Opinion
No. C-00-00501 CRB
May 13, 2002
MEMORANDUM AND ORDER
Plaintiff brings this action pursuant to the Fair Credit and Reporting Act ("FCRA"). He alleges defendant Trans Union LLC ("Trans Union" or "defendant") inaccurately reported a delinquent account and inaccurately described his address as a "restaurant/bar/nightclub." The Court previously dismissed the individual defendants and plaintiff's state law claims. Now before the Court is Trans Union's motion for summary judgment on the remaining FCRA claims. After carefully considering the papers filed by the parties, including plaintiff's opposition, Trans Union's motion for summary judgment is GRANTED in part and DENIED in part.
SUMMARY JUDGMENT STANDARD
Summary judgment is proper when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). An issue is "genuine" only if there is a sufficient evidentiary basis on which a reasonable fact finder could find for the nonmoving party, and a dispute is "material" only if it could affect the outcome of the suit under governing law. See Anderson v. Liberty Lobby. Inc., 477 U.S. 242, 248-49 (1986). A principal purpose of the summary judgment procedure "is to isolate and dispose of factually unsupported claims." Celotex Corp. v. Catrett, 477 U.S. 317, 323-24 (1986). "Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no `genuine issue for trial.'"Matsushita Elec. Ind. Co. v. Zenith Radio, 475 U.S. 574, 587 (1986).
"In considering a motion for summary judgment, the court may not weigh the evidence or make credibility determinations, and is required to draw all reasonable inferences in a light most favorable to the non-moving party." Freeman v. Arpaio, 125 F.3d 732, 735 (9th Cir. 1997). However, an inference may be drawn in favor of the non-moving party only if the inference is "rational" or "reasonable" under the governing substantive law. See Matsushita, 477 U.S. at 588.
DISCUSSION
The purpose of the FCRA is to "require that consumer reporting agencies adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information." 15 U.S.C. § 1681 (b). "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 the FCRA." Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1332 (9th Cir. 1995) (citing 15 U.S.C. § 1681o). The FCRA also permits a consumer to recover punitive damages if the defendant's non-compliance with the Act was willful. See id. (citing 15 U.S.C. § 1681n).
Section 1681 e(b) of the FCRA provides that "[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." Section 1681 c prohibits a consumer reporting agency from reporting certain information, such as adverse information that is more than seven years old.
Plaintiff makes three claims. First, that Trans Union violated 15 U.S.C. § 1681e (b) by reporting that plaintiff was in arrears on an ITT Financial Services ("ITT") account. Second, that plaintiff violated 15 U.S.C. § 1681e(b) by describing plaintiff's address as a restaurant/bar/nightclub. Third, that Trans Union violated 15 U.S.C. § 1681c by reporting the ITT account more than seven years after it had been charged off.
A. The accuracy of the ITT account
Defendant reported that plaintiff had a delinquent account with ITT which was past due. No reasonable trier of fact could find that the reported information was inaccurate.
Defendant has submitted the declaration of Yvonne Lemire, an employee with the successor to ITT. Based on her review of ITT's records, Ms. Lemire attests: ITT made a cash advance consumer loan to plaintiff in the amount of $2,021.55 on April 17, 1987; no payments were made on the loan; and ITT charged off the loan on July 20, 1988. Plaintiff in fact submitted the same declaration in support of his motion for summary judgment, except that he redacted Ms. Lemire's testimony stating that the loan belonged to plaintiff and that he never made any payments on the loan. Moreover, plaintiff has submitted a "payment history" showing that the loan was made to him and that it was charged off in July 1988.
The fact that defendant deleted the ITT account in January 2000 after plaintiff complained about its accuracy does not create a "genuine" dispute as to the accuracy of the information defendant reported. Defendant explains that it deleted the account in response to plaintiff's inquiry pursuant to its own internal procedures because "ITT was no longer in business and had sold its accounts to various entities." Declaration of Diane A. Terry ("Terry Decl.") at ¶ 53. Plaintiff has not offered any evidence that suggests the real reason defendant deleted the account was because it was inaccurate.
Plaintiff's contention that the payment history shows he made some payments, and therefore Ms. Lemire's testimony is wrong, also does not defeat summary judgment. First, the payment history is completely unauthenticated; there is no evidence as to who prepared the document and what it means. Second, plaintiff did not produce the document in discovery. Third, the document does not show that plaintiff made any payments. The balance plaintiff owed remained the same until the account was charged off on July 20, 1998. Finally, even if plaintiff had made some payments, it is undisputed he did not pay as required and that the account was charged off Accordingly, defendant's reporting of the account was accurate.
