Opinion
Civil Action Number 99-2724 SECTION "L" (2)
May 16, 2000
ORDER REASONS
Before the Court is the motion of defendants Allstate Insurance Company and Allstate Indemnity Company (collectively "Allstate") for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Allstate seeks a dismissal of claims asserted by plaintiffs Steven and Andrea LeBlanc against Allstate for violations of the Fair Credit Reporting Act ("FCRA"). For the following reasons, Allstate's motion for summary judgment is GRANTED.
I. BACKGROUND
Plaintiffs Steven and Andrea LeBlanc brought this class action suit under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. Plaintiffs allege that on or about January 27, 1998, Allstate obtained the plaintiffs' consumer reports, which are also referred to as "credit reports," in connection with investigation of an insurance claim filed by plaintiffs for a loss due to car theft. Plaintiffs further aver that defendants obtained the credit reports of the LeBlancs, and other class members, without an authorization or pursuant to an invalid authorization. Plaintiffs' complaint asserts that Allstate violated provisions of the FCRA, specifically 15 U.S.C. § 1681b and 1681q, and seeks relief for injuries sustained by plaintiffs as provided by 15 U.S.C. § 1681a(4).
Allstate moves to dismiss plaintiffs' claims under Rule 56 of the Federal Rules of Civil Procedure. Allstate argues that as a matter of law, Allstate did not violate the FCRA because plaintiffs' credit reports were obtained pursuant to their written authorizations. According to Allstate, the authorizations were valid and did not contain any material omissions that would render them invalid.
Plaintiffs filed a second amended complaint that asserts claims of computer fraud. Plaintiff was granted leave to file the pleading after Allstate's motion for summary judgment was filed, and Allstate had not answered the second amended complaint when the motion was heard. Therefore, the instant motion for summary judgment only applies to the claims asserted in plaintiffs' original complaint and shall be treated as a motion for partial summary judgment.
Plaintiffs respond that defendants' motion should be denied because issues of fact exist as to the validity of the authorizations. Specifically, plaintiffs contend that the LeBlancs' authorizations are invalid because they were not obtained through their informed consent. Allstate's use of the credit reports for litigation, according to plaintiffs, was impermissible because the use was not disclosed to the LeBlancs.
II. SUMMARY JUDGMENT STANDARD
Summary judgment will be granted only if the pleadings, depositions, answers to interrogatories, and admissions, together with affidavits show that there is no genuine issue as to any material fact and that the defendant is entitled to a judgment as a matter of law. Fed.R.Civ.P. 56. If the party moving for summary judgment demonstrates the absence of a genuine issue of material fact tithe nonmovant must go beyond the pleadings and designate specific facts showing that there is a genuine issue for trial." Willis v. Roche Biomedical Laboratories, Inc., 61 F.3d 313, 315 (5th Cir. 1995). "[A] dispute about a material fact is genuine if the evidence is such that a reasonable jury could return a verdict for the nomnoving party." Id. To oppose a motion for summary judgment, the non-movant cannot rest on mere allegations or denials but must set forth specific facts showing that there is a genuine issue of material fact. See Celotex Corp. v. Catrett, 477 U.S. 317, 321-22 (1986).
The burden of demonstrating the existence of a genuine issue is not met by "metaphysical doubt" or "unsubstantiated assertions." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio, 475 U.S. 574, 586 (1986)). The Court must "resolve factual controversies in favor of the nonmoving party, but only when there is an actual controversy, that is, when both parties have submitted evidence of contrary facts." Id. The Court does not, "in the absence of proof, assume that the nonmoving party could or would prove the necessary facts." Id. If the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party, no genuine issue exists for trial. See Matsushita, 475 U.S. at 588. Finally, "the mere existence of some factual dispute will not defeat a motion for summary judgment; Rule 56 requires that the fact dispute be genuine and material." Willis, 61 F.3d at 315. If the evidence leads to only one reasonable conclusion, summary judgment is proper. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986).
III. ANALYSIS
The Fair Credit Reporting Act provides the exclusive circumstances under which a credit reporting agency may furnish a credit report to another. See 15 U.S.C. § 1681b(a)(2). Under the plain language of the statute, an insurer who obtains a consumer's credit report pursuant to the consumer's written instructions has complied with section 1681b of the FCRA. In Washington v. CSC Credit Services, Inc., the Fifth Circuit recently specified the two instances in which a credit reporting agency may provide consumer reports to an insurance company under section 1681b:
(1) when the consumer consents in writing; and (2) when the agency has reason to believe that the insurance company intends to use the information in connection with the underwriting of insurance involving the consumer.199 F.3d 263, 266 (5th Cir. 2000). In Washington, the court held that a plaintiff bringing a suit under the FCRA must first show that § 1681b was violated, meaning that the report was not obtained for one of the two "permissible purposes." See id. at 266-67. Washington indicates that written consent of the consumer satisfies the FCRA under the "written instruction" provision.
