Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-3_04-cv-01192/USCOURTS-azd-3_04-cv-01192-0/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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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Christine Baker, 

Plaintiff, 

vs.

Capital One Bank; Equifax Information

Services, LLC; Retailers National Bank; 

Defendants. 

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No. CV 04-1192-PHX-NVW

ORDER

The court has considered Defendant Retailers National Bank's Motion For Summary

Judgment (doc. # 63) ("Motion"), Statement Of Facts In Support Of Defendant Retailers

National Bank's Motion For Summary Judgment (doc. # 64) ("Retailers SOF" and "Retailers

SOF Ex."), Notice Of Errata Filed By Defendant Retailers National Bank (doc. # 66),

Plaintiff's Response And Memorandum Opposing The Retailers National Bank Motion For

Summary Judgment (docs. # 68 or # 69) ("Response"), Affidavit Of Plaintiff Christine Baker

In Support Of Her Objection To The Retailers National Bank Motion For Summary

Judgment (doc. # 70), Plaintiff's Response To The Retailers National Bank Statement Of

Facts (doc. # 71), Reply Supporting Defendant Retailers National Bank's Motion For

Summary Judgment (doc. # 79) ("Reply"), and Retailers National Bank's Objection To

Exhibits . . . Plaintiff's Affidavit . . . And Response To Retailers National Bank Statement Of

Facts (doc. # 81) ("Objection"). The court has also considered Plaintiff's Response To

Retailer National Bank's Objection To Her Exhibits, Affidavit And Response To The

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Statement Of Facts In Support Of Her Opposition To Its Motion For Summary Judgment

(doc. # 95). 

Plaintiff Christine Baker ("Baker") brought this action against various defendants

alleging violations of the Fair Credit Reporting Act and the Equal Credit Opportunity Act

with regard to her personal credit reports and her creditors' reporting practices. Defendant

Retailers National Bank ("Retailers"), a creditor of Baker and reporter of credit information

about Baker to credit reporting agencies, now moves for summary judgment on Baker's

claims that Retailers violated various provisions of those acts. 

I. Background

Retailers issued two credit cards to Baker, a Target store card and a Mervyn's credit

card. (Motion at 2.) Retailers routinely submits information related to Baker's accounts to

credit reporting agencies on an automated basis. (Retailers SOF at ¶ 2.) On November 6,

2002, and February 10, 2003, Retailers received notices from credit reporting agencies that

Baker had disputed information reported by Retailers to such agencies. (Retailers SOF at ¶¶

9, 11.) The parties dispute whether Retailers conducted a reasonable investigation of those

disputes and whether Retailers submitted accurate corrective information to the credit

reporting agencies in response to the notices.

Baker contends that Retailers' failure to report Baker's credit limit leads credit

reporting agencies to report her "high credit" amount, which is the highest amount of credit

ever utilized, as her credit limit, a practice that has the effect of reducing her credit score.

(Response at 4.) Retailers submits that although it has no legal duty to report customers'

credit limit, it does report its customers credit limit along with all other pertinent information

in its reports to credit reporting agencies. (Retailers SOF at ¶ 8.) 

II. Legal Standard For Summary Judgment

Rule 56 of the Federal Rules of Civil Procedure provides that summary judgment shall

be entered if the pleadings, depositions, affidavits, answers to interrogatories, and admissions

on file show that there is no genuine dispute regarding the material facts of the case and the

moving party is entitled to a judgment as a matter of law. See Fed. R. Civ. P. 56(c) (2004);

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Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986). The Court must evaluate a

party’s motion for summary judgment construing the alleged facts with all reasonable

inferences favoring the nonmoving party. See Baldwin v. Trailer Inns, Inc., 266 F.3d 1104,

1117 (9th Cir. 2001).