On the eve of oral argument, plaintiff submitted a supplemental declaration in which he mentions identity theft. The Court hereby strikes the supplemental declaration as untimely. Moreover, there is no competent evidence in the record from which a reasonable trier of fact could find that the ITT account was opened by someone else in plaintiff's name.
Since the ITT information was not inaccurate, plaintiff's section 1681e(b) claim based on that information necessarily fails. See Guimond, 45 F.3d at 1333 (to establish a prima facie violation of section 1681 e(b) a consumer must "present evidence tending to show that a credit reporting agency prepared a report containing inaccurate information").
B. The address description
Plaintiff's credit report described his previous address in Hawaii as a "restaurant/bar/nightclub." Defendant obtains information from various vendors concerning residence and business addresses in order to provide subscribers with a description of the addresses reported on a consumer's credit report, for example, single family dwelling, commercial property, etc. The information is included in a section of defendant's reports known as the "Hawk Alert." The purpose of the Hawk Alert is to advise subscribers of potentially inaccurate information which the subscribers should check carefully. Defendant's subscribers agree not to deny credit based on an address description contained in the Hawk Alert.
On July 14, 1995, a vendor reported to defendant that plaintiff's address at 3600 Aolele, Hawaii was a "restaurant/bar/nightclub" and that information appeared in the Hawk Alert section of plaintiff's credit report. Plaintiff denies his previous residence fits that description and he claims defendant negligently and willfully reported such inaccurate information.
Assuming that the ECRA applies to Hawk Alert messages, no reasonable jury could find that defendant willfully reported an inaccurate address description for plaintiff. Plaintiff offers no evidence that defendant "knowingly and intentionally committed an act in conscious disregard for the rights of others," Philbin v. Trans Union Corp., 101 F.3d 957, 970 (3rd Cir. 1996), or "recklessly disregarded" its FCRA responsibilities.Mathews v. Government Employees. Ins. Co., 23 F. Supp.2d 1160, 1164 (S.D. Cal. 1998).
Nor could a reasonable jury find that defendant acted negligently. "The FCRA does not impose strict liability . . . — an agency can escape liability if it establishes that an inaccurate report was generated despite the agency's following reasonable procedures." Guimond, 45 F.3d at 1333. Defendant's evidence establishes such reasonable procedures. First, it contracts with vendors responsible for providing accurate information. Second, the information is provided in a section of the report entitled "Hawk Alert" and intended to alert the subscriber to possible errors or issues the subscriber should investigate further. Third, defendant requires its subscribers to agree not to use the information to deny credit; thus, if the information is inaccurate defendant has taken steps to ensure that the consumer is not harmed such by such inaccuracy.
Plaintiff has offered no evidence to dispute the reasonableness of these procedures; indeed, plaintiff does not make any suggestion as to what more defendant should have done to ensure the accuracy of the address information. While "[t]he reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases," Guimond, 45 F.3d at 1333, this is one of those minority of cases where no reasonable jury could find that defendant acted unreasonably. The alleged fact that plaintiff's previous address was not a restaurant/bar/nightclub is simply not enough, without more, to rebut defendant's showing that it has reasonable procedures and followed those procedures with respect to plaintiff. In Guimond, in contrast, defendant's reporting system was "plagued with errors." 45 F.3d at 133. Similarly, in Natale v. TRW. Inc., 1999 WL 179678 (N.D.Cal. March 30, 1999), defendant claimed it was not negligent in failing to report positive account information because it is not required to report information of which it is not aware. The plaintiff had offered evidence, however, that the defendant had previously reported the positive account information. Id. at *5; see also Philbin v. Trans Union Corp., 101 F.3d 957, 966 (3rd Cir. 1996) (reasonableness of defendant's procedures a jury question where defendant issued two inconsistent credit reports and the inconsistencies related to the inaccurate information).
C. The obsolete ITT account
Plaintiff also contends that since the ITT account was charged off in 1988, defendant should not have reported it in 1999, more than seven years later. Section 1681 c prohibits consumer reporting agencies from reporting adverse information which "antedate the report by more than seven years." 15 U.S.C. § 1681c(a)(4) (5). The FCRA defines when the seven years begins to run:
(c) Running of reporting period
(1) In general. — The 7-year period referred to in paragraphs (4) and (6) of subsection (a) of this section shall begin, with respect to any delinquent account that is placed for collection internally or by referral to a third party, whichever is earlier), charged to pro f and loss, or subjected to any similar action, upon the expiration of the 180-day period beginning on the date of the commencement of the delinquency which immediately preceded the collection activity, charge to profit and loss, or similar action.
It is undisputed that ITT charged plaintiff's account to profit and loss on July 20, 1988. The seven years thus began to run around January 20, 1989. Accordingly, defendant was prohibited from including the ITT account information in credit reports generated after January 1996; it is undisputed, however, that defendant included the information in reports generated in November 1999.