As plaintiffs correctly point out, insurance companies may be held liable under the FCRA. See St. Paul Guardian Ins. Co. v. Johnson, 884 F.2d 881, 883 (5th Cir. 1989). In St. Paul, the defendant insurer had used the plaintiff insured's credit report to investigate his claim. The Fifth Circuit held that the insurer was bound to comply with the terms of the FCRA in handling the insured's credit report. See id. at 885. However, the St. Paul court did not address an insurer who had obtained a credit report pursuant to a written authorization executed by the insured. Also, while the court held that insurance companies are bound to comply with the FCRA's provisions, the court did not state what a plaintiff must prove to sustain a claim under the Act.
In this case, Mark Picou, an Allstate adjuster obtained written statements from Steven and Andrea LeBlanc. The forms authorized "Allstate, its affiliates, and their employees, agents, representatives or lawyers" to obtain:
[A]ny and all information regarding my salary, employment records, bank statements or records, finances or installment purchases, credit standing or rating, police, traffic or accident reports.
Pls.' Ex. 1 (emphasis added). The authorizations further state that they are
relative to a loss which involves vehicle theft loss that occurred on or about December 22, 1997, and is to be used exclusively to investigate any and all aspects of this loss or matters that pertain thereto.
Pls.' Ex. 1 (emphasis added). Plaintiffs do not challenge the authenticity of the authorizations. Plaintiffs contend that the authorizations were invalid because Allstate failed to advise them that the FCRA prohibits the use of credit reports in connection with claims investigation.
The documents executed by the LeBlancs provide Allstate broad authorization to obtain a wide array of information in order to investigate whatever aspects of the LeBlancs' claims that Allstate deemed necessary. Plaintiffs do not cite any requirement, statutory or jurisprudential, that an insurer advise an insured of rights when obtaining written authorizations to obtain credit reports.
The courts have demonstrated reluctance to examine the circumstances surrounding an insurer's procurement of a credit report when the report has been obtained for a permissible purpose, such as pursuant to written authorization. See Washington, 199 F.3d at 266; see also Malbrough v. State Farm Fire Cas. Co., No. 96-1540, 1997 WL 159511, at 3-4 (E.D. La.
March 31, 1997) (finding that a consumer's written authorization satisfies the FCRA's "written instructions" provision); Hammons v. Enterprise Leasing, Co., 993 F. Supp. 1388 (W.D. Ok. 1998) (granting summary judgment for an insurer who obtained credit report pursuant to plaintiffs written authorization). Further support for Allstate's position is provided by the Federal Trade-Commission's official comment, which provides that "[i]f the [credit] report subject furnishes written authorization for a report, that creates a permissible purpose for furnishing the report." 16 C.F.R. § 604(2)(2000). Thus, according to the Federal Trade Commission, the administrative agency charged with interpreting the FCRA, the procurement of a credit report is permissible if done pursuant to the consumer's written authorization, as was done here. The court finds that Allstate's use of the LeBlancs' credit reports was in compliance with § 1681b.
In order to violate § 1681q, Allstate must have obtained the credit reports under "false pretenses." See 15 U.S.C. § 1681q; Advanced Conservation Sys. v. Long Island Lighting Co., 934 F. Supp. 53, 54 (E.D.N.Y. 1996) (concluding that the credit report cannot have been obtained under false pretenses if a permissible purpose underlies the request for the report), aff'd 113 F.3d 1229 (2d Cir. 1997). In this instance, the broad authorizations specifically reference claims investigation and permit Allstate's agents, employees, representatives or lawyers to use the reports. Because Allstate obtained plaintiffs' credit reports for a permissible purpose, Allstate cannot be held liable under § 1681q. Therefore, plaintiffs' claims against defendants under § 1681q must also fail.
The Court is not persuaded by plaintiffs' argument that the authorizations do not permit the use of the reports for litigation purposes and that there is an issue of fact concerning whether the credit reports were used in litigation against the LeBlancs for two reasons. First, the authorizations are sweeping in their terms and scope and do not in any way limit Allstate in using the reports. Use of the reports by Allstate's lawyers is expressly permitted. By their stated terms, the authorizations pertain to the LeBlancs' car theft claim, and permit Allstate's lawyers and representatives to investigate any and all aspects of the loss. Use of the credit reports would seem to fall within the broad scope of authority given to Allstate by the LeBlancs. Second, though Allstate apparently does not dispute plaintiffs' assertion that copies of the LeBlancs' credit reports were included in the claims files used by Allstate's lawyers, plaintiff has not produced evidence that the credit reports were actually used in litigation against the LeBlanes. Plaintiffs contend that the reports are impermissibly used if they are merely disclosed to, not necessarily used by, a lawyer in litigation. To accept this argument, however, would impose a limitation on Allstate that is not found in the writing of the broad authorizations. Again, the plain language of the consent forms specifically permits Allstate's lawyers to use plaintiffs' credit reports to investigate any and all aspects of the car theft claim.
IV. CONCLUSION
Given the expansive written authorizations furnished by the LeBlancs to Allstate, the Court finds that Allstate did not violate § 1681. The expansive authorizations specifically grant Allstate permission to utilize the credit reports for claims investigation. Requiring more of the defendants would write into the statute language that could have been included, but was not. Accordingly, Allstate is entitled to a judgment in its favor as a matter of law. The motion of defendants Allstate Insurance Company and Allstate Indemnity Company for partial summary judgment is HEREBY GRANTED. Plaintiffs' claims under 15 U.S.C. § 1681 of the Fair Credit Reporting Act are DISMISSED.