judgment [docket # 21-1]. Experian’s motion to strike plaintiff's responses to Experian’s
statement of facts is denied as moot [docket # 25-1]. The Clerk is directed to enter

judgment in favor of defendant Experian Information Solutions, Inc.

MATTHEW F. KENNELL
United States District Judg

Date: January 21, 2004

13


and (3) “Insufficient income to support loan.” Jd. | 47; Def.’s Ex. W. Countrywide Home Loans
relied on a credit report received from Landsafe Credit. Id. § 49; Def.’s Ex. W. The Landsafe
Credit Merge Report relied upon by Countrywide stated that Molton had several collection
accounts and delinquent credit obligations in addition to the FNBM account. Jd. ¥ 49.

Molton claims, and Experian admits, that she filled out one of Experian’s correction
forms on September 23, 2002, and sent it to Experian. Pl.’s Facts [ 3. With it she enclosed a
letter from Allied Interstate, dated April 30, 2002, stating: “the above referenced account has
been settled in full. Therefore, there remains no further outstanding obligations pertaining to this
account.” Jd.; Pl.’s Ex. A. Molton also included a copy of the money order showing proof of a
$351.50 payment by Molton to Allied Interstate. /d.; Pl.’s Ex. G. Citibank denied Molton credit
in a letter dated October 2, 2002. Def.’s Facts { 52. And Molton contacted Experian again, this
time via the Internet on October 9, 2002, to request a reinvestigation of the FNBM account, again
claiming that the account was paid. Jd. 19. That day, Experian sent a CDV to FNBM
describing Molton’s dispute as “Consumer States: Consumer states inaccurate info. / ACCT PD
TO ALLIED INTERSTATE 04/04/02 PH 800-833-5313. VERIFY AND UPDATE.” Jd. { 20.
In her deposition, Molton stated that this summary of her dispute was reasonable and told FNBM
everything it needed to know about the dispute. /d. ] 21. On October 22, 2002, FNBM advised
Experian that Molton’s account had an outstanding charge-off balance of $350.78. Id. { 22.
Experian sent a confirmation of the results of its investigation to Molton on November 7, 2002,
thirty days after Molton requested the investigation. Id. J 23.

However, on September 26, 2002, FNBM had sent Molton a letter in which it agreed to

update her account’s status to “paid charge-off/less than full balance” within 90 days. Id. { 24.


GMAC, which sent a letter to the credit reporting agency requesting that the charge off be
removed from Cahlin’s report and replaced with a rating signifying that a debt had been paid
within 30 days of billing. Jd. The credit reporting agency replaced the charged-off rating with a
debt paid within 30 days of billing rating, but it noted the charge off in the “previous history”
section of Cahlin’s credit report. Jd. Cahlin complained to the credit reporting agency again. Id.
The agency called GMAC, which instructed the agency to remove any reference to the charge off
from Cahlin’s credit report. Jd. The credit reporting agency did so. Id.

To determine whether the credit report was accurate, the Eleventh Circuit first looked to
“the intent of the creditor who transmitted the information about a particular account.” Jd. at
1158. The Eleventh Circuit concluded that GMAC had “intended the account to be reported as a
‘paid charge off or the equivalent” and that its instruction to delete the charge off from Cahlin’s
record was “largely motivated by a desire to mollify Cahlin and avoid potential litigation, not to
correct any reporting errors.” Jd. Similarly, in this case FNBM had to charge off the account
because Moiton was delinquent and never paid the balance in full. Molton later settled the
account with a collection agency for only half the amount she owed. We agree with the Eleventh
Circuit that

[i]n interpreting the meaning of “accuracy” within [§ 1681e(b)], we cannot

conclude that a debt which has been charged off by the creditor and is later settled

for an amount less than the original balance due should be reported without any

derogatory references on a credit report. This information, which reflects the

efforts required to collect a debt, is clearly of interest to potential creditors and

would be effectively hidden by a credit report that treated the account as being in

good standing.
Id. Molton’s partial payment of the outstanding debt, though relinquishing her from liability for

the full amount of the debt, did not constitute a payment in full. The description of the account


