TU's Public Records Reporting Procedures:Soghomonian

Maximum Possible Accuracy
David A. Szwak

TU's Public Records Reporting Procedures:Soghomonian

Postby David A. Szwak » Sat Nov 05, 2005 8:03 am

278 F.Supp.2d 1151, 92 A.F.T.R.2d 2003-5919

Motions, Pleadings and Filings

United States District Court,
E.D. California.
Raffi SOGHOMONIAN and Deborah Garabedian, Plaintiffs,
THE UNITED STATES of America, the Internal Revenue Service, Fidelity National
Title Insurance Company, Trans Union LLC, and Does 1-50, inclusive, Defendants.
No. CV F 99-5773 AWU DKB.
July 29, 2003.

Consumer and his spouse brought action against, inter alia, credit reporting agency, alleging violations of the Fair Credit Reporting Act (FCRA). On agency's motion for summary judgment, the District Court, Ishii, J., held that: (1) fact issues as to whether agency acted reasonably in handling consumer's dispute, regarding inclusion of tax liens on his credit report, and whether consumer was damaged by agency's alleged negligent handling of its dispute, precluded summary judgment on claim that agency negligently violated FCRA; (2) statement of dispute that plaintiffs sent to agency, contesting the inclusion of tax lien information on consumer's credit report, which included telephone number of agent for Internal Revenue Service (IRS), along with notation stating that agent could verify that liens had been nonattached, was relevant to FCRA claims; (3) fact issues as to whether spouse requested that agency not supply corrected information to potential creditors, precluded summary judgment on claim that agency violated FCRA by not sending such information to creditors; (4) fact issues as to whether agency acted in good faith in handling consumer's dispute, even though it took agency months to delete erroneous information from consumer's credit report, precluded summary judgment for agency on claim that it willfully violated FCRA; (5) under FCRA, agency could not disclose identifying information about consumer to government unless it was of type specifically allowed by statutory provision, i.e., name, address, former addresses, places of employments, and former places of employment; (6) fact issue as to whether agency disclosed more identifying information about plaintiffs to Internal Revenue Service (IRS) than that permitted by FCRA, precluded summary judgment on excessive disclosure claim under the FCRA; and (7) spouse had standing to sue under FCRA for inaccurate information in consumer's credit report, even though she was not named in report.
Motion denied.

V. Remaining Issues

Before concluding, there are a few remaining issues that should be addressed.
First, it is clear that Plaintiffs main theory so far as the incorrect reporting of credit information is concerned is that Trans Union failed to correct the tax lien-related information after Plaintiffs brought Trans Union's reporting errors to its attention. The court has already ruled that this claim may proceed. However, this does not necessarily mean that Plaintiffs should be allowed to proceed on the related but slightly different theory--and perhaps more common type of FCRA violation--of failure to maintain adequate measures to ensure that only accurate information is reported in the first place. See 15 U.S.C. § 1681e(b). Therefore, although it is clear that Plaintiffs should be allowed to proceed to the extent that their claim is one of failure to correct after being asked to do so, it still remains for the court to decide whether the same is true of any theory of recovery that does not depend so much on the notion not that Trans Union failed to correct, but that Trans Union failed to implement procedures that would have made it unnecessary to ask for a correction. (This theory will be referred to in the following discussion as Plaintiffs' subsection e(b) theory, because it is based on 15 U.S.C. section 1681e(b).) The court concludes that although the complaint is far from clear on this point, such a claim is indeed contained therein, and to the extent that Trans Union may have requested summary judgment on this claim it must be denied. This conclusion is based both on the contents of the complaint and on the fact that Trans Union does not appear to contend otherwise.