The party seeking summary judgment bears the initial burden of informing the Court

of the basis for its motion, and identifying those portions of the pleadings, depositions,

answers to interrogatories, and admissions on file, together with the affidavits, if any, which

it believes demonstrate the absence of any genuine issue of material fact. See Celotex Corp.

v. Catrett, 477 U.S. 317, 323 (1986). Where the moving party has met its initial burden with

a properly supported motion, the party opposing the motion “may not rest upon the mere

allegations or denials of his pleading, but ... must set forth specific facts showing that there

is a genuine issue for trial.” Anderson, 477 U.S. at 248. Summary judgment is appropriate

against a party who “fails to make a showing sufficient to establish the existence of an

element essential to that party’s case, and on which that party will bear the burden of proof

at trial.” Id. at 322. See also Citadel Holding Corp. v. Roven, 26 F.3d 960, 964 (9th Cir.

1994). Although the initial burden is on the movant to show the absence of a genuine issue

of material fact, this burden may be discharged by indicating to the Court that there is an

absence of evidence to support the nonmoving party’s claims. See Singletary v.

Pennsylvania Dep’t of Corr., 266 F.3d 186, 193 n.2 (3d Cir. 2001).

III. Reporting Credit Limits In Response To Notification Of Dispute From A Credit

Reporting Agency Under The Fair Credit Reporting Act

Baker alleged in her Complaint that Retailers violated the Fair Credit Reporting Act

by failing to report Baker's credit limit to credit reporting agencies after being informed by

those agencies that Baker had disputed information reported by Retailers. The Fair Credit

Reporting Act as codified in 15 U.S.C. § 1681s-2(b)(1) states:

(b) Duties of furnishers of information upon notice of

dispute

(1) In general

 After receiving notice pursuant to section 1681i(a)(2) of this

title of a dispute with regard to the completeness or accuracy of

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any information provided by a person to a consumer reporting

agency, the person shall— 

(A) conduct an investigation with respect to the disputed

information;

(B) review all relevant information provided by the

consumer reporting agency pursuant to section

1681i(a)(2) of this title;

(C) report the results of the investigation to the consumer

reporting agency; and

(D) if the investigation finds that the information is

incomplete or inaccurate, report those results to all other

consumer reporting agencies to which the person

furnished the information and that compile and maintain

files on consumers on a nationwide basis.

(Emphasis added). Focusing on the "completeness" language of § 1681s-2(b)(1)(D), Baker

argues that Retailers' failure to report Baker's credit limit — in addition to all other pertinent

information — to consumer reporting agencies after receiving notice of Baker's dispute was

a violation of this section.

Baker has not provided authority for the assertion that 15 U.S.C. § 1681s-2(b)(1)

requires creditors to include in their reports consumers' credit limits in order for the creditors'

reports to be "complete." "Completeness" as required by § 1681s-2(b)(1) must have

boundaries; the determination of what is "complete" must be made with reference to some

objective standard of what is generally required in creditors' reports to reporting agencies.

Baker has provided no authority and the court has found none suggesting that the statute

would generally require credit limits to form a part of such reports. On the contrary, a

negative inference is permissible. The statute expressly provides that creditors must report

specific other information to consumer reporting agencies yet does not so mandate with

respect to a consumer's credit limit. See 15 U.S.C. § 1681s-2(1)(3)-(5). Retailers also urges

a negative inference from a January 18, 2000 press release by the Federal Financial

Institutions Examination Council, which referenced the practice of some financial institutions

that do not report credit limits but made no suggestion that such omissions were unlawful.

(Retailers SOF at Ex. D.) In light of the foregoing, Baker's bare assertion that the report

needed to include her credit limit in order to be "complete" is unsupported. Retailers is

therefore entitled to summary judgment on this issue. 

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IV. The Adverse Action Letter Requirement Under The Fair Credit Reporting Act

And The Equal Credit Opportunity Act

A. The Fair Credit Reporting Act

Baker argues that Retailers did not comply with the adverse action letter requirement

of the Fair Credit Reporting Act in 15 U.S.C. § 1681m(a), which states in relevant part:

(a) Duties of users taking adverse actions on the basis of

information contained in consumer reports

 If any person takes any adverse action with respect to any

consumer that is based in whole or in part on any information

contained in a consumer report, the person shall– 

(1) provide oral, written, or electronic notice of the adverse

action to the consumer;

(2) provide to the consumer orally, in writing, or electronically–

(A) the name, address, and telephone number of the

consumer reporting agency (including a toll-free

telephone number established by the agency if the

agency compiles and maintains files on consumers on a

nationwide basis) that furnished the report to the person

. . . .