Analysis

Molton claims that Experian violated two sections of the FCRA and defamed her.
Specifically, she claims Experian violated 15 U.S.C. § 1681i by (1) failing to conduct a
reasonable reinvestigation into her claims of inaccurate reporting; (2) failing to provide FNBM
with the letter Molton gave Experian from Allied Interstate saying Molton’s account had been
settled in full; (3) failing to review the Allied Interstate letter and proof of payment provided by
Molton; (4) failing to delete inaccurate information from Molton’s file after completing its
reinvestigation; and (5) failing to note Molton’s dispute in her credit file. Compl. { 22. She also
claims Experian violated 15 U.S.C. § 1681e(b) by “failing to employ and follow reasonable
procedures to assure maximum possible accuracy of [her] credit report, information and file.” Jd.
As a preliminary matter, the Court notes that because Molton admitted that she “never requested
that a consumer dispute statement be added to her personal credit report,” Def.’s Facts 31; Pl.’s
Resp. to Facts 4 31, she cannot claim that Experian violated § 1681i(c) by failing to note
Molton’s dispute in her credit report. If a consumer is not satisfied with the results of the
requested reinvestigation, “the consumer may file a brief statement setting forth the nature of the
dispute.” 15 U.S.C. § 1681i(b). “Whenever a statement of dispute is filed . . . the consumer
reporting agency shall, in any subsequent consumer report containing the information in
question, clearly note that it is disputed by the consumer. . . .” 15 U.S.C. § 1681i(c). Because
Molton concedes that she never filed a statement of dispute, Experian cannot be held liable for
failing to append such a statement to her credit report.

Molton alleges other violations of § 1681i and § 1681e(b). Because the two sections

involve different elements, the Court will address each section separately. See Henson v. CSC


Molton testified at her deposition that this designation with the comment of “Account legally
paid in full for less than full balance” was what she had wanted. /d. § 25. Molton filed her
complaint on November 5, 2002. Jd. 428. Molton’s credit report reflected this agreed upon
status by December 3, 2003, which was within 90 days of FNBM’s September 26, 2002 letter.
Id. 4 27; Def.’s Ex. K. Asa result of the lawsuit, Experian sent another CDV to FNBM on
December 6, 2002, saying “CONS STATES ACCT HAS BEEN PAID IN FULL SINCE APRIL
2002.” Id. | 29. “FNBM responded on December 19, 2002 that the account was correctly
reported as ‘settled/charge-off with a comment that the ‘account legally paid in full for less than
full balance.” Jd. J 30.
Standard of Review

Summary judgment is proper when “the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). The Court must look at the evidence “as a jury might,
construing the record in the light most favorable to the nonmovant and avoiding the temptation to
decide which party’s version of the facts is more likely true.” Payne v. Pauley, 337 F.3d 767,
770 (7" Cir. 2003). The Court’s “function is not to weigh the evidence but merely to determine
if ‘there is a genuine issue for trial.” Bennett v. Roberts, 295 F.3d 687, 694 (7" Cir. 2002)
(citation omitted). To avoid summary judgment, the nonmovant “must produce more than a
scintilla of evidence to support his position.” Pugh v. City of Attica, Indiana, 259 F.3d 619, 625

(7* Cir. 2001) (citation omitted).


Molton does not respond directly to Experian’s claim that it is entitled to summary judgment
because it published accurate information; instead Molton argues that there is a genuine issue as
to the reasonableness of Experian’s investigative procedures.

In Cahlin v, General Motors Acceptance Corp., the Eleventh Circuit faced the same
question as we do today: “whether a credit report containing derogatory information about an
account which was charged off by a creditor for accounting purposes and which was later settled
by the consumer for an amount less than the full balance due is ‘accurate.’” Id. at 1158. Because
the Seventh Circuit relied heavily on Cahlin in Henson, we will rely on Cahlin because it is
directly on point. Cahlin involved a car loan extended to the plaintiff by General Motors
Acceptance Corp. (“GMAC”). Cahlin leased a car from GMAC but decided to retum it less than
three months after he signed the lease. Jd. at 1154, Several months later, GMAC sent notices to
Cahlin, stating he owed $3,842.44 on the lease. /d. Cahlin paid $2,000 to GMAC’s collection
agency as full satisfaction for his debt, and GMAC discharged him of his debts previously owed.
Id, at 1154-55. While the dispute was being settled, GMAC informed a credit reporting agency
that Cahlin’s account was delinquent and had been charged off by GMAC. Jd. Cahlin’s credit
report thus reflected a charge off with a balance due of $3,843.44." Id. After Cahlin paid $2,000
to GMAC’s collection agency, Cahlin’s credit report was changed to reflect a zero balance — but
it continued to show that there had been a charge off. Jd. When Cahlin saw his credit report, he
filed a customer dispute, attaching a copy of the general release that GMAC had sent him. Id.

The credit reporting agency did not alter Cahlin’s credit report. fd. Cahlin complained to

4 In Cahlin the court gave two different amounts — $3,842.44 and $3,843.44 — as the
balance Cahlin owed GMAC. Because we do not know which amount is correct, in summarizing
the facts of Cahlin, we use the different amounts as the Eleventh Circuit did.

