Matching Programs:County Vanlines v. Experian:Important Read

Father-Son, Mother-Daughter, Junior-Senior-Trey [Generational Designators], Common Names, Variations on Social Security Numbers and Other Mixed File Issues
David A. Szwak

Matching Programs:County Vanlines v. Experian:Important Read

Postby David A. Szwak » Mon Dec 12, 2005 10:09 pm

County Vanlines, Inc. v. Experian Information Solutions, Inc.
317 F.Supp.2d 383

We similarly reject plaintiff's apparent argument that the lack of procedures and safeguards in the computer-matching system for ensuring complete accuracy when the computer must process conflicting or confusing data amounts to defendant's reckless disregard for the truth, or knowledge of the statements' probable falsity. (Pl. Mem. Opp. Cross Mot. Summ. J. at 11-12.) Indeed, the Seventh Circuit has held such matching *395 systems compliant as a matter of law under the "reasonable procedures to assure maximum possible accuracy" standard of the FCRA, 15 U.S.C. § 1681e(b). See Crabill v. Trans Union, L.L.C., 259 F.3d 662, 663 (7th Cir.2001). Moreover, this "reasonable procedures" provision allows for the imposition of liability on credit bureaus based on mere negligence; it is, therefore, far less forgiving of credit agencies than is the constitutional malice standard. See Henson v. CSC Credit Servs., 29 F.3d 280, 284 (7th Cir.1994) (noting that credit agencies may be held liable for actual damages, costs and attorney's fees for negligent violation of § 1681e(b), and subject to punitive damages for wilful violations); King v. MTA Bridges & Tunnels, 933 F.Supp. 220, 225 (E.D.N.Y.1996) (stating that a plaintiff seeking to prove a violation of § 1681e(b) must demonstrate that "the consumer reporting agency was negligent in that it failed to follow reasonable procedures to assure the accuracy of its credit report," in addition to the reporting of inaccurate information, injury and causation).
Crabill is particularly illuminating. In that case, the plaintiff, a man named Jerry, had a brother named John, and their social security numbers differed only by one digit. 259 F.3d at 663. This resulted in the defendant credit bureau erroneously furnishing a credit report on John several times when one had been requested on Jerry. Id. "Denied credit several times, Jerry complained to Trans Union, which began adding at the end of its credit reports on Jerry the notation (in capital letters): 'do not confuse with brother John D. Crabill.' " Id. Nevertheless, Jerry's creditors continued to receive from the defendant credit bureau unsolicited reports about John, although those reports did contain the cautionary notation. Id. This occurred because the credit bureau's computer "treated requests for a credit report on Jerry as requests for a credit report on John as well. If any of these creditors missed the notation and erroneously supposed that both reports pertained to Jerry, the mistake was the creditor's." Id. Some creditors, however, continued to decline credit to Jerry, which caused him to bring an action against the credit bureau. The Seventh Circuit concluded that "the statutory duty to maintain reasonable procedures to avoid inaccuracy does not require a credit agency to disregard the possibility that similar files refer to the same person." Id. In so holding, it accepted the credit bureau's argument that "two files with similar though not identical identifying data may actually be referring to the same person, the differences in data being the result of errors in data collection or compilation, and so it was useful for creditors to have both Crabills' files and make their own judgment of whether they were different persons." [FN12] Id.

FN12. In Crabill, however, the Seventh Circuit ultimately concluded that there was a question of fact as to the reasonableness of the credit bureau's procedure because Jerry's complaint had given it notice of the confusing effect of the multiple reports, and the "ensemble [of reports on John and Jerry] was potentially misleading." 259 F.3d at 664. The court also concluded, however, that Jerry had not proven that the reports caused him any compensable injuries. Id.

In light of such cases applying a far less stringent reasonableness standard, we conclude that defendant's operation of its computer system did not amount to reckless disregard for the truth. Indeed, there is evidence in the record that a 100 percent matching requirement would be harmful because it would eliminate from consideration relevant credit information based on errata in the database. (Poteraj Aff. ¶¶ 4-5.) Furthermore, the April 2001 Bank of New York credit application submitted and signed by Lucchesi, the president of CVL *396 himself, and plaintiff's counsel, as CVL's vice-president named the business as "County Van & Storage," not "County Vanlines," a misspelling that renders the terms searched even closer to "County Van & Storage." (Broderick Decl., Ex. L.) Thus, in the context of the credit defamation cases from New York and elsewhere, this case is far closer to the "Truman" and "Numan" confusion of O'Neil, 456 S.W.2d at 900-01, or "John" and "Jerry" in the FCRA case Crabill, 259 F.3d at 663, than it is to the grossly negligent conduct of the credit bureau in Robinson publishing a report of bankruptcy based only on casual gossip, 233 Ark. at 177-78, 345 S.W.2d 34, or the vindictive, scheming credit bureau in Nat'l Apparel Adjustment Council, 42 A.D.2d at 60-61, 345 N.Y.S.2d 40. Accordingly, we conclude that plaintiff has not introduced evidence of malice sufficient to pierce the protection afforded to defendant by the qualified privilege, and we dismiss plaintiff's commercial defamation claims in their entirety. [FN13]

FN13. Plaintiff, relying primarily on State Farm Mut. Auto. Ins. Co. v. Bockhorst, 453 F.2d 533 (10th Cir.1972), also argues that a company that utilizes a computer to assemble credit reports is held to a higher standard and cannot claim that an erroneous report is an "honest mistake." (Pl. Mem. Opp. Cross Mot. Summ. J. at 11-12.) We do not read Bockhorst as supporting plaintiff's argument in any way--indeed, to begin with, it is not a defamation case. In Bockhorst, an insurance company argued that an insured was not covered for an automobile accident because it had reissued a lapsed policy solely based on the operation of its computer system having processed a payment, and without knowledge of the insured's accident that had occurred shortly before the payment and reissuance. 453 F.2d at 535-36. The Tenth Circuit rejected that argument, and stated: Holding a company responsible for the actions of its computer does not exhibit a distaste for modern business practices as State Farm asserts. A computer operates only in accordance with the information and directions supplied by its human programmers. If the computer does not think like a man, it is man's fault. The reinstatement of Bockhorst's policy was the direct result of the errors and oversights of State Farm's human agents and employees. The fact that the actual processing of the policy was carried out by an unimaginative mechanical device can have no effect on the company's responsibilities for those errors and oversights. Id. at 536-37. Thus, in the present case, the computer-matching system merely is a tool that defendant uses in its work. Its use does not alter in any way the legal standards applicable to defendant, be they imposed by statute, common law or constitution. Indeed, in the present case, we follow the common sense-imposed lead of other courts considering credit defamation and FCRA claims, and focus our inquiry on the defendant's programming of the computer, and the quality of the data supplied by persons for entry into that computer system at various points in the credit investigation process. Thus, we reject as fundamentally unsound any contention that defendants who operate computers in their work cannot raise defenses of an "honest mistake" in their work.

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