Opinion
8:02CV378
March 30, 2004
MEMORANDUM AND ORDER
Introduction
Neal (Neal) is suing CSC Credit Services, Inc. (CSC) for the damages she allegedly suffered because CSC failed to remove an "included in bankruptcy notation from Neal's credit report. Before me now is the defendant's motion, Filing No. 100, for summary judgment. Both parties filed briefs, Filing Nos. 101 and 153, and indexes of evidence, Filing Nos. 106 and 161. CSC filed a reply brief, Filing No. 175, which is supported by another index of evidence, Filing No. 180. Neal filed a sur-reply brief, Filing No. 187. The defendant has also moved for oral argument, Filing No. 182, which motion the court now denies.
I have carefully reviewed the record, the parties' briefs and indexes of evidence, and the applicable law, and (conclude that CSC's motion for summary judgment should be denied.
Summary Judgment Standard
Summary judgment is proper if no disputed issues of material fact exist and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The court must view the evidence and the inferences which may be reasonably drawn from the evidence in the light most favorable to the nonmoving party. Enterprise Bank v. Magna Bank, 92 F.3d 743, 747 (8th Cir. 1996). Furthermore, the court must not weigh evidence or make any credibility determinations; these are functions only for the jury. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Kenny v. Swift Transp., Inc., 347 F.3d 1041, 1044 (2003). Essentially, the court performs the threshold inquiry of determining whether a trial is necessary. Anderson, 477 U.S. at 250.
The moving party bears the initial burden of showing the absence of a genuine issue of material fact, which can be done by pointing to the lack of evidence to support an essential element of the nonmoving party's claim. Celotex Corp. v. Catrett, 477 U.S. 317, 323-25 (1986). Once the moving party has met its burden, the nonmoving party must then set forth "specific facts showing that there is a genuine issue for the trial." Fed.R.Civ.P. 56(e). See Anderson, 477 U.S. at 256; Kreink v. County of LaSueur, 47 F.3d 953, 957 (8th Cir. 1995). Generally, a genuine issue of material fact exists when there is sufficient evidence favoring the nonmovant for a jury to return a verdict for that party. Anderson, 477 U.S. at 248.
Background
The issue here, essentially, is whether CSC violated any clause of the Fair Credit Reporting Act, 15 U.S.C. § 1681-1681u (FCRA). The undisputed facts follow.
In January 2002, Commercial Federal Bank denied Neal's application for $500 overdraft protection and in March 2002, the bank denied Neal's application for a loan. Following this second denial, Neal contacted CSC in order to obtain a copy of her credit report. This report, dated April 4, 2002, stated that a Wells Fargo debt for a car lease was "included in bankruptcy." The car lease was for a Jeep Wrangler which Neal and her father had jointly leased in August 1999. Both Meal's and her father's names and signatures appear on the lease documents. Neal drove the Jeep and her father made the payments until her father filed for Chapter 7 bankruptcy. The Jeep was repossessed.
The report also stated that Neal had six other accounts that had been delinquent, two of which for more than ninety days on several occasions. Neal does not dispute the accuracy of this part of the credit report, but "disagrees with the inference made that this is why she was declined for credit or employment." Filing No. 153, Pl's Opposing Brief at 6, ¶ IV.
On April 10, 2002, Neal sent CSC a dispute letter indicating that debt was "a joint lease; my father filed bankruptcy, I did not. This bank never tried to contact me; only spoke to my father." CSC sent Wells Fargo, the creditor, an Automated Consumer Dispute Verification (ACDV) to verify the accuracy of the lease debt, telling Wells Fargo that Neal claimed the lease account "[b]elongs to another individual with same/similar name." Wells Fargo returned the ACDV stating that the information was "verified as reported." CSC therefore left the "included in bankruptcy" notation on Neal's credit report and sent Neala letter dated May 16, 2002, explaining the results of its investigation.
