X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

OPINION AND ORDER   Plaintiff Maurice Konig (“Plaintiff”) brings this action against Bank of America, N.A. (“BANA”), Trans Union, LLC (“Trans Union”), and Equifax Information Services, LLC (“Equifax”) (collectively “Defendants”) under the Fair Credit Reporting Act, 15 U.S.C §1681c, et seq. (“FCRA”) for allegedly reporting aged BANA accounts for a period in excess of the maximum time allowed.1 Plaintiff now moves pursuant to Fed. R. Civ. P. 15(a)2 for leave to file a Second Amended Complaint in order to (1) add factual allegations in support of his claims, and (2) convert his individual claim into a class action. (Docket Nos. 80, 81). Defendants oppose the motion. (Docket Nos. 85, 86, 87). Plaintiff filed a reply in further support of his motion. (Docket No. 90). For the reasons set forth below, the motion is granted in its entirety. I. BACKGROUND Plaintiff brings this action under the FCRA alleging, inter alia, that Defendants Trans Union and Equifax reported Plaintiff’s aged BANA accounts for more than seven-and-a-half years past the date of delinquency, in violation of Sections 1681c(a)(4) and (a)(5) of the FCRA. The FCRA provides that: [N]o consumer reporting agency may make any consumer report containing any of the following items of information: … (4) Accounts placed for collection or charged to profit and loss which antedate the report by more than seven years. (5) Any other adverse item of information, other than records of convictions of crimes which antedates the report by more than seven years. 15 U.S.C §1681c(4), c(5). Pursuant to Section 1681c(c), the seven year period “shall begin, with respect to any delinquent account that is placed for collection…charged to profit and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of commencement of the delinquency which immediately proceeded the collection activity, charge to profit and loss, or similar action.” Id. §1681c(c)(1). Plaintiff filed his first complaint on July 31, 2018. (Docket No. 1). A Case Management and Scheduling Order was entered on November 20, 2018. (Docket No. 26). On March 13, 2019, Plaintiff moved for leave to amend his complaint to clarify that there were four separate BANA accounts at issue, two of which were reported on Plaintiff’s Trans Union credit file, and two of which were reported on his Equifax credit file. (Docket Nos. 36, 37). The Court granted Plaintiff’s motion. (Docket No. 49). Plaintiff filed his First Amended Complaint on June 5, 2019. (Docket No. 51). Plaintiff now moves for leave to file his Second Amended Complaint (1) to add factual allegations relating to the FCRA background and regulatory guidance on how credit reporting agencies should prevent obsolete data from being reported, and to further detail how Defendants’ policies and practices violated the FCRA, and (2) to convert his individual claim into a putative class action (“Proposed 2d Am. Compl.”). (Docket Nos. 80, 81, 81-1, 81-2). Plaintiff’s proposed amendment includes four sub-classes: Class A: All natural persons residing within the United States, beginning two years prior to the filing of this Complaint and continuing through the resolution of this action, whose Equifax and TransUnion credit reports contained an adverse BANA trade line with a date of last payment date that is more than seven years and seven months from the date of the reporting. Subclass A: All natural persons residing in the State of New York, beginning two years prior to the filing of this Complaint and continuing through the resolution of this action, whose Equifax and TransUnion credit reports contained an adverse BANA trade line with a date of last payment date that is more than seven years and seven months from the date of the reporting. Class B: All natural persons residing within the United States, beginning two years prior to the filing of this Complaint and continuing through the resolution of this action, on whose behalf a dispute was made to Equifax and TransUnion on an antedated adverse BANA trade line, after which Equifax, TransUnion and BANA verified the account as accurately reporting. Subclass B: All natural persons residing in the State of New York, beginning two years prior to the filing of this Complaint and continuing through the resolution of this action, on whose behalf a dispute was made to Equifax and TransUnion on an antedated adverse BANA trade line, after which Equifax, TransUnion and BANA verified the account as accurately reporting. (Proposed 2d Am. Compl.

