Court Opinion

ID: 23605
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:12:30+00
Date Added: 2024-06-11T12:43:26.231948
License: Public Domain

REVISED, APRIL 9, 2001

                 UNITED STATES COURT OF APPEALS
                      For the Fifth Circuit

                          No. 99-60429

                          TERRY COUSIN,

                                               Plaintiff-Appellee,

                             VERSUS

                    TRANS UNION CORPORATION,

                                               Defendant-Appellant.

          Appeal from the United States District Court
            For the Northern District of Mississippi
                         March 21, 2001

Before GARWOOD, DeMOSS, and PARKER, Circuit Judges.

DeMOSS, Circuit Judge:

     Defendant-Appellant Trans Union Corporation (“Trans Union”)

appeals, after a jury trial, a final judgment awarding Plaintiff-

Appellee Terry Cousin (“Cousin”) $50,000 in compensatory damages

and $4,470,000 in punitive damages for violating the Fair Credit
Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681u,1 and for defaming

Cousin with malice.      Because no reasonable jury could have found

that Trans Union acted willfully or with malice and because there

was insufficient evidence of actual damages, we vacate the district

court’s judgment and render in favor of Trans Union.

                              I. BACKGROUND

      Cousin lives in Clarksdale, Mississippi, with his wife and two

teenage daughters, and has worked at the Mississippi Department of

Health for 19 years.         He has apparently maintained a flawless

credit    history   except   for   certain    items    resulting    from    the

fraudulent acts of others posing as Cousin.

      In 1984, Cousin’s brother Richie misappropriated Cousin’s

personal   identifying    information,       i.e.,    his   name   and   social

security number, to obtain automobile loans from two different

lenders, NBC Bank of Mississippi (“NBC”) and City Finance of

Okolona    (“City   Finance”).      When   Richie     failed   to   pay,   the

delinquencies were negatively noted on Cousin’s file with Trans

Union, a consumer reporting agency as defined by the FCRA.

      In 1993, Richie again pretended to be Cousin and applied for

credit to purchase an automobile in Aberdeen, Mississippi, a place

where Cousin has never lived.       To purchase the automobile, Richie

gave a down payment check that later bounced. The dealer contacted

  1
   The FCRA is one of seven independent subchapters of the Consumer
Credit Protection Act, 15 U.S.C. §§ 1601-1693r.

                                     2
Cousin,    who   explained      that     his   brother   was   an    impostor.

Nevertheless, General Motors Acceptance Corporation (“GMAC”), the

apparent   lender   on   that    automobile      loan,   forwarded    negative

information about Cousin to Trans Union.

     On December 6, 1993, Trans Union sent a consumer report to

Cousin containing the adverse information about the GMAC account or

tradeline. The consumer report also contained negative information

about the NBC account and another account with American General and

listed a fraudulent Aberdeen address.           Cousin immediately informed

GMAC of the error, and on December 10, 1993, Cousin filled out

Trans Union’s Investigation Request Form (“IRF”) and requested

Trans Union to delete all the fraudulent information.               On January

11, 1994, Trans Union responded by sending Cousin a partially

corrected consumer report.             The GMAC account and the Aberdeen

address were deleted, but the consumer report still contained the

NBC and American General accounts. Attached to the consumer report

was a green postcard that said:

           In response to your recent request, we have
           reinvestigated disputed information contained on
           your credit file. The enclosed file reflects the
           results of our investigation.     Some information
           which was disputed may have been changed or deleted
           due to the creditor’s failure to adequately respond
           to our verification requests.      If the creditor
           satisfactorily verifies this information in the
           future, it may be reinstated to the credit file.
           In the event Trans Union reinstates information to
           your report as a result of credit grantor
           verification, you will be notified in writing and
           you will receive an updated copy of your Trans
           Union report reflecting the reinstatement.

                                         3
In May 1994, however, Cousin sued Trans Union for its continued

reporting of the NBC and American General accounts.2               That lawsuit

was settled in January 1995, and Trans Union agreed to suppress all

the adverse information about NBC and American General.

      To suppress the improperly adverse information, Trans Union

implemented     a   procedure   called      cloaking.         Normally,      when

information reported to Trans Union is found to be inaccurate after

reinvestigation pursuant to § 1681i, it is deleted. But unless the

credit grantor involved also deletes the information from its

monthly computer tape submission,3 the information will be re-

reported into the consumer’s Trans Union file.                  To avert such

errors, Trans Union designed a procedure called cloaking.                     The

cloak is a flag in Trans Union’s computer system associated with

the subject account.         The cloaking flag prevents the deleted

information from reappearing in a consumer’s file even if the

credit grantor fails to remove the inaccurate information from its

magnetic tapes and resubmits the information.                The cloaking flag

remains   in   effect   until   the    credit      grantor   has   deleted   the

inaccurate     information   from     its   tape    submissions     for   twelve

consecutive months.     At that point, Trans Union believes that the

  2
   Cousin also sued Jerry Enis Motors and Equifax, Inc.
(“Equifax”), another major consumer reporting agency, for failing
to reinvestigate and delete information about the GMAC account.
  3
   Credit grantors regularly send to Trans Union magnetic tape data
that updates the credit history of their consumers. The update is
usually monthly.

                                       4
credit grantor has deleted the information permanently, and the

cloaking flag expires automatically.

      On February 6, 1995, three weeks after settling the first

lawsuit, Trans Union sent a consumer report to Cousin, which still

contained the fraudulent NBC and American General accounts and the

Aberdeen address.     Furthermore, that consumer report for the first

time listed a fraudulent BellSouth Mobility (“BellSouth”) account.

Richie had apparently opened an account in Cousin’s name with

BellSouth for cellular phone service in mid-1994.

      On February 17, 1995, Cousin completed another IRF, again

contesting the NBC and American General accounts and the Aberdeen

address.     In addition, he challenged for the first time the

BellSouth account.     On February 28, 1995, Trans Union forwarded

another consumer report to Cousin, but it still retained all of the

false information.     After further communication between Cousin’s

lawyers and Trans Union, a clean consumer report was furnished to

Cousin on March 9, 1995.        Moreover, the BellSouth account was

cloaked as of that date.4

      On   November   15,   1996,   Cousin   went   to   Heafner   Motors

(“Heafner”) to buy a vehicle.       After reaching agreement on price

and other details, Cousin sought credit to purchase the vehicle.