Before Neal received this letter, however, she sent a second letter to CSC on May 3, 2002, disputing the lease debt. Neal explained that she had never filed for bankruptcy, so the "included in bankruptcy" entry had to be an error. In response, CSC did a second investigation. It again sent Wells Fargo an ACDV asking it to verify the information, describing the dispute as "account not included in bankruptcy." Wells Fargo again verified the lease debt, and asked CSC to add "Chapter 7" to the entry. CSC added this statement to Neal's credit report as requested and then sent a letter to Neal dated June 6, 2002, explaining the results of its investigation.
In August 2002, Neal filed this suit against Wells Fargo and CSC. Neal claims that as a result of the "included in bankruptcy" entryon her credit report, she has lost jobs and been denied both credit and employment. The jobs Neal claims to have lost because of the entry on the credit report include teller jobs at Team Bank in June 2002 and Wells Fargo Bank in November 2002. Both Team Bank and Wells Fargo Bank also denied Neal credit while she was employed with them. The jobs that Neal claims to have been denied because of the entry on her credit report include teller applications at American National Bank in May 2002, Strategic Air Command Federal Credit Union in May 2002, First National Bank in the fall of 2002, and Pinnacle Bank in October 2002. As further damage, Neal claims to have been charged a higher interest rate on a car loan. Finally, Neal claims to have suffered emotional distress as a result of the entry on the credit report.
Wells Fargo is no longer a party. See Filing No. 26.
Neal worked for Wells Fargo Bank for only three weeks. Neal admitted during a deposition that another factor in her termination was a one-day shortage in her teller drawer of between $300 to $500.
As a consequence, CSC has taken her credit report "off-line," thereby making it unavailable to creditors and employers.
Analysis
Neal claims that CSC violated the FCRA by not following reasonable procedures in handling her dispute. The act requires consumer reporting agencies such as CSC to "maintain reasonable procedures" to avoid reporting prohibited information and to limit the use of reports for prohibited purposes. 15 U.S.C. § 1681e(a). The act requires that when a consumer reporting agency prepares a credit 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).
The act specifically describes types of information that may not be included in consumer credit reports. See 15 U.S.C. § 1681c(a)
The act also details permissible uses for consumer credit reports. See 15 U.S.C. § 1681b.
Accuracy
As a threshold requirement in establishing a prima facie violation of section 1681 e(b), a consumer must show that a credit reporting agency prepared a report containing inaccurate information. Wilson v. Rental Research Servs., Inc., 165 F.3d 642, 644 (8th Cir. 1999), vacated, 191 F.3d 91, on rehear'g, rev'd by an equally divided court, 206 F.3d 810 (8th Cir. 2003) (en banc). If the consumer fails to make this showing, the court need not address the reasonableness of the credit agency's procedures. Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991). However, courts — including the Eighth Circuit — have not agreed on what constitutes an "accurate" credit report.
Some courts require credit reports to be technically accurate. See, e.g., Todd v. Associated Credit Bureau Servs., Inc., 451 F. Supp. 447, 449 (E.D. Pa. 1977) (finding no violation where credit agency reported that store charged off plaintiff's balance as a bad debt and referred it to collection, even though plaintiff eventually paid off balance in full; report was "unquestionably accurate"). Under this standard, a credit reporting agency need only guarantee that its reports that contain factually correct information, even though that information might be misleading or incomplete. Cahlin, 936 F.2d at 1156. The majority of courts, however, subscribe to the "maximum possible accuracy" standard, in which credit reporting agencies maybe held liable for "reports containing factually correct information that nonetheless mislead their readers." Wilson, 165 F.2d at 645; Koropoulos v. Credit Bur., Inc., 734 F.2d 37, 40-42 (D.C. Cir. 1984).
