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Naranjo v. Nusenda Credit Union

United States District Court, E.D. Michigan, Southern Division

June 25, 2019




         The Court must decide whether requiring Nusenda Credit Union to defend Gerald Naranjo's lawsuit here, in Michigan, would violate Nusenda's rights under the Due Process Clause. As explained below, the answer is “yes.”

         In 2006, Naranjo was living in New Mexico. (ECF No. 14, PageID.101.) And, at that time, Naranjo wanted to buy a Mazda MX5. (Id.) He decided to finance the purchase by obtaining a loan from Nusenda Credit Union. (Id.)

         In 2008, Naranjo moved to Michigan. From here, Naranjo continued to make his monthly loan payments to Nusenda. (ECF No. 14, PageID.101.)

         But starting in January or February 2009, Naranjo was “unable to keep up with the payments and [his] account with Nusenda became delinquent.” (ECF No. 14, PageID.101.) So, in March or April 2009, Nusenda repossessed the Mazda. (Id.) Nusenda sold the car but the proceeds did not cover all that Naranjo owed. (ECF No. 13, PageID.96.) So, in July 2009, Nusenda sent Naranjo a letter, to his address in Michigan, stating that he still owed about $7, 000 and that interest was accruing. (Id.)

         As far as the current record and pleadings go, things went dormant for almost nine years.

         At some point, apparently in 2018, Naranjo noticed that the Nusenda delinquency was appearing on a credit report prepared by Experian. (See ECF No. 9, PageID.52.) Naranjo believed this to be error because consumer reporting agencies are not supposed to include certain “adverse item[s]” that are more than seven years old, see 15 U.S.C. § 1681c(a)(5), and, as noted, Naranjo received the deficiency letter in 2009. (See ECF No. 13, PageID.81.) So, in June 2018, Naranjo contacted Experian to dispute the Nusenda entry on his credit report. (See ECF No. 14, PageID.102.) But, says Naranjo, Nusenda did not adequately investigate the issue and continued to tell consumer reporting agencies that he first became delinquent in 2012. (ECF No. 13, PageID.81-82; ECF No. 9, PageID.53); see also 15 U.S.C. § 1691s-2(a)(5) (placing obligation on furnishers of information to provide consumer reporting agencies with the date of delinquency). So Naranjo sued Nusenda for violating the Fair Credit Reporting Act. And his chosen forum was this federal court in Michigan.

         Nusenda says this case should be dismissed for lack of personal jurisdiction. In particular, the credit union asserts that requiring it to defend against Naranjo's FCRA claims in Michigan would violate its rights under the Due Process Clause. (ECF No. 11, PageID.67-68.)

         Naranjo does not argue that Nusenda, a New Mexico company, is “at home” in Michigan. Daimler AG v. Bauman, 571 U.S. 117, 139 (2014). So that leaves Naranjo with specific personal jurisdiction.

         To establish specific jurisdiction, Naranjo must show that (1) Nusenda purposefully availed itself of the privilege of acting in Michigan or caused a consequence here, (2) that his claims under the Fair Credit Reporting Act arise out of Nusenda's Michigan activities, and (3) that requiring Nusenda to defend here would comport with fair play and substantial justice. See AlixPartners, LLP v. Brewington, 836 F.3d 543, 549-50 (6th Cir. 2016). Because the parties have relied solely on the pleadings and affidavits, Naranjo's burden of establishing personal jurisdiction is “relatively slight.” Air Prod. & Controls, Inc. v. Safetech Int'l, Inc., 503 F.3d 544, 549 (6th Cir. 2007).

         Slight though it is, Naranjo has not carried his burden. A review of the affidavits and pleadings reveals that what gave rise to Naranjo's claims under the FCRA was Nusenda's continued reporting of the delinquency more than seven years after 2009. But Naranjo does not say that Nusenda's reporting (or Nusenda's investigation into the onset date) occurred in Michigan. Indeed, it appears that they occurred in New Mexico (or, maybe, where the consumer reporting agencies are located). As such, the Court fails to see how any of Nusenda's actions that led to this suit involved Michigan.