  4
   BellSouth also notified Trans Union via a Universal Data Form
(“UDF”) on December 15, 1995, that the BellSouth account was
subscription fraud.

                                    5
The salesman filled out the paperwork and submitted it to the

credit manager Bill Harmon.

      At trial, Harmon testified that Heafner does not lend any

credit.5   Instead, he stated that Heafner obtains consumer reports

on customers to select the best financing match among a group of

lenders.   Heafner obtained a consumer report on Cousin from Trans

Union, which    again   included   the   old   BellSouth   account.   The

consumer report listed the account as a “P and L write off” and

showed it to have a “N09" rating, the worst rating a consumer can

receive and which means “bad debt” or “charged off account.”

Heafner selected GMAC to provide financing for Cousin’s purchase

and sent his application, but not Trans Union’s consumer report, to

it.

      Like Heafner, GMAC sought a consumer report and obtained one

from Equifax.    The Equifax report also contained the BellSouth

account. GMAC denied in writing Cousin’s application for credit to

purchase the car from Heafner.     GMAC based its denial on two items:

1) the Equifax report containing the BellSouth account and 2)

GMAC’s own internal record of the loss on the prior GMAC account,

which neither the Equifax or Trans Union reports listed.

      Cousin called Heafner later in the afternoon of November 15,

1996, and was told that his application had not been approved.         On

December 11, 1996, Cousin requested disclosure of his file from

  5
   The retail installment contract, however, would have listed
Heafner as the seller/creditor.

                                    6
Equifax.   Before releasing the file to Cousin, Equifax deleted the

BellSouth account from the file, thus making Cousin unaware of the

BellSouth problem.

      On January 13, 1997, Cousin requested a consumer report from

Trans Union. Upon receipt, he noticed that the report included the

false Aberdeen address and the BellSouth account.6    As a result,

Cousin sent to Trans Union another IRF on January 24, 1997,

notifying it that the entries were false.

      In response to Cousin’s notice, Trans Union sent to Cousin

another consumer report, dated February 27, 1997.      That report

deleted any reference to the BellSouth account, but it restated the

GMAC account that had previously been deleted in January 1994.

Apparently, GMAC had decided to re-report the old GMAC account

after it noted that the Equifax report did not list the GMAC

account.   Moreover, GMAC had re-reported the old GMAC account,

using a different prefix number to designate the account. On March

4, 1997, Cousin notified Trans Union about the GMAC account.7

      On March 28, 1997, Cousin sued Trans Union, alleging various

claims, including 1) negligent violation of the FCRA, 2) willful

violation of the FCRA, 3) defamation with malice, and 4) breach of

  6
   This was the first time that Cousin realized that the BellSouth
account had been reinserted. Trans Union did not notify him before
the information was reinserted.
  7
   As with the BellSouth account, Trans Union did not notify Cousin
before reinsertion of the GMAC account.

                                 7
contract.8      Notwithstanding this lawsuit challenging its handling

of the GMAC account, Trans Union sent to BellSouth a consumer

report displaying the GMAC account on April 9, 1997.           Thereafter,

Trans Union attempted to recloak the GMAC account on April 21,

1997. It proved to be short-lived.        The following day, Trans Union

pulled Cousin’s file off the automated system and manually examined

the file, penning certain comments on the file.               Moreover, it

uncloaked the file.       Later on May 12, 1997, Trans Union sent a

consumer report to GMAC with the GMAC tradeline still on the

report.

      The jury trial commenced on May 11, 1998.        Before submitting

the case to the jury, Trans Union moved for judgment as a matter of

law under Federal Rule of Civil Procedure 50.         The district court

granted the motion with respect to the breach of contract claim,

but denied the rest of the motion.        The jury returned a verdict of

$50,000    in    compensatory   damages   and   $4,470,0009   in   punitive

damages.

      On June 4, 1998, Trans Union again moved for judgment as a

  8
   Cousin also filed suits against several other defendants. On
March 20, 1997, Cousin sued BellSouth, alleging that it “willfully
and maliciously and in a secretive manner not reasonably
discoverable by plaintiff published the false and libelous
Bellsouth tradeline to Trans Union.”     Furthermore, on April 7,
1997, Cousin commenced an action against GMAC for re-reporting the
GMAC account.   In addition, he filed suits against Equifax and
Memphis Consumer Credit, an Equifax affiliate, for negligently
reporting the inaccurate BellSouth account to GMAC on November 15,
1996.
  9
   This represented one percent of Trans Union’s net worth.

                                     8
matter of law under Rule 50 and moved for a new trial under Rule

59. In the alternative, Trans Union also moved for a remittitur of

the compensatory and punitive damages awards or for a new trial

based upon the admission of irrelevant and prejudicial evidence and

argument   regarding   the    Heafner   automobile   transaction.   The

district court denied the motions and entered judgment.             This

appeal ensued.

                             II. DISCUSSION

     On appeal, Trans Union contends that it was entitled to

judgment as a matter of law with respect to Cousin’s claims for

negligent violation of the FCRA, willful violation of the FCRA, and

defamation with malice.      In the alternative, Trans Union maintains

that it merits a remittitur of the compensatory and punitive

damages awards or a new trial.      We review those issues in turn.

A.   Standard of Review

     “Judgment as a matter of law is proper on an issue if ‘there

is no legally sufficient evidentiary basis for a reasonable jury to

find for that party on that issue.’”       Satcher v. Honda Motor Co.,

52 F.3d 1311, 1316 (5th Cir. 1995) (quoting Fed. R. Civ. P. 50(a)).

When reviewing the denial of a motion for judgment as a matter of

law, we will uphold a jury verdict unless the facts and inferences

point so strongly and so overwhelmingly in favor of one party that

reasonable men could not arrive at any verdict to the contrary.

