Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_06-cv-02370/USCOURTS-cand-4_06-cv-02370-8/pdf.json

Nature of Suit Code: 890
Nature of Suit: Other Statutory Actions
Cause of Action: 15:1681 Fair Credit Reporting Act

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United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

STEVEN R. YOURKE,

Plaintiff,

v.

EXPERIAN INFORMATION SOLUTIONS, INC.,

Defendant.

 /

No. C 06-2370 CW

ORDER DENYING

DEFENDANT'S MOTION

FOR SUMMARY JUDGMENT

Defendant Experian Information Solutions, Inc. moves for

summary judgment on Plaintiff Steven Yourke's claims of negligent

and willful non-compliance with the Fair Credit Reporting Act

(FCRA). Plaintiff opposes the motion. The matter was heard on May

10, 2007. Having considered all of the papers filed by the

parties, the evidence cited therein and oral argument, the Court

denies Defendant's motion.

BACKGROUND

This dispute arises out of a series of tax liens filed against

Yourke based on his failure to file federal and state tax returns

for tax years 1995 through 1997 and 1999 through 2002. The liens

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The FTB filed four tax liens: a $129,986 lien in January,

1999 for the 1996 tax year, which was recorded as released in

August, 1999, a $741,167 lien in June, 2000 for the 1997 tax year,

which was recorded as released in October 2000, a $9,916 lien in

January, 2003 for the 1999 and 2000 tax years, which was recorded

as released in June, 2005, and a $19,374 lien in September, 2004

for the 2001 and 2002 tax years, which was recorded as released in

September, 2005. The IRS filed one $51,655 lien in April, 2004,

which was recorded as released in September, 2004. 

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The consumer versions of Yourke's report which he presents as

evidence state that the liens are "paid" rather than "released." 

Defendant presents evidence that the liens are reported as

"released" in all reports provided to creditors. The consumer

version of the report is only provided to Yourke and would not be

used to deny him credit. Thus it is irrelevant.

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ranged from $9,916 to $741,167, based on estimates by the Internal

Revenue Service and Franchise Tax Board of the amount of tax

potentially due. Yourke states that he did not file tax returns in

those years because he had no tax liability. After the liens were

filed, Yourke filed his tax returns for the years in question. The

IRS and FTB agreed that he did not owe taxes and released all of

the liens by September, 2005.1 The FTB charged Yourke collection

cost recovery fees of $114, $120 and $11, pursuant to California

Revenue and Taxation Code § 19254. 

These liens began appearing on Yourke's credit report sometime

prior to October, 2005, when he first called Experian regarding the

reporting of the liens on the report. At that time all five tax

liens were reported by Experian. Although all five liens had been

recorded as released, Experian reported only two of them as having

been released.2 All of the liens were listed at the high amounts

for which they had originally been filed. Yourke informed the

customer relations department that his reports were inaccurate. 

Yourke followed up with Experian in writing on October 27, 2005; he

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sent letters from the FTB, indicating that no tax was due for each

of the years in question, that Yourke had paid the total amounts

due including penalties and interest and that the FTB had filed a

release of lien for each lien recorded. He further requested that

all references to the liens be expunged from his credit report

because he "never owed any taxes and never failed to pay that

[which he] owed." Anderson Declaration, Exhibit B. 

Pursuant to 15 U.S.C. § 1681i, Experian reinvestigated the

liens after receiving Yourke's complaint. Experian states that its

public records vendor confirmed that the five liens had been filed

but that each had been released. Experian updated Yourke's report

to indicate that each of the liens was released and sent him a copy

of the new version with a correction summary on December 12, 2005. 

The liens were still listed with the high amounts for which they

had been filed.

Yourke wrote another letter to Experian on January 10, 2006.

He again explained that he had not in fact owed any taxes and that

any amounts paid in order for the liens to be released were fees. 

He stated that the liens were "now correctly reported as 'paid'"

but argued that they should be expunged from his report because

"they have no relevance to the issue of [his] creditworthiness." 

Anderson Declaration, Exhibit D. He again attached the letters

from the FTB. Yourke also attached an IRS document, which showed

that the lien had been filed but that he had been credited back for

the amounts the IRS had believed he owed and the lien had been

released.

 On January 26, January 31 and February 14, 2006, Experian

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sent Yourke additional copies of his credit report, indicating that

the information regarding the released liens had been verified in

November, 2005. The liens were all listed at the high amounts for

which they had originally been filed. Experian customer affairs

specialist Carrie Higginbotham also sent a letter on February 14,

2006, stating that a tax lien "is part of public records and may be

reflected on the credit report." Anderson Declaration, Exhibit E. 

