Credit Reporting Agency's Many Duties in Mixed Credit File Cases
August 20, 2009 – 6:04 pmIN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
CHRISTOPHER JUNG )
)
Plaintiff, )
vs. )
) Civil Action No. 07-2514
TRANS UNION, LLC, et al. )
)
Defendants. )
)
PLAINTIFF CHRISTOPHER JUNG’S MEMORANDUM OF LAW
IN SUPPORT OF HIS RESPONSE IN OPPOSITION TO DEFENDANT
TRANS UNION, LLC’S MOTION FOR SUMMARY JUDGMENT
Plaintiff Christopher Jung, through counsel, hereby respectfully submits this Memorandum of Law in opposition to Defendant Trans Union, LLC’s (TU) Motion for Summary Judgment (Motion) (Docket Nos. 53, 54, 55). For the reasons below, the Motion should be denied.
I. INTRODUCTION
Jung brought this consumer action seeking relief under the Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. (FCRA) and related common law claims against TU, one of the major consumer reporting agencies (CRA) in the world. The parties stipulated to dismiss the common law claims so that they can streamline this matter for trial. (See Docket No. 56) (submitted April 24, 2009). The FCRA claims, therefore, are the only ones at issue.
TU seeks to obtain summary judgment and avoid trial as to the FCRA claims by filing a motion which distorts and ignores the factual record — a record which is replete with genuine issues of material fact. Reading TU’s motion, one may form the impression that this case is about a dispute concerning a single utility account that really did not affect Jung. When the actual facts are set forth below, it will be evident that this case involves many credit reporting inaccuracies over multiple years, that Jung suffered significant and cognizable harm, that many material facts are contested, and that summary judgment is therefore impossible.
Significantly, the record shows that the following central issues are in dispute:
• Whether the disputed information that TU reported was in fact “inaccurate” (Plaintiff contends it was “inaccurate” and “not his,” while TU’s witnesses testified that TU only included “accurate” information in Plaintiff’s file and that a frequently disputed account actually belonged to Jung);
• The causes for the alleged inaccuracies and why they were not corrected (which goes to TU’s willful conduct); and
• The harm that TU’s conduct actually caused to Jung.
TU also misstates the applicable legal standards, repeatedly citing non-binding cases from other jurisdictions instead of the multiple decisions from within our Circuit (many against TU itself), which have previously addressed the credit reporting claims at issue here. Under the proper legal standards, which will be set forth below, it is also evident that TU is not entitled to judgment as a matter of law in this case.
Accordingly, TU’s Motion should be denied.
II. FACTUAL BACKGROUND
A. Jung Repeatedly Tells TU That Another Consumer’s Information Is Appearing On His Credit Report
From as far back as 2001, when Jung was a teenager, TU had another man’s name, identifying information and accounts on Jung’s credit report. (PCSF ¶ 35). The other man is Christopher Seibert, a real person (not a fictitious name used by an identity thief) about whom TU also sells credit reports. (PCSF ¶¶ 35, 36). Through the years, some of the information was in good standing but several other accounts (including accounts with NCO, Nicor Gas, Verizon Wireless, and Portfolio Recovery) were in delinquent status, including highly derogatory “charge-off” and “collection” accounts. (PCSF ¶¶ 37, 51, 61, 65). Jung himself has never been delinquent on any account and his true credit status is excellent. (PCSF ¶ 74).
Jung tried to correct the errors with TU from when he was 18 years old, but after TU rejected his disputes he gave up. (PCSF ¶¶ 39, 40). After he graduated from college and had a problem obtaining an apartment due to his TU credit report, Jung again took up the task of trying to correct his credit. (PCSF ¶ 41). He contacted TU on another 16 different occasions in 2006 and 2007 (according to TU’s own records) about the problem of TU placing Seibert’s information on Jung’s report. (PCSF ¶ 85) (Exhibit 18 at 135:1-11). He disputed to TU via telephone, mail, facsimile and the internet, in every way he knew how. (PCSF ¶ 85).
TU treated many of Jung’s contacts as disputes, purportedly “investigated,” but repeatedly failed to correct the problem. (PCSF ¶ 73). TU also misrepresented what it was allegedly doing to correct the problem to the Indiana Attorney General, who contacted TU after Jung filed a complaint with that office. (PCSF ¶ 71). Although TU removed the derogatory accounts about which Plaintiff was disputing after this suit was filed, it still has not fully corrected Plaintiff’s credit report. (PCSF ¶ 75).