                                    9
See id.       Furthermore, we are bound to view the evidence and all

reasonable inferences in the light most favorable to the jury's

determination.       See Denton v. Morgan, 136 F.3d 1038, 1044 (quoting

Rideau v. Parkem Indus. Servs., 917 F.2d 892, 897 (5th Cir. 1990)).

Although we might have reached a different conclusion if we had

been the trier of fact, we are not free to reweigh the evidence or

to reevaluate the credibility of witnesses.           See id.     “We must not

substitute for the jury's reasonable factual inferences other

inferences that we may regard as more reasonable.”              Id.

B.        Negligent Noncompliance with the FCRA

          Section   1681o10   provides    statutory   authority    for   civil

liability for negligent noncompliance with the FCRA.               Any person

who is negligent in failing to comply with a requirement of the

FCRA is liable for any actual damages sustained by the consumer.

15 U.S.C. § 1681o(a). Here, Cousin charged that Trans Union failed

to meet the requirements of § 1681e(b).11              Under that section,

     10
    That section provides in pertinent part:
   Any person who is negligent in failing to comply with any
   requirement imposed under this subchapter with respect to any
   consumer is liable to that consumer in an amount equal to the
   sum of–
      (1) any actual damages sustained by the consumer as a
      result of the failure;
      (2) in the case of any successful action to enforce any
      liability under this section, the costs of the action
      together with reasonable attorney’s fees as determined by
      the court.
15 U.S.C. § 1681o(a).
     11
    In his response brief, Cousin mentions a § 1681i claim. Under
that section, a consumer reporting agency after reinvestigation

                                         10
“[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).

       In the present case, Trans Union concedes the inaccuracy of

its disclosures but maintains that some of those disclosures were

not consumer reports and, therefore, could not have formed the

basis of a § 1681e(b) claim.   Moreover, it asserts that it followed

reasonable procedures as a matter of law.       Finally, Trans Union

argues that the inaccurate information must have been published to

a third party and that Cousin must have suffered a credit denial to

establish a § 1681e(b) claim.12    We review each argument in turn.

       First, Trans Union maintains that there was only one consumer

report in evidence, the November 15, 1996 report to Heafner.    With

respect to the other disclosures of January and February 1997 to

Cousin himself, Trans Union submits that they were not consumer

must promptly delete from a consumer’s file inaccurate, incomplete,
or unverifiable information that a consumer disputes. 15 U.S.C.
§ 1681i(a)(5)(A). Although Cousin’s complaint and the pre-trial
order averred general claims of negligent and willful violations of
the FCRA, neither specifically stated § 1681i nor did the jury
instructions present a claim for violating § 1681i. Because the
record does not establish that a § 1681i claim was ever presented
to the jury, we focus solely on the claims seeking redress for
noncompliance with § 1681e(b).
  12
    Trans Union seems to vacillate as to whether a credit denial is
necessary for a § 1681e(b) claim. At the district court, Trans
Union stated on one occasion that a credit denial may not be a
prerequisite. But it then argued that without a denial, Cousin
could not establish any causation between Trans Union’s alleged
failure to comply with § 1681e(b) and Cousin’s supposed damages.

                                  11
reports and, hence, could not have formed the basis for a claim

under § 1681e(b), which concerns the preparation of consumer

reports.13     Trans Union contends that, by definition, a consumer

report is a communication of information to a third party bearing

on a consumer’s eligibility for credit.          Because the January and

February 1997 disclosures were only to Cousin, Trans Union asserts

that they cannot be consumer reports.

       Trans   Union   further   argues   that   the   qualified    immunity

afforded § 1681g disclosures to consumers pursuant to § 1681h(e)

necessarily distinguishes the January and February 1997 disclosures

from consumer reports like the one sent to Heafner.             Section 1681g

pertains to the disclosure of information in a consumer’s file to

consumers who make a request to a consumer reporting agency. Under

§ 1681h(e), disclosures made pursuant to § 1681g may not be the

predicate for a consumer’s common law claims of defamation or

negligence     against   a   consumer     reporting    agency    unless   the

disclosures contained information furnished with malice or willful

  13
    In its initial brief, Trans Union argues that the report sent
to Heafner and the two disclosures in January and February were the
only possible “consumer reports.” Interestingly, it speaks very
little of its disclosures of Cousin’s file to BellSouth and to GMAC
on April 9 and May 12, 1997, respectively. Only in the reply to
Cousin’s brief, which clearly raises those two disclosures, does
Trans Union address them.     Although those two disclosures were
transmitted after the filing of Cousin’s complaint, the pretrial
order clearly included those publications, and Cousin presented
evidence about them at trial. Consequently, those disclosures were
a part of the trial record. See Fed. R. Civ. P. 16(e) (“[Pretrial]
order shall control the subsequent course of the action unless
modified by a subsequent order.”).

                                     12
intent to injure the consumer.     Moreover, § 1681h(e) excludes from

qualified immunity those actions commenced under §§ 1681n and

1681o.   Trans Union suggests that the January and February 1997

disclosures to Cousin were not consumer reports because it is

illogical to make disclosures to consumers qualifiedly immune from

common law torts such as negligence but still allow them to be

characterized as consumer reports and, consequently, vulnerable to

attack under § 1681o as the purported by-product of negligent

noncompliance with § 1681e(b).

     Although Trans Union’s argument that the January and February

disclosures were not consumer reports may be valid, especially in

light of § 1681h(e), we generally do not consider on appeal matters

not presented to the trial court.         Webb v. Investacorp Inc., 89
F.3d 252, 257 n.2 (5th Cir. 1996).            Other than, 1) a general

statement   by   Trans    Union   in    its   answer   denying   Cousin’s

characterization of his communications with Trans Union and the

nature of those documents, and 2) an attempt to include a jury

instruction that no credit reports were disseminated in the instant

case and that all the reports admitted in evidence were file

disclosures, which attempt failed and which Trans Union did not

object to, Trans Union did not present any argument remotely

suggesting that the January and February 1997 disclosures, or any

other disclosures, were not consumer reports for purposes of a

§ 1681e(b) claim.        Hence, we decline to address Trans Union’s

                                   13
position that the January and February 1997 disclosures were not

consumer reports.