While far from certain, it appears that the Eighth Circuit has elected the technical accuracy standard. In the first Wilson decision, the court reversed the district court's grant of summary judgment to the crediting reporting agency. The district court had found the credit report "accurate as a matter of law because it is both `technically accurate' and contained a warning disclosing the accuracy limitations of the reporting method employed." 165 F.3d 644. The circuit first found, however, that while the report was factually accurate, it was not "maximally accurate in any sense" and was also misleading as to the person who was the subject of the report. Id. at 645. The court announced that it "join[ed] the strong majority of courts . . . in rejecting the `technical accuracy' defense in favor of a thorough examination of whether the report was maximally accurate with respect to the individual who is the subject of the report." Id., n. 3
The court vacated its decision, however, and after rehearing, an equally divided en banc court affirmed the decision of the district court granting summary judgment to the credit reporting agency. See Wilson v. Rental Research Servs., Inc., 206 F.3d 810 (8th Cir. 2003) (en banc). The court gave no reasons for its decisions to vacate or affirm. The district court's ruling is thus apparently the law of the Eighth Circuit.
This court believes that the Eighth Circuit found the additional warning contained in the WILSON credit report a determinative factor in deciding to affirm the district court. Judge Loken, dissenting in part in the first Wilson opinion, stated,
[E]ven if it is proper to look beyond technical accuracy when dealing with public court records, the . . . report was accurate because Rental Research reasonably selected the [information included in the report] and then clearly warned landlord subscribers of the accuracy limitations. . . . Given this disclosure, the [majority] engages in fantasy when it speculates that the [report] was misleading because `a landlord could not determine which, if any, of the unlawful detainers were brought against [Wilson]." No one, and most assuredly not an experienced landlord, could be misled by [information from court records] that is accurately reproduced and described. Because the information combined with the Warning [sic] was neither inaccurate nor misleading, the district court properly granted summary judgment.Wilson, 165 F.3d 649-50 (emphasis in original) (interior citation omitted). Thus, it was additional warning, coupled with the technically accurate information, which led the district court to grant summary judgment.
The "included in bankruptcy" information that CSC placed in Meal's credit report is also technically accurate information. Neal co-signed the car lease with her father. Nothing in the record indicates that Meal's legal liability onthe lease was inany manner conditional. Although Neal herself did not file for bankruptcy, the debt for the car lease was included in her father's bankruptcy. CSC properly reported information about the debt on the credit reports of both Neal and her father, since both Neal and her father had been legally liable under the lease. The debt was, quite literally, "involved in bankruptcy." However, the record does not demonstrate that CSC warned readers of the credit report that the information should be reviewed with caution and verified where necessary. Thus, I find that although the information was technically accurate, summary judgment will be denied, based on M/son-type accuracy, because no additional warnings about the need to clarify or verify the entries were present.
Reasonableness
If a plaintiff passes the accuracy hurdle, the plaintiff must then establish with specific facts the second prong of a prima facie case, that the credit reporting agency's procedures were unreasonable. "The reasonableness of procedures is usually a jury question." Olwell v. Medical Info. Bur., 2003 WL 79035, *3 (D. Minn. 2003). Neal contends that CSC employed unreasonable procedures to investigate her dispute over the "involved in bankruptcy" entry.
Neal apparently does not contend that CSC unreasonably failed to investigate the credit information provided by the source when CSC initially compiled Meal's credit report. Such an argument likely would fail. See Orwell at *4 (Citing Henson c. CSC Credit Servs., 29 F.3d 280, 286 (7th Cir. 1994), and Cushman v. Trans Union Corp., 115 F.3d 220, 225 (3d Cir. 1997)) ("[A]bsent any indication that the information in the consumer's report is inaccurate, § 1681e(b) does not mandate that the [agency] go beyond the initial reported information when compiling the report."). Wells Fargo, the credit provider, conveyed information to CSC that the car lease debt was "included in bankruptcy." CSC had no reason to suspect that this information was incorrect. Until CSC received notice from Neal disputing the entry, it was not unreasonable for CSC to rely on the Wells Fargo information. Thus, with respect to any § 1681e(b) claim based on a theory that CSC had an initial duty to investigate the Wells Fargo data, the court finds that CSC's procedures in this regard were reasonable as a matter of law.
