Reasonableness is a Question for the Jury; Not Summary Judgm

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Reasonableness is a Question for the Jury; Not Summary Judgm

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Reasonableness is a Question for the Jury; Not Summary Judgm
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Pace v. Experian Information Solutions Inc.
Not Reported in F.Supp.2d, 2004 WL 1057795
E.D.Tex.,2004.
April 28, 2004

ORDER


WARD, J.
*1 For the reasons expressed herein, the court grants in part and denies in part Experian's motion for summary judgment or, alternatively, for partial summary judgment (39, 40).

1. In this case under the Fair Credit Reporting Act (“FCRA”), the defendant, Experian Information Solutions, Inc. (“Experian”), has filed a motion for summary judgment on the plaintiff's various claims. The case involves the allegation that a third party fraudulently opened accounts in the plaintiff's name and that information concerning those accounts was posted to the plaintiff's credit report by the defendant, a credit reporting agency. The court has carefully considered the motion for summary judgment and is persuaded that it should be granted in part and denied in part.

2. Experian first moves for summary judgment on the grounds that it cannot be held liable for any damages that occurred prior to the first date it obtained notice of the disputed nature of the accounts. The court disagrees. Although Experian correctly points out that, prior to being notified by a consumer, a credit reporting agency generally has no duty to reinvestigate credit information, 15 U.S.C. § 1681i(a); Casella v. Equifax Credit Information Services, 56 F.3d 469, 474 (2d Cir.1995), a credit reporting agency has an independent statutory duty to follow reasonable procedures to assure maximum possible accuracy in the reporting of credit information which is distinct from its reinvestigation duties. In the vast majority of cases, the question of reasonable procedures will be one of fact. Section 1681e(b) provides specifically that a consumer reporting agency must use “reasonable procedures to assure maximum possible accuracy” when preparing a consumer credit report; see also Pinner v. Schmidt, 805 F.2d 1258, 1262 (5th Cir.1986) (Section 1681e(b) “imposes a duty of reasonable care in the preparation of a consumer report.”).

To prove negligent noncompliance with § 1681e(b), a plaintiff must establish that (1) inaccurate information was included in his credit report; (2) the inaccuracy was due to the defendant's failure to follow reasonable procedures to assure maximum possible accuracy; (3) the plaintiff suffered injury; and (4) the injury was caused by the inclusion of the inaccurate entry. See Zala v. Trans Union, L.L.C., 2001 WL 210693, at *3 (N.D.Tex. Jan.17, 2001). Under § 1681e(b), a plaintiff must demonstrate that an inaccuracy in a credit report resulted from negligent failure to use reasonable procedures when the report originally was prepared, not upon reinvestigation. Sepulvado v. CSC Credit Services, Inc., 158 F.3d 890, 895 (5th Cir.1998), cert. denied, 526 U.S. 1044, 119 S.Ct. 1344, 143 L.Ed.2d 507 (1999); Swoager v. Credit Bureau of Greater St. Petersburg, Florida, 608 F.Supp. 972, 974-75 (M.D.Fla.1985). The FCRA, however, “does not impose strict liability for inaccurate entries.” Sepulvado, 158 F.3d at 896. “The standard of conduct by which the trier of fact must judge the adequacy of agency procedures is what a reasonably prudent person would do under the circumstances.” Thompson v. San Antonio Retail Merchants Assoc., 682 F.2d 509, 513 (5 Cir.1982). Section 1681e(b) “does not require that a consumer reporting agency follow reasonable procedures to assure simply that the consumer report be ‘accurate,’ but to assure ‘maximum possible accuracy.” ’ Pinner, 805 F.2d at 1263.

*2 Although Experian urges that its procedures were reasonable as a matter of law, the court disagrees and holds that the reasonableness of the procedures is a question for the jury. The court notes that this holding on this issue is consistent with the holding of several other courts, including those in this district. See Crabill v. Trans Union L.L.C., 259 F.3d 662, 664 (7 Cir.2001)(“The determination of the ‘reasonableness' of the defendant's procedures, like other questions concerning the application of a legal standard to given facts (notably negligence, a failure to exercise reasonable care), is treated as a factual question even when the underlying facts are undisputed. It therefore cannot be resolved on summary judgment unless the reasonableness or unreasonableness of the procedures is beyond question, which it is not in this case.”). As the court said in Jensen v. Experian Info. Solutions, Inc., 2001 WL 1045510 (E.D.Tex. March 30, 2001)(Faulkner, Magistrate Judge):