       Trans Union’s second argument for reversing the district

court’s denial of its motion for judgment as a matter of law

concerns      the    reasonableness       of     its    cloaking         procedure.        The

adequacy of the consumer reporting agency’s procedures is judged

according to what a reasonably prudent person would do under the

circumstances. Thompson v. San Antonio Retail Merchants Ass’n, 682
F.2d 509,    513    (5th     Cir.   1982).           In    the    majority       of   cases,

reasonableness is a question for the jury.                              Cahlin v. General

Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991).

Trans Union, however, maintains that its procedure should be deemed

to be reasonable as a matter of law because, unlike other reported

cases that concerned a consumer reporting agency’s inadequate

response to a known problem, it had no way to know that its

cloaking system would fail.               It argues that BellSouth and GMAC

should   have       notified    it    before      re-reporting            their    erroneous

information     about    Cousin,      and      thus,        it   should      not   have   been

penalized for something others failed to do.

       We disagree.       “Allowing inaccurate information back onto a

credit report        after     deleting     it    because          it   is   inaccurate     is

negligent.”         Stevenson v. TRW Inc., 987 F.2d 288, 293 (5th Cir.

1993).   Creditors report all magnetic tape data without notice of

any kind.       They do not highlight any particular data in their

                                            14
magnetic tape       submissions.        Instead,      it   is    incumbent       on   the

consumer reporting agency to permanently delete and cloak the

erroneous information.           Trans Union knew about problems with re-

reporting as Trans Union’s own cloaking manual indicated that a

process had to be developed to ensure that inaccurate information

that was deleted did not keep reappearing.                 Trans Union offers no

reason why, as a matter of law, cloaking for only twelve months is

a reasonable procedure, especially when it could have easily

cloaked any adverse information permanently and when its own

witness conceded that in retrospect the twelve month cloaking

procedure may have been unreasonable.14                The fact that Experian,

another of Trans Union’s consumer reporting agency competitors, did

not have a problem with ensuring the non-reappearance of, at least,

the    BellSouth    account      suggests     the    unreasonableness       of    Trans

Union’s procedure.         Accordingly, Trans Union’s cloaking procedure

was    not    reasonable    as    a   matter    of    law,      and   the   issue     of

reasonableness was properly before the jury to consider.

       Trans Union’s final argument concerns whether the inaccurate

information must have been published to a third party and that

Cousin must have suffered a credit denial to establish a § 1681e(b)

claim.       In essence, that argument involves two interrelated legal

elements--causation and injury--and charges that no injury flowed

from the disclosures of the inaccurate information because they

  14
    She partially retracted the statement later in the same
deposition testimony that was admitted into the trial record.

                                         15
were not publicized to a third party and that Cousin suffered no

injury because there was no credit denial.     Referring to various

cases from this and other circuits, Trans Union insists that

publication and denial of credit are prerequisites to a § 1681e(b)

claim. See, e.g., Pinner v. Schmidt, 805 F.2d 1258, 1262 (5th Cir.

1986); Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996);

Casella v. Equifax Credit Info. Servs., 56 F.3d 469 (2d Cir. 1995);

Cahlin, 936 F.2d 1151; Hauser v. Equifax, Inc., 602 F.2d 811 (8th

Cir. 1979).   But see Guimond v. Trans Union Credit Info. Co., 45
F.3d 1329, 1333 (9th Cir. 1995) (concluding that district court

erred in predicating liability under § 1681e(b) on the occurrence

of a credit denial or the transmission of a report to a third

party).   Because the January and February 1997 disclosures were

sent to Cousin, rather than a third party, and because they did not

contribute to a credit denial, Trans Union contends that those

disclosures   cannot   support   Cousin’s    claim   for   negligent

noncompliance with § 1681e(b).   As for the consumer report sent to

Heafner in November 1996, Trans Union maintains that there was no

evidence indicating that Heafner utilized the report to deny credit

to Cousin.

     We need not address Trans Union’s specific arguments as to

whether publication and denial of credit are necessary to assert a

§ 1681e(b) claim because even assuming arguendo that denial of

credit and publication are not prerequisites for a § 1681e(b)

                                 16
claim, we see insufficient evidence of actual damages to warrant

the jury’s award. As previously noted, § 1681o provides for actual

damages when there has been negligent noncompliance with the FCRA.

Here,   the   jury   awarded   $50,000     in   compensatory   damages     and

$4,470,000    in   punitive    damages.     Those    compensatory    damages

constituted the actual damages award and were apparently for

Cousin’s   purported    denial   of   credit    by   Heafner   and   for   his

emotional distress.15     Trans Union contends that no compensatory

damages should have been awarded for Cousin’s failure to receive

credit for the purchase of a vehicle because the credit grantor did

not utilize a Trans Union credit report.         It asserts that GMAC, not

Heafner, denied Cousin credit and that GMAC used a report from

Equifax and its own internal files.             Additionally, Trans Union

argues that the evidence did not support an award for Cousin’s

emotional distress.

       Having reviewed the record, we agree.          There was no legally

sufficient evidence for a reasonable jury to find that a Trans

Union credit report was utilized to deny Cousin credit.                Three

items purportedly supported the belief that Heafner denied Cousin

  15
    Actual damages may include damages for humiliation or mental
distress even if the consumer has suffered no out-of-pocket losses,
as well as damages for injury to reputation and creditworthiness.
Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th
Cir. 1983).   No evidence about other actual damages was in the
record. Cousin’s attorneys did seek attorney’s fees and costs, but
those related to the filing of the instant action and were sought
post-verdict pursuant to the attorney’s fees provisions of the FCRA
and the common law.

                                      17
credit based on a Trans Union credit report.    One, a letter from

GMAC read:

          “We were recently informed by HEAFNER MOTORS, INC.
          that it was considering the credit sale or lease of
          an automobile or other product to you and asked
          whether we would be prepared to accept your
          obligation if the transaction was completed.     We
          must regretfully inform you that we were not
          agreeable to handling the proposed transaction.”

Two, some testimony revealed that Heafner would have been noted as

the seller/creditor on the vehicle’s installment sales contract.

