7 ever received notice of the dispute from a Credit Reporting Agency. See also Conrad v. Experian 8 Info. Sols., Inc., No. 16-CV-04660 NC, 2017 WL 1739167, at *4 (N.D. Cal. May 4, 2017) 9 (“Consumers have a private right of action against data furnishers for willful or negligent 10 noncompliance with FCRA requirements, but that right of action is limited to claims arising from 11 duties triggered upon notice of a dispute from a [Credit Reporting Agency].”). Nor do Plaintiffs 12 allege they ever complained to the credit reporting agencies to trigger those agencies providing 13 notice to Chase. Plaintiffs also fail to allege any facts indicating Chase failed to investigate or that 14 the investigation it conducted was unreasonable. Gorman, 584 F.3d at 1155-56 (explaining “[t]he 15 text of the FCRA states [] that the creditor shall conduct ‘an investigation with respect to the 16 disputed information,’” § 1681s–2(b)(1)(A), and holding the FCRA also requires investigation be 17 “reasonable”). So, Plaintiffs’ 15 U.S.C. § 1681s-2(b) claim against Chase is DISMISSED. 18 B. JLR 19 Plaintiffs allege JLR violated 15 U.S.C.A. § 1681s-2(b) because:
20 JLR received the “Lemon” vehicle from Plaintiffs . . . , and JLR failed or refused to process the return. As a result, JLR failed to furnish 21 correct information to the credit bureaus and instead furnished information it knew to be false—that Plaintiffs were still in possession 22 or the vehicle and/or that they still had to make lease payments, neither of which was accurate. . . . Plaintiffs have had no opportunity 23 to discover what specific information was exchanged between Defendant and the credit bureaus apart from what is in their reports. 24 25 (Dkt. No. 56 ¶ 23.) Even assuming JLR furnished any information to a credit reporting agency, 26 Plaintiffs have not pled sufficient facts to state a claim because they fail to allege JLR ever 27 received notice of the dispute from a credit reporting agency—indeed, Plaintiffs admit they do not 1 (Id.) Nor have Plaintiffs alleged JLR failed to investigate, or that the investigation JLR conducted 2 was unreasonable. So, Plaintiffs’ 15 U.S.C. § 1681s-2(b) claim against JLR is DISMISSED. 3 II. DEFAMATION 4 Plaintiffs’ second cause of action alleges JLR “willfully defamed Plaintiffs by way of false 5 credit reporting.” (Dkt. No. 56 ¶ 25.) As discussed in this Court’s previous order, to the extent 6 Plaintiffs allege JLR is a furnisher, and therefore is regulated under 15 U.S.C. § 1681s-2, their 7 defamation claim is preempted. (See Dkt. No. 55 at 4-8.) To the extent Plaintiffs’ defamation 8 claim is based on conduct outside the purview of 15 U.S.C. § 1681s-2, Plaintiffs have failed to 9 plead sufficient facts to state a claim because they plead no specific facts about the allegedly 10 defamatory statement. See Med. Marijuana, Inc. v. ProjectCBD.com, 46 Cal. App. 5th 869, 888 11 (2020) (“The general rule is that the words constituting an alleged libel must be specifically 12 identified, if not pleaded verbatim, in the complaint.”) (citing Kahn v. Bower, 232 Cal. App. 3d 13 1599, 1612 n.5 (Ct. App. 1991), reh’g denied and opinion modified (Sept. 6, 1991)). 14 So, Plaintiffs defamation claim against JLR is DISMISSED. 15 III. UNFAIR COMPETITION 16 Plaintiffs’ third cause of action alleges JLR a violation of California’s Unfair Competition 17 Law (“UCL”). (Dkt. No. 56 ¶¶ 27-29.) The UCL, California Business & Professions Code § 18 17200, prohibits “unfair competition,” which it defines as “unlawful, unfair or fraudulent business 19 act or practice and unfair, deceptive, untrue or misleading advertising.” Cal. Bus. & Prof. Code § 20 17200. Because it is “written in the disjunctive, it establishes three varieties of unfair 21 competition—acts or practices which are unlawful, or unfair, or fraudulent.” Cal-Tech Comms. 