Case Law Interpreting Private Causes of Action Under § 1681n
The language of the Act, which creates a cause of action against "any person," reflects an amendment made to the Act in 1996. Prior to 1996, Sections 1681n and 1681o contained more specific language, imposing liability on "[a]ny consumer reporting agency or user of information". See Pub.L. 104-208 at § 2412; 110 Stat. 3009 at § 2412 (1996) (amending language in §§ 1681n and 1681o from "any consumer reporting agency or user of information" to "any person"). By changing the language in both sections to impose liability on "any person", the 1996 amendment appears to have clearly expanded the scope of liability under the Act. Thus, as discussed above, the Act seems to provide consumers with a private right of action against a furnisher of information. This court notes, however, that the right to bring a § 1681n cause of action against furnishers of information, subsequent to the 1996 amendment, has not yet been recognized by a decision of this Circuit.
Other Circuits, however, have addressed the issue of whether a consumer can sue a furnisher of information as a result of the 1996 amendment to § 1681n. Most on point is the Ninth Circuit's recent decision in Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057 (9th Cir.2002). The Ninth Circuit held that a consumer does have a private cause of action against a furnisher of information because: (1) the structure of the statute provides such a right [FN2]; (2) the 1996 congressional amendments to Section 1681n do not seem to serve any purpose other than to expand a consumer's right to bring actions against furnishers of credit information since the old language already allowed consumers to bring actions against CRAs and users of credit information; and (3) providing "some private remedy to injured consumers, coheres with what we see as a primary purpose for the FCRA, to protect consumers against inaccurate and incomplete credit reporting." Id. at 1060. The Ninth Circuit also noted that "[t]he statute has been drawn with extreme care, reflecting the tug of the competing interests of consumers, CRAs, furnishers of credit information, and users of credit information. It is not for a court to remake the balance struck by Congress, or to introduce limitations on an express right of action where no limitation has been written by the legislature." Id. Thus, relying squarely on the statutory language, the Ninth Circuit has recognized a consumer's statutory right to initiate a private cause of action against a furnisher of information who violates § 1681s-2(b).
FN2. In its analysis, the Ninth Circuit also noted that although Section 1681s-2(c) expressly bars the private cause of action created in Section 1681n from applying to Section 1681s-2(a), it does not bar application of Section 1681n to Section 1681s-2(b). See Nelson, 282 F.3d at 1059-60.
In addition, the Fifth Circuit recently discussed the provisions of the FCRA at issue here, and although it did not ultimately decide the issue, it noted that the FCRA, as amended, appears to impose civil liability on furnishers of information. The Fifth Circuit explained:
15 U.S.C. § § 1681n and 1681o impose civil liability on 'any person' violating *49 duties under FCRA. Section 1681s-2(b) imposes duties on furnishers of information to, inter alia, investigate disputed information and report the results of any such investigation to the consumer reporting agency. The plain language of FCRA thus appears to impose civil liability on 'any person' violating a FCRA duty unless some exception applies. Section 1681s-2(c) does provide an exception to civil liability for failure to comply with Section 1681s-2(a) .... Nothing in these sections precludes a private right of action for violation of the investigation and reporting requirements of Section 1681s-2(b).
Young v. Equifax Credit Info. Servs., Inc., No. 00-31254, 2002 WL 1277584, at *7 (5th Cir. June 11, 2002) (internal citations omitted). The court, however, declined to rule on whether the plaintiff could bring a private right of action against a furnisher of information because the plaintiff had failed to establish that the particular furnisher of information in that case was in fact aware of the dispute. Thus, the plaintiff could not prove that the furnisher of information's duty to investigate had been triggered. See id. Further, the Fifth Circuit expressly chose not to approve or disapprove of the Nelson holding. Id. Nonetheless, the Fifth Circuit's discussion of the Act's plain language, as quoted above, tends to support the analysis and conclusions reached by the Ninth Circuit.