Further, the letter noted that "Blacks Law Dictionary defines

release as to discharge a claim one has against another. It does

not state that the debt has been released by payment of a claim." 

Id. (emphasis in original). 

After continuing complaints by Yourke, Experian updated the

credit report in March, 2006 to indicate the small amounts actually

paid by Yourke as the claim amount for the FTB liens. In April,

2006, Experian updated the credit report to indicate $0 for the

amount of the federal lien. Yourke states that Trans Union and

Equifax, the other two major credit reporting agencies, agreed to

delete the tax lien information entirely from his report. 

Yourke states that in January, 2006, Citibank denied his

application for a credit card and Wells Fargo denied his

application for a personal loan. Yourke also alleges that he

suffered emotional distress.

On April 4, 2006, Yourke filed his complaint stating claims

for negligent and willful non-compliance with the FCRA. Yourke

alleges that Experian failed to comply with 15 U.S.C. § 1681e(b),

which requires Experian to "use reasonable procedures to assure

maximum possible accuracy of the information concerning the

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individual about whom the report relates," and 15 U.S.C. 

§ 1681i(a)(5)(A), which states that when "information is found to

be inaccurate or incomplete or cannot be verified," Experian must

"promptly delete that item of information from the consumer's file

or modify that item of information as appropriate, based on the

results of the reinvestigation." 

Experian now moves for summary judgment on both claims,

arguing that the inclusion of the liens, and the amounts for which

they were filed, on Yourke's report was not incorrect and therefore

triggered no duty to make any changes. Further, Experian argues

that even if Yourke were able to demonstrate a triable issue of

fact regarding its compliance with FCRA, Yourke has not provided

any admissible evidence of damages stemming from its actions. 

LEGAL STANDARD

Summary judgment is properly granted when no genuine and

disputed issues of material fact remain, and when, viewing the

evidence most favorably to the non-moving party, the movant is

clearly entitled to prevail as a matter of law. Fed. R. Civ. P.

56; Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986);

Eisenberg v. Ins. Co. of N. Am., 815 F.2d 1285, 1288-89 (9th Cir.

1987).

The moving party bears the burden of showing that there is no

material factual dispute. Therefore, the court must regard as true

the opposing party's evidence, if supported by affidavits or other

evidentiary material. Celotex, 477 U.S. at 324; Eisenberg, 815

F.2d at 1289. The court must draw all reasonable inferences in

favor of the party against whom summary judgment is sought. 

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Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,

587 (1986); Intel Corp. v. Hartford Accident & Indem. Co., 952 F.2d

1551, 1558 (9th Cir. 1991). 

Material facts which would preclude entry of summary judgment

are those which, under applicable substantive law, may affect the

outcome of the case. The substantive law will identify which facts

are material. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986).

Where the moving party does not bear the burden of proof on an

issue at trial, the moving party may discharge its burden of

production by either of two methods. Nissan Fire & Marine Ins.

Co., Ltd., v. Fritz Cos., Inc., 210 F.3d 1099, 1106 (9th Cir.

2000). 

The moving party may produce evidence negating an

essential element of the nonmoving party’s case, or,

after suitable discovery, the moving party may show that

the nonmoving party does not have enough evidence of an

essential element of its claim or defense to carry its

ultimate burden of persuasion at trial. 

Id. 

If the moving party discharges its burden by showing an

absence of evidence to support an essential element of a claim or

defense, it is not required to produce evidence showing the absence

of a material fact on such issues, or to support its motion with

evidence negating the non-moving party's claim. Id.; see also

Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 885 (1990); Bhan v.

NME Hosps., Inc., 929 F.2d 1404, 1409 (9th Cir. 1991). If the

moving party shows an absence of evidence to support the non-moving

party's case, the burden then shifts to the non-moving party to

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produce "specific evidence, through affidavits or admissible

discovery material, to show that the dispute exists." Bhan, 929

F.2d at 1409. 

If the moving party discharges its burden by negating an

essential element of the non-moving party’s claim or defense, it

must produce affirmative evidence of such negation. Nissan, 210

F.3d at 1105. If the moving party produces such evidence, the

burden then shifts to the non-moving party to produce specific

evidence to show that a dispute of material fact exists. Id.

If the moving party does not meet its initial burden of

production by either method, the non-moving party is under no

obligation to offer any evidence in support of its opposition. Id.

This is true even though the non-moving party bears the ultimate

burden of persuasion at trial. Id. at 1107.