8


Minute Order Form (06/97)

ll
United States District Court, Northern District of Illinois

Name of Assigned Judg Sitting Judge if Other
. or Magistrate Judge Matthew F. Kennelly than Assigned Judge
CASE NUMBER 02 C 7972 DATE 1/21/2004
CASE Molton vs. Experian Information Solutions, Inc
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.)
DOCKET ENTRY:
qd) QO Filed motion of [ use listing in “Motion” box above.]
(2) oOo Brief in support of motion due
@G) a Answer brief to motion due. . Reply to answer brief due. :
(4) Oo Ruling/Hearing on set for at
(5) a Status hearing(held/continued to] [set for/re-set for] on set for at
{6) o Pretrial conference[held/continued to] [set for/re-set for] on set for at .
(7) Qa Trial{set for/re-set for] on at
(8) 0 {Bench/Jury trial] [Hearing) hetd/continued to at
(9) Q This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4(m) (CLocal Rule 41.1 CUFRCP41(a)(1) [ FRCP41(a)(2).
do «ob {Other docket entry] For the reasons set forth on the attached Memorandum Opinion and Order,
the Court grants Experian’s motion for summary judgment (21-1). Experian’s motion to strike plaintiff's
responses to Experian’s statement of facts is denied as moot (25-1). Judgment is entered in favor of
defendant Experian Information Solutions, Inc.
(1) @ (For further detail see order attached to the original minute order.]
No notices required, advised in open court. { Document
No notices required.
Notices mailed by judge's staff.
Notified counsel by telephone.
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Copy to judge/magistrate judge. yu319
courtroom BO:lWd SONY wu
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will depend, in part, on whether the consumer has alerted the reporting agency to

the possibility that the source may be unreliable or the reporting agency itself

knows or should know that the source is unreliable. The credit reporting agency’s

duty will also depend on the cost of verifying the accuracy of the source versus the

possible harm inaccurately reported information may cause the consumer.

Id, In this case there is no dispute that Molton brought the alleged error to Experian’s attention
on multiple occasions. But Experian argues that the trier of fact need not weigh the above factors
to determine whether it violated § 1681i, because a credit reporting agency cannot be found to
have violated § 1681i if it reported accurate information.

In Cahlin the Eleventh Circuit agreed. “[A § 1681i] claim is properly raised when a
particular credit report contains a factual deficiency or error that could have been remedied by
uncovering additional facts that provide a more accurate representation about a particular entry.”
Cahlin, 936 F.2d at 1160 (emphasis in original). The Eleventh Circuit found that “no additional
amount of factual investigation by [the credit reporting agency] would have revealed any
‘inaccuracy’ in its reporting of the GMAC account because there was none,” and thus the district
court properly granted summary judgment to the credit reporting agency on Cahlin’s § 1681i
claim. Id.

As discussed in the previous section, Molton’s account was accurately described as a
charge off. As soon as Molton informed Experian on July 10, 2002, that she had settled the
balance, Experian contacted FNBM and reduced the amount past due from $702 to $350 and
continued to denote the account as charged off. This was accurate. As in Cahlin, Experian is
entitled to summary judgment on Molton’s § 16811 claim; “[n]o reasonable investigation on the

part of [Experian] could have uncovered any inaccuracy in [Molton’s] report because there was

never any factual deficiency in the report.” Jd. Although Molton settled the account with a

ut



as charged off was both intended by FNBM and accurate. As in Cahlin, the fact that FNBM
decided to amend Molton’s credit report to include the statement “paid charge-off/less than full
balance” did not render prior reports inaccurate, because the amendment represented FNBM’s
attempt to mollify Molton and did not reflect a change in FNBM’s view of the status of her
account. And, as in Cahtin, the lag time between April 30, 2002 when Allied Interstate
recognized Molton’s account as settled and August 8, 2002 when Molton’s credit report reflected
the reduced unpaid balance does not constitute a Period of inaccuracy. Based on the undisputed
facts, Molton’s credit report at all times accurately reflected the status of her FNBM account as
intended by FNBM. Experian, therefore, is entitled to summary judgment on Molton’s §
1681e(b) claim.