B. TU’s Repeated Systemic Lapses Fail To Correct The Problem
The painstaking, blow-by-blow rendition of all Jung’s contacts with TU and what TU did and failed to do through the years is set forth in Plaintiff’s Counter Statement of Facts. (PCSF ¶¶ 35-71, 75). For purposes of this background summary, the following facts are most relevant:
• TU mixed Plaintiff’s file through the years with that of one or more other consumers according to Plaintiff’s expert Evan Hendricks. One of TU’s witnesses, Shontese Norwood, specifically admitted to mixing Plaintiff’s file with that of Seibert during one dispute that she personally handled. (PCSF ¶¶ 60, 77);
• TU has a procedure called “do not merge” for purposes of separating the files of two or more consumers which become mixed, but TU never followed or implemented that procedure as to Jung’s file. (PCSF ¶ 79);
• TU received a dispute from Jung on August 14, 2006 which it failed to investigate in any way whatsoever according to TU’s witness Marianne Litwa, but instead treated simply as a request for a credit file disclosure. (PCSF ¶¶ 45, 47);
• After TU’s representatives told Jung that he may be a victim of fraud or identity theft (Exhibit 1, Jung Dep. at 51), Jung sent to TU twice, and TU received twice, on August 14, 2006 and again on December 14, 2006, a police report identifying the Nicor Gas account as a possibly fraudulent account which Jung was disputing. TU, however, did not “block” that account from reporting to Jung’s report within four days, as required by the FCRA, or at any time. (PCSF ¶¶ 45, 52, 79-80, 81, 86). TU’s 30(b)(6) witness, the Director of the Fraud Department, Steve Reger, was virtually clueless about the FCRA mandated procedure of “blocking” during his deposition. (PCSF ¶ 80);
With respect to the “reinvestigations” that TU purportedly conducted following Jung’s repeated disputes, the evidence shows that:
• As a matter of policy and practice, TU did not forward Jung’s police reports, dispute letters, dispute forms, social security card, W-2 form, or any relevant documentation or information that Jung sent to TU along with his disputes to any credit furnisher of information that Jung was disputing despite TU’s knowledge that under the FCRA it must forward “all relevant information” to any credit furnisher who is the subject of a consumer dispute. (PCSF ¶ 81);
• As a matter of policy and practice, TU simply parroted every credit furnisher (such as Nicor Gas and Verizon Wireless) who responded to TU’s automated dispute system (the ACDV system) that a given account disputed by Mr. Jung should stay on his report. (PCSF ¶ 82);
• TU parroted the credit furnishers’ responses without any independent investigation. (PCSF ¶ 82). Specifically, TU never searched for any original applications for any disputed account; did not search for signatures as to who signed to open the disputed accounts or to pay any disputed bills; did not check who lived at the addresses serviced by the disputed gas and/or telephone accounts; never checked who actually lived at any of the addresses that Jung disputed as not his; did not ever inquire with Seibert about the disputed accounts; did not follow-up in any way with any government agency as to whether Jung ever used the name Seibert or whether Seibert ever used Jung’s social security number; and did not follow up in any way with the police, even after receiving police reports. (PCSF ¶ 82); and
• TU hires “investigators” with no investigation experience, and then requires them to conduct each investigation into a consumer dispute in 5 to 10 minutes, or sometimes less time. (PCSF ¶ 83).
In the present motion, TU’s lawyers argue that “the information on Plaintiff’s consumer reports were a result of an identity thief . . . .” (TU Mem. at 13). The “explanation” that TU’s counsel posture, however, is not a defense to this case. Moreover, that explanation is not supported by the testimony of any of TU’s witnesses, who stated at their depositions that they do not know, and they never determined, whether Jung was a victim of fraud or identity theft. (PCSF ¶ 77). By contrast, Jung has offered an unrebutted report of an expert who opines that TU mixed Jung’s file with that of another consumer, Seibert. (PCSF ¶ 77).
The “mixed file” problem is one that is well known to TU. (PCSF ¶ 77). It was the subject of a regulatory enforcement action against TU by the attorneys general of many states during the 1990s, where TU promised in a Consent Order that it would take measures to “avoid” the problem. (PCSF ¶ 78). A “mixed file” is defined as a credit report in which some or all of the information pertains to a person other than the person who is the subject of the report, and TU knows that mixed files are unacceptable and must be avoided. (PCSF ¶ 77).
Mixed files occur because TU does not use full identifying information (name, address, social security number and date of birth) in compiling and selling credit reports. (PCSF ¶¶ 77-78). Thus if there are sufficient similarities in the name and address, TU’s computer system will allow the files of two or more people to mix and become one file. (PCSF ¶ 77). In the Consent Order, however, TU stipulated that it would use such full identifying information. (PCSF ¶ 78).
The problem of mixed files continues in this decade with numerous complaints and lawsuits, as Plaintiff’s expert, Evan Hendricks, explains in his report. (PCSF ¶¶ 78-79). TU continues to compile and sell credit reports using only an imprecise version of a given consumer’s name and address, and without using full identifying information. (PCSF ¶¶ 77-78, 84).
TU continues to have a mixed file problem, more than a decade after the Consent Order, because it deliberately chooses not to correct it. (PCSF ¶ 78). TU’s “do not merge” procedure is easy to implement and works every time in avoiding the recurrence of mixed files according to TU’s 30(b)(6) witness. (PCSF ¶ 79). Moreover, TU can require highly precise matching in personal identifying information from its customers before it sells reports. (PCSF ¶ 84). Yet according to Plaintiff’s expert, mixed files continue to exist in significant numbers because TU would simply not be able to sell as many credit reports if it eliminated mixed files. (PCSF ¶ 84).
The analysis is rather simple: if TU requires that every buyer of a credit report have the proper name, address, social security number and date of birth of the consumer to whom the report relates, it would not be able to sell reports to those entities who do not have all that information — entities that seek to make a quick sale, collect debts or promote credit to consumers who are not already their customers. (PCSF ¶ 84). The tightening of TU’s “file matching” criteria to require full identifying information would greatly reduce or eliminate mixed files, it would greatly improve accuracy, but it would also reduce the number of credit reports that TU can sell. (PCSF ¶ 84).