         Naranjo thinks he can see a way. He points out that Nusenda knew that he was living in Michigan. (ECF No. 13, PageID.86.) And, argues Naranjo, with knowledge that he was located in Michigan, Nusenda reported the too-old delinquency to consumer reporting agencies. (ECF No. 13, PageID.87.) In other words, citing Calder v. Jones, 465 U.S. 783 (1984), Naranjo argues, “when a defendant's tortious conduct is directed toward a plaintiff known to inhabit a certain state, such that the tortious conduct can itself be said to be expressly aimed at that state, then the exercise of personal jurisdiction in that forum state is proper.” (ECF No. 13, PageID.85 (citing Calder, 465 U.S. at 788).)

         As this Court has explained, see Vangheluwe v. Got News, LLC, 365 F.Supp.3d 850, 856 (E.D. Mich. 2019), and more importantly, as the Supreme Court has explained, see Walden v. Fiore, 571 U.S. 277, 287-88 (2014), the exercise of personal jurisdiction in Calder was based on more than a finding that the defendants could foresee injury in the forum state. True, it was plenty foreseeable to Calder and the other defendants that Shirley Jones would be defamed in California (the forum state); but it was also true that the National Enquirer had “a California circulation of roughly 600, 000, ” that “[the] defendants relied on phone calls to ‘California sources' for the information in their article, ” and that the defendants “wrote the story about the plaintiff's activities in California.” Walden, 571 U.S. at 287. Thus, as Walden clarified, “[t]he proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way.” 571 U.S. at 290; accord Sangha v. Navig8 ShipManagement Private Ltd., 882 F.3d 96, 103 (5th Cir. 2018) (noting that the Supreme Court clarified in Walden that “mere injury to a forum resident is not a sufficient connection to the forum”). And that rule holds even if the defendant knows that the plaintiff has substantial connections to the forum state when it engages in the allegedly wrongful activity. See Walden, 571 U.S. at 289 (“[Defendant's] actions in Georgia did not create sufficient contacts with Nevada simply because he allegedly directed his conduct at plaintiffs whom he knew had Nevada connections.”); Axiom Foods, Inc. v. Acerchem Int'l Inc., 874 F.3d 1064, 1069-70 (9th Cir. 2017) (“In Walden, the Supreme Court rejected our conclusion that the defendants' knowledge of the plaintiffs' strong forum connections, plus the foreseeable harm the plaintiffs suffered in the forum, comprised sufficient minimum contacts.” (internal quotation marks and alterations omitted)); Maxitrate Tratamento Termico E Controles v. Super Sys., Inc., 617 Fed.Appx. 406, 408 (6th Cir. 2015) (“Hedman relies on language in Calder suggesting that, if a defendant knows that its intentional acts will cause effects in a state, then that state can exercise jurisdiction over the defendant. But the Supreme Court rejected that theory of personal jurisdiction (and that interpretation of Calder) last year in Walden.” (citations omitted)); Cunningham v. Nationwide Sec. Sols., Inc., No. 3:17-CV-337, 2018 WL 4575005, at *15 (N.D. Tex. Aug. 31, 2018) (explaining, in case where defendant accessed plaintiff's credit report without authorization, “since the Supreme Court issued its decision in Walden and in relying on its holding, courts have held that a defendant's allegedly violating the FCRA to harm a plaintiff known to reside in the forum state, without more, does not establish purposeful availment of the forum state's privileges”), report and recommendation adopted, 2018 WL 4568803 (N.D. Tex. Sept. 24, 2018).

         Perhaps recognizing that his broad reading of Calder might not carry the day, Naranjo also argues that this case involves more than just foreseeable injury within the forum state. (See ECF No. 13, PageID.87-88.) Urging the Court to take a broader view of Nusenda's conduct, Naranjo asserts that the activity giving rise to his suit is not just Nusenda's reporting of a too-old delinquency. Instead, he says, the relevant activity includes Nusenda's attempts, in Michigan, to collect a debt. Naranjo points out that Nusenda accepted monthly loan payments from Michigan, had an agent repossess collateral located in Michigan, and then sent a letter about the post-sale deficiency to him in Michigan. (ECF No. 13, PageID.88.) Naranjo ...

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