61-62). Defendants oppose the proposed Second Amended Complaint on the grounds that it is unduly delayed, made in bath faith, unduly prejudicial, and ultimately futile. (Docket No. 85). II. DISCUSSION Pursuant to Rule 15(a), leave to amend “shall be freely given when justice so requires.” Fed. R. Civ. P. 15(a)(2). “Under this liberal standard, a motion to amend should be denied only if the moving party has unduly delayed or acted in bad faith, the opposing party will be unfairly prejudiced if leave is granted, or the proposed amendment is futile.” Agerbrink v. Model Serv. LLC, 155 F. Supp. 3d 448, 452 (S.D.N.Y. 2016). A. Undue Delay Defendants assert that the motion should be denied on the ground that there was undue delay. (Docket No. 85 at 21).3 Defendants maintain that discovery was complete as to Trans Union by April 2019, and that Plaintiff waited four additional months to file the motion when summary judgment was “imminent.” (Id.). However, “[d]elay alone, in the absence of bad faith or prejudice, is not a sufficient reason for denying a motion to amend.” Duling v. Gristede’s Operating Corp., 265 F.R.D. 91, 97 (S.D.N.Y. 2010); see also Parker v. Columbia Pictures Indus., 204 F.3d 326, 339 (2d Cir. 2000) (“[W]e have held repeatedly that ‘mere delay’ is not, of itself, sufficient to justify denial of a Rule 15(a) motion…”) (internal citations omitted). Furthermore, “delay is rarely fatal to a Rule 15 motion if it can be explained.” Duling, 265 F.R.D. at 97. “Although some explanation must be provided to excuse a delay…even vague or ‘thin’ reasons are sufficient, in the absence of prejudice or bad faith.” Id. (emphasis in original) (internal citation omitted). Moreover, “under the liberal standard of Rule 15(a), leave to amend may be appropriate at any stage of litigation.” Id. Indeed, courts in this Circuit have allowed amendments involving much longer intervals between a party’s discovery of relevant facts and filing of an amended pleading. See Agerbrink, 155 F. Supp. 3d at 453; see also Blagman v. Apple, Inc., No. 12 Civ. 5453(ALC)(JCF), 2014 WL 2106489, at *3 (S.D.N.Y. May 19, 2014) (collecting cases where leave to amend was granted after delays of up to seven years). Here, Plaintiff offers sufficient reasons for his delay. Plaintiff asserts that he “was not provided any explanation for how his BANA trade lines remained on his credit reports until the deposition of each Defendant.” (Docket No. 81 at 13). Specifically, Plaintiff argues that “[w]hile Trans Union’s Deposition occurred in April, it was not until the deposition of BANA and Equifax on July 2 and July 3, that the issues became clear enough to warrant amendment.” (Id.). Plaintiff further maintains that “[t]his is especially demonstrated by the fact that BANA and the CRAs4 dispute who reported what pieces of information concerning the payment status and so until Plaintiff deposed both the CRAs and BANA, Plaintiff could not determine what to put in the amended Complaint, and where liability could be established.” (Id. at 13-14). Accordingly, because Plaintiff offers an adequate explanation for the delay and because “the time period at issue here is not substantial,” Blagman, 2014 WL 2106489, at *3, Defendants must show bad faith or undue prejudice in connection with the delay in order to warrant denial of the motion. B. Bad Faith Defendants also argue that Plaintiff’s motion was made in bad faith. (Docket No. 85 at 25). Defendants assert that “the timing of the [m]otion is more than a little suspicious,” maintaining that the motion was filed “on the brink of summary judgment,” and “the true purpose of the [m]otion was to increase the settlement value of the case.” (Id. at 26). Defendants also acknowledge, however, that “[n]one or all of these suppositions may be true.” (Id.). The Court finds that these are “exactly the type of conclusory allegation[s] of bad faith” that courts in this Circuit reject. Agerbrink, 155 F. Supp. 3d at 453; see also Blagman, 2014 WL 2106489, at *3 (which held that “[t]o the extent that the defendants claim that [plaintiff's] delay was strategic…they provide no showing of bad faith apart from the delay itself.”); Primetime 24 Joint Venture v. DirecTV, Inc., No. 99 Civ. 3307(RMB)(MHD), 2000 WL 426396, at *5 (S.D.N.Y. April 20, 2000) (which held that “when the opponent of an amendment asserts that the movant is acting in bad faith, there must be something more than mere delay or inadvertence for the court to refuse to allow the amendment.”). Because Defendants provide no showing of bad faith, Defendants have not sustained their burden. C. Undue Prejudice Defendants also argue that the motion should be denied because they would be unfairly prejudiced by the proposed amendment. (Docket No. 85 at 22). “Prejudice alone is insufficient to justify a denial of leave to amend; rather the necessary showing is ‘undue prejudice to the opposing party.’” A.V. by Versace, Inc. v. Gianni Versace S.p.A., 87 F. Supp. 2d 281, 299 (S.D.N.Y. 2000) (internal citations omitted); see also Agerbrink, 155 F. Supp. 3d at 454 (same). To determine whether the proposed amendment will cause undue prejudice, courts “generally consider whether the assertion of the new claim or defense would ‘(i) require the opponent to expend significant additional resources to conduct discovery and prepare for trial; (ii) significantly delay the resolution of the dispute; or (iii) prevent the plaintiff from bringing a timely action in another jurisdiction.’” Monahan v. N.Y.C. Dep’t of Corr., 214 F.3d 275, 284 (2d Cir. 2000) (quoting Block v. First Blood Assoc., 988 F.2d 344, 350 (2d Cir. 1993)). Central to this analysis is the extent to which the new claims arise from the existing ones and whether a party had prior notice of a new claim. See Blagman, 2014 WL 2106489, at *3. “The non-moving party bears the burden ‘of demonstrating that substantial prejudice would result were the proposed amendment to be granted.’” Agerbrink, 155 F. Supp. 3d at 454 (internal citations omitted); see also Oneida Indian Nation of