Opinion ID: 4510978
Heading Depth: 3
Heading Rank: 3

Heading: The Cortez Litigation

Text: In 2005, Sandra Cortez, a consumer, sued TransUnion in the Eastern District of Pennsylvania under circumstances similar to Ramirez’s. See Cortez v. Trans Union, LLC, 617 F.3d 688, 696–706 (3d Cir. 2010). Cortez attempted to purchase a car but was delayed for hours because TransUnion sent the car dealership a credit report with a false OFAC alert on it. Id. at 697–99. When Cortez attempted to resolve the issue, TransUnion repeatedly told her that there was no OFAC alert on her report and refused to investigate or remove the alert. Id. at 699–700. A jury found in Cortez’s favor on four FCRA claims: (1) TransUnion negligently failed to follow reasonable procedures to ensure maximum possible accuracy in producing Cortez’s credit report, in violation of 15 U.S.C. § 1681e(b); (2) TransUnion willfully failed to provide Cortez all information in her file despite her requests, in violation of § 1681g(a); (3) TransUnion willfully failed to reinvestigate the OFAC alert after Cortez informed TransUnion of the false alert, in violation of § 1681i(a); and (4) TransUnion willfully failed to note Cortez’s dispute on subsequent reports, in violation of § 1681i(c). Id. at 705. 14 RAMIREZ V. TRANSUNION The jury awarded Cortez $50,000 in actual damages and $750,000 in punitive damages. Id. The district court remitted the punitive damages to $100,000, but otherwise upheld the verdict. Id. at 705–06. On appeal, TransUnion argued that OFAC information was not covered by the FCRA because it was not part of the “consumer report” as defined by the statute. Id. at 706. 3 In August 2010, the Third Circuit flatly rejected this argument, noting that it was “difficult to imagine an inquiry more central to a consumer’s ‘eligibility’ for credit than whether federal law prohibits extending credit to that consumer in the first instance.” Id. at 707–08 (quoting 15 U.S.C. § 1681a(d)(1)). The court upheld the jury’s verdict on the reasonable procedures claim, explaining: “The jury could reasonably conclude that [TransUnion] could have taken steps to minimize the possibility that it would erroneously place an OFAC alert on a credit report, such as checking the birth date of the consumer against the birth date of the person on the SDN List.” Id. at 709. With respect to Cortez’s second claim, that TransUnion willfully failed to disclose all of the information in Cortez’s file when she requested it, TransUnion argued that OFAC 3 Under the FCRA, a consumer report is defined as “any written, oral, or other communication of any information by a [CRA] 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, employment, or another purpose authorized by the statute. 15 U.S.C. § 1681a(d)(1). We use the terms “consumer report” and “credit report” interchangeably in this Opinion. RAMIREZ V. TRANSUNION 15 information was not part of the consumer “file” because TransUnion did not store OFAC information in its usual database; rather, it contracted with Accuity to store the information separately. Id. at 711. Again, the Third Circuit emphatically rejected this argument: “We do not believe that Congress intended to allow credit reporting companies to escape the disclosure requirement in § 1681a(g) by simply contracting with a third party to store and maintain information that would otherwise clearly be part of the consumer’s file and is included in a credit report.” Id. Finally, the court upheld Cortez’s reinvestigation and dispute claims, and affirmed the district court’s rulings as to damages. Id. at 712–24. However, the court expressed concern over the district court’s reduction of the punitivedamages award because “the record certainly support[ed] a jury becoming ‘incensed’ over [TransUnion’s] ‘insensitivity’ to Cortez’s claim[.]” Id. at 718 n.37.