Experian secures pleading-stage dismissal in CARES Act-related class action
Client(s) Experian Information Solutions, Inc.
Jones Day secured a pleading-stage dismissal for Experian Information Solutions, Inc. in a class action arising out of the Coronavirus Aid, Relief, and Economic Security ("CARES") Act. On March 27, 2020, in response to the ongoing coronavirus pandemic, Congress passed the CARES Act, which provided, among other things, relief for certain categories of consumers, including mortgage and student loan borrowers. On May 20, 2020, the plaintiffs in this first-of-its-kind lawsuit filed their complaint against Great Lakes Educational Loan Services, Inc., the three major credit reporting agencies ("CRAs"), and the CRAs' jointly owned subsidiary, VantageScore Solutions, LLC.
The plaintiffs purported to represent a nationwide class of student loan borrowers, alleging that the defendants damaged the borrowers' credit and mishandled the implementation of the relief provided under the CARES Act. Specifically, the plaintiffs alleged their credit scores suffered as a result of the inaccurate or misleading reporting of the CARES Act's automatic deferment of their student loan obligations. With respect to Experian, in particular, the plaintiffs alleged that Experian should have directed VantageScore to adjust its credit scoring model to ensure that deferred student loans were not treated as derogatory in any way. The plaintiffs sought compensatory and punitive damages, as well as injunctive relief under California's Unfair Competition Law. Given the attenuated legal theories advanced by the plaintiffs, Experian filed an early motion to dismiss for failure to state a claim. Rather than fighting the motions or amending the complaint, the plaintiffs voluntarily dismissed on August 28, 2020.
The case was among the earliest litigation flowing from the COVID-19 crisis. And, as such, the novel theories advanced, and the legal strategies employed to defend Experian against these attacks, are likely to shape the CARES Act litigation for many years to come.
Sass, et al. v. Great Lakes Educational Loan Services, Inc., et al., No. 3-20-cv-03424 (N.D. Cal.)