In the case of Jung, TU never followed or implemented the “do not merge” procedure. (PCSF ¶ 79). It also sold Jung’s report to third parties using its very loose personal identifying matching criteria of only a version of his name and address. (PCSF ¶¶ 31, 55, 77-78). For example, on January 24, 2007, TU sold Jung’s report to Insight Communications even though that company (according to TU’s records) had entered a request on TU’s database for the report of “Chris Seibert” at a “Rockford, Illinois” address. (PCSF ¶ 55). TU also made sales of Jung’s report for “promotional purposes” to entities which simply wanted to promote their business or credit products with Jung. (PCSF ¶ 78). TU also sold Jung’s report to Assetcare on April 11, 2007, a business that sought to collect a debt that Jung did not owe from some unidentified debtor, most probably Seibert. (PCSF ¶¶ 75, 78).
C. Jung’s Damages At The Hands Of TU
As a result of TU’s conduct, Jung: (1) erroneously came to believe that he was a victim of fraud, and thus scrambled around aimlessly to two police stations and to the AG’s office in order to file reports and complaints/fraud alerts (PCSF ¶¶ 81, 86); (2) lost sleep at night (PCSF ¶ 87); (3) wasted very significant periods of time trying to solve this problem through letters, calls, faxes and the internet (PCSF ¶¶ 87, 91); (4) made 16 contacts directly with TU in 2006 and 2007 and additional contacts with other companies in his attempt to solve this problem, waiting on hold during numerous telephone calls, for as long as one hour and twenty minutes (PCSF ¶¶ 85, 87, 91); (5) felt “frustrated,” “afraid” and “angry” when TU continued to advise him that he was the person responsible for the disputed debts (PCSF ¶ 91); (6) found TU’s conduct to be “detestable” and “rude,” advising the AG that after his attempts to correct the problem were repeatedly rejected by TU “something in [him] snapped” (PCSF ¶ 72); (7) felt embarrassed and humiliated when “Trans Union basically called [him] a liar to the Indiana Attorney General” (PCSF ¶ 73); (8) lost the use of his excellent credit and of credit opportunities, explaining that he “didn’t want to apply for any new accounts or any new credit for fear that they would see [the TU report] and reject me” (PCSF ¶¶ 89, 92-93); (9) had to delay the purchase of his first home by a year (PCSF ¶¶ 88, 93); and (10) had his credit score and credit status harmed. (PCSF ¶ 90).
The factual record is far more detailed than TU suggests. For example, in his deposition, Jung elaborated on his damages as follows:
15 A. Well, I mean, I spent tons and
16 tons of time trying to get this issue
17 fixed. I mean, at times I wasn’t
18 really sure what was going on, if this
19 guy had stolen my identity or not. I
20 was kind of afraid what that’s — what
21 that meant or what that could mean.
22 I feel like my reputation has
23 been injured to all of my — all of my
24 creditors, as well as to the attorney
25 general. I wasn’t able to use my
78
1 credit the way I wanted to because of –
2 because of this bad information on my
3 credit report. I didn’t want to apply
4 for any new accounts or any new credit
5 for fear that they would see that and
6 reject me.
7 And I mean, it was just, you
8 know, really frustrating, made me angry
9 to, you know, do everything I could
10 possibly do to get this cleared up, and
11 it’s like, you know, how do you — how
12 do you prove to someone that an account
13 isn’t yours?
(Exhibit 1, Jung Dep. at 77-78). Jung explained further:
25 So, I contacted the Rock Ford
52
1 Police Department directly, and they
2 referred me to the Beach Grove Police
3 Department. I filed a police report
4 with them. They basically said that
5 they couldn’t investigate fraud any more
6 because it wasn’t under their
7 jurisdiction.
8 I did everything I could to
9 dispute with Nicor, and got to the point
10 where Nicor said they didn’t have the
11 account any more on their records. Yet
12 when I continued to dispute with Trans
13 Union, Trans Union came back every time
14 and said the account has been verified,
15 it’s yours, basically calling me a liar.
16 And I tried going to the
17 Indiana Attorney General and complaining
18 to them, and Trans Union basically
19 called me a liar to the Indiana Attorney
20 General.
21 I mean, I have spent many
22 hours trying to get this fixed, and it’s
23 been very frustrating. Then I
24 discovered that Trans Union had two
25 credit reports for me. I’m not sure if
53
1 they created a second one, or if they
2 always had a second one that they
3 weren’t telling me about.
4 I then tried to fix all of
5 that mess, and I wrote a letter to Trans
6 Union’s CEO. I also investigated other
7 avenues to get this off of my record.
8 I found it detestable to have an account
9 like this on my record, because I
10 consider myself an honorable person, and
11 I always pay my accounts on time. And
12 none of this worked. So, I had to
13 resort to following through on my threat
14 for legal action.
(Exhibit 1, Jung Dep. at 51-53).
In answering a TU interrogatory about his damages, Jung explained:
RESPONSE: Due to Trans Union’s conduct, Plaintiff was constrained from applying for the credit to which he was entitled as a consumer with an otherwise excellent credit history. Specifically, Plaintiff was paralyzed in his efforts to purchase his first home, and to apply for credit which would allow him to transfer his debt to credit accounts with lower interest rates. In March 2007, Plaintiff was very interested in buying his first home in the range of $100,000, but believed that he was unable to secure a desirable mortgage loan due to the numerous inaccuracies on his Trans Union credit report. Furthermore, at that time, Plaintiff wished to transfer his $6,000 school loan debt with AES and Direct Loan to a credit line with lower interest, but believed he was unable to do so due to Defendant’s actions. Furthermore, Plaintiff wished to obtain a loan in order to satisfy a loan in the amount of $14,000 lent by his father for Plaintiff’s college education. Plaintiff also wanted to refinance his automobile loan with an interest rate that he would have qualified for but for Defendant’s inaccurate reporting.
