Opinion
Civil Action No. 03-767.
July 23, 2004
MEMORANDUM AND ORDER
Presently before this Court is Defendant's Motion for Partial Summary Judgment (Doc. 17). For the reasons set forth below, upon consideration of Defendant's Motion for Partial Summary Judgment, Plaintiff's Response (Doc. 19), and Defendant's Reply (Doc. 25), this Court will deny Defendant's Motion for Partial Summary Judgment.
BACKGROUND
Plaintiff Gregory Lukens filed this action on February 6, 2003, contending that Defendant Dunphy Nissan, Inc. violated the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., and invaded his privacy, when one of its employees provided Plaintiff's personal credit information to an "imposter" who proceeded to open five fraudulent credit accounts in Plaintiff's name. From the evidence of record, taken in a light most favorable to the Plaintiff, the pertinent facts are as follows.
On October 3, 2002, Anthony Williams visited Defendant's dealership to apply for a position as a car salesman. Williams is a repeat offender for crimes of forgery and theft-by-deception. Prior to being hired, Williams told Defendant's managers about his criminal history. However, Defendant hired him on the spot without further inquiry.
One day later, on October 4, 2002, Plaintiff visited Defendant's dealership to inquire about purchasing a new car. Plaintiff spoke with Defendant's employee, Williams, now working his second day, about a sport utility vehicle. Williams completed, and Plaintiff signed, a form authorizing Defendant to obtain Plaintiff's credit report. The form contained two errors; it incorrectly stated Plaintiff's middle initial and telephone number. Defendant obtained Plaintiff's credit report, which also had the incorrect middle initial on the first page. When the parties could not agree on a price, the Plaintiff left the dealership.
In late October and early November of 2002, five fraudulent credit accounts were opened in Plaintiff's name in Maryland and Virginia. Plaintiff immediately notified Experian, Trans Union, and Equifax and requested that a "security alert" be issued. This alert provides some protection by requiring telephone confirmation with Plaintiff prior to the issuance of credit, thereby preventing the applicant from obtaining instant credit.
Each of the applications used to open the fraudulent accounts in Plaintiff's name contain Plaintiff's incorrect middle initial and telephone number, matching the errors copied down by Williams on the authorization form. The applications used to open the fraudulent accounts also contain information appearing in Plaintiff's credit report. Although approximately $12,000 was charged to these accounts, Plaintiff has not been required to pay for the charges. By January 7, 2003, all five accounts had been closed, however, some evidence of the accounts still remains on Plaintiff's credit report.
LEGAL STANDARD
Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party.Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id.
A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis of its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the movant's initial Celotex burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Celotex, 477 U.S. at 325, 106 S.Ct. at 2553-54. After the moving party has met its initial burden, "the adverse party's response, by affidavits or otherwise as provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). That is, summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322, 106 S.Ct. at 2552-53. "[I]f the opponent [of summary judgment] has exceeded the `mere scintilla' [of evidence] threshold and has offered a genuine issue of material fact, then the court cannot credit the movant's version of events against the opponent, even if the quantity of the movant's evidence far outweighs that of its opponent." Big Apple BMW, Inc. v. BMW of North America, Inc., 974 F.2d 1358, 1363 (3d Cir. 1992). Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson, 477 U.S. at 255, 106 S.Ct. at 2513-14.
DISCUSSION
Defendant seeks summary judgment as to Plaintiff's FCRA claims on grounds that: (1) Defendant's conduct did not violate the FCRA; (2) Defendant cannot be held vicariously liable for its employees' willful violations of the FCRA; (3) Plaintiff has not established a casual nexus between the credit report initially obtained by Defendant's employee and the subsequent theft of his identity; and (4) Plaintiff has suffered no compensable damages.(1) Does the FCRA apply?
The FCRA was passed in 1970 as part of the Consumer Credit Protection Act and aims to "promote efficiency in the Nation's banking system and to protect consumer privacy." TRW, Inc. v. Andrews, 534 U.S. 19, 23 (2001). These purposes are achieved primarily by regulating the dissemination of consumer information by consumer reporting agencies. However, the FCRA does impose some duties on those who request information from the reporting agencies, so called "users," and it is the extent of such duties that is at issue in this case.
The FCRA's regulation of users logically begins by requiring that credit reports be obtained for permissible purposes:
A person shall not use or obtain a consumer report for any purpose unless —
(1) the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section; and
(2) the purpose is certified in accordance with section 607 [ 15 U.S.C. § 1681(e)] by a prospective user of the report through a general or specific certification.15 U.S.C. § 1681(b)(f). The FCRA contemplates multiple permissible purposes, several of which are relevant to this case. Credit reports are to be furnished only:
[. . .]