The act requires that when a consumer notifies a credit reporting agency that the consumer disputes "the completeness or accuracy of any item of information contained in[the] consumer's file," the credit reporting agency must "reinvestigate free of charge and record the current status of the disputed information" or delete the item. 15 U.S.C. § 1681i(a)(1). Within five days after a consumer notifies an agency of a dispute, the agency must notify the source that provided the credit information, communicating to the source all the relevant additional information received from the consumer. 15 U.S.C. § 1681 i(a)(2)(A-B). The source must then investigate the disputed information, review the new information, and report the results back to the agency. 15 U.S.C. § 1681-s2(b)(1)(A-C).
This section does not specify what type of investigation an entity supplying credit information must conduct, but the investigation would likely need to meet the reasonableness standard of section 1681i(a). Zotta v. Nations Credit Fin. Servs. Corp., 297 F. Supp.2d 1196, 1203 (E.D. Mo. 2003) (citing Bruce v. First U.S.A. Bank, 103 F. Supp.2d 1135, 1143 (E.D. Mo. 2000)).
The questions here are 1) whether CSC correctly formulated its reinvestigation notifications to Wells Fargo, and 2)just how much reliance CSC was entitled to place on Wells Fargo's response. Under section 1681 i(a), credit reporting agencies have a duty to conduct a "reasonable investigation." Bruce v. First U.S.A. Bank, 103 F. Supp.2d 1135, 1143 (E.D. Mo. 2000) (citing Cushman, 115 F.3d at 224-25; Henson, 29 F.3d at 286-87; Cahlin, 936 F.2d at 1160; and Pinner v. Schmidt, 805 F.2d 1258, 1262 (5th Cir. 1986)). Whether an agency's reinvestigation is reasonable depends on several factors, such as "(1) whether the consumer has alerted the agency that the initial source of information may be unreliable or if the agency knows or should know that the source is unreliable, and (2) the cost of verifying the accuracy of the source versus the possible harm of reporting inaccurate information." Zotta v. Nations Credit Fin. Servs. Corp., 297 F. Supp.2d 1196, 1203 (E.D. Mo. 2003) ( citing Bruce at 1143). The weighing of these factors is for the jury. Bruce, 103 F. Supp.2d at 1143.
Here, Meal's first dispute letter notified CSC that the car lease debt was "a joint lease; my father filed bankruptcy, I did not. This bank never tried to contact me; only spoke to my father." She wrote in her second dispute letter, "I have neverfiled for bankruptcy and this entry is in error." Although these statements may not be a clear explanation of the problem Neal perceived with the entry on her credit report, they are clear enough to raise questions about the reasonableness of CSC's response procedures. Cf. Kettlerv. CSC Credit Serv. Inc., 2003 WL 21975919, *2 (D. Minn. 2003) (granting summary judgment to credit reporting agency because the plaintiff, "rather than merely insisting that she had never filed for bankruptcy[,]. . . should have explained [to the defendants] that her [former] husband filed for bankruptcy and mistakenly listed the debts as his."). Neal attempted to explain her situation to CSC as clearly as she could. Under these circumstances, the court finds that material factual questions remain about the reasonableness of CSC's reinvestigation procedures.
Damages
Based above my prior rulings, I also find that material factual issues remain about whether Meal's alleged damages were actually caused by inaccurate credit information which CSC disseminated to others. See 15 U.S.C. § 1681 n and 1681o. The issue of damages thus will be reserved for the jury.
IT IS THEREFORE ORDERED:
1. CSC's motion, Filing No. 182, for oral argument is denied;
2. CSC's motion, Filing No. 100, for summary judgment is denied.