Plaintiff has also suffered great emotional distress, extreme frustration and anxiety, as well as great humiliation and embarrassment as a result of Trans Union’s conduct. These damages suffered by Plaintiff are well recognized as cognizable under the FCRA. There is no computation for such damages other than their valuation by jury. In addition, see answer to interrogatory number 16, supra. Furthermore, see documents produced with Plaintiff’s Responses to Defendant Trans Union, LLC’s Requests for Production of Documents to Plaintiff.
(P’s Resp. to TU Inter. No. 16) (PCSF ¶ 93).
Jung’s documents and witnesses corroborate these damages. For example, Jung’s dispute letters to TU clearly show his anger, frustration and anxiety. (PCSF ¶¶ 37, 45, 49, 52, 55, 59, 91). Similarly, Plaintiff kept notes for certain of the calls and disputes (so the he could remember names and what people were telling him) which further corroborate his frustration and lost time. (PCSF ¶ 87); (Exhibit 1 at 149:7-11). Plaintiff’s father further supported his son’s position, remembering that his son’s credit inaccuracies stemmed back almost a decade and caused a lot of frustration for Jung. (Deposition transcript not yet available). Plaintiff’s expert also opined that Jung’s damages are consistent with the type of harm consumers typically suffer due to mixed files and chronic credit inaccuracies. (PCSF ¶ 85) (Exhibit 11 at pp. 13-14).
III. STANDARD
Pursuant to Federal Rule of Civil Procedure 56(c), a motion for summary judgment will only be granted:
if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue of material fact and that the moving party is entitled to a judgment as a matter of law.
Fed. R. Civ. P. 56(c). In other words, summary judgment may only be granted if the movant shows, by admissible evidence, that there exists no genuine issue of material fact that would permit a reasonable jury to find for the nonmoving party. Wetzel v. Tucker, 139 F.3d 380, 383 n.2 (3d Cir. 1998); Miller v. Indiana Hosp., 843 F.2d 139, 143 (3d Cir.), cert. denied, 488 U.S. 870 (1988).
A court may not, at the summary judgment stage, weigh evidence or make credibility decisions. These tasks are left to the factfinder. Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware Co., Inc., 998 F.2d 1224, 1230 (3d Cir.), cert. denied, 510 U.S. 994 (1993). To raise a genuine issue of material fact, the respondent need not match, item for item each piece of evidence proffered by the movant. As the Third Circuit has explained:
In practical terms, if the opponent has exceeded the “mere scintilla” threshold and has offered a genuine issue of material fact, then the court cannot credit the movant’s version of events against the opponent, even if the quality of the movant’s evidence far outweighs that of its opponent. It thus remains the province of the factfinder to ascertain the believability and weight of the evidence.
In re Unisys Savings Plan Litigation, 74 F.3d 420, 433 n. 10 (3d Cir. 1996). If there are gaps in the pertinent materials submitted by the movant, without explanation, that justifies denial of the motion. O’Donnell v. United States, 891 F.2d 1079, 1082 (3d Cir. 1989).
In the case at bar, there exist genuine issues of material fact and TU is not entitled to judgment as a matter of law. Summary judgment, therefore, is inappropriate.
IV. ARGUMENT
A. Plaintiff Has Come Forward With More Than Sufficient Evidence Of Harm Caused By TU To Show A Genuine Issue Of Material Fact As To His FCRA Section 1681e(b) Actual Damages Claim
One of Jung’s claims is that TU violated the FCRA by failing to prepare his consumer report following procedures that assured “maximum possible accuracy,” as required by FCRA section 1681e(b). Indeed, Jung’s TU report was not anything close to accurate. TU first argues that Jung “cannot establish” a section 1681e(b) claim allegedly because “he was not harmed” by TU. (TU Mem. at 5). This is an argument that TU has tried and tried again in this Circuit, never with success. Again, this argument must be rejected.
The Third Circuit has held that for an FCRA section 1681e(b) negligence claim (although not a willfulness claim) a consumer must make a prima facie showing that the credit reporting inaccuracy caused actual damages. Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir. 1996). Here, Plaintiff has alleged that TU violated FCRA section 1681e(b) negligently and/or willfully. (See Amed. Comp. at ¶¶ 26-31) (Docket No. 32). Since Plaintiff will show in this case that TU’s FCRA violations were willful, he does not have the burden of showing any actual damages at summary judgment or at trial. However, since under either a negligence or willfulness theory Jung may recover, and in this case will seek, actual damages, he has come forward with more than sufficient evidence of the type of harm which constitutes “actual damages” under the FCRA.