Three, additional testimony indicated that Heafner assigns loans to

other entities after the sale of a car.   Although we are bound to

view the evidence and all reasonable inferences in the light most

favorable to the jury’s determination, we cannot find that a

reasonable jury would have inferred from the foregoing evidence

that Heafner denied Cousin credit based on a Trans Union credit

report, particularly when the unequivocal testimony from Heafner

was that it does not grant credit to customers.16   The thrust of the

  16
    The three items correspond to concerns with the Truth in
Lending Act (“TILA”), 15 U.S.C. §§ 1601-1667f.       That statute
attempts to achieve the “informed use of credit results from an
awareness of the cost thereof” by consumers by “mandating a
meaningful disclosure of credit terms.” 15 U.S.C. § 1601(a). And
it distinguishes between the responsibilities of creditors and
assignees. See generally Riviere v. Banner Chevrolet, Inc., 184
F.3d 457, 460-61 (5th Cir. 1999).      Under the TILA, “[i]f an
obligation is initially payable to one person, that person is the
creditor even if the obligation by its terms is simultaneously
assigned to another person.” Id. (quoting the staff interpretation
to Regulation Z, 12 C.F.R. § 226). The TILA recognizes that an
automobile dealer and a bank may create an arrangement whereby the
credit sale contracts are initially payable to the dealer but are
immediately assignable to the bank. Id. In such cases, the dealer

                                18
evidence indicated that GMAC was the credit grantor and that it

denied Cousin’s application based on an internal credit report and

a report from Equifax, not Trans Union.                   As the denial of credit

was due to something other than Trans Union’s consumer report on

Cousin, we cannot justify the $50,000 compensatory damages award to

include damages arising from that credit denial.

           Accordingly, the only possible actual damages related to

Cousin’s emotional distress.                   The evidence of that distress,

however,         was    very   limited   and    legally   insufficient.     Cousin

testified that as a result of the November 15, 1996 credit denial,

he        felt   real   frustrated   and   irritated      because   the   BellSouth

information was being re-reported.17              At the time he felt emotional

distress, he did not know whether a Trans Union report had been

utilized by any of the parties.                 In light of the fact that the

credit denial occurred due to an Equifax report, Cousin’s emotional

distress from the denial of credit cannot be attributed to Trans

Union, and he cannot recover actual damages for that distress.

           The only other testimony about emotional distress concerned

and purchaser execute the contract only after the bank approves the
creditworthiness of the purchaser; yet, the dealer is deemed to be
the only creditor in the transaction. Id. Heafner’s arrangement
with GMAC correlates to the TILA model.
     17
      Cousin testified:
     A:   On that day I felt real frustrated, real irritated to
          know that this information was continuing to be reported
          over and over again. I already told them that it was not
          me. I wanted to say that it was a feeling of like being
          in jail knowing that I – I mean, I didn’t do this. I’m
          not guilty, but I was continuing to be punished for it.

                                           19
Cousin’s reaction to seeing his inaccurate Trans Union credit

reports of November 15, 1996, and January 17, 1997.18    Upon being

questioned about how he felt when he saw the November 15, 1996

credit report, Cousin testified:

       A:   Very upset, angry. And it just was that, you know,
            all things I had done, the company to not – they
            didn’t hear me.    I had told them over and over
            again but they didn’t listen to me, you know. So
            that’s how I felt.

       Q:   You felt like nobody was listening?

       A:   Felt like nobody was listening.

As for the January 17, 1997 disclosure, Cousin stated:

       A:   I felt like, if you [k]now anything about a maze,
            it’s like being trapped inside of something that
            you can’t get out of.

       In Carey v. Piphus, 98 S. Ct. 1042, 1052 (1978), the Supreme

Court required proof of actual injury for compensatory damages to

be awarded for mental or emotional distress in an action brought

under 42 U.S.C. § 1983.      It concluded that a jury’s award for

emotional distress must be supported by evidence of genuine injury,

such as the evidence of the injured party’s conduct and the

observations of others.   Id. at n.20.   We extended Carey’s holding

and reasoning to other cases involving federal claims for emotional

harm in Patterson v. P.H.P. Healthcare Corp., 90 F.3d 927, 938 (5th

  18
    No testimony related to the February 1997 disclosure to Cousin,
the April 9, 1997 disclosure to BellSouth, or the May 12, 1997
disclosure to GMAC. Accordingly, no damages award may stand based
on those arguably negligent acts.

                                 20
Cir. 1996), a case concerning claims for racial discrimination and

retaliatory discharge.          There, we recognized that to establish

intangible loss, Carey requires “a degree of specificity which may

include   corroborating        testimony    or    medical   or    psychological

evidence in     support   of    the   damage     award.     Id.   at   940.   In

Patterson, we were confronted with the following evidence of

emotional distress by one of the plaintiffs.

             [He] testified that he felt “frustrated” and “real
             bad” for being judged by the color of his skin.
             [He] explained that the work environment was
             “unbearable” and was “tearing [his] self-esteem
             down.” [He] also stated that it “hurt” and made
             him “angry” and “paranoid” to know that his
             supervisor referred to [him] as a “porch monkey” or
             a “nigger” and generally though that he was
             inferior to white employees.

Id. at 939. That plaintiff’s testimony was much more concrete than

Cousin’s; yet, we vacated the district court’s $40,000 emotional

distress award, finding that his testimony of mental distress was

insufficient.    Id.   Because Cousin presented no more than what was

offered in Patterson, we likewise vacate the award for emotional

distress in the present case for insufficient evidence of actual

damages.19

  19
    Although in vacating the emotional distress award in Patterson
we remanded the case to the district court with instructions for
the district court to award nominal damages, “[n]ominal damages to
vindicate a technical right cannot be recovered unless actual loss
has occurred.” Hyde v. Hibernia Nat’l Bank, 861 F.2d 446, 448 (5th
Cir. 1988) (mentioning general rule about nominal damages in
context of FCRA); Restatement (Second) of Torts § 907 cmt. a (1979)
(“If actual damage is necessary to the cause of action, as in
negligence, nominal damages are not awarded.”); W. Page Keeton et