Notably, a district court decision from this Circuit, although decided prior to Nelson, similarly found a private right of action under § 1681n for damages suffered as a result of violations of § 1681s-2(b). In McMillan v. Experian Info. Servs., 119 F.Supp.2d 84 (D.Conn.2000), Judge Arterton held that "the plain language of Section 1681n and Section 1681o when read in conjunction with Section 1681s-2, expressly provides a consumer remedy for violation by a furnisher of credit information of the obligations imposed under 15 U.S.C. § 1681s-2(b)." Id. at 89. In reaching this decision, the district court noted that three other district courts outside of this Circuit had reached the same conclusion. Id. at 86 (citing Dornhecker v. Ameritech Corp., 99 F.Supp.2d 918 (N.D.Ill.2000); DiMezza v. First USA Bank, Inc., 103 F.Supp.2d 1296 (D.N.M.2000); Campbell v. Baldwin, 90 F.Supp.2d 754 (E.D.Tex.2000)). Further, while grounding its holding on the clear statutory language of the Act, the McMillan court also observed that "both the legislative history and the Federal Trade Commission's interpretation reflecting the intent that consumers can pursue a civil action against furnishers of information for violations of 15 U.S.C. § 1681s-2(b)" were consistent with its finding that a private cause of action exists. Id. at 88-89 (citing Minority Report from House Banking Committee on Banking, Finance and Urban Affairs and Letter from Clarke W. Brinkerhoff, Attorney with Division of Financial Practices Division of the Federal Trade Commission).
Finally, I note that there is one Second Circuit case, Northrop v. Hoffman, 134 F.3d 41 (2d Cir.1997), decided after the enactment of the 1996 amendments, but prior to their taking effect, in which the Court discussed in dicta the possible congressional intent in amending § 1681n to cover "any person." In Northrop, the Court noted that:
[t]he amended version of § 1681n ... replaced the reference to 'any consumer reporting agency or user of information' with 'any person' .... It is unclear what conclusions we can draw from these amendments with respect to the meaning of 'user' in the pre-amended version of the statute. On the one hand, it might be argued that the amendments reflect Congress's intent to expand the FCRA beyond its initial scope and to permit it to apply to previously excluded defendants.... It might just as easily *50 be argued, however, that these amendments were intended simply to clarify that Congress never intended to employ 'users' in ... § 1681n as a restrictive term.
Id. at 48 n. 9. Under either of the possible interpretations suggested by the Second Circuit, the civil liability created by § 1681n is interpreted broadly rather than narrowly. This statutory analysis, though speculative, indicates that it would be appropriate to interpret the new language, which explicitly broadens the category of defendants, as have the Ninth Circuit and the District of Connecticut, to expand the scope of liability to include furnishers of information.
 Relying on the clear and unambiguous statutory language of the Act, and also considering the Act's purpose--to protect the rights of consumers--and the absence of any controlling law from this Circuit, I am persuaded by the analysis and holding of the Ninth Circuit decision in Nelson, as well as that of the District of Connecticut in McMillan. Accordingly, I find that pursuant to Section 1681n and Section 1681s-2(b) of the FCRA, consumers have a private right of action against furnishers of information who fail to comply with the requirements of Section 1681s-2(b).
C. Defendant is Liable to Plaintiff under § 1681n
 On February 14, 2001, Plaintiff notified three of the largest CRAs (Experion, Trans Union and Equifax) of a dispute regarding his credit information as furnished by Citibank. A series of correspondence, starting with a letter from Citibank, dated February 26, 2001, indicates that Citibank was aware of Plaintiff's dispute regarding information furnished by Citibank to CRAs. Moreover, in failing to answer the complaint, Citibank has admitted its willful failure to investigate upon notice of the dispute as required by Section 1681s-2(b).
As discussed above, Plaintiff may bring a private cause of action, pursuant to Section 1681n, against Citibank, a furnisher of information, for willfully failing to comply with its duties to Plaintiff under Section 1681s-2(b). Further, I find that the allegations and facts set forth in Plaintiff's complaint are sufficient to establish a cause of action under these provisions, and that Defendant has admitted these facts, and its liability. [FN3] See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir.1997) ("It is, of course, ancient learning that a default judgment deems all the well-pleaded allegations in the pleadings to be admitted."). Therefore, Citibank is subject to the civil penalties provided under Section 1681n.
FN3. Thus, unlike the facts underlying the decision in Equifax Credit Info. Servs., Inc., 2002 WL 1277584, here, Plaintiff has established each of the elements necessary to state a cause of action for a violation of Section 1681s-2(b), and is thus entitled to relief under the Act.
Hawthorne v. Citicorp Data Systems, Inc.
216 F.Supp.2d 45
Jun 27, 2002
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