Notably, emotional and mental distress, anxiety, frustration, anger, humiliation, and embarrassment as well as damage to credit reputation are all recognized as “actual damages” under the FCRA. See Philbin v. Trans Union Corp., 101 F.3d 957, 963 & n.3 (3d Cir. 1996); see also Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1333 (9th Cir. 1995); Stevenson v. TRW Inc., 987 F.2d 288, 296 (5th Cir. 1993); Millstone v. O’Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir. 1976); see generally Cushman v. Trans Union Corp., 115 F. 3d 220 (3d Cir. 1997); Lukens v. Dunphy Nissan, Inc., Civ. No. 03-767, 2004 WL 1661220 at * 5 (E.D. Pa. Jul. 26, 2004) (FCRA plaintiff may recover for having to place fraud alert on his credit report and for time in dealing with and attempting to clear up credit inaccuracies); Lawrence v. Trans Union, LLC, 296 F. Supp. 2d. at 588-89; Evantash v. G.E. Capital Mortgage Servs., Inc., E.D. Pa. Civ. No. 02-1188, 2003 WL 22844198 * 5; Crane v. Trans Union, LLC 282 F. Supp. 2d at 319-321; Sheffer v. Experian Info. Solutions, Inc., E.D. Pa. Civ. No. 02-7407, 2003 WL 21710573 at * 3-4. Indeed, most of the above holdings were against TU itself in FCRA cases. These cases also demonstrate that a consumer-plaintiff may recover such damages without the need for medical testimony. Id.
The Third Circuit has explained that in an FCRA case a plaintiff need not come forward with a mountain of evidence in order to proceed to the jury with his/her emotional damages case. In Philbin, the Third Circuit found the following interrogatory response to be sufficient for the plaintiff to survive summary judgment:
Plaintiff cannot with specificity outline the actual damages sustained. However, he sustained damages over the past (4) four to (5) five years as a result of the persistent and continual rejections from credit agencies as a result of the false information contained in his credit report. Plus the humiliation and embarrassment following the rejection with the particular vendor whom [sic] he sought credit.
Philbin, 101 F.3d at 963 n. 3; see also Crane v. Trans Union, LLC 282 F. Supp. 2d at 319 (summary judgment denied on similar evidence).
“The loss of credit opportunities [also] constitutes compensable harm under the FCRA.” Lawrence v. Trans Union, LLC, 296 F. Supp. 2d. at 588-89 (citing Philbin, 101 F.3d at 957); Guimond , 45 F.3d at 1333; Bach v. Fist Union Nat’l Bank, 149 Fed. Appx. 354, 2005 WL 2009272 *7 (6th Cir. Aug. 22, 2005) (FCRA plaintiff offered testimony of lost credit opportunities in the form of second mortgage and credit card); see also Rothery v. Tran Union, Civ. No. 04-312-ST, 2006 WL 1720498 (D. Or. Apr. 6, 2006) (denying TU motion for summary judgment as to lack of damages where consumer-plaintiff has offered her subjective account and declaration from her mother as to loss of credit opportunities); O’Brien v. Equifax, 382 F. Supp. 2d 733, 734-35 (E.D. Pa. 2005) (lost opportunity to refinance mortgage basis of FCRA claim).
Here, Jung has proffered sufficient evidence of both emotional damages and lost credit opportunities. As set forth above, due to TU’s conduct Jung: (1) erroneously came to believe that he was a victim of fraud, and thus scrambled around aimlessly to two police stations and to the AG’s office in order to file reports and complaints/fraud alerts (PCSF ¶¶ 81, 86); (2) lost sleep at night (PCSF ¶ 87); (3) wasted very significant periods of time trying to solve this problem through letters, calls, faxes and though the internet (PCSF ¶¶ 87, 91); (4) made 16 contacts directly to TU in 2006 and 2007 and additional contacts with other companies in his attempt to solve this problem, waiting on hold during numerous telephone calls, for as long as one hour and twenty minutes (PCSF ¶¶ 85, 87, 91); (5) felt “frustrated,” “afraid” and “angry” when TU continued to advise him that he was the person responsible for the disputed debts (PCSF ¶ 91); (6) found TU’s conduct to be “detestable” and “rude,” advising the AG that after his attempts to correct the problem were repeatedly rejected by TU “something in [him] snapped” (PCSF ¶ 72); (7) felt embarrassed and humiliated when “Trans Union basically called [him] a liar to the Indiana Attorney General” (PCSF ¶ 73); (8) lost the use of his excellent credit and of credit opportunities, explaining that he “didn’t want to apply for any new accounts or any new credit for fear that they would see that [the TU report] and reject me” (PCSF ¶¶ 89, 92-93); (9) had to delay the purchase of his first home by a year (PCSF ¶¶ 88, 93); and (10) had his credit score and credit status harmed (PCSF ¶ 90). This is more than sufficient evidence of cognizable FCRA actual damages with which to go to a jury.
TU is further mistaken in arguing that there is no evidence here of any “causal link” between TU’s conduct and Plaintiff’s damages. TU cites to cases form other jurisdictions (Cousin and Konter) in support of this argument. (Def. Mem. at 6). As TU knows, the seminal case on FCRA causation is against TU itself from this Circuit. Philbin v. Trans Union Corp., 101 F.3d 957, 966-70 (3d Cir. 1996). In Philbin, our Circuit Court concluded that a consumer may recover actual damages where inaccurate credit reporting was a “substantial factor” (not a “but for” factor) in leading to the damages. Id. Philbin made clear that other substantial factors can also be at play, but do not preclude a consumer from recovery. Id.