                                       21
C.        Willful Noncompliance with the FCRA

          Section 1681n20 provides the statutory authority for civil

liability for willful noncompliance with the FCRA.        As with his

negligent noncompliance claim, Cousin’s willful noncompliance claim

pertains to Trans Union’s failure to meet the requirements of

§ 1681e(b).       Under the willful noncompliance statute, a consumer

may obtain punitive damages.       See 15 U.S.C. § 1681n(a)(2).   Here,

the jury awarded $4,470,000 in punitive damages.

al., Prosser and Keeton on Torts § 30, at 165 (5th ed. 1984).
Here, in this negligent noncompliance action, there was
insufficient evidence of actual loss. Therefore, we need not award
any nominal damages, and we make no determination as to whether
Cousin has satisfied all the purported elements of a negligent
noncompliance with § 1681e(b) claim to warrant nominal damages.
   It is true that Cousin maintained a willful noncompliance claim
and a claim for defamation with malice for which nominal damages
could possibly be awarded, but both fail for other reasons. See
infra Parts C & D.
     20
    That section provides in pertinent part:
   Any person who willfully fails to comply with any requirement
   imposed under this subchapter with respect to any consumer is
   liable to that consumer in an amount equal to the sum of–
      (1)(A) any actual damages sustained by the consumer as a
      result of the failure or damages of not less than $100
      and not more than $1,000; or
         (B) . . .
      (2) such amount of punitive damages as the court may
      allow; and
      (3) in the case of any successful action to enforce any
      liability under this section, the costs of the action
      together with reasonable attorney’s fees as determined by
      the court.
15 U.S.C. § 1681n(a).

                                    22
       “Malice or evil motive need not be established for a punitive

damages award, but the violation must have been willful.”                      Fischl

v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th Cir.

1983).       In Pinner, we noted that “willful” is a word of many

meanings and that its construction is often influenced by its

context.      See Pinner, 805 F.2d at 1263.             In concluding that the

consumer reporting agency in that case did not commit a willful

violation, we remarked that there was no evidence suggesting that

the    agency      “knowingly   and   intentionally         committed    an    act    in

conscious disregard for the rights of others.”                      Id.; see also

Philbin, 101 F.3d at 970; Stevenson, 987 F.2d at 293.                    Generally,

courts have allowed a willful noncompliance claim to proceed where

a   defendant’s       conduct   involves      willful       misrepresentations        or

concealments.        See Pinner, 805 F.2d at 1263.              In those cases, a

consumer reporting agency has typically misrepresented or concealed

some    or   all    of   a   credit   report    from    a    consumer.        See    id.

(discussing Millstone v. O’Hanlon Reports, Inc., 528 F.2d 829 (8th

Cir. 1976)); see also Stevenson, 987 F.2d at 294.

       In its initial brief, Trans Union asserts two bases for

rejecting Cousin’s § 1681n claim.              First, it argues that Cousin’s

§ 1681n claim depended heavily on allegations that Trans Union

willfully reinserted the GMAC tradeline into Cousin’s consumer

report in early 1997 and that judicial estoppel should have barred

that claim from being asserted. Second, Trans Union maintains that

                                         23
Cousin   failed     to   present   sufficient     evidence   of   willfulness,

comparing    the    instant    situation     to   various    other    decisions

involving far more egregious facts that were held insufficient to

state a claim under § 1681n.

      We need not address the first of Trans Union’s arguments as

Cousin essentially concedes in his response brief that Trans Union

did not willfully dredge up the GMAC tradeline and reinsert it into

Cousin’s     consumer      report.      Notwithstanding       this     apparent

concession, Cousin challenges Trans Union’s second argument that he

failed to present sufficient evidence of willfulness.                    Cousin

points to several facts, which apparently were brought forth at

trial, to establish that Trans Union’s actions constituted willful

noncompliance.       First, Cousin refers to the re-reporting of the

BellSouth account in the November 15, 1996 report to Heafner

despite the prior cloaking and the December 1995 notice from

BellSouth to Trans Union confirming that the BellSouth information

was subscription fraud.        Second, Cousin argues that Trans Union

knew about the problems of re-reporting but failed to do anything

about it.        He maintains that the company failed to adequately

assess whether a twelve-month cloaking system would work.                Third,

Cousin complains of Trans Union’s transmittal to BellSouth on April

9,   1997,   a    report   including   the    fraudulent     GMAC    tradeline.

Finally, Cousin raises the uncloaking of his consumer report on

April 22, 1997, after the report had been cloaked on April 21, and

                                       24
its transmission to GMAC.21       In its reply to Cousin’s brief, Trans

Union attempts to address Cousin’s counter-arguments.22

       At   trial,   Cousin   introduced   evidence   that   the   BellSouth

tradeline was fraudulent and that Trans Union had cloaked the

account in March 1995.          Additional evidence indicated that in

December 1995, BellSouth had submitted to Trans Union a UDF stating

that the BellSouth account was probably subscription fraud. Eleven

  21
    Cousin also avers that Trans Union made misrepresentations to
him when it sent a green postcard during the first Trans Union
lawsuit in 1995, telling him that if the inaccurate information was
ever reinstated after reverification, Trans Union would notify him.
That allegation does not raise a § 1681n claim for violating
§ 1681e(b). As noted in Pinner, the misrepresentations that might
give    rise   to   a    willfulness    claim   normally    concern
misrepresentations of the consumer’s own report and concealment of
that report from the consumer. See Pinner, 805 F.2d at 1263.
  22
    Normally, “[a]n appellant abandons all issues not raised and
argued in its initial brief on appeal.” Cinel v. Connick, 15 F.3d
1338, 1345 (5th Cir. 1994).     But see Piney Woods Country Life
School v. Shell Oil Co., 905 F.2d 840, 854 (5th Cir. 1990)
(recognizing procedural bar about raising issues in initial brief,
but still addressing as an exercise of discretion some issues newly
raised in reply brief). Although Trans Union’s initial brief did
not directly address some of the specific acts that may have formed
the basis of the jury’s § 1681n verdict and that Cousin discusses
in his response brief, we believe that Trans Union’s appeal
questioning the evidentiary sufficiency of the willfulness claim
sufficiently raised the issue of Trans Unions’ willful conduct for
us to consider all the arguments. Indeed, Cousin’s brief raising
all the purported willful acts is a tacit acknowledgment that the
general issue of willful conduct was presented in Trans Union’s
brief. Furthermore, unlike the more contemptible situation where
an appellant raises a completely new issue in its reply brief,
disadvantaging the appellee, and for which the procedural bar
concerning initial briefs was properly developed and utilized, we
see no real new issue in the reply brief, but rather responsive
arguments to the appellee’s own contentions, and, therefore, little
or no prejudice. With that in mind, we review the sufficiency of
the willfulness claim.