22 Inc., v. Los Angeles Cellular Telephone Co., 20 Cal. 4th 163, 180 (1999). Plaintiffs, again, appear 23 to bring the claim under the “unlawful” prong of the statute. (Dkt. No. 56 ¶¶ 27-28 (referring to 24 the conduct as “unlawful”).) With respect to the unlawful prong, virtually any state, federal or 25 local law can serve as the predicate for an action.” People ex rel. Bill Lockyer v. Fremont Life Ins. 26 Co., 104 Cal. App. 4th 508, 515 (2002) (cleaned up). Here, Plaintiffs allege violations of 27 California Civil Code § 2987(g) and California Civil Code § 1785.25(a). 1 Credit Reporting Act. (Dkt. No. 55 at 8-10.) So, any claim under California’s UCL is 2 DISMISSED. 3 IV. DECLARATORY RELIEF 4 Plaintiffs’ fourth cause of action seeks declaratory relief over JLR—specifically, 5 “Plaintiffs seek a judicial decree stating that the lease contract is rescinded and Plaintiffs have no 6 obligations to Defendants.” (Dkt. No. 56 ¶ 31.) 7 As discussed in the Court’s previous order (Dkt. No. 55), “[i]njunctive relief is a remedy 8 and not, in itself, a cause of action, and a cause of action must exist before injunctive relief may be 9 granted. Additionally, a claim for declaratory relief is duplicative and unnecessary when it is 10 commensurate with the relief sought through other causes of action.” McNeary-Calloway v. JP 11 Morgan Chase Bank, N.A., 863 F. Supp. 2d 928, 964 (N.D. Cal. 2012) (cleaned up). 12 Accordingly, Plaintiffs’ independent claim for declaratory relief is DISMISSED. 13 V. VIOLATIONS OF CALIFORNIA CIVIL CODE 14 Plaintiffs’ fifth cause of action alleges JLR violated California Civil Code § 1785.25(a), 15 which provides “[a] person shall not furnish information on a specific transaction or experience to 16 any consumer credit reporting agency if the person knows or should know the information is 17 incomplete or inaccurate.” The Fair Credit Reporting Act “expressly saves” California Civil Code 18 § 1785.25(a) “from preemption.” Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 888 (9th 19 Cir. 2010) (citing 15 U.S.C.A. § 1681t (b)(1)(F)(ii)). 20 JLR moves to dismiss this claim because “Plaintiffs’ own credit reports, attached as 21 exhibits to the [Amended Complaint], conclusively show that Dealer has not furnished 22 information regarding Plaintiffs to any of the credit reporting agencies.” 2 (Dkt. No. 57 at 12.) 23 Plaintiffs attach two reports to the Amended Complaint: the first is the credit report of 24 Eliyahu Khankin (Dkt. No. 56-1) and the second is the credit report of Darya (Dumov) Khankin 25 (Dkt. No. 56-2.) Plaintiffs allege these are “[r]edacted copies of the negative credit reporting 26
27 2 JLR requests the Court take judicial notice of its application to register a foreign limited liability 1 showing the defamatory matter.” (Dkt. No. 56 ¶ 25.) The Court considers these exhibits as part of 2 its analysis. See Swartz v. KPMG LLP, 476 F.3d 756, 763 (9th Cir. 2007) 3 Eliyahu Khankin’s report includes a section for “Installment Accounts” which are defined 4 as “loans that require payment on a monthly basis until the loan is paid off, such as auto or student 5 loans.” (Dkt. No. 56-1 at 43.) The report indicates Eliyahu Khankin has existing, outstanding 6 loans with “VW Credit INC.” for an “Auto Lease” (Id. at 46), and “JPMCB – Auto Finance” for 7 an “Auto Lease.” (Id. at 49.) The “VW Credit Inc.” loan indicates no payments are past due. (Id. 8 at 44.) The “JPMCB – Auto Finance” loan indicates $3,934 is pas due. (Id. at 48-49.) The report 9 also indicates only one account has negative information in the report. (Dkt. No. 56-1 at 3.) No 10 where does the report mention JLR. 11 Darya (Dumov) Khankin’s “Installment Accounts” section includes two open accounts: 12 one from “JPMCB-Auto Finance” which