Here, there can be no doubt that Jung was made to feel like a victim of fraud because TU told him so. TU’s own records, including Jung’s dispute letters, show that Jung suffered emotion distress. Jung lost sleep and further lost huge amounts of time trying to solve a serious problem that TU had created. The only reason Jung was humiliated before the AG is because of TU. Indeed, TU was a substantial factor in all of the damages that Plaintiff articulates. Moreover, in comparison to the single interrogatory response that the Philbin court found to be sufficient for that plaintiff to survive summary judgment in an FCRA case, here Jung has come forward with far more detailed and corroborated evidence of emotional harm.
With respect to lost credit opportunities, the consumer in Philbin (who was also a victim of a TU mixed file) sometimes offered “no reason for the denial of credit.” Id. at 968 (as to Household International). Nevertheless, the Third Circuit found that it was for the trier of fact to decide whether a lost of credit was caused by TU’s inaccurate credit reports by necessary implication, not a legal determination that could be made at summary judgment. Id.
Given the clear case law regarding the recovery of non-economic damages under the FCRA, as well as the causal standard for lost credit opportunities, Plaintiff’s evidence of actual damages is more than sufficient. TU’s Motion must therefore be denied.
B. Plaintiff Has Come Forward With Evidence To Show A Genuine Issue Of Material Fact As To His FCRA Section 1681i Claims, Relating To TU’s Unreasonable Reinvestigations
Jung has also brought claims under FCRA section 1681i, relating to TU’s duty to “reinvestigate” consumer disputes. (See Amend. Comp. at ¶¶ 26-31) (Docket No. 32). FCRA section 1681i places a host of obligations upon a CRA such as TU when it receives a consumer dispute. TU does not contend in the present Motion that it met any of those obligations. Rather it argues that Jung cannot show “economic” or “emotional distress” damages, and thus cannot satisfy all of the elements of an FCRA section 1681i negligence claim. (Def. Mem. at 7-8). TU separately argues as to Plaintiff’s sub-section 1681i(c) claim that although it did not note Jung’s dispute on his reports for a period of time, that claim is not actionable because it also did not sell Plaintiff’s report during that same time period. (Def. Mem. at 6-7). These arguments fail.
First, there is no doubt in this case that Plaintiff put TU on notice through multiple direct disputes of the inaccuracies on his credit report. (See PCSF at ¶¶ 35, 39, 43, 45, 49, 52, 57, 59, 67). Nor is there any dispute that TU failed to correct Jung’s report, or delete the inaccuracies, within 30 days of Plaintiff’s dispute, as require by FCRA section 1681i(a). (See PCSF at ¶¶ 39, 44, 51, 54, 58, 65, 70, 73).
As it did with respect to Plaintiff’ section 1681e(b) claims, TU’s focuses upon what it seeks to characterize as an absence of damages. As explained in the above discussion under section 1681e(b), however, Jung has come forward with more than sufficient evidence of cognizable FCRA “actual damages.” (See Section IV(A), supra). Plaintiff is not strictly required to show an “economic” loss, as TU contends. Jung has proffered evidence of lost credit opportunities and of a lowering of his credit standing, which are cognizable FCRA actual damages, as discussed above. (See Id.) (See also PCSF at ¶ 88).
Plaintiff has also come forward with detailed and significant evidence of different types of emotional harm which is cognizable under the FCRA. (See Id.). TU presumably clumps all of Plaintiff’s damages claims together as “emotional distress,” and then argues that Plaintiff has failed to show evidence of emotional distress “as a matter of law.” (Def. Mem. at 8). Yet there is no FCRA authority for this proposition. TU cites to non-FCRA cases and ignores the multiple FCRA cases from within this Circuit that allow consumers to proceed to trial with damages claims similar to the ones Jung has here. Philbin, 101 F.3d at 963 n. 3; see also fn. 4, supra.
With respect to TU’s contention that a subsection 168i(c) claim cannot stand because it issued no “consumer reports” concerning Plaintiff between November 2006 and March 2007, TU’s own documents plainly contradict that position. TU focuses upon the “Regular Inquiries” portion of Jung’s report, but ignores the “Account Review Inquiries.” Those latter inquiries list companies that “obtained information from [Plaintiff’s] consumer report for the purpose of an account review or other business transaction with [Plaintiff].” (See Exhibit 37). TU made such sales for account review purposes presumably to Plaintiff’s existing creditors nine times between November 2006 and April 2007, including five sales to Capital One (11/06, 12/06, 1/07, 2/07, 407), two to Bank of America (1/07 and 4/07), one to Discover (4/07) and one to First Marblehead Corp. (11/06). (See PCSF at ¶ 78) (Exhibit 37 at p. 5 of 7) (Jung’s TU 5/15/07 credit report at 5 or 7, Account Review Inquiries).
FCRA sub-section 1681i(c) simply required TU to “clearly note” Plaintiff’s consumer statement “in any subsequent consumer report” after receipt of the same. 15 U.S.C. § 1681i(c). TU acknowledges that Plaintiff offered evidence of having filed such a statement with TU in November 2006. (Def. Mem at 7). TU, however, assumes that only “Regular Inquiries,” but not “Account Review Inquiries,” can constitute a subsequent consumer report. The FCRA, however, makes no such distinction. Rather, the Act simply defines “consumer report” as:
any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for . . . [credit].
15 U.S.C § 1681a(d) (emphases). “Any” information can certainly be “some” information that bears upon a “consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living.” Id. Thus, even if one assumes that the “information obtained from your consumer report” for account review purpose is not “all” the information in Jung’s TU file, the account review transactions still constitute a “consumer report” for FCRA purposes. Nor can there be any doubt that TU reports are “used or expected to be used or collected in whole or in part for” credit eligibility purposes. Id. (emphasis added).