DISCUSSION

I. Violations of the FCRA

The FCRA creates a private right of action against credit

reporting agencies for negligent or willful non-compliance with its

duties. 15 U.S.C. §§ 1681n, 1681o. Both of Yourke's claims

require a prima facie showing of inaccurate information to proceed. 

See Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1334

(9th Cir. 1995). 

Experian argues that Yourke cannot demonstrate that there was

any inaccuracy in his report. Experian cites Cahlin v. General

Motors Acceptance Corporation, 936 F.2d 1151 (11th Cir. 1991), for

the proposition that an item on a credit report, even if

potentially misleading, does not give rise to a private right of

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action if it is not technically incorrect. Experian argues that

Yourke's request is similar to that in Cahlin, where the plaintiff

sought to have all references to a prior loan dispute removed from

his credit report. There, the plaintiff had terminated an auto

lease agreement, believing that he could do so within ninety days

without penalty or financial obligation. The lessor sent two

notices to the plaintiff, indicating that he owed $3,842.44 and

threatening legal action. The plaintiff later settled with the

lessor's collection attorney by paying $2,000 as full satisfaction

for the indebtedness. Between the time the plaintiff returned the

car and the time he settled with the lessor, the lessor reported

the account as delinquent and later as charged off as an active

receivable. Therefore, the credit reporting agency listed an "I9"

rating, indicating a charged off account, with a balance due of

$3,843.44.

After the plaintiff satisfied the terms of the settlement, the

lessor informed the credit reporting agency that the loss had been

paid in full and stated, "We would appreciate your marking your

file accordingly." Id. at 1155. In response, the credit reporting

agency kept the I9 rating, but changed the account balance to $0. 

Both the plaintiff and the lessor, at the plaintiff's request,

continued to complain to the credit reporting agency, seeking

deletion of I9 rating. The credit reporting agency first changed

the rating on the account to an I1 rating, indicating that the

account was paid within thirty days of billing but kept the I9

rating in the plaintiff's credit history. Eventually, based on

instructions from the lessor, the agency removed all negative

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information about the lease account from the plaintiff's account

history. 

The Eleventh Circuit held that the inclusion of the negative

history "was more accurate than the negative-free report that [the

plaintiff] contends he should have received." Id. at 1159 n.19. 

In this case, it is undisputed that the liens were valid when

filed. As in Cahlin, reporting the liens as released, with the

small amounts that Yourke paid to have them released, is more

accurate than omitting any information regarding the liens. 

However, triable issues of fact remain concerning the accuracy of

Yourke's report when he first requested it in October, 2005 for

purposes of § 1681e(b), and the reasonableness of Experian's

response to his complaints about the report for purposes of §

1681i(a). 

As recognized by the Eleventh Circuit in Cahlin, some courts

have held that "factually correct information that could 

also be interpreted as being misleading or incomplete" is enough to

sustain a claim under the FCRA. Id. (citing Koropoulos v. Credit

Bureau, Inc., 734 F.2d 37 (D.C. Cir. 1984); Alexander v. Moore &

Assocs., Inc., 553 F. Supp. 948, 952 (D. Haw. 1982); see also,

Andrews v. Trans Union Corp., 7 F. Supp. 2d 1056, 1074 (C.D. Cal.

1998)("Section 1681e(b) targets not only strictly inaccurate

information, but also information that is technically accurate but

nevertheless misleading."), rev'd in part on other grounds in

Andrews v. TRW Inc., 225 F.3d 1063 (9th Cir. 2000). The

Cahlin court also noted that other courts allow the reporting of

"factually correct information about a consumer that might

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nonetheless be misleading or incomplete in some respect." Cahlin,

936 F.2d at 1157 (citing McPhee v. Chilton Corp., 468 F. Supp. 494

(D. Conn. 1978); Todd v. Associated Credit Bureau Servs., Inc., 451

F. Supp. 447 (E.D. Pa. 1977), aff'd mem., 578 F.2d 1376 (3d. Cir.

1978), cert. denied, 439 U.S. 1068 (1979)). 

In Koropoulos, the D.C. Circuit followed the reasoning of

Alexander, holding that § 1681e(b) applies "to consumer reports

even though they may be technically accurate, if it is shown that

such reports are not accurate to the maximum possible extent." 734

F.2d at 42 (quoting Alexander, 553 F. Supp. at 952). However,

because the statute requires only maximum possible accuracy, the

court held that a balancing test should be used to determine

whether a reporting agency has violated § 1681e(b). Id. Under

this test, the court should 

weigh the potential that the information will create a

misleading impression against the availability of more

accurate or complete information and the burden of

providing such information. Clearly the more misleading

the information [i.e., the greater the harm it can cause

the consumer] and the more easily available the

clarifying information, the greater the burden upon the

consumer reporting agency to provide this clarification. 