N.Y. v. Cty. of Oneida, 199 F.R.D. 61, 77 (N.D.N.Y. 2000) (noting that where moving party provides explanation for delay, opposing party must make “greater showing” of prejudice). Defendants argue that reopening discovery on new class claims would force them to incur significant costs associated with ascertaining every single class member and that this process will be “an incredibly difficult one.” (Docket No. 85 at 22-23). Plaintiff claims, however, that “[b]ecause the bulk of discovery has been completed with the second deposition of BANA, and the anticipated responses from Equifax,5 there is very little class discovery that will actually be required.” (Docket No. 81 at 19). Notwithstanding this disagreement, “[t]he need for new discovery is not sufficient to constitute undue prejudice on its own.” Duling, 265 F.R.D. at 100; see also A.V. by Versace, Inc., 87 F. Supp. 2d at 299 (“Allegations that an amendment will require the expenditure of additional time, effort, or money do not constitute ‘undue prejudice.’”) (internal citations omitted); United States v. Cont’l Ill. Nat’l Bank & Trust Co., 889 F.2d 1248, 1255 (2d. Cir. 1989) (“[T]he adverse party’s burden of undertaking discovery, standing alone, does not suffice to warrant denial of a motion to amend a pleading.”). Defendants’ argument that the inclusion of class claims would require additional discovery is, therefore, not sufficient to defeat the motion at this stage. Defendants also had prior notice of the proposed amendment because it “arises from the same transaction as the claims in the original pleading.” Agerbrink, 155 F. Supp. 3d at 455; see also Presser v. Key Food Stores Co-op, Inc., 218 F.R.D. 53, 56 (E.D.N.Y. 2003) (which held that there was no prejudice to defendants when plaintiff sought to amend to add a class of plaintiffs because the class action would present the defendant with the same issues involved in the original lawsuit); A.V. by Versace, 87 F. Supp. 2d at 299 (which held that there was no undue prejudice to defendants where the proposed amendments “do not raise factual claims unrelated to the events [in] its original [complaint].”); Monahan, 214 F.3d at 284 (which held that courts will allow amendment where the party “had knowledge of the facts giving rise to the [amendment].”). Furthermore, Defendants’ argument that they have already “made numerous decisions in this case,” such as consenting to this Court’s jurisdiction, as well as decisions relating to the scope of discovery and settlement, (Docket No. 85 at 24-25), are conclusory and unpersuasive. See Academy of Ambulatory Foot Surgery v. American Podiatry Ass’n, 516 F. Supp. 378, 382-83 (S.D.N.Y. 1981). Accordingly, Defendants have not demonstrated that they will be unduly prejudiced by the proposed amendment. D. Futility “It is well established that ‘[l]eave to amend need not be granted…where the proposed amendment would be futil[e].’” Williams v. Citigroup Inc., 659 F.3d 208, 214 (2d Cir. 2011) (quoting Advanced Magnetics, Inc. v. Bayfront Partners, Inc., 106 F.3d 11, 18 (2d Cir. 1997)) (alterations in original). Proposed amendments are futile if they would fail to state a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure. See IBEW Local Union No. 58 Pension Tr. Fund & Annuity Fund v. Royal Bank of Scot. Grp., PLC, 783 F.3d 383, 389 (2d Cir. 2015). “Accordingly, the proposed amendment must be viewed in the light most favorable to the party moving to amend…and leave to amend should only be denied if the moving party can prove no set of facts which would entitle her to relief.” Presser, 218 F.R.D. at 56; see also Dougherty v. Town of North Hempstead Bd. of Zoning Appeals, 282 F.3d 83, 91-92 (2d Cir. 2002) (which reversed district court’s denial of amendment as futile because, although defendants “vigorously dispute[d]” plaintiff’s version of events, “ proposed amended complaint adequately set[ ] forth specific facts, which if proven, c[ould] support a finding of [defendant's liability].”). 1. Plaintiff’s Individual Claim Defendants argue that the proposed amendment to include class claims is futile on the ground that Plaintiff’s individual claims, upon which his class allegations are based, do not constitute a violation of the FCRA. (Docket No. 85 at 9-12). Specifically, Defendants assert that Plaintiff “misunderstands” and “blurs the distinction between” Section 1681c(a)(4) and (a)(5) of the statute. (Id. at 9-10). Defendants further argue that Plaintiff misstates the provisions by “substituting for the term ‘date of first delinquency,’ the benchmark for measuring the statutory maximum reporting period under [the statute], the term ‘date of last payment,’ the latter of which plays no role in the FCRA’s statutory scheme.” (Id. at 10). Defendants maintain that “Section 1681c(a)(4) does not even apply in this case, because Plaintiff fails to allege…that the [BANA] Accounts ever were ‘placed for collection or charged to profit and loss.’” (Id.). In sum, Defendants argue that “[b]ecause Plaintiff has not pled…that the subject [BANA] Accounts underlying Plaintiff’s individual claims were placed for collection or charged to profit and loss,” or that the BANA Accounts included adverse items of information that antedate the report by more than seven years, as required for a violation of Section 1681c(a)(5), Defendants could not have violated the statute as to the putative classes. (Id. at 15-17). Accepting as true all factual allegations set forth in the proposed Second Amended Complaint, and drawing all reasonable inferences in Plaintiff’s favor, the Court finds that Plaintiff states a legally cognizable claim for relief under the FRCA. Plaintiff sufficiently pleads that the subject BANA Accounts were placed for collection or charged to profit and loss. (Proposed 2d Am. Compl. 20). Plaintiff specifically claims that he had four mortgage lines which were held by BANA sometime prior to 2008, and that “[i]n or around 2008 or 2009, Plaintiff made his last payment on these debts, leaving a balance due.” (Proposed 2d Am. Compl.

