United States District Court, E.D. Michigan, Southern Division
OPINION & ORDER GRANTING DEFENDANTS' MOTION
TO DISMISS (Dkt. 25)
A. GOLDSMITH United States District Judge
William Dorton filed his amended complaint against Defendants
on June 6, 2016, alleging that Defendants violated the Equal
Credit Opportunity Act, 15 U.S.C. § 1691 et
seq. (“ECOA”), when they communicated with
Dorton regarding his application to lease a videogame system
made at one of Defendant Kmart's Detroit, Michigan,
locations. See generally Am. Compl. (Dkt.
In lieu of an answer, Defendants filed a motion to dismiss on
June 28, 2016, which makes alternative arguments that the
complaint should be dismissed under Federal Rule of Civil
Procedure 12(b)(1) and/or 12(b)(6) (Dkt. 25). The issues have
been fully briefed, and a hearing was held on November 9,
2016. For the reasons set forth below, the Court grants
Defendants' motion to dismiss.
Kmart is a retail store that sells, among many other things,
videogame systems. See Am. Compl. ¶¶
24-25. Defendant WhyNot Leasing is a company “partnered
with” Kmart, which offers alternative financing by
providing Kmart customers “an option to purchase the
product at the end of [a] lease term.” Id.
¶¶ 7, 13(a).
is an individual who, on May 2, 2014, went to a Kmart
location to purchase a videogame system. Id.
¶¶ 24-25. Because Dorton was unable to pay for the
videogame system in full at that time, he sought to obtain
the videogame system under Defendants'
“WhyNotLeaseIt” program (the
“Program”), id. ¶¶ 29-31,
which permits a customer to lease the product for a term of
months and, if he so chooses, to purchase the product at the
end of the lease term, id. ¶ 13. As a first
step in this process, Dorton furnished Defendants with his
social security number; Kmart's salesperson, however,
told Dorton that someone else's information was
associated with that social security number. Id.
¶¶ 33-34. The salesperson told Dorton that, as a
result of the confusion surrounding the social security
number, Dorton was not eligible for the Program. Id.
alleges that the salesperson did not provide him with the
information necessary to identify the source of the
inaccurate information concerning the social security number.
Id. ¶ 42. However, Dorton does not allege that
he requested any such information from the salesperson.
3, 2014, Dorton claims that he sent Kmart a letter
“pursuant to 15 U.S.C. § 1961(d), ”
requesting an “adverse action notice” and
specific reasons for the “adverse action” taken.
See Am. Compl. ¶ 44. As discussed fully below,
when certain criteria are met, a creditor is required to
issue these notices to a “credit applicant, ”
usually when the creditor denies that applicant's
application for credit. The only reply that Dorton received
was a handwritten letter from Kmart stating that they were
referring his request to the “lease company, ”
which Dorton identifies as Defendant WhyNot Leasing.
STANDARD OF DECISION
jurisdiction is always a “threshold determination,
” American Telecom Co., L.L.C. v. Republic of
Lebanon, 501 F.3d 534, 537 (6th Cir. 2007) (citing
Steel Co. v. Citizens for a Better Env't, 523
U.S. 83, 101 (1998)), and “may be raised at any stage
in the proceedings, ” Schultz v. General R.V.
Center, 512 F.3d 754, 756 (6th Cir. 2008). “A Rule
12(b)(1) motion can either attack the claim of jurisdiction
on its face, in which case all allegations of the plaintiff
must be considered as true, or it can attack the factual
basis for jurisdiction, in which case the trial court must
weigh the evidence and the plaintiff bears the burden of
proving that jurisdiction exists.” DLX, Inc. v.
Kentucky, 381 F.3d 511, 516 (6th Cir. 2004). “A
facial attack on the subject-matter jurisdiction alleged in
the complaint questions merely the sufficiency of the
pleading.” Gentek Bldg. Products, Inc. v.
Sherwin-Williams Co., 491 F.3d 320, 330 (6th Cir. 2007).
“If the court determines at any time that it lacks
subject-matter jurisdiction, the court must dismiss the
action.” Fed.R.Civ.P. 12(h)(3).
evaluating a motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6), “[c]ourts must construe the
complaint in the light most favorable to plaintiff, accept
all well-pled factual allegations as true, and determine
whether the complaint states a plausible claim for
relief.” Albrecht v. Treon, 617 F.3d 890, 893
(6th Cir. 2010). To survive a motion to dismiss, a complaint
must plead specific factual allegations, and not just legal
conclusions, in support of each claim. Ashcroft v.
Iqbal, 556 U.S. 662, 678-679 (2009). A court may
consider exhibits attached to the complaint without
converting the motion to one for summary judgment.
Rondigo, L.L.C. v. Twp. of Richmond, 641 F.3d 673,
680-681 (6th Cir. 2011).
ECOA exists to prevent discrimination by creditors against
certain classes of credit applicants. See Mays v. Buckeye
Rural Elec. Coop., 277 F.3d 873, 876 (6th Cir. 2002); 15
U.S.C. § 1691. As part of its scheme to create
accountability for creditors' decisions, the ECOA imposes
certain notice obligations on creditors when they take
“adverse action” against a credit applicant,
which is typically a denial of credit. See id.
