In re Anders Rydholm

Case Type:
Case Status:
20-3425 (8th Circuit, Aug 16,2022) Published
Two judges of the U.S. Court of Appeals for the Eighth Circuit (Circuit) affirmed the dismissal by the U.S. District Court for the District of Minnesota (DC) of a complaint filed by Anders Rydholm (Rydholm), once a chapter 7 debtor, alleging that two credit reporting agencies (CRAs) violated the Fair Credit Reporting Act (FCRA) by listing his Wells Fargo credit account as open and with a balance despite the underlying debt's discharge, refusing, like other circuits, to oblige CRAs to preemptively judge reported debts' validity,; the dissenter favored reversal and remand for standing's lack.
Procedural context:
In March 2020, Rydholm sued two CRAs--Experian Information Solutions (Experian) and Trans Union LLC (Trans Union)--for violations of section 1681e of the FCRA by failing to "maintain reasonable procedures to ensure debts that are derogatory prior to a consumer’s bankruptcy filing do not continue to report balances owing or past due amounts when those debts are almost certainly discharged in bankruptcy.," as evidenced by their reporting of his discharged credit debt as an open account with an outstanding balance. Rydholm requested damages for credit denials, less favorable borrowing rates, and emotional distress. The CRAs jointly moved to dismiss the complaint, contending Rydholm failed to plausibly allege their reporting procedures were statutorily unreasonable, The DC granted their request, dismissing with prejudice, and Rydholm timely appealed. While all three judges would have dismissed, the majority affirmed the DC's dismissal with prejudice, and the third would have reversed and remanded to the DC to dismiss without prejudice due to a lack of standing.
The bankruptcy case began and proceeded like so many others. Rydholm filed a petition in bankruptcy under chapter 7 on May 14, 2019. His schedules listed a Wells Fargo credit card ending in *1765 as an unsecured non-priority claim of $7,977. The bankruptcy court entered a discharge order a little over three months later. Sometime later, Rydholm, on one side, and Experian and Trans Union knocked heads over the credit reports provided by both CRAs to him on November 6, 2019. The Trans Union one indicated Rydholm's discharge, but still listed his Wells Fargo account as "Current: Paid or paying as Agreed" and with a balance of $7,786. Experian's report did the same. Unlike Trans Union's version, while it noted that Rydholm had filed for bankruptcy, its report did not mention his discharge in its public records section. Strangely, however, very other bankruptcy debt appeared as discharged.
Ralph R. Erickson; Michael J.. Melloy; and Jonathan A. Kobes

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