its lawsuit; and all four companies agreed to request that the credit reporting agencies remove the derogatory reports. The complaint lastly alleges that the agencies have not yet removed the reports.
Podell's complaint contains eight causes of action. Podell first claims that all defendants violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681. He asserts that by willfully and negligently failing to comply with the requirements of FCRA, defendants are liable under § 1681n (first cause of action) and § 16810 (second cause of action), respectively.
The remainder of the complaint states six state law causes of action. Podell contends that all defendants violated N.Y.S. General Business Law § 349, which prohibits deceptive acts and practices by businesses. Podell also asserts the following state common law claims: negligent infliction of emotional distress; intentional infliction of emotional distress; defamation; prima facie tort; and negligence.
Diners Club and Credit Services argue that this Court should dismiss Podell's § 1681 claims as lacking legal sufficiency pursuant to Fed.R.Civ.P. 12(b)(6) and; consequently, dismiss his supplemental state claims as lacking subject matter jurisdiction pursuant to Fed.R.Civ.P. 12(b)(1). For the reasons discussed below, I agree.
II. THE FAILURE OF PODELL'S FEDERAL CLAIMS
1. The Rule 12(b)(6) motion
A lineal descendent of the common law general demurrer, Curacao Trading Co., Inc., v. William Stake & Co., Inc., 61 F. Supp. 181, 184 (S.D.N.Y., 1945), the Rule 12(b)(6) motion to dismiss for "failure to state a claim upon which relief can be granted" illustrates the evolution of modern federal practice away from burdensome, technical pleadings toward adjudication of cases on their merits. In considering Rule 12(b)(6) motions, courts should remain faithful to the liberal nature of the modern federal rules of procedure and guard against the use of the rule to delay litigation and harass a party. Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure: Civil 2d § 1356 (1990).
The Rule 12(b)(6) motion challenges the formal legal sufficiency of a claim, and not its underlying facts. Consideration of the motion does not amount to consideration of the merits of the case. Geisler v. Petrocelli, 616 F.2d 636, 639 (2d Cir. 1980). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims. Indeed it may appear on the face of the pleadings that a recovery is very remote and unlikely but that is not the test." Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S. Ct. 1683, 1686, 40 L. Ed. 2d 90 (1974). The motion only questions whether the complaint itself sufficiently states a legal claim.
Accordingly, the court looks to the four corners of the complaint to determine whether its allegations can give rise to a legal claim. Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991); cert. denied, 112 S. Ct. 1561, 118 L. Ed. 2d 208 (1992); Kramer v. Time Warner, Inc., 937 F.2d 767, 773 (2d Cir. 1991). The court should assume the truth of plaintiff's well-pleaded factual allegations, see Papasan v. Allain, 478 U.S. 265, 283, 92 L. Ed. 2d 209, 106 S. Ct. 2932 (l986); LaBounty v. Adler, 933 F.2d 121, 123 (2d Cir. 1991), and should read the complaint "generously, and draw all reasonable inferences in favor of the pleader." Cosmas v. Hassett, 886 F.2d 8, 11 (2d Cir. 1989).
Because dismissal of a complaint pursuant to Rule 12(b)(6) denies a party's right to its "day in court" or even to conduct discovery, "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that plaintiff can prove no set of facts in support of his claim which would entitle him to relief, " Conley v. Gibson, 355 U.S. 41, 45-46, 78 S. Ct. 99, 102, 2 L. Ed. 2d 80 (1957).
2. Applicability of the Federal Credit Reporting Act
The Fair Credit Reporting Act regulates credit reporting agencies and the reports which they assemble and issue. The section was enacted to protect individual consumers from inaccurate or arbitrary credit reports, which might jeopardize one's eligibility for credit, insurance, or employment. Porter v. Talbot Perkins Children's Services, 355 F. Supp. 174, 176 (S.D.N.Y. 1973).
The Act limits the purposes and uses of a credit report, § 1681b; prohibits the reporting of obsolete information, § 1681c; establishes the requirements and procedures for disclosing consumer credit reports, § 1681d and § 1681e; and imposes civil liability upon credit reporting agencies or users of reports who willfully or negligently violate the Act, § 1681n and § 1681o.
Diners Club and Credit Services argue that, within the meaning of the statute, they are not "credit reporting agencies" and the information that they supplied to the credit reporting agencies is not a "consumer report." On both points, they are correct.
The statute defines a "consumer reporting agency" as "any person, which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. . . ." § 1681a(f).
The statute defines "consumer report" as
any written, oral or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (1) credit or insurance to be used primarily for personal, family, or household purposes, or (2) employment purposes, or (3) other purposes authorized under [this title]. . . . The term does not include (A) any report containing information solely as to transactions or experiences between the consumer and the person making the report. . . . § 1681a(d).
Podell has only alleged that Diners Club and Credit Services reported to the three consumer reporting agencies notice of his outstanding debts and that Diners Club additionally reported notice of their lawsuit against Podell. These acts fail to convert defendants into "credit reporting agencies." As the Second Circuit recently reasoned,
[Persons] that merely furnish information to consumer reporting agencies based on their experience with consumers are not consumer reporting agencies within the meaning of the FCRA. . . . As used in the statute the term refers to firms that are in the business of assembling and evaluating consumer credit information. . . . The FCRA does not impose obligations upon a creditor who merely passes along information concerning particular debts owed to it. DiGianni v. Stern's, 26 F.3d 346, 349, (2d Cir. 1994)