Baker argues that Retailers violated this provision in two ways. First, Baker argues that

Retailers should have sent Baker an adverse action letter when Retailers reduced her

Mervyn's account credit limit due to inactivity. Second, Baker argues that Retailers should

have sent Baker an adverse action letter when Retailers thereafter reinstated her credit limit,

at her request, to $300 as opposed to her requested level of $400. Retailers has withdrawn

its motion for summary judgment with respect to this latter incident. (Reply at 6.)

The issue before the court, therefore, is whether the definition of "adverse action" in

§ 1681m(a) includes a reduction in a credit limit based on account inactivity. The definition

of "adverse action" applicable in "Subchapter III–Credit Reporting Agencies," in which §

1681(m)(a) is found, is located in 15 U.S.C. § 1681a(k). That section states that "The term

'adverse action' . . . has the same meaning as in section 1691(d)(6) of this title." The

definition in § 1691(d)(6) is elaborated in 12 C.F.R. § 202.2(c), which states in relevant part:

(c) Adverse action.

(1) The term means: 

. . .

(2) The term does not include:

. . . 

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(ii) Any action or forbearance relating to an account taken in

connection with inactivity, default, or delinquency as to that

account.

Thus, reduction in a consumer's credit limit based on account inactivity is not an "adverse

action" and does not trigger the "adverse action" letter duty in 15 U.S.C. § 1681m(a). Since

Baker does not dispute that Retailers' reduction of Baker's credit limit was taken due to

account inactivity, the court grants Retailers' motion.

B. The Equal Credit Opportunity Act

The regulations referenced above were passed pursuant to the Equal Credit

Opportunity Act, 15 U.S.C. § 1691 et. seq., which requires similar disclosures upon such

"adverse actions." Because the Equal Credit Opportunity Act uses the same definition of

"adverse action" as the Fair Credit Reporting Act, the court also grants Retailers' motion with

respect to the Equal Credit Opportunity Act for Retailers' failure to provide an adverse action

letter based on its reduction of Baker's credit line for account inactivity. As with Baker's

claim under the Fair Credit Reporting Act, Retailers has withdrawn its motion for summary

judgment related to Retailers' reinstatement of a lower credit limit than that requested by

Baker. (Reply at 6.) 

V. Reasonable Investigation Under The Fair Credit Reporting Act

Baker alleged in her Complaint that Retailers wilfully and negligently failed to

conduct a reasonable investigation of Baker's disputes, in violation of the Fair Credit

Reporting Act, 15 U.S.C. § 1681s-2(b). As discussed above, that section requires creditors

who have received notice of a consumer's dispute to "conduct an investigation with respect

to the disputed information." 15 U.S.C. § 1681s-2(b)(1)(A). Case law interpreting the

section requires that such an investigation be "reasonable." Johnson v. M.B.N.A. Amer. Bank,

357 F.3d 426, 431 (4th Cir. 2004). 

Retailers moves for summary judgment arguing that it reasonably investigated and

corrected the consumer disputes of which it was apprised. Although Baker makes passing

references to the issue in her Response to Retailers' Statement Of Fact (doc. # 71 at ¶¶ 9-14),

Baker does not openly oppose Retailers' motion on this issue in her brief. 

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Baker submits evidence that Retailers confirmed incorrect information with the credit

reporting agencies, (see doc. # 71 at ¶¶ 9-14; doc. # 70 at ¶¶ 2-3), apparently to show the

unreasonableness of Retailers' investigations by reference to Retailers' actions after those

investigations. Specifically, Baker's affidavit suggests that on two occasions – on November

3, 2002, and sometime in February – she disputed her Target store card credit limit and that

Retailers confirmed its reporting of $157 as opposed to her true credit limit of $200. (doc.