(2) In accordance with the written instructions of the consumer to whom it relates.
(3) To a person which it has reason to believe —
(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or . . .
(F) otherwise has a legitimate business need for the information —
(i) in connection with a business transaction that is initiated by the consumer; or
(ii) to review an account to determine whether the consumer continues to meet the terms of the account15 U.S.C. § 1681(b)(a). Defendant contends that Plaintiff's credit report was obtained for the permissible purpose of evaluating his fitness for financing of a new car in accordance with the authorization form that he signed. However, given that Williams was working only his second day, it is possible that Plaintiff's credit report was obtained for an impermissible purpose. Although from Plaintiff's perspective, he and Williams appeared to be engaged in a legitimate business interaction, the record supports the inference that Williams intended to steal Plaintiff's identity when he obtained authorization to access Plaintiff's credit report. Thus, whether or not Plaintiff's credit report was obtained solely for a permissible purpose is a material fact that is in dispute, rendering summary judgment inappropriate.
Thus, Defendant claims that its only potential duty to Plaintiff falls under § 1681(m). Section 1681(m) requires users of credit information to notify consumers when adverse credit actions are taken after viewing a report. This duty has not been triggered in this case because no adverse credit action was taken, rather Plaintiff left Defendant's dealership as the parties could not agree on a price.
Section 1681(q), which provides criminal penalties for parties obtaining credit reports under false pretenses, has been used to impose civil liability on users as well. Yohay v. City of Alexandria Employees Credit Union, 827 F.2d 967, 971-72 (4th Cir. 1987); Hansen v. Morgan, 582 F.2d 1214, 1216 (9th Cir. 1978). However, imposing civil liability under this section has been rendered anachronistic with the addition of § 1681(b)(f) in 1996 as part of the Consumer Credit Reporting Reform Act.Ausherman v. Bank of Am. Co., 352 F.3d 896, 900 (4th Cir. 2003).
Alternatively, § 1681(b)(f) may also prohibit the impermissible use of a credit report that was initially obtained for a permissible purpose. Even if Plaintiff's credit report was permissibly obtained to evaluate his fitness for financing, it is alleged that Plaintiff's credit report was subsequently used impermissibly to supply an "imposter" with his personal information. Courts have reasoned that imposing liability under § 1681(b)(f) for impermissible uses furthers the FCRA's policy of protecting consumer information. See Chester v. Purvis, 260 F. Supp.2d 711, 718 (S.D. Ind. 2003) (concluding that reading the FCRA as a whole requires user liability); Castro v. Union Nissan, Inc., 2002 U.S. Dist. LEXIS 12917, at *7 (N.D. Ill. July 8, 2002) (holding car dealership liable under FCRA for unauthorized use of credit report). But see Kodrick v. Ferguson, 54 F. Supp.2d 788 (N.D. Ill. 1999) (holding that the FCRA is aimed primarily at consumer reporting agencies and refusing to extend liability to users without a more definite statement by Congress). Although it would be nonsensical to interpret the FCRA to allow the improper use of credit reports as long as such reports were originally obtained for permissible purposes, this Court does not reach the issue.
Moreover, the two sections of the FCRA imposing civil liability for willful and negligent noncompliance were amended in 1996. 15 U.S.C. § 1681(n)-(o). Whereas liability previously extended to "any consumer reporting agency or user of information," it now extends to "any person." Id. § 1681(n)-(o). "Person" is defined by the act as "any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity." Id. § 1681(a)(b). If user liability was unclear prior to 1996, the amendments have resolved any such ambiguity. See Amora v. Metro Car Sales and Serv., Inc., 206 F. Supp.2d 947, 951 (N.D. Ill. 2002) (finding user liability consistent with purposes of FCRA). Defendant is clearly a "person," and therefore this Court finds that Defendant may be subject to liability under the FCRA.
(2) Can Defendant be held vicariously liable under the FCRA?
Defendant argues that it cannot be held liable under the FCRA for the alleged actions of its employee Williams. Unfortunately, the FCRA does not "address the existence or the scope of vicarious liability," and it appears that only the Fourth and Sixth Circuits have addressed the issue. Jones v. Federated Fin. Reserve Corp., 144 F.3d 961, 964 (6th Cir. 1998); Yohay, 827 F.2d at 973. Before following Jones and Yohay, and thus finding that Defendant can be held vicariously liable, we must determine whether any theory of agency applies to the facts of this case, recognizing that,
the law favors an understanding of agency which shifts the costs of the injuries to the employer because the employer has ultimate control over both the hiring, tasking and supervision of the wrongdoing employee. This is all the more true as to consumer protection legislation, such as the FCRA, which was specifically designed to protect consumers and remedy wrongs done consumers related to credit reporting.Adams v. Berger Chevrolet, 2001 U.S. Dist. LEXIS 6174, at *12 (W.D. Mich. May 7, 2001).