Plaintiff has thus also set forth sufficient facts for all of his section 1681i claims, including under sub-section 1681i(c). TU’s Motion should therefore be denied.
C. TU’s Conduct Here May Be Deemed By A Reasonable Jury To Constitute One Or More Willful Violations Of The FCRA
Under the facts of this case, a reasonable jury may find not only that TU violated the FCRA, but that it did so willfully. A willful violation allows a jury to award punitive damages. See 15 U.S.C. § 1681o(a)(3).
1. The Legal Standard: Reckless or Conscious Disregard
The standard to show a “willful” violation under the FCRA is not high. A plaintiff need not show malice, but only that the defendant recklessly committed an act in conscious disregard for the rights of others. See Cushman v. Trans Union Corp., 115 F. 3d 220, 227 (3d. Cir. 1997). This is a lower standard than the standard for willful violations or punitive damages claims under most common law torts. Although the terms “willful” or “willfully” are not defined in the FCRA, case law has held that neither malice nor evil motive need be established for a finding of a willful violation. Id.; see also Stevenson v. TRW, Inc., 987 F.2d 288, 294 (5th Cir. 1993) (citing Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th Cir. 1983)).
Many courts have noted that willfulness under the FCRA is demonstrated by recklessness and not by a knowing violation of the law. See id. at 293 (citing Pinner v. Schmidt, 805 F.2d 1258, 1263 (5th Cir. 1986), cert. denied, 483 U.S. 1022 (1987)); Cushman, 115 F. 3d at 227; see also Reynolds v. Hartford Fin. Servs. Group, 435 F.3d 1081, 1097-99 (9th Cir. 2006) (discussing meaning of “willfully” with CRA and relying on Cushman). Such reckless or conscious disregard may be found when a defendant adopts a policy either knowing it to be in “contravention of the rights possessed by consumers under the FCRA or in reckless disregard for whether the policy contravenes those rights.” Cushman, 115 F. 3d at 227; see also Reynolds v. Hartford Fin. Servs. Group, 435 F.3d 1081, 1097-99 (9th Cir. 2006).
Multiple cases within this District, examining the willfulness standard in FCRA investigation cases against CRAs such as TU, have found that plaintiffs may proceed to trial with their willfulness claims where the defendant’s conduct is not merely a result of a negligent act that was promptly cured. See Sheffer v. Experian Info. Solutions, Inc., Civ. No. 02-7407, 2003 WL 21710573 at *3 (E.D. Pa. July 24, 2003) (Schiller, J.) (defendant’s conduct was willful, and not merely an “isolated instance of human error . . . promptly cure[d]”) (quoting Boris v. Choicepoint Servs., 249 F. Supp. 2d 851, 862 (W.D. Ky. 2003)) (emphasis added); see also Lawrence v. Trans Union, LLC, Civ., 296 F. Supp. 2d. 582, at. 590; Crane v. Trans Union, LLC, 282 F. Supp. 2d 311, at 321; Evantash v. G.E. Capital Mortgage Servs., Inc., E.D. Pa. Civ. No. 02-1188, 2003 WL 22844198 *8.
Chief Judge Bartle also agreed with this interpretation of the willfulness standard under the FCRA when he recently permitted punitive damages to go to the jury in an FCRA investigation matter with facts less egregious than the case at bar. See Abusaab v. Equifax Information Services LLC, Civ. No. 05-5094, 2006 WL 1214782 (E.D. Pa. May 4, 2006).
2. Safeco Only Affirmed The Reckless Disregard Standard
TU makes much of the U.S. Supreme Court’s 2007 decision in Safeco, but TU’s reliance on Safeco is ironic because the Safeco decision, if anything, undermines TU’s argument. See Safeco Insurance Co. of America v. Burr, 127 S. Ct. 2201 (2007). In Safeco, the U.S. Supreme Court was asked to decide which of two conflicting standards governed FCRA willfulness claims, and it adopted the lower and least rigorous “reckless disregard” standard, which this Court has followed for years.
Prior to Safeco, there was a circuit split as to what level of scienter should be applied in assessing FCRA willfulness claims. Several circuits had held that a knowing violation of the law (higher standard) was required for a consumer to prove willfulness under the FCRA, while others, including the Third Circuit and the Ninth Circuit, had held that “reckless disregard” (lower standard) was all that was required. In Safeco, the U.S Supreme Court endorsed our Circuit’s standard, and held that proof of “reckless disregard” by a defendant (i.e. not a knowing violation of law, as the credit industry argued) is sufficient to establish a willful violation of the FCRA. Safeco, 127 S.Ct. at 2208-2210.
“Reckless disregard” is precisely the FCRA willfulness standard that this Court has followed for many years. See Cushman v. Trans Union Corp., 115 F. 3d 220, 227 (3d. Cir. 1997). In Safeco, the U.S. Supreme Court cited our Circuit’s decision in Cushman as the correct standard for assessing willfulness claims, not the intentional disregard standard. Safeco therefore forever disposed of the argument that a consumer-plaintiff must show that a defendant knowingly violated the FCRA.