Defendant responds that it has implemented reasonable procedures for deleting obsolete adverse items. Every month defendant's system scans its files to identify items of information which are six months and eleven months old. The system then deletes such items from the files so they will not be included in subsequent reports. An item's age is calculated by examining the delinquency, charge-off or collection date reported to defendant by the subscriber. If more than one date is available, the earliest date is applied to determine the item's age. If a delinquency, charge-off, or collection date has not been reported, then the item's age is calculated by examining the date on which defendant received the last account update from the credit grantor.
Defendant asserts that in or about April 1993, ITT reported to defendant that plaintiff had a past due balance. ITT did not provide defendant with a delinquency date, collection date, or charge-off date. Accordingly, defendant's system calculated the running of the seven-year period based on the date ITT first reported the account, April 1993. Under that calculation defendant was required to purge the tradeline in March 2000. Defendant contends that summary judgment must be granted because no reasonable jury could find that the above procedures are unreasonable.
The Court disagrees. Defendant's system depends entirely on the credit grantor reporting the date of delinquency, collection, or charge-off. If no such date is reported, defendant nonetheless reports the adverse information and assumes the seven-year period should start running at the time the credit grantor reports the account; defendant makes no further inquiry of the credit grantor. Defendant offers no evidence or argument as to why such a system is reasonable as a matter of law, especially given that the FCRA specifically requires the seven-year period to run from certain dates. Given that requirement, common sense dictates that a reasonable procedure would ensure that a credit grantor provide such dates before the defendant includes such information on a credit report. Indeed, the FTC Commentary on the FCRA (cited by defendant) provides:
A consumer reporting agency should establish procedures with its sources of adverse information that will avoid the risk of reporting obsolete information. For example, the agency should either require a creditor to supply the date an account was placed for collection or charged off, or the agency should use a conservative date for such placement or charge off (such as the date of the last regularly scheduled payment), to be sure of complying with the statute.55 Fed. Reg. 18819 (1990) (cited at p. 12 of defendant's motion). Defendant's procedures neither require a creditor to supply the date, nor use a conservative date for placement for collection or charge off.
Defendant's reliance on the Sixth Circuit's decision in Spence v. TRW. Inc., 92 F.3d 380, 381 (6th Cir. 1996) is unpersuasive. The Spence defendant reported a delinquent account that had been placed for collection more than seven years earlier. The court held that the defendant had not violated the FCRA because at the time the debt was reported to defendant and defendant included the information in a credit report, defendant was not aware of the date the debt had been placed for collection. The court's decision is premised on the fact that before the credit report at issue was published, the plaintiff had advised the defendant that it disputed the obsolete account, but the plaintiff did not advise the defendant that it was obsolete. Thus, reasoned the court, if the plaintiff had "directly conveyed" to the defendant the pertinent information on when the debt had been placed for collection, the defendant presumably would have deleted the item and it would not have appeared in the credit report at issue in the lawsuit. Id. at 383.
Here, in contrast, plaintiff did not have any communications with defendant until after he was denied credit; he thus had no opportunity to advise defendant of the pertinent date before the erroneous credit report was issued. Moreover, the Spence decision does not refer to the statutory definition of when the seven years begins to run. Nor does the court refer to the regulation which specifically identifies certain reasonable procedures. The Spence court simply ignored that it is the consumer reporting agency's obligation to implement reasonable procedures to ensure maximum accuracy in the first place.
In light of defendant's failure to explain why it is reasonable to report adverse information even when defendant does not know when the seven-year period should start to run, the Court cannot conclude that no reasonable jury could find that defendant's reporting of the obsolete ITT account was negligent. See Guimond, 45 F.3d at 1333 ("[t]he reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases"). Plaintiff has nonetheless not come forward with evidence sufficient to permit a reasonable trier of fact to find that defendant's reporting of the obsolete account was willful; accordingly, the Court will grant summary judgment in defendant's favor on the willfulness claim.
CONCLUSION
For the foregoing reasons, defendant's motion for summary judgment is GRANTED in part and DENIED in part as follows:
1. Defendant's motion for summary judgment on the first and second causes of action relating to the alleged inaccuracy of the ITT information is GRANTED.
2. Defendant's motion for summary judgment on the third cause of action relating to the reporting of the ITT information even though it was more than seven years old is
DENIED.
3. Defendant's motion for summary judgment on the fourth cause of action relating to defendant's willful reporting of the obsolete ITT information is GRANTED.
5. Defendant's motion for summary judgment on the fifth and sixth causes of action relating to the erroneous description of plaintiff's a is GRANTED.