                                     25
months later, the BellSouth tradeline reappeared in Cousin’s file.

Testimony indicated that BellSouth may have re-reported the adverse

tradeline information to Trans Union between April 1996 and August

1996.     The prior lawsuit, the cloaking of the BellSouth account,

and BellSouth’s own UDF transmittal may have put Trans Union on

notice about the falsity of the BellSouth account with respect to

Cousin; nevertheless, we cannot conclude that such evidence is

legally sufficient to establish that Trans Union willfully violated

§ 1681e(b).       In Philbin, the Third Circuit found no willful

violation despite the reappearance of inaccurate information that

had previously been deleted and which the consumer had again

notified the consumer reporting agency about when that information

reappeared.      See id.; see also Casella, 56 F.3d at 476 (failing to

delete    inaccurate   information    notwithstanding      notification    to

consumer reporting agency did not rise to the level of conscious

disregard or deliberate and purposeful action necessary to make out

a willful noncompliance claim).        The present situation is no more

egregious than in Philbin or Casella.          The fact that Trans Union

may have had experience with Cousin’s BellSouth tradeline and that

BellSouth had submitted a UDF to Trans Union about subscription

fraud     does   not   necessarily     translate    into    knowingly     and

intentionally committing an act in conscious disregard of Cousin’s

rights.       BellSouth   itself     appears   to   have   reinserted     the

information, and several months had elapsed from the time of the

                                      26
UDF and/or the initial cloaking to the reinsertion of the BellSouth

tradeline into Cousin’s file. Finally, Trans Union did not conceal

Cousin’s consumer reports or misrepresent them.         That in and of

itself suggests that Trans Union did not commit a willful violation

of § 1681e(b).    Stevenson, 987 F.2d at 294 (“Only defendants who

engaged   in   ‘willful   misrepresentations   or   concealments’   have

committed a willful violation and are subject to punitive damages

under § 1681n.”).

     Similarly, we find Cousin’s argument with respect to Trans

Union’s failure to implement a better cloaking system unavailing.

The system was not perfect, but it was effective for a few months,

and Trans Union never attempted to mislead Cousin with respect to

his consumer report or his rights.      We may fault the failure to

implement a full-proof cloaking procedure as unreasonable, but we

cannot say that it was willful.

     As for Trans Union’s disclosure of Cousin’s consumer reports

to BellSouth in April 1997 and to GMAC in May 1997, we first note

the evidence at trial and the parties’ admissions. When on January

17, 1997, after having been denied credit to purchase a car from

Heafner, Cousin received a Trans Union report, the report included

the false Aberdeen address and the BellSouth tradeline.         Cousin

immediately notified Trans Union that those entries were false, and

Trans Union deleted them. At that time, however, GMAC submitted to

Trans Union, as much of the evidence indicates and as Cousin now

                                   27
apparently concedes, the old GMAC tradeline that had previously

been deleted from Cousin’s report.                 But GMAC utilized a different

prefix code to identify the tradeline rather than the old one.

Cousin notified Trans Union about the fraudulent nature of the GMAC

tradeline on March 4, 1997.            That tradeline was later released in

a consumer report to BellSouth on April 9, 1997.                         On April 21,

1997, the record reveals that Cousin’s file was cloaked.                            That

cloak   was     short-lived       as   it        was   uncloaked      the    next   day.

Thereafter, on May 12, 1997, Cousin’s consumer report with the

fraudulent GMAC tradeline was transmitted to GMAC.

        Although the consumer reports to BellSouth and to GMAC

contained inaccurate information about the GMAC tradeline, we do

not   believe      that   those   or   any       other    acts    amount     to   legally

sufficient evidence for a reasonable jury to find for Cousin on his

§ 1681n claim for violation of § 1681e(b).                  The GMAC tradeline had

a new prefix code and, in essence, was not the same as before.                        We

cannot deem as a willful violation Trans Union’s inability to

distinguish two tradelines that on their face were different.

Thus, Trans Union’s failure to quickly delete the GMAC tradeline

and its decision to release a consumer report with that information

while it reinvestigated the tradeline cannot be deemed a willful

violation     of    §   1681e(b).      See       15    U.S.C.    §   1681i   (providing

reinvestigation procedure in case of disputed accuracy).

      Cousin makes much of the fact that Trans Union cloaked his

                                            28
file on April 21 with notations stating “ID FRAUD” and “derogs” and

then      uncloaked    the   file   the   next   day.     He    argues   that   the

uncloaking demonstrates willfulness because the evidence showed

that only a Trans Union supervisor could have manually uncloaked

his file.         Thus, Cousin believes that Trans Union must have

intended for the GMAC tradeline to be in his file.                Even if a Trans

Union supervisor had uncloaked Cousin’s file, we conclude that such

an act did not constitute a willful violation of § 1681e(b).                     As

the testimony indicated, cloaking is a process whereby Trans Union

precludes future submissions of inaccurate tradeline information

from being entered into a consumer’s file.                     Cloaking does not

concern the actual deletion of any inaccurate information.                 Hence,

when Trans Union determined to uncloak Cousin’s file, it did not

actually do anything substantively to his file.                    Rather, Trans

Union allowed the status quo to stand while it reinvestigated the

fraudulent nature of the GMAC tradeline.                Consequently, we see no

willful violation of § 1681e(b) under the evidence presented to the

jury.23

D.        Defamation With Malice

          Cousin’s last claim is a common law action for defamation with

malice.        Under    §    1681h(e),    consumer   reporting     agencies     are

generally qualifiedly immune from state law claims for defamation

     23
    In making this ruling, we again make no determination as to
whether publication and denial of credit are prerequisites for a
claim predicated on § 1681e(b).