2. § 1681i — duty to reinvestigate

When a consumer informs a credit reporting agency that she disputes the “completeness
or accuracy” of her credit report, “the agency shall reinvestigate free of charge and record the
current status of the disputed information, or delete the item from the file . . . , before the end of
the 30-day period beginning on the date on which the agency receives the notice of the dispute
from the consumer.” 15 U.S.C. § 1681i(a)(1)(A). Molton claims that Experian did not conduct a
reasonable reinvestigation of her complaints that her credit report was inaccurate. More
specifically, she claims that it was unreasonable for Experian to rely on FNBM’s
communications without further investigation. The Seventh Circuit has recognized that “a credit
reporting agency may be required, in certain circumstances, to verify the accuracy of its initial
source of information.” Henson, 29 F.3d at 287. The Court went on to explain that

[w]hether the credit reporting agency has a duty to go beyond the original source

10


Credit Services, 29 F.3d 280 (7" Cir. 1994). The Court will conclude by addressing Molton’s
defamation claim.

1. § 1681e ~ reasonable procedures to assure maximum possible accuracy

Under the FCRA, “[w]henever a consumer reporting agency prepares a consumer report it
shall follow reasonable procedures to assure maximum possible accuracy of the information
concerning the individual about whom the report relates.” 15 U.S.C. § 1681e(b). However, “[iJn
order to state a claim under 15 U.S.C. § 1681e(b), a consumer must sufficiently allege ‘that a
credit reporting agency prepared a report containing ‘inaccurate’ information.” Henson, 29 F.3d
at 284 (citing Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1156 (11 Cir.
1991)). In Henson the Seventh Circuit went on to explain that

the credit reporting agency is not automatically liable even if the consumer proves

that it prepared an inaccurate credit report because the FCRA “does not make

reporting agencies strictly liable for all inaccuracies.” A credit reporting agency is

not liable under the FCRA if it followed “reasonable procedures to assure

maximum possible accuracy,” but nonetheless reported inaccurate information in

the consumer’s credit report.
Id. (quoting Cahlin, 936 F.2d at 1156, and holding “that, as a matter of law, a credit reporting
agency is not liable under the FCRA for reporting inaccurate information obtained from a court’s
Judgment Docket, absent prior notice from the consumer that the information may be
inaccurate”). But if the credit reporting agency can demonstrate that it only reported accurate
information, “[the] court need not inquire further as to the reasonableness of the procedures
adopted by the credit reporting agency.” Cahlin, 936 F.2d at 1156 (citation omitted). Experian,

therefore, is correct that if the information it reported was accurate, it is entitled to summary

judgment because, as a matter of law, Molton cannot establish a violation of § 1681e(b). Jd.



sent her that day. /d. ¢ 11. Molton contacted Experian via the Internet on July 10, 2002 and
claimed that the FNBM account was paid. Jd. 4 12. Experian sent a CDV to FNBM on July 10
describing Molton’s claim as “Consumer States: Status Disputed” and “Consumer Claims: Paid.”
Jd. 413. FNBM responded on July 25, 2002, asking Experian to “(1) change the date of
[Molton’s] jast payment to April 2002; (2) reduce the ‘recent balance’ amount from $702.28 to
$350.78; and (3) reduce the amount past due from $702 to $350.” Jd. { 14. But FNBM
confirmed that Experian was correctly reporting the account as a charge-off after a lengthy
delinquency. Jd. Experian updated the account to reflect the changes requested by FNBM. Jd.
49 17-18. Experian claims’ it sent Molton the results of its reinvestigation on August 8, 2002,
within thirty days of Molton’s request for an investigation. /d, 415. The correction summary
sent to Molton by Experian stated that the FNBM account was updated and that Molton had a
right under the Fair Credit Reporting Act to have a consumer dispute statement placed on her
credit report if she disagreed with the results of the reinvestigation. Jd. { 16. Molton never asked
for a consumer dispute statement to be added to her credit report. Jd. ¥ 31.

Molton applied in August 2002 for a residential mortgage of $73,742 with Countrywide
Home Loans, Inc. Jd, § 44. Countrywide denied the application on September 6, 2002, checking
off three reasons for the denial on a standard form: (1) “Garnishment, attachment, foreclosure,

collection or judgment repossession or suit”; (2) “Delinquent credit obligations (past or present);

3 Molton disputes this claim in her response to Experian’s statement of facts and refers to
44 5 and 6 of Molton’s statement of facts. However, nothing in J 5 or 6 contradicts Experian’s
claim. Furthermore, Molton admits Experian’s statement of fact in { 16, and it seems that if] 16
is true, J 15 must be as well.. Thus, Experian’s statement of fact in { 15 is deemed admitted. But
the Court notes that we do not base our decision to grant Experian’s motion for summary
judgment on this fact.


summarize.' Molton held a credit card issued by FNBM. Def.’s Facts | 34. Molton’s account
became 30 days past due in July 2000; 60 days past due in August 2000; 90 days past due in
September 2000; 120 days past due in October 2000; and 150 days past due in November 2000.
Id. 436. FNBM “charged off” the account on December 16, 2000 in the amount of $702.28. Jd.
4 35, 37. Molton owed the balance of $702.28 in full, and FNBM forwarded the balance to
Allied Interstate, a collection agency. /d. {{ 37-38.