Conversely, if the misleading information is of

relatively insignificant value, a consumer reporting

agency should not be required to take on a burdensome

task in order to discover or provide additional or

clarifying data, and it should not be penalized under

this section if the procedures used are otherwise

reasonable.

Id. (quoting Alexander, 553 F. Supp. at 952) (alterations in

original). 

Other courts have similarly held that technical accuracy is

not sufficient to satisfy § 1681e(b). See, e.g., Dalton v. Capital

Associated Indus., 257 F.3d 409, 415 (4th Cir. 2001) ("A report is

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inaccurate when it is 'patently incorrect' or when it is 

'misleading in such a way and to such an extent that it can be 

expected to [have an] adverse[]' effect.) (quoting Sepulvado v. CSC

Credit Servs., 158 F.3d 890, 895 (5th Cir. 1998)) (alterations in

original). The legislative history, which indicates that the FCRA

was enacted "to protect consumers from being unjustly damaged

because of inaccurate or arbitrary information," supports this

broader interpretation of § 1681e. S. Rep. No. 91-517, at 1 (1969)

(emphasis added); see also 115 Cong. Rec. 2411 (1969) (statement of

Sen. Proxmire) ("perhaps the most serious problem in the credit

reporting industry is the problem of accurate or misleading

information." (emphasis added)). 

The Court finds that Experian's original reporting in October,

2005 of only two of the liens as released when all five had been

recorded as released creates a triable issue of fact with respect

to whether it violated § 1681e(b). Further, after Yourke

demonstrated that the liens had all been released with the payment

of little or no money, Experian's continued inclusion of the liens

as released but with the full amount for which they were originally

filed could be viewed as misleading. A creditor who saw a tax lien

filed for a large amount and released could reasonably believe that

Yourke had in fact failed to pay that amount in taxes. Experian

argues that its decision to change the report on the liens to state

only the amount Yourke actually paid to have them released

undermines Yourke's claims. However, Experian's failure to change

the amount of the liens until five months after Yourke first

complained, and only under continued pressure from Yourke, creates

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a triable issue of fact regarding the reasonableness of Defendant's

reinvestigation process under § 1681i(a). 

II. Damages

In the alternative, Defendant argues that Yourke's claims fail

as a matter of law because he has not produced evidence that any

denial of credit was due to the inclusion of the tax liens on his

credit report. However, the Ninth Circuit has held that evidence

of "a failure to comply with § 1681e(b) is actionable even absent a

denial of credit" and noted that "'actual damages' has been

interpreted to include recovery for emotional distress and

humiliation." Guimond v. Trans Union Credit Info. Co., 45 F.3d

1329, 1333 (9th Cir. 1995). At his deposition, Yourke testified

that he experienced "anxiety, headaches, insomnia, anger, feelings

of frustration, and helplessness, feelings of rage," which he

attributed to the amount of effort he put into getting Experian to

change his report combined with the feeling that he was being

ignored. Anderson Declaration, Exhibit T at 84-85. 

Therefore, the Court denies Defendant's motion for summary

judgment on this ground.

III. Punitive Damages

Finally Defendant argues that Yourke's claim for punitive

damages must fail because he cannot demonstrate that it willfully

violated the FCRA. However, Defendant's argument is based on its

assertion that it did not violate the FCRA. Therefore, the Court

denies Defendant's motion to dismiss on this ground. 

CONCLUSION

For the foregoing reasons, the Court DENIES Defendant's motion

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3

Defendant's motion in limine to exclude the testimony of

Plaintiff's expert witness Evan Hendricks (Docket No. 35) is

GRANTED for purposes of this motion. The motion to exclude

Hendricks' testimony at trial is denied without prejudice to

raising as a motion in limine at the pretrial conference. 

13

for summary judgment (Docket No. 34).3 As discussed at the

hearing, the parties shall continue to try to settle this matter

using the same mediator they have already used. If that is not

possible, they shall request that the Court refer the case to a

magistrate judge for a settlement conference. A pretrial

conference will be held on August 7, 2007 at 2:00 PM. A four day

jury trial is scheduled to begin on August 20, 2007 at 8:30 AM. 

IT IS SO ORDERED.

6/20/07

Dated: ________________________ 

CLAUDIA WILKEN

United States District Judge

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