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

Premium Subscription

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now

Team Accounts

Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now

Bundle Subscriptions

Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now

New York Legal Awards 2021

October 13, 2021
New York, NY

The New York Law Journal honors attorneys and judges who have made a remarkable difference in the legal profession in New York.


Register

Women Influence & Power in Law Awards 2021

October 07, 2021
Washington, DC

Women Influence & Power in Law Awards honors women lawyers who have made a remarkable difference in the legal profession.


Register

Women Influence & Power in Law (WIPL) 2021

October 06, 2021 - October 08, 2021
Washington, DC

WIPL is the original global forum facilitating women-to-women exchange on leadership and legal issues.


Register

Attorney

Newark, New Jersey, United States

Gibbons is seeking an associate with six (6) or more years of experience, practicing in New Jersey and New York, in Products /Liability/Phar...


Apply Now ›

Transactional And Litigation Attorneys

Monmouth County, New Jersey, United States

Sonnenblick Parker & Selvers, PC an AV rated firm established in 1977 welcomes experienced and highly-regarded transactional and litigation ...


Apply Now ›

Attorney Job Posting - Essex County Counsel's Office

Newark, New Jersey, United States

Assistant County Counsel position available in our Mental Health & Governmental Affairs Section. The Essex County Counsel's Office is locat...


Apply Now ›

JAVERBAUM WURGAFT HICKS

09/20/2021
NJLJ Web

JAVERBAUM WURGAFT HICKS mourn the passing of our Co-Founding Partner, collegue, and friend.


View Announcement ›

BARTON GILMAN LLP

09/14/2021
CLT Web

Barton Gilman Expands Into Connecticut


View Announcement ›

BARTON GILMAN LLP

09/14/2021
TLI Web

Barton Gilman LLP is excited to announce that its expansion into Philadelphia


View Announcement ›