Opinion ID: 6341644
Heading Depth: 2
Heading Rank: 1

Heading: The Willfulness Framework.

Text: On appeal, McIntyre challenges only the district court's determination that she did not adduce evidence sufficient to show that RentGrow willfully failed to comply with its obligations under section 1681e(b). In Safeco, the Supreme Court clarified that, under the FCRA as under the common law, willfulness encompasses not only intentional or knowing violations but also reckless ones. See 551 U.S. at 57-58. McIntyre does not contend that RentGrow intentionally or knowingly failed to comply with section 1681e(b). Instead, she contends that the summary judgment record, construed in the requisite light, suffices to show recklessness on RentGrow's part. To define recklessness, the Safeco Court looked to the common law. See id. at 68-69. Recklessness — which usually is measured under an objective standard in civil cases — entails disregard for an unjustifiably high risk of harm that is either known or so obvious that it should be known. Id. at 68 (quoting Farmer v. Brennan, 511 U.S. 825, 836 (1994)). The essence of recklessness, the Court stated, is the high risk, id. at 69, which must be substantially greater in amount than that which is necessary to make [] conduct negligent, id. (quoting Restatement - 12 - (Second) of Torts § 500(g) (1965)). Thus, to prove actionable recklessness, a plaintiff must show that the defendant knew or had reason to know of facts that would lead it to understand that it was running an 'unjustifiably high risk' of violating the statute. Id. at 70. The Safeco Court applied this general paradigm to a situation in which a defendant claimed compliance with the FCRA based exclusively on interpretation of the relevant statutory provision. The statute sub judice required a consumer to be notified if something in her credit report resulted in adverse action, including an increase in any charge for . . . any insurance. 15 U.S.C. § 1681s(k)(1)(B)(i). But the statute was silent on how an increase should be measured. Safeco, acting [on] the rationale that 'increase' presupposes prior dealing, . . . took the definition as excluding initial rate offers for new insurance. Safeco, 551 U.S. at 69. As a result, it made no effort to comply with the notice requirement when dealing with the plaintiff. See id. The Court rejected Safeco's reading of the statute but acknowledged that Safeco's reading, even though incorrect, ha[d] a foundation in the statutory text. Id. at 69-70. And up to that point, neither the Court itself nor any court of appeals had addressed the issue. See id. at 70. By the same token, no authoritative guidance had yet emerged from the Federal Trade - 13 - Commission (FTC).3 Id.; see id. at 70 n.19 (rejecting as insufficient an opinion letter from a single FTC staff attorney and noting that the letter did not canvass the issue and explicitly indicated that it was merely 'an informal staff opinion . . . not binding on the Commission' (alteration in original)). In these circumstances, the Court determined that Safeco lacked the benefit of guidance . . . that might have warned it away from the view it took. Id. at 70. Given this dearth of guidance and the less-than-pellucid statutory text, the Court concluded, Safeco's reading was not objectively unreasonable, and so f[e]ll[] well short of raising the 'unjustifiably high risk' of violating the statute necessary for reckless liability. Id. The Supreme Court's reasoning suggests that if a CRA is acting in compliance with a reasonable reading of an ambiguous statute — or, as the Supreme Court carefully put it, a reading that is not objectively unreasonable — it cannot have been acting recklessly. See id. at 69 ([T]here is no need to pinpoint the negligence/recklessness line, for Safeco's reading of the statute, 3Until 2011, the FTC was the principal regulatory agency charged with enforcement of the FCRA. See 15 U.S.C. § 1681s; see also Fed. Trade Comm'n, 40 Years of Experience with the Fair Credit Reporting Act 3-4 (July 2011). On July 21, 2011, the CFPB was given primary regulatory and enforcement authority. See generally Consumer Financial Protection Act of 2010, Pub. L. No. 111-203, 124 Stat. 1376 (2010); id. at 2090-92 (codified at 15 U.S.C. § 1681s(e)). - 14 - albeit erroneous, was not objectively unreasonable.); id. at 70 (Safeco's reading was not objectively unreasonable . . . .). Following that reasoning, [a] credit reporting agency may act in reckless disregard of a statute's requirements by adopting an objectively unreasonable interpretation of the law. See Cortez, 617 F.3d at 721 (citing Safeco, 551 U.S. at 69). But compliance need not necessarily turn squarely on a question of statutory interpretation. After all, the statute may be very clear or the reasonableness of a CRA's compliance may depend more on context than on the CRA's reading of the statutory text. RentGrow concedes that section 1681e(b), which requires that a CRA follow reasonable procedures to assure maximum possible accuracy of reported information, presents just such a situation, that is, a situation in which compliance does not turn squarely on statutory interpretation but, rather, on the facts. 15 U.S.C. § 1681e(b). In such a case, we must evaluate whether a CRA acted in disregard of facts that would make it obvious, considering the totality of the circumstances, that there was an unjustifiably high risk that it was not complying with the statute. See Cortez, 617 F.3d at 721-22 (A credit reporting agency may also willfully violate the FCRA by adopting a policy with reckless disregard of whether it contravenes a plaintiff's rights under the FCRA.). - 15 -