§ 1691(d)(6) (defining “adverse action” as,
inter alia, “a denial or revocation of credit”);
id. § 1691(d)(2) (general notice requirements).
purposes of this motion, Defendants concede that they did not
provide Dorton with an adverse action notice. See
Defs. Mot. at 5. The parties' dispute is twofold: (i)
whether Defendants were required to provide Dorton with an
adverse action notice; and (ii) if such notice was required,
what that notice should have contained. Generally speaking,
an adverse action notice must contain “a statement of
reasons for such [adverse] action” that is
“specific.” 15 U.S.C. § 1691(d)(2), (3).
Dorton complains that he was harmed when Defendants did not
comply with his request for an adverse action notice,
see Am. Compl. ¶¶ 48-49; additionally, he
argues that a proper “statement of reasons”
includes “the information necessary to identify the
source of the inaccurate information concerning his Social
Security Number.” Id. ¶ 42.
argue that this Court lacks subject-matter jurisdiction
because Dorton lacks standing. See Defs. Mot. at
3-4; see also Fed.R.Civ.P. 12(b)(1). Specifically,
Defendants claim that Dorton lacks standing because he has
not alleged a “concrete and particularized”
injury. Id. at 4 (citing Friends of the Earth,
Inc. v. Laidlaw Envtl. Servs., Inc., 528 U.S. 167,
180-181 (2000)). Defendants assert that, even after the
complaint was amended, Dorton's allegations of harm
merely speculate that, had Defendants provided him with the
requested adverse action notice, such notice
“may have allowed him to correct his consumer
reports and prevent future damage.” Id. at 4
(quoting Am. Compl. ¶ 48) (emphasis by Defendants). To
allege sufficiently a concrete and particularized harm, say
Defendants, Dorton at least had to claim that Defendants'
actions caused - not “may have caused” -
claim Defendants, even assuming that Dorton had alleged a
non-speculative harm flowing from his inability to identify
the “source” of the inaccurate information, this
harm cannot be attributed to Defendants, because Defendants
have no statutory duty to provide such information.
Id. at 5-6. Assuming for the sake of argument that
Defendants are “creditors” subject to the ECOA,
Defendants claim that a creditor need only provide a
“short, check-list statement” that
“reasonably indicates the reasons for adverse
action.” Id. at 6 (quoting O'Dowd v.
S. Cent. Bell, 729 F.2d 347, 352 (5th Cir. 1984)). As
Defendants interpret this requirement, it does not entitle
Dorton to the “source of the reported reason for
denial” under the statute. Id. (citing
Anderson v. Capital One Bank, 224 F.R.D. 444, 447
(W.D. Wis. 2004)). Accordingly, say Defendants, Dorton lacks
standing to claim he was injured by a failure to receive
information to which, under their view of the statute, he was
not entitled. Id.
counters that he did allege a harm that meets Article
III's standing requirements. See Pl. Resp. at
8-9. Dorton says his injury was not speculative, because he
alleged exactly what the statute prohibits - a failure to
deliver a requested adverse action notice. See Pl.
Resp. at 7. For standing purposes, Dorton's response
fails to discuss his original claim that he suffered specific
harm from the lack of “source” information,
see id. at 7-11; instead, he focuses his argument on
the fact that “Defendants were required to provide
adverse action notices yet failed to do so when required,
” id. at 7, notwithstanding the content of the
‘irreducible constitutional minimum' of standing
consists of three elements. The plaintiff must have (1)
suffered an injury in fact, (2) that is fairly traceable to
the challenged conduct of the defendant, and (3) that is
likely to be redressed by a favorable judicial
decision.” Spokeo, Inc. v. Robins, 136 S.Ct.
1540, 1547 (2016), as revised (May 24, 2016) (quoting
Lujan v. Defenders of Wildlife, 504 U.S. 555, 560
(1992)). “To establish injury in fact, a plaintiff must
show that he or she suffered ‘an invasion of a legally
protected interest' that is ‘concrete and
particularized' and ‘actual or imminent, not
conjectural or hypothetical.'” Id. at 1548
(quoting Lujan, 504 U.S. at 560).
Defendants' standing argument takes two forms: (i) that
Dorton's claimed injury flowing from a lack of
“source” information was speculative; and (ii)
that, in any case, an adverse action notice did not have to
contain “source” information. The parties'
dispute about the required contents of an adverse
action notice, however, does not bear on standing; standing
“in no way depends on the merits of the plaintiff's
contention that particular conduct is illegal.”
Warth v. Seldin, 422 U.S. 490, 500 (1975).
“The fundamental aspect of standing is that it focuses
on the party seeking to get his complaint before a federal
court and not on the issues he wishes to have
adjudicated.” Flast v. Cohen, 392 U.S. 83, 99
(1968); see also Jenkins v. McKeithen, 395 U.S. 411,
423 (1969) (“[T]he concept of standing focuses on the
party seeking relief, rather than on the precise nature of
the relief sought.”). The Supreme Court has stated:
[T]he district court has jurisdiction if the right of the
petitioners to recover under their complaint will be
sustained if the Constitution and laws of the United States
are given one construction and will be defeated if they are
given another, unless the claim clearly appears to be
immaterial and made solely for the purpose of obtaining
jurisdiction or where such a claim is wholly insubstantial
and frivolous. Dismissal for lack of subject-matter
jurisdiction because of the inadequacy of the federal claim
is proper only when the claim is so insubstantial,