Opinion ID: 435787
Heading Depth: 1
Heading Rank: 2

Heading: the wage earner plan

Text: 11 In Koropoulos, at 41-42, decided today, we state that where, as here, a consumer reporting agency reports inaccurate information, a claim for violation of section 1681e(b) will turn on the reasonableness of the agency's procedures for assuring maximum accuracy of its reports. See also Hauser v. Equifax, Inc., 602 F.2d 811 (8th Cir.1979) (consumer reporting agencies not strictly liable for inaccurate reports under the Act). We hold here that with respect to this second element a plaintiff cannot rest on a showing of mere inaccuracy, shifting to the defendant the burden of proof on the reasonableness of procedures for ensuring accuracy: There is no indication that Congress meant to so shift the nominal plaintiff's burden of proof as to requisite components of a claim based on a statutory violation. 5 Thus, we conclude that a plaintiff must minimally present some evidence from which a trier of fact can infer that the consumer reporting agency failed to follow reasonable procedures in preparing a credit report. We believe, however, that Stewart did present enough evidence to create a genuine dispute about the reasonableness of CBI's procedures. 12 The standard of conduct by which the trier of fact must judge the adequacy of [consumer reporting] agency procedures is what a reasonably prudent person would do under the circumstances. Bryant v. TRW, Inc., 689 F.2d 72, 78 (6th Cir.1982) (quoting Thompson v. San Antonio Retail Merchants Association, 682 F.2d 509, 513 (5th Cir.1982) (per curiam)) (insertions by Bryant court). Judging the reasonableness of an agency's procedures involves weighing the potential harm from inaccuracy against the burden of safeguarding against such inaccuracy. See Koropoulos, at 42; Alexander v. Moore & Associates, Inc., 553 F.Supp. 948, 952 (D.Haw.1982). Under this standard a plaintiff need not introduce direct evidence of unreasonableness of procedures: In certain instances, inaccurate credit reports by themselves can fairly be read as evidencing unreasonable procedures, and we hold that in such instances plaintiff's failure to present direct evidence will not be fatal to his claim. 13 Our holding is buttressed by several section 1681e(b) cases in which the plaintiffs prevailed despite their failure to present direct evidence on defendants' reporting procedures. In Bryant v. TRW, Inc., 487 F.Supp. 1234 (E.D.Mich.1980), aff'd, 689 F.2d 72 (6th Cir.1982), the court upheld a jury verdict against the credit reporting agency, which had reported inaccurate information supplied to it by several sources. The court pointed to apparent inconsistencies between credit reports issued in May and September of 1976, and concluded that such inconsistencies imposed a duty on the reporting agency to verify the information in those reports. Bryant, 487 F.Supp. at 1242. 6 In Morris v. Credit Bureau, Inc., 563 F.Supp. 962 (S.D.Ohio 1983), the agency inadvertently maintained two files on the plaintiff. After the plaintiff disputed information which the agency had reported, the agency corrected the information in one but not both of the files. Later, it again reported the inaccurate information. Morris found the existence of the two similar files to be a sufficient indicium of unreasonable procedures to satisfy the plaintiffs' burden of proving that the defendant did not follow reasonable procedures to assure the maximum accuracy of information reported about him by the defendant. Morris, 563 F.Supp. at 968. 7 See also Millstone v. O'Hanlon Reports, Inc., 383 F.Supp. 269, 275 (egregiousness of report's inaccuracy was evidence of willful non-compliance with section 1681e(b)), aff'd, 528 F.2d 829 (8th Cir.1976). 14 Stewart's claim is similar to those in Bryant and Morris. He contends that the wage earner plan entry was facially inconsistent with the rest of his file, which he claims showed minimal debt obligations and ... [no] substantial delinquency. Reply Brief for Appellant at 3. He notes that, in adding section 1681e(b) to the FCRA, Congress was particularly concerned with the potentially devastating effects that reports of bankruptcies and wage earner plans can have on a consumer's ability to get credit. See Koropoulos, at 43-44; H.R.Rep. No. 1587, 91st Cong., 2d Sess. 29 (1970); Hearings On H.R. 16340 Before the Subcommittee on Consumer Affairs of the House Committee on Banking and Currency, 91st Cong., 2d Sess. 385-393 (Remarks of Royal E. Jackson, Chief, Division of Bankruptcy, Administrative Office of the U.S. Courts). Certainly, inconsistencies within a single file or report involving an inaccuracy as fundamental as a falsely reported wage earner plan, as well as inconsistencies between two files or reports involving less fundamental inaccuracies, can provide sufficient grounds for inferring that an agency acted negligently in failing to verify information. And, at least as the record now stands, CBI has not impugned such an inference either by asserting that, in fact, it does verify information where a file shows internal inconsistencies, 8 or that the rest of Stewart's file was sufficiently consistent with a wage earner plan so as not to give rise reasonably to any such inference. 15 The district court in fact never addressed whether Stewart must present direct evidence of CBI's allegedly unreasonable procedures because it read his Memorandum in Opposition to Defendant's Renewed Motion for Summary Judgment as indicating that he did not intend to show CBI's procedures were unreasonable. See Memorandum Opinion, slip op. at 10-11. In light of the procedural posture of the case at that time, the court's reading, we believe, was unwarranted. 9 In granting summary judgment on an issue different from that raised by CBI, the district court denied Stewart any opportunity to explain how he would attempt to prove the unreasonableness of CBI's procedures. 10 In light of Stewart's argument on appeal--that a facial inconsistency between the wage earner entry and the rest of the file creates a duty for CBI to reinvestigate the information, see Reply Brief of Appellant at 3--and the present record in this case, which does not belie that argument, we hold that summary judgment on the issue of the reasonableness of CBI's procedures is inappropriate at this time.