On September 26, the CFPB filed a memorandum opposing a credit reporting agency’s renewed motion to dismiss the Bureau’s second amended complaint in ongoing litigation in the U.S. District Court for the Central District of California over alleged violations of the FCRA. As previously covered by InfoBytes, the district court dismissed the Bureau’s original claims as time-barred, finding the Bureau’s tolling agreement applied only to the agency’s parent company and not the defendant, but granted the CFPB leave to amend to include allegations of a mutual mistake regarding the omission of the defendant from the tolling agreement. The court noted that the complaint would have been “facially sufficient” to survive dismissal if such allegations were included in the first amended complaint.

Following the Bureau’s filing of a second amended complaint, the defendant, in a renewed motion to dismiss, argued that the CFPB’s amended complaint failed to establish a mutual mistake, that the tolling agreement cannot be reformed to add a party, and that the Bureau’s claims remain untimely. The defendant also contended that the Bureau’s allegations regarding the tolling agreement were “immaterial” and should be stricken.

In response, the CFPB argued that its amended complaint sufficiently alleged that both parties intended the tolling agreement to cover the defendant and that its omission was the result of inadvertent mutual error. The Bureau contended that under federal common law and the Restatement (Second) of Contracts, a contract may be reformed to reflect the parties’ “actual intent” when a mutual mistake has occurred. The CFPB asserted that the amended complaint detailed the negotiation, shared understanding, and inadvertent omission, thus meeting the “heightened” pleading standard for mistake under Rule 9(b) of the Federal Rules of Civil Procedure. The Bureau also refuted other arguments made by the defendant, including that California contract rules that prevent adding a party are inapplicable when the issue involves federal law, as federal common law controls.