The only agency theory that applies to the facts of this case is the aided in agency concept. "A master is not subject to liability for the torts of his servants acting outside the scope of their employment, unless . . . [the servant] was aided in accomplishing the tort by the existence of the agency relation." Restatement (Second) of Agency § 219(2) (1958); Burlington Indus. v. Ellerth, 524 U.S. 742, 758 (1998). This theory is applicable where an employee misuses his actual authority, and it has been applied to FCRA claims. Amora, 206 F. Supp.2d at 952;Myers v. Bennett Law Offices, 238 F. Supp.2d 1196, 1202 (D. Nev. 2002). As noted, Williams was given the authority to evaluate potential customers using their credit information and allegedly misused his authority to obtain and leak Plaintiff's credit information to an "imposter," and was therefore aided by the agency relation.
However, since the aided in agency concept could lead to unlimited employer liability, "the existence of something more than the employment relation itself" has been required in some cases. Ellerth, 524 U.S. at 760. It is not clear whether "something more" is required in FCRA cases, although courts have been hesitant about effectively holding employers strictly liable under the FCRA. Smith v. Sears, Roebuck Co., 276 F. Supp.2d 603, 610 (S.D. Miss. 2003). If something more is required, Defendant's disregard for Williams' relevant criminal history, the access to consumer credit information Defendant provided to a known identity thief, and the eventual leak of Plaintiff's information clearly satisfies such a standard. Moreover, application of the aided in agency concept to FCRA claims encourages employers to develop programs and procedures to keep consumer information confidential. See Durham Life Ins. Co. v. Evans, 166 F.3d 139, 152 (3d Cir. 1999) (applying this concept in harassment cases premised, in part, on encouraging antidiscrimination programs).
Defendant argues that Pennsylvania has not adopted the aided in agency concept as stated in § 219(2)(d) of the Restatement (Second) of Agency, and thus that it should not be applicable to Plaintiff's FCRA claims given the statute's silence on vicarious liability. The Supreme Court has stated though that "a uniform and predictable standard [of agency] must be established as a matter of federal law." Ellerth, 524 U.S. at 754-55. In creating such a standard for discrimination cases, the Court "relied on the general common law of agency, rather than on the law of any particular State." Cmty. for Creative Non-Violence v. Reid, 490 U.S. 730, 740 (1989). Moreover, the Third Circuit has recently recognized the applicability of the aided in agency concept to a federal question claim notwithstanding Pennsylvania common law. Suders v. Easton, 325 F.3d 432, 449-50 (3d Cir. 2003). This Court sees no reason to ignore this trend, and will accordingly apply general agency principles, including the aided in agency concept, to Plaintiff's FCRA claims.
(3) Casual nexus
The FCRA regulates "consumer reports." 15 U.S.C. § 1681(b). Defendant argues that Plaintiff's personal information was obtained from the authorization form that Williams filled out and Plaintiff signed, rather than from Plaintiff's credit report, and therefore the FCRA does not apply. Defendant's argument would be more persuasive if the record clearly established that Plaintiff's credit report was not used by the "imposter." The applications used to open the five fraudulent credit accounts contain errors that appear on both the authorization form and Plaintiff's credit report. However, Plaintiff alleges that Visa is used on one of the fraudulent applications as a credit reference, and the information about his Visa account is only contained in his credit report. Plaintiff has submitted sufficient evidence to support his claim that the "imposter" used both the credit application and the credit report to steal Plaintiff's identity. In short, the factual issue of where the "imposter" obtained Plaintiff's information is in dispute, and thus it is a matter best left to the province of the jury.
(4) Plaintiff's damages
Lastly, Defendant argues that Plaintiff has suffered no damages. Although Plaintiff has not had to pay for any of the charges to the unauthorized accounts, he nevertheless has been forced to place a security alert on his name and has spent considerable time dealing with the entire situation. Plaintiff may, at the very least, recover for his emotional distress.Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir. 1996);Sheffer v. Experian Info. Solutions, Inc., 2003 U.S. Dist. LEXIS 12728, at *11 (E.D. Pa. July 24, 2003).
CONCLUSION
For the foregoing reasons, Defendant's Motion for Partial Summary Judgment will be denied. An appropriate order follows.