Molton called Experian on November 8, 2001 and requested a copy of her credit file,
which Experian sent to her that day. Jd. 6. Molton called Experian on December 10, 2001,
saying that the FNBM account was not hers. Jd. (7. Experian sent a Consumer Dispute
Verification (“CDV”) to FNBM describing Molton’s claim as “Consumer States: Not mine.” /d.
48. On December 24, 2001, FNBM verified that Molton was liable for the account and that the
account’s status was correctly reported as charged-off in the amount of $702.28 after a lengthy
delinquency. Jd. J 9. Experian claims? that it sent the results of its reinvestigation to Molton on
January 2, 2002, within 30 days of Molton's request for an investigation. Jd. § 10.

In April 2002, Molton paid Allied Interstate $351.50 on the FNBM account. Jd. ¥ 38.

She called Experian on May 29, 2002 to request another copy of her credit file, which Experian

1 Except where expressly stated otherwise, the facts summarized below were offered by
Experian and admitted by Molton.

7 In Molton’s response to Experian’s statement of facts, Molton disputed this claim,
stating: “Plaintiff has insufficient information to agree or disagree with Defendant’s Statement of
Fact.” Pl.’s Resp. to Def.’s Facts { 10. Experian moved the Court to strike this and similar
answers and deem the facts admitted. As will become apparent below, this and the other facts
subject to the motion to strike are not essential to the outcome of the case. Because we are
granting Experian’s motion for summary judgment, Experian’s motion to strike is denied as
moot.


IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

SONNJA MOLTON,
Plaintiff,
Case No. 02 C 7972

Vv.

EXPERIAN INFORMATION
SOLUTIONS, INC.,

wwe were

Defendant.

MEMORANDUM OPINION AND ORDER DOCKETED

MATTHEW F. KENNELLY, District Judge: JAN 2 6 2004

Sonnja Molton sued Experian Information Solutions, Inc., CBC Credit Services, First
National Bank of Marin (“FNBM”), and Marlin Integrated, claiming violations of the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seg. Molton settled her claims against CBC
Credit Services, FNBM and Marlin Integrated, and they were dismissed from the case on May
29, 2003. The remaining defendant, Experian, a credit reporting company, has moved for
summary judgment on the ground that it did not report any inaccurate information about
Molton’s credit status. For the reasons stated below, the Court grants Experian’s motion.

Facts
The facts relevant to resolving this case are not in dispute. Molton has admitted most of

the facts outlined by Experian in its Rule 56.1(a)(3) Statement of Material Facts, which we will


collection agency, she paid only 50 cents on the dollar. In passing the FCRA, Congress
recognized the need for “procedures that were not only ‘fair and equitable to the consumer,’ but
that also met the ‘needs of commerce’ for accurate credit reporting.” Id. at 1158 (quoting 15
U.S.C. § 1681). The statement on Molton’s credit report that FNBM had charged off Molton’s
pervious balance was not only accurate; it was consistent with the dual purposes of the FCRA.
Id.

3. Defamation

Experian argues that it is entitled to summary judgment on Molton’s defamation claim
because Experian accurately reported Molton’s credit status and Molton cannot prove that
Experian acted with “malice or willful intent to injure.” 15 U.S.C. § 1681h(e). Under §
1681h(e) of the FCRA,

no consumer may bring any action or proceeding in the nature of defamation,

invasion of privacy, or negligence with respect to the reporting of information

against any consumer reporting agency . . . based on information disclosed

pursuant to section 1681g, 1681h, or 1681m of this title, or based on information

disclosed by a user of a consumer report to or for a consumer against whom the

user has taken adverse action, based in whole or in part on the report except as to

false information furnished with malice or willful intent to injure such consumer.
15 U.S.C. § 1681h(e) (emphasis added). We have already concluded that at all times
Experian reported Molton’s credit status accurately, which precludes a finding that “false
information [was] furnished with malice or willful intent to injure [Molton].” See Moline
Experian Information Solutions, Inc., 289 F. Supp. 2d 956, 959 (N.D. Ill. 2003).
Experian, therefore, is entitled to summary judgment on Molton’s defamation claim.

Conclusion

For the reasons stated above, the Court grants Experian’s motion for summary

12