# 70 at ¶¶ 2, 3.) Baker alleges that $ 157 was her "High Balance," inaccurately reported as

her credit limit. (Id.) 

Retailers presents evidence that Baker only registered two complaints, one on

November 6, 2002 and one on February 10, 2003. (DSOF Ex. B at ¶¶ 3, 5, 7.) The first

complaint, according to Retailers, dealt with erroneously reported lated payments and did not

relate to Baker's credit limit. (Id. at ¶ 3.) In response to Baker's second complaint, which

Retailers acknowledges related to Baker's credit limit, Retailers argues that it corrected the

reporting error. (DSOF Ex. B at ¶¶ 5-6.) Despite Baker's allegations to the contrary, even

Baker's evidence suggests that Retailers corrected her report following the second complaint.

(See doc. # 68 or # 69 at Ex. K-6 (correctly reporting the "High Balance" as $157 and the

"Credit Limit/ Original Amount" as $200 and noting that "This item was verified on Feb

2003 and remained unchanged.").)

Baker's evidence is not probative of the reasonableness of Retailers' investigation.

The credit reports and Baker's affidavit tend to show only that after investigating Baker's

complaints, Retailers declined to alter the information it was reporting. (See PSOF Ex. K-1

("RNB – Target remains" (emphasis added)); K-3 ("Target verified the information it was

reporting."); K-4 (RNB – Target remains" (emphasis added)); K-5 (showing reporting of

$157 limit).) Nevertheless, Retailers has objected to Baker's evidence. 

A. Evidentiary Issues

"It is well settled that only admissible evidence may be considered by the trial court

in ruling on a motion for summary judgment." Beyene v. Coleman Sec. Servs., 854 F.2d

1179, 1181 (9th Cir. 1988). Baker's evidence consists of various exhibits and an affidavit.

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(Response at "Exhibits K" at K-1 through K-8; doc. # 68 or # 69.) The exhibits appear

predominantly to be portions of Baker's personal credit reports or responses to inquiries made

of credit reporting agencies, and the affidavit relates information obtained by Baker from

credit reporting agencies while investigating the claims underlying her Complaint. (See doc.

#s 68 or # 69, 70.) Retailers first objects to Baker's exhibits on the ground that they are

unauthenticated.

Baker's exhibits are properly authenticated. "The requirement of authentication or

identification as a condition precedent to admissibility is satisfied by evidence sufficient to

support a finding that the matter in question is what its proponent claims." Fed.R.Evid.

901(a). Testimony of a witness with knowledge that a matter is what it is claimed to be

satifies this requirement. Fed.R.Evid. 901(b)(1). Baker submits an affidavit stating that "All

my exhibits are true copies of documents received from the [Credit Reporting Agencies]."

(doc. # 70 at ¶ 8.) Baker's affidavit testimony satisfies the requirement of authentication for

these exhibits to be admitted as reports received from credit reporting agencies.

Retailers next objects to Baker's exhibits and affidavit on the ground that they are

hearsay. Hearsay is an out-of-court assertion offered to prove the truth of the matter asserted.

Fed.R.Evid. 801(c); Beyene, 854 F.2d at 1182. 

Baker offers her exhibits into evidence for the truth of statements made in them. For

example, Exhibit K-2 — apparently part of an Experian credit report — states with respect

to Baker's Target account that "This item was verified on 11-2002 and remained

un[changed]." (Response at Exh. K-2 at 1.) Baker submits this document as proof that

Retailers verified $157 as Baker's credit limit instead of $200. (doc. # 70 at ¶ 2). Exhibit K2 is thus offered to prove the truth of the matter asserted in it, and is hearsay. See Capital

Funding v. Chase Manhattan Bank, 2005 U.S. Dist LEXIS 2212, no. 01-6093, *6 (E.D.Pa.

