Plaintiff’s Claim Against Servicer For Outrageous Conduct Not Preempted And Sufficiently Plead A Claim Under FCRA

At issue in Llewellyn v. Shearson Financial Network, Inc., 08-cv-00179 (D. Colo., March 31, 2009) were the legality of efforts by a loan servicer to collect on a loan the plaintiff believed to have been repaid (but was in fact still outstanding due to an intermediary’s absconding of the funds). The plaintiff plead that he contacted the servicer to inform them that the loan had been paid in full but the servicer nevertheless provided negative credit information regarding plaintiff to various credit reporting agencies. Plaintiff sued under the Fair Credit Reporting Act (FCRA) claiming that the servicer’s conduct was outrageous. The servicer argued that the outrageous conduct claim was preempted by the FCRA and that the conduct alleged was not sufficiently outrageous. The court disagreed finding that the conduct alleged adequately stated a claim for outrageous conduct under Colorado law. It rejected the servicer’s preemption defense on the basis that the statutory authority for preemption, 15 U.S.C. § 1681h(e) is limited to actions in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of [credit] information … except as to false information furnished with malice or willful intent to injure such consumer. An outrageous conduct claim is not a claim for defamation, invasion of privacy, or negligence, nor is it necessarily in the nature of such a claim. Outrageous conduct claims occupy a well-established niche in the common law, discrete from the claims specifically described in the statute. Also a claim for outrageous conduct is cognizable within the express exception of § 1681h(e) permitting claims based on false information furnished with malice or willful intent to injure. The court also rejected the contention that 15 U.S.C. § 1681t(b)(1)(F), which provides that [n]o requirement or prohibition may be imposed under the laws of any State with respect to any subject matter [ ] relating to the responsibilities of persons who furnish information to consumer reporting agencies preempts a state-law outrageous conduct claim. Noting that a recent unpublished case, _Pinson v. Equifax Credit Information Servs._, —Fed.Appx. —-, 2009 WL595991 (10th Cir. March 2009) affirmed a district court’s dismissal of state tort claims of libel, false-light, and invasion of privacy by explaining that the state-law claims were preempted by 15 U.S .C. § 1681t(b)(1)(F), the Llewellyn court refused to follow that case because it had no precedential effect. The court instead followed the reasoning explained in cases such as _Gorman v. Wolpoff & Abramson, LLP_, 552 F.3d 1008, 1026-27 (9th Cir. 2009) and _Saint Torrance v. Firstar,_ 529 F.Supp.2d 836, 841 (S.D.Ohio 2007) which said that treating § 1681t as broadly preempting every common-law tort claim arising out of credit reporting disputes gives the statute a broader reach than is necessary or appropriate.

Download Related Document