Credit Report Complaint Receives Failing Grade Under Twombly Pleading Standard

A federal judge in the U.S. District Court for the Southern District of Florida has handed Experian and CoreLogic a victory after finding an antitrust complaint against the two credit report companies failed to meet the Twombly pleading standard.

As an information repository, Experian collects and stores consumer credit reports.  Both the plaintiff, Credit Bureau Services Inc., and CoreLogic purchase data from Experian and two other repository companies to resell credit reports to the mortgage industry.

According to Credit Bureau, Experian adopted an allegedly anticompetitive “Project Green,” which raised Experian’s prices by imposing a minimum purchase amount and compliance fees known as Project Green.

Credit Bureau alleged that Experian’s Project Green knocked several resellers out of the market by imposing exorbitantly high fees.  Credit Bureau argued that and in exchange for Experian’s knocking out other resellers from the market, CoreLogic agreed that it would not enter the repository market – ultimately preserving dominance for both companies.

However, Judge Robin Rosenbaum dismissed the complaint in Credit Bureau Services Inc. v. Experian Information Solutions Inc., finding that it alleged insufficient facts to show the companies made an illegal anticompetitive agreement, rather than taking similar, independent actions.

The court also pointed out that an Experian memo explained to employees the higher prices were necessary to protect consumers and the company from the theft and misuse of credit data.  

“It is at least equally plausible that Experian was willing to tolerate the additional costs associated with Project Green to avoid incurring even greater expense dealing with lawsuits, additional regulations, harm to goodwill, and additional regulatory scrutiny that could result from improper safeguarding and handling of private consumer information,” Judge Rosenbaum wrote.

The court also gave Credit Bureau leave to file an amended complaint, and transferred the case to the U.S. District Court for the Central District for California.