Feb. 11, 2005) (affirming exclusion of credit reports as hearsay). 

Exhibits K-1 and K-3 through K-5 are similarly introduced for the purpose of proving

that Retailers verified reported amounts, which is the matter asserted in statements in those

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documents. (See doc. # 68 or # 69 at K-1, K-3, K-4, K-5; doc. # 70 at ¶¶ 2-3; doc. # 71 at

¶¶ 10, 12.) These exhibits are therefore also hearsay. 

Some of Baker's affidavit testimony, moreover, is hearsay. For example, Baker's

affidavit testimony relates conversations she had with employees of credit reporting agencies

and is offered in order to prove the things stated by those employees during the

conversations. (See doc. # 70 at ¶¶ 2-3.) 

Baker lays no foundation to qualify any of this evidence for an exception to the

hearsay rule. Arguably, for instance, the credit reports fall within the business records

exception of Fed.R.Evid. 803(6). However: 

A writing is admissible under this exception only if two

foundational facts are proved: (1) the writing is made or

transmitted by a person with knowledge at or near the time of

the incident recorded, and (2) the record is kept in the course of

regularly conducted business activity. These facts must be

proved through the testimony of the custodian of the records or

other qualified witness, though not necessarily the declarant.

Beyene, 854 F.2d at 1183 n.4 (emphasis added) (citations and internal quotations omitted).

As a mere consumer, Baker cannot testify to the truth of these necessary foundational facts.

As stated by the Capital Funding court, which found the business records exception

inapplicable under very similar circumstances, "[Plaintiff] has not provided sufficient

evidence that [the authenticating witness] has personal knowledge of the record keeping

practice of [the credit reporting agency], a company [the authenticating witness] is neither

employed by nor affiliated with, other than as a consumer. Accordingly, the Court did not

error in excluding the credit reports." Capital Funding, 2005 U.S. Dist. LEXIS at *7. The

court therefore does not look to Baker's hearsay evidence in deciding Retailers' motion for

summary judgment. Beyene, 854 F.2d at 1182 (holding that because defendant had not

properly laid a foundation for any exception to the hearsay rule, defendant's hearsay evidence

was properly ignored on motion for summary judgment).

The court granted Baker's request for additional time to respond to Retailer's

evidentiary objections in the event that the court denied Baker's motion to strike those

objections. (See doc. # 93.) Baker's supplemental submission does not correct the

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evidentiary insufficiencies. (See doc. # 95.) Exhibits 1-5 and paragraphs 2, 3, and 4 of

Baker's affidavit are therefore inadmissible to the extent they rely on or constitute

inadmissible hearsay. 

B. Effect Of Inadmissible Evidence On Baker's Reasonable Investigation

Claim 

Because Baker has submitted no admissible evidence contradicting Retailers' evidence

related to the reasonableness of its investigations, no reasonable jury could find that Retailers'

investigation and resolution of the disputes was unreasonable, even if the jury did not believe

Retailers' witnesses. Canada v. Blain's Helicopters, Inc., 831 F.2d 920, (9th Cir. 1987)

("Discredited testimony is not a sufficient basis for drawing an affirmative contrary

conclusion." (citations omitted)). The court therefore grants Retailers' motion. 

VI. Allegation Of Impermissible Credit Report Solicitation

Baker's Complaint suggests that Retailers' solicitation of Baker's credit report, when

deciding whether to reinstate her Mervyn's credit line to its previous amount, was improper.

(Complaint at ¶ 85.) The Fair Credit Reporting Act does not, however, impose liability on

users of consumer credit information. Frederick v. Marquette Nat'l Bank, 911 F.2d 1, 2 (7th

Cir. 1990). Because Baker has not opposed Retailers' motion on this issue and has provided

no other rationale for imposing liability based on Retailers' solicitation of a credit report, the

court grants Retailers' motion.

IT IS THEREFORE ORDERED that Retailers' motion for summary judgment (doc.

# 63) is granted.

DATED this 24th day of January 2006.

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