                                          29
unless they involve malice or willful intent to injure.                Both Trans

Union and Cousin agree that courts have determined that malice

under this statutory scheme is congruent with the common law

standard.       See Thornton v. Equifax, 619 F.2d 700, 703 (8th Cir.

1980).    Thus, to establish defamation with malice in the present

case, one must establish that the defendant when he published the

words--(1) either knew they were false, or (2) published them in

reckless disregard of whether they were true or not.                    See Gulf

Publishing Co. v. Lee, 434 So. 2d 687, 695 (Miss. 1983) (citing

Reaves v. Foster, 200 So. 2d 453, 458-59 (Miss. 1967)).

       In the instant case, there were three disclosures to outside

parties: 1)      the   report   to    Heafner   Motors    with   the   BellSouth

tradeline and the fraudulent Aberdeen address on November 15, 1996;

2) the report to BellSouth with the GMAC tradeline on April 9,

1997; and 3) the report to GMAC with the GMAC tradeline on May 12,

1997.     None of those disclosures amounted to defamation with

malice.

       As previously indicated, after learning of the fraudulent

nature of the BellSouth tradeline, Trans Union had cloaked the

BellSouth tradeline in March 1995.              Pursuant to that procedure,

that information was not reported in Cousin’s file for at least a

year and was not publicized to another party until November 1996.

Only    after    BellSouth   had     apparently   begun    re-reporting     that

tradeline did it get back into Cousin’s file.                     The lack of

                                        30
permanence with the cloaking procedure may evidence the weakness

and unreasonableness of the procedure, but no malice can be derived

from it.

       Likewise, we see no legally sufficient evidentiary basis for

concluding that Trans Union defamed with malice when it transmitted

the GMAC tradeline to BellSouth and to GMAC itself.        GMAC had re-

reported    the   tradeline,   utilizing   a   different   prefix   code.

Although in March 1997 Cousin had notified Trans Union about the

fraudulent nature of that tradeline, we cannot say that Trans Union

knew that the tradeline was false when the evidence revealed that

the tradeline had been re-reported with a different prefix code and

that Trans Union was reinvestigating that tradeline. Trans Union’s

subsequent actions do not suggest a reckless disregard for the

truth.     It promptly corrected any errors and fully disclosed its

reports to Cousin.      Therefore, we find that there was legally

insufficient evidence to support Cousin’s defamation with malice

claim.24

  24
    We also note that in Thornton, the Eighth Circuit held that the
standard of proof required for a claim under the exception to the
qualified immunity provision of § 1681h(e) is greater than that for
a willful violation claim under § 1681n. Thornton, 619 F.2d at
705. Assuming that were the case, we would have to find against
the defamation with malice claim in light of our previous
determination that there was no legally sufficient evidence to
support a willfulness violation under § 1681n.

                                   31
                          III. CONCLUSION

       For the foregoing reasons, we vacate the district court’s

judgment and render that Cousin taken nothing with respect to his

claims.25   Each party is to bear their respective costs on appeal.

ENDRECORD

  25
    In light of our ruling, we do not address Trans Union’s
argument, in the alternative, regarding remittitur or a new trial.

                                 32
ROBERT M. PARKER, Circuit Judge, dissenting:

      Because the evidence, taken in the light most favorable to the

jury verdict, supports that verdict, I respectfully dissent.                   “Our

assigned role is neither to re-try the case de novo nor to supplant

the   jury    verdict   so   long   as    it   is   supported    by    substantial

evidence.”     Pinner v. Schmidt, 805 F.2d 1258 (5th Cir. 1986).

      I agree that with the majority that Trans Union’s cloaking

procedure cannot be held reasonable as a matter of law and that the

issue    of   reasonableness    was      properly    submitted    to    the   jury.

However, I would hold that the evidence of actual damages was

sufficient to warrant the jury’s award of $50,000.                Actual damages

may include out-of-pocket losses, damages for injury to reputation

and creditworthiness and for humiliation or mental distress.                    See

Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th

Cir. 1983). Cousin and his attorney, over a four-and-one-half year

period, repeatedly advised Trans Union that specific derogatory

credit information in its files was inaccurate.                 Cousin commenced

two successive federal lawsuits in an effort to obtain Trans

Union’s compliance with the Fair Credit Reporting Act (“FCRA”), 15

U.S.C. §§ 1681-1681u.        Moreover, Cousin testified concerning his

mental and emotional pain arising from the ongoing struggle.                    The

jury’s    conclusion    that   Cousin      suffered    actual    financial     and

emotional damages was entirely reasonable in light of the evidence

                                         33
presented at trial.

     Further, I conclude that the evidence supports the jury’s

punitive damage award of one percent of Trans Union’s net worth.

Cousin presented evidence of Trans Union’s willful noncompliance

with 15 U.S.C. § 1681e(b)’s requirement that a credit reporting

agency   shall    follow   reasonable    procedures   to   assure   maximum

possible accuracy of credit information.        Again, the majority does

not find as a matter of law that Trans Union complied with the

reasonableness requirement of FCRA.        Rather, it reverses the jury

verdict on the basis that the evidence was insufficient for the

jury to conclude that its noncompliance was willful.          I disagree.

At the heart of our inquiry lies Trans Union’s policy of limiting

its cloaking of erroneous information to one year.           The evidence

was more than sufficient for a jury to conclude that Trans Union

was aware that one-year cloaking limit was inadequate, and that it

could have addressed the problem by implementing permanent cloaking

procedures.      Further, Trans Union knew, after years of repeated

complaints and a prior lawsuit, that Cousin’s file had been the

target of “ID FRAUD,” yet the majority holds that a reasonable

juror could not conclude that the decision to uncloak the file and

release a consumer report while it reinvestigated yet another

complaint was a willful violation of its duty to behave reasonably.

In short, both Trans Union’s general cloaking policy and its

specific handling of Cousin’s file support the jury’s finding of

willful noncompliance.

                                    34
    Based on the foregoing, I would affirm the verdict for Cousin

in toto.

                              35