also indicates $3,934 is past due (Dkt. No. 56-2 at 58), 13 and one from “BMW Financial Services,” which indicates nothing is past due. (Id. at 61.) Like 14 Eliyahu Khankin’s report, the report lists only one account with negative information (id. at 3) 15 fails to mention JLR. 16 Plaintiffs’ exhibits indicate “JPMCB – Auto Finance” provided information to the credit 17 reporting agencies—not JLR. Plaintiffs plead no other facts indicating JLR ever furnished any 18 information to any credit reporting agencies. Indeed, they admit “the specifics of the furnishing 19 are alleged on information and belief because they are within Defendants’ knowledge, but not 20 Plaintiffs’, and Plaintiffs have had no opportunity to discovery what specific information was 21 exchanged between Defendant and the credit bureaus apart from what is in their reports.” (Dkt. 22 No. 56 ¶ 23.) Further, Plaintiffs plead “the bank (JP Morgan Chase Bank) reported Plaintiffs 23 delinquent on their lease” and Chase “bore ultimately responsibility for making the false reports to 24 the credit bureaus.” (Dkt. No. 56 ¶¶ 2, 6.) Accordingly, Plaintiffs fail to sufficiently plead JLR 25 violated California Civil Code § 1785.25(a), and this claim is DISMISSED. 26 LEAVE TO AMEND 27 “The standard for granting leave to amend is generous.” United States v. Corinthian 1 696, 701 (9th Cir. 1988)). “The court considers five factors in assessing the propriety of leave to 2 amend—bad faith, undue delay, prejudice to the opposing party, futility of amendment, and 3 whether the plaintiff has previously amended the complaint.” Id. “Under futility analysis, 4 ‘[d]ismissal without leave to amend is improper unless it is clear, upon de novo review, that the 5 complaint could not be saved by any amendment.’” Id. (quoting Krainski v. Nevada ex rel. Bd. of 6 Regents of NV. System of Higher Educ., 616 F.3d 963, 972 (9th Cir. 2010)). “Leave to amend is 7 warranted if the deficiencies can be cured with additional allegations that are ‘consistent with the 8 challenged pleading’ and that do not contradict the allegations in the original complaint.” Id. 9 (quoting Reddy v. Litton Indus., Inc., 912 F.2d 291, 296–97 (9th Cir. 1990)). 10 The Court finds any amendment would be futile. Plaintiffs were given leave to amend 11 once before. (Dkt. No. 55.) Nevertheless, Plaintiffs’ amended complaint admits Plaintiffs do not 12 know what information the credit reporting agencies provided to Chase or JLR (Dkt. No. 56 ¶¶ 22- 13 23), so Plaintiffs cannot make out a claim under 15 U.S.C. § 1681s-2(b), which requires the credit 14 reporting agencies provide notice of a dispute to Chase and JLR. Plaintiffs’ claims for defamation 15 and a violation of the UCL are both preempted by the Fair Credit Reporting Act. Plaintiffs’ claim 16 for declaratory relief fails as a matter of law. The exhibits attached to Plaintiffs’ complaint 17 indicate JLR did not provide any information to credit reporting agencies, so Plaintiffs’ claim 18 under California Civil Code § 1785.25(a) is insufficiently pled. Finally, Plaintiffs failed to 19 respond to the motions to dismiss. In these circumstances, the Court finds no allegations 20 consistent with the challenged pleadings could cure the deficiencies of the complaint. So, the 21 Court DISMISSES Plaintiffs’ claims WITHOUT LEAVE TO AMEND. 22 // 23 // 24 // 25 // 26 // 27 // 1 CONCLUSION 2 For the reasons discussed above, the Court GRANTS JLR’s motion to dismiss and 3 GRANTS Chase’s motion to dismiss WITHOUT LEAVE TO AMEND. As all named defendants 4 || have been dismissed, a separate judgment will follow. 5 This Order resolves Dkt. Nos. 57, 58. 6 IT IS SO ORDERED. 7 Dated: May 17, 2024 8 9 ’ AQQUELINE SCOTT CORLE 10 Unitéd States District Judge 11 a 12
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