Reported / Citable
Background
Matthew Allen Arp sued over a dispute involving a Creality purchase and related credit reporting. His live complaint alleged that Experian and Synchrony Bank violated the Fair Credit Reporting Act, while PayPal and other defendants committed fraud or misrepresentation and violated the Texas Deceptive Trade Practices Act.
In an October 8, 2026 order, the court dismissed Arp’s FCRA claims and denied leave to amend as futile. Arp sought reconsideration, contending that his proposed second amended complaint pleaded additional inaccuracies. PayPal then moved to dismiss the remaining state-law claims after the federal claims were dismissed.
The Court’s Holding
Judge Andrew S. Hanen denied reconsideration. The proposed allegations did not plausibly show that Synchrony conducted an unreasonable FCRA investigation: a discrepancy between two merchant-provided refund figures did not establish an inadequate investigation; Arp did not allege that listed interest or fees were inaccurate; and a later $2.48 correction did not support an inference that the broader disputed balance was objectively verifiable.
The court granted PayPal’s Rule 12(b)(1) motion and declined supplemental jurisdiction over the remaining state-law claims. With the FCRA claims gone, only state claims remained, and the statutory and common-law jurisdiction factors favored dismissal. Arp’s remaining claims against PayPal and Creality were dismissed without prejudice.
Key Takeaways
- A claimed credit-reporting inaccuracy must support a plausible allegation that the furnisher’s investigation was unreasonable.
- Minor, objectively correctable account errors do not alone make a broader dispute over an underlying transaction objectively verifiable under the FCRA.
- When federal claims are dismissed early, a federal court will generally decline to retain related state-law claims.
Why It Matters
The order distinguishes disputes capable of verification through account records from disputes that depend on resolving alleged fraud in the underlying transaction. It also illustrates the Fifth Circuit’s usual approach of leaving state-law claims to state court once the federal anchor claims have been eliminated before trial.