Opinion ID: 687345
Heading Depth: 2
Heading Rank: 1

Heading: Violation of 15 U.S.C. Sec. 1681e(b)

Text: 15 U.S.C. Sec. 1681e(b) states: 13 Whenever 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. 14 The FCRA provides for compensation in the form of actual damages and attorneys' fees if a consumer reporting agency negligently fails to comply with any provision of FCRA. 15 U.S.C. Sec. 1681o. In addition, a consumer can recover punitive damages for willful non-compliance. 15 U.S.C. Sec. 1681n. 15 In granting Trans Union's motion for summary judgment, the district court noted that the parties disputed the scope of the term actual damages and disputed whether such damages were a prerequisite to finding Trans Union liable under Sec. 1681e(b). The district court held that while mental anguish may be an independent basis upon which to find liability, plaintiff in this case has not identified evidence sufficient to meet her burden to show that any damage due to emotional harm was caused by inaccuracies in defendant's credit report. The district court found that since there was no denial of credit, the emotional distress plaintiff claimed could not have resulted from Trans Union's activities, even if it came within the definition of actual damages. As a result, Guimond's claims were rejected due to lack of causation between Guimond's alleged harm and Trans Union's activities. 16 The term actual damages has been interpreted to include recovery for emotional distress and humiliation. See Johnson v. Department of Treasury, I.R.S., 700 F.2d 971, 984 (5th Cir.1983) (mental anguish included as an element of recovery in FCRA claims); Thompson v. San Antonio Retail Merchants Ass'n, 682 F.2d 509, 514 (5th Cir.1982); Millstone v. O'Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir.1976); Bryant v. TRW, Inc., 487 F.Supp. 1234, 1240 (E.D.Mich.1980), aff'd, 689 F.2d 72 (6th Cir.1982); Jones v. Credit Bureau of Huntington, Inc., 184 W.Va. 112, 117, 399 S.E.2d 694 (1990). Moreover, no case has held that a denial of credit is a prerequisite to recovery under the FCRA. 17 Accordingly, as a procedural matter, the district court erred in granting summary judgment on the issue of causation because there was uncontroverted evidence to support Guimond's theory of liability. Trans Union did not contest Guimond's claims of damages, nor that those damages were a result of the inaccuracies in her credit report. On this record, summary judgment is inappropriate. The district court found that Guimond's claimed damages could not have resulted from Trans Union's activity because there was no denial of credit. Yet, absent some authority stating that a denial of credit, and not mere credit inaccuracies, are necessary for recovery under FCRA, the issue of causation should have been left for a fact finder to determine. 18 In addition, we find that a failure to comply with Sec. 1681e(b) is actionable even absent a denial of credit. Accordingly, the district court erred in finding that any liability under Sec. 1681e(b) was predicated, as a matter of law, on the occurrence of some event--denial of credit or transmission of the report to third parties--resulting from the compilation and retention of erroneous information. 19 The FCRA was the product of congressional concern over abuses in the credit reporting industry. St. Paul Guardian Insurance Co. v. Johnson, 884 F.2d 881, 883 (5th Cir.1989). The legislative history of the FCRA reveals that it was crafted to protect consumers from the transmission of inaccurate information about them, Kates v. Croker National Bank, 776 F.2d 1396, 1397 (9th Cir.1985); see also St. Paul, 884 F.2d at 883 (citing Pinner v. Schmidt, 805 F.2d 1258, 1261 (5th Cir.1986), cert. denied, 483 U.S. 1022, 107 S.Ct. 3267, 97 L.Ed.2d 766 (1987), and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner. St. Paul, 884 F.2d at 883 (citing Hovater v. Equifax. Inc., 823 F.2d 413, 417 (11th Cir.), cert. denied, 484 U.S. 977, 108 S.Ct. 490, 98 L.Ed.2d 488 (1987)). These consumer oriented objectives support a liberal construction of the FCRA. Kates, 776 F.2d at 1397. 20 Liability under Sec. 1681e(b) is predicated on the reasonableness of the credit reporting agency's procedures in obtaining credit information. Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir.1991); Bryant v. TRW, Inc., 689 F.2d 72, 77 (6th Cir.1982); Thompson v. San Antonio Retail Merchants Ass'n, 682 F.2d 509, 513 (5th Cir.1982); Ladner v. Equifax Credit Information Services, 828 F.Supp. 427, 430 (S.D.Miss.1993); Boothe v. TRW Credit Data, 768 F.Supp. 434, 437 (S.D.N.Y.1991). In order to make out a prima facie violation under Sec. 1681e(b), a consumer must present evidence tending to show that a credit reporting agency prepared a report containing inaccurate information. Cahlin, 936 F.2d at 1156. 3 The FCRA does not impose strict liability, however--an agency can escape liability if it establishes that an inaccurate report was generated despite the agency's following reasonable procedures. The reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases. Id. 21 An inquiry into the reasonableness of the procedures utilized by the agency in acquiring information belies a claim that liability under Sec. 1681e(b) must be predicated on the effect of that information once disseminated. In the instant case, the focus should not have been on Guimond's damage claims. Rather the inquiry should have centered on whether Trans Union's procedures for preparing Guimond's file contained reasonable procedures to prevent inaccuracies. Guimond has made out a prima facie case under Sec. 1681e(b) by showing that there were inaccuracies in her credit report. The district court was then required to consider whether Trans Union was liable under Sec. 1681e(b) before it determined that Guimond had suffered no recoverable damages. 22 The district court's application of Sec. 1681e(b) is particularly troubling given the following statement in the court's opinion: 23 The fact that multiple errors existed does not show that defendant refused to correct the mistake or changed the entries back to the incorrect data [in Guimond's file], but rather indicates the unfortunate extent to which defendant's reporting system was plagued with errors. 24 This statement indicates that Trans Union might indeed be liable under Sec. 1681e(b) because of the errors in its reporting system. Accordingly, we reverse the district court's grant of summary judgment on this issue and remand for trial of Guimond's claims applying the above-cited precedent.