Thus, the inquiry now is not the standard for a willfulness claim, but rather when the “reckless disregard” standard is met in an FCRA case brought against a defendant. Unlike the situation in the circuits which had previously followed the knowing violation standard, this question has been thoroughly investigated and answered by the courts within this Circuit, as discussed and cited above. These cases also demonstrate that the reckless disregard standard is a fact-bound inquiry, a concept that our Circuit just recently reiterated. See Whitfield v. Radian Guaranty, Inc., 501 F.3d 262 (3d Cir. 2007). Indeed, in Whitfield the Third Circuit, in a post-Safeco FCRA decision, reversed a grant for summary judgment on an FCRA willfulness claim and held that the issue of willfulness was for the jury to decide. Id. at 271. The Third Circuit stated:
We do not suggest that a factfinder could not or would not determine that [the defendant] did not act willfully. Instead, we hold that whether it did so is a factual issue, not a question of law, and it therefore cannot be decided either on appeal or by the District Court as a matter of law.
Id. at 271. ) (emphasis added) (vacated on mootness grounds, 2008 WL 2329934 (U.S. 2008)).
3. Summary Judgment As To The Issue Of FCRA Willfulness Is Not Possible Here Because Key Liability Facts Are Contested
As an initial matter, summary judgment is not possible in this case because the factual record presents genuine issues of material fact as to the central questions of liability. Plaintiff obviously contends that the information and accounts associated with Seibert’s name are not his and have no place on his credit report. Defense witnesses testified that all of the information that TU reported on Jung’s report was “accurate” and that the much disputed Nicor Gas account “belonged” to Jung. (PCSF ¶ 76).
The parties also disagree as to how the alleged inaccuracies happened and why they were not corrected promptly by TU upon notice. Jung has offered expert testimony explaining he is a victim of a “mixed file,” a recurring problem that TU deliberately refuses to correct, because it would cut into its profits. TU witnesses either see no pattern in the alleged mistakes on Jung’s file or may believe that this is a case of identity theft.
These types of disagreements go to the core liability issues in this case, including whether TU’s conduct was willful: Was the disputed information accurate? If it was inaccurate, why is that so? Why didn’t TU promptly correct the alleged inaccuracies upon receipt of Jung’s disputes? These are jury questions that cannot be resolved at summary judgment because they require credibility determinations. Thus summary judgment as to liability (whether under a negligence or a willfulness standard) is not possible in the case at bar.
4. Plaintiff Has Come Forward With A Factual Record That Would Easily Permit A Reasonable Jury To Find That TU’s Violations Of The FCRA In This Case Were Willful
Finally, the factual record that Plaintiff has amassed is more than sufficient evidence to present a genuine issue of material fact as to whether TU willfully violated the FCRA. The question of willfulness, therefore, must be left for the jury.
The jury can, for example, reasonably determine that TU’s conduct was in reckless or conscious disregard for Plaintiff’s rights because TU repeatedly and systemically failed to get to the bottom of Jung’s disputes. The jury can reasonably find that TU’s practice of never going beyond the limited information provided on the ACDV forms by its credit furnishers in handling these type of investigations shows a reckless disregard. This practice, known as “parroting,” has already been deemed by several courts within our Circuit to constitute a basis for FCRA willfulness claims to go to the jury. Lawrence v. Trans Union, LLC, 296 F. Supp. 2d 582, at 590 (“merely parroting information without verifying its accuracy, could be found by a reasonable jury to be knowing or reckless violations of the FCRA”); Crane v. Trans Union, LLC, 282 F. Supp. 2d 311, at 321; Sheffer v. Experian Info. Solutions, Inc. and Trans Union, Civ. No. 02-7407, 2003 WL 21710573 at * 3 (Schiller, J.).
Some of these same courts have also found TU’s practice of not forwarding all relevant information to credit furnishers also forms a basis for FCRA willfulness claims to go to the jury. Lawrence, 296 F. Supp. 2d 582, at 590 ; Crane, 282 F. Supp. 2d 311, at 321; see 15 U.S.C. § 1681i(a)(2)(A) (CRA “shall” provide notice to furnisher with “all relevant information regarding the dispute . . . ”). Despite this legal guidance, TU has not changed its practices in this respect. TU now seeks to argue that it was somehow confused about its duties to reinvestigate and that its understanding of those duties was not objectively unreasonable. Not surprisingly, TU provides no support whatsoever for this argument, because none exists.
Other facts may also support a “reckless disregard” finding by the jury: the fact, for example, that TU knows how to avoid its mixed file problem but consistently fails, like it did in this case, to use its “do not merge” procedure or “full identifying information”; the fact that TU failed so many times to properly address Plaintiff’s problem, despite a wealth of notice; the fact that TU failed to “block” the Nicor Gas account despite two police reports that identified that account as a possible fraud; the fact that TU took such liberties and made such significant misrepresentations in responding to Jung’s dispute through the Indiana Attorney General’s Office; the fact that TU did not disclose to Jung that it had two or more files on him; and the list goes on.
In sum, the record here provides more than sufficient evidence on which a jury may reasonably make a reckless or conscious disregard finding. Accordingly, TU’s Motion should be denied.
V. CONCLUSION
For all of the reasons set forth above, Defendant TU’s Motion should be denied.
FRANCIS & MAILMAN, P.C.
/s/ John Soumilas
JOHN SOUMILAS
Attorney for Plaintiff
Land Title Building, 19th Floor
100 South Broad Street
Philadelphia, PA 19110
DATE: April 27, 2009 (215) 735-8600
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