Harry Smith v. InformData, LLC, formerly known as Wholesale Screening, LLC

Summary

The United States District Court for the Eastern District of Virginia considers InformData, LLC’s motion to compel arbitration or dismiss Harry Smith’s amended complaint. The court denies arbitration because InformData was not a party or qualifying beneficiary of the arbitration agreement between Smith and Turn Technologies, and equitable estoppel does not apply. The court addresses Smith’s Fair Credit Reporting Act, negligence, and defamation claims, including whether reporting expunged convictions may constitute an inaccurate consumer report.

Holdings

1. InformData could not enforce the arbitration agreement because the agreement covered disputes between plaintiff and Turn Technologies and limited the definition of covered beneficiaries to users or beneficiaries of Turn's services or sites; the complaint did not allege that InformData was such a user or beneficiary.
2. Equitable estoppel did not permit InformData to compel arbitration because plaintiff alleged misconduct by InformData alone and did not allege substantially interdependent and concerted misconduct by InformData and Turn Technologies.
3. Plaintiff failed to plausibly allege an actionable inaccuracy because reporting convictions that had later been expunged was not inaccurate under the applicable federal definition of conviction and accuracy, particularly where the expungement was not publicly verifiable.
4. The negligence claim was barred because plaintiff alleged purely economic damages and did not establish an applicable exception to Delaware's economic loss doctrine.
5. The defamation claim failed because the complaint established that the reported criminal convictions were substantially true, and expungement did not convert historically true facts into falsehoods.

Questions Presented

1. Whether InformData, a nonsignatory to the arbitration agreement between plaintiff and Turn Technologies, could compel arbitration as a beneficiary or under equitable estoppel.
2. Whether plaintiff plausibly alleged that InformData reported inaccurate information in violation of 15 U.S.C. § 1681e(b).
3. Whether Delaware's economic loss doctrine barred plaintiff's negligence claim.
4. Whether plaintiff plausibly alleged defamation where the reported criminal convictions were historically true but had been expunged.

Disposition

dismissed