The mere fact that inaccurate information appeared on Plaintiff's credit report does not make Experian liable or demonstrate that reasonable procedures were not followed. The law does not hold Experian strictly liable for the reporting of inaccurate information. The question that must be decided is did Experian follow reasonable procedures in creating Plaintiff's credit report. Experian has presented evidence explaining the procedures it follows in creating credit reports. The Court finds that in this case this decision cannot be settled by a motion for summary judgment. The question of whether Experian followed reasonable procedures must be decided by the trier of fact at trial. Summary judgment should be denied on Plaintiff's claim that Experian violated § 1681e(b).

The question whether Experian violated § 1681e(b) is for the jury.

2. The court also denies the motion for summary judgment on the reinvestigation claim. When a credit reporting agency receives notice of inaccurate information from a consumer, § 1681i(a) imposes a duty on the agency to reinvestigate the accuracy of the information. In this circuit, the law is clear that “in a reinvestigation of the accuracy of credit reports, a credit bureau must bear some responsibility for evaluating the accuracy of information obtained from subscribers.” Stevenson v. TRW, Inc., 987 F.2d 288 (5 Cir.1998)(affirming finding of negligence where credit reporting agency relied exclusively on consumer dispute verification forms (CDVs) when discharging its reinvestigation duties). In this case, the record contains evidence from which a reasonable fact-finder could conclude that Experian failed to discharge its duty to reinvestigate the accuracy of the plaintiff's credit information. As such, the court will deny the defendant's motion for summary judgment on the reinvestigation claim.

3. The court will also deny the motion for summary judgment with respect to the plaintiff's claims for mental anguish. The court has considered the cited portions of the deposition testimony of the plaintiff under the standards set forth in Cousin v. Trans Union Corp., 246 F.3d 359 (5 Cir.2001). The court's review of that testimony and the reasonable inferences drawn therefrom counsels the court to leave this issue to the jury.

*3 4. The court grants the motion for summary judgment on the plaintiff's claim for punitive damages. In the Fifth Circuit, a plaintiff seeking punitive damages under the FCRA must prove a willful violation of the FCRA. Cousin, 246 F.3d at 372. A credit reporting agency willfully violates the FCRA only when it knowingly and intentionally commits an act in conscious disregard for the rights of others. Id. The plaintiff's chief complaint is that the CDV procedure employed by Experian is insufficient to address the situation in which a third party fraudulently opens accounts in the name of another. However, some courts have noted that “the CDV procedure alone is accepted by courts as an adequate method both for assuring accuracy and for reinvestigation,” Lee v. Experian Info. Solutions, 2003 WL 22287351 (N.D.Ill. Oct.2, 2003), even in a fraud case. Quinn v. Experian Info. Solutions, 2004 WL 609357 (N.D.Ill. March 24, 2004). Although this court views the questions of reasonable preparation and reinvestigation procedures as factual disputes, given the holdings of some other district courts, it can hardly be said that Experian's use of the CDV procedure exhibits a conscious disregard for the rights of consumers. Even viewed in the light most favorable to the plaintiff, the court cannot say on this record that the defendant knowingly and intentionally committed an act in conscious disregard for the rights of others. Under the standards set forth in Cousin, the plaintiff's claim for punitive damages fails. The court therefore grants the motion for summary judgment on the plaintiff's claim for punitive damages.

5. Finally, the court grants the motion for summary judgment on the plaintiff's defamation claim. The plaintiff concedes that the cause of action requires a showing of malice or conscious disregard for the rights of others. For the reasons expressed above in the court's discussion of plaintiff's claim for punitive damages, the court concludes that the evidence is insufficient to create a triable issue of fact on the plaintiff's state law claim for defamation. As such, the court will grant the motion for summary judgment on this claim.

6. The court denies the balance of the motion for summary judgment.

So ORDERED.

E.D.Tex.,2004.
Pace v. Experian Information Solutions Inc.
Not Reported in F.Supp.2d, 2004 WL 1057795 (E.D.Tex.)
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
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Chairman, Consumer Protection Section, Louisiana State Bar Association

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