In their opposition papers, Plaintiffs state that if "liberally construed," their complaint asserts not only the claims that have already been discussed above, but also a claim for failure to follow reasonable procedures to assure maximum accuracy in violation of 15 U.S.C. section 1681e(b). Trans Union does not appear to respond directly to this assertion in its reply papers; it does, however, refer to subsection e(b) at one point as the "source of the key statutory duty at issue in this litigation." (Reply at 18:12-13.) Thus, it appears that Trans Union does not dispute that Plaintiffs have alleged a subsection e(b) claim in this case. Neither Trans Union nor Plaintiffs have addressed the state of evidence as it might relate to Plaintiffs' subsection e(b) claim--assuming one exists--in anything more than the most cursory fashion. Thus, the court must conclude that Plaintiffs' subsection e(b) "reasonable procedures" claim--the existence of which Trans Union itself does not appear to challenge--must be allowed to proceed to trial. This is the first reason for the court to conclude that a subsection e(b) claim does indeed exist, and for the court to deny summary judgment on this claim.
[15] The second reason for the court to conclude that a subsection e(b) claim is set forth in the complaint is the complaint itself. The complaint alleges that
[a]s a result of how the credit reporting agencies reported the liens, Raffi Soghomonian and Deborah Garabedian were not previously aware that the May 16, 1995 liens were the source of their constant credit reporting and related problems because the credit reporting agencies do not list sufficient information to have singled out the May 16, 1995 series as the cause [of Plaintiffs' credit problems]. Specifically, the credit reports which were provided by Trans Union listed the March, 1995 scries which were supposedly effectively non-attached; of course, the credit reporting agencies eventually claimed otherwise, holding the position that what they reported was accurate.
(First Am. Compl. at 46:20-47:3.) Later, the complaint alleges that although Trans Union "claims it has followed correct reporting procedures regarding insuring the accuracy of the reports ... in fact, the reports are highly inaccurate [and Trans *1171 Union is] still incorrectly reporting." (Id. at 48:5-8.) Although these allegations are not made in the portion of the complaint that contains the eighth claim for relief against Trans Union, the eighth claim, like all the others, specifically incorporates all prior paragraphs. Under the notice pleading rules used in federal court, all that is required to state a claim for relief is that "the averments of the complaint sufficiently establish a basis for judgment against the defendant." AlliedSignal, Inc. v. City of Phoenix, 182 F.3d 692, 696 (9th Cir.1999) (citation and quotations omitted). Fairly read, and when viewed in light of the other allegations, the language of the complaint quoted above is sufficient to have put Trans Union on notice that Plaintiffs sought recovery for failure to follow reasonable procedures to assure maximum accuracy, in violation of subsection e(b). If nothing else, it should have suggested that (1) the tax liens as reported before the submission of Plaintiffs' statement of dispute was not reasonably accurate, because it failed to identify the proper series of liens; and (2) this lack of reasonable accuracy was due to Trans Union's failure to utilize adequate procedures to ensure that its reports were as accurate as they reasonably could be--although Trans Union would eventually contend that the report had been accurate all along. Thus, the court concludes that Plaintiffs have adequately alleged a subsection e(b) violation. Because the parties have failed to address the state of the evidence with respect to such a claim in connection with the present motion, summary judgment on this claim must be denied. [FN14]

FN14. Even if the parties had addressed the subsection e(b)-related issues in a more comprehensive manner, and these issues were therefore more sharply focused for the court's consideration, the court would still conclude based on the evidence that summary judgment should not be granted as to this claim.

The Ninth Circuit follows a burden-shifting approach in determining the propriety of granting summary judgment on a subsection e(b) claim. First, the plaintiff must make out a prima facie case. This is done by offering evidence "tending to show that [the] credit reporting agency prepared a report containing inaccurate information." Guimond, 45 F.3d at 1333 (citation omitted). Once this initial burden is met, it becomes the defendant's duty to "establish[ ] that an inaccurate report was generated despite the agency's following reasonable procedures." Id. If the defendant can meet this burden, the defendant escapes liability. However, as observed earlier, in "the overwhelming majority of cases" the reasonableness of a credit reporting agency's procedures, along with the question of whether the agency actually followed such procedures (if they did in fact exist), are jury questions. Id. (citation omitted).

Here, Trans Union appears to contend that the procedure it used to avoid the appearance of inaccurate information consisted of contracting with Hogan, a "third party vendor" responsible for collecting public record information for the geographic area which includes Plaintiffs' place of residence. But it is not at all clear from the record that this "procedure"--which may, based on the evidence, have consisted of nothing more than a wholesale abdication to Hogan of the duty to act reasonably-- was at all reasonable. For example, it appears to be undisputed that Hogan does not check for CNAs when it investigates the status of a consumer's tax lien, or at least that it did not check for CNAs prior to the commencement of this litigation. This is sufficient to preclude a finding by this court that Trans Union acted reasonably as a matter of law in obtaining and reporting the information contained in Plaintiffs' credit report, especially in light of the Ninth Circuit's clear mandate that the district courts must allow the question of reasonableness to be decided by juries in the "overwhelming majority of cases." In short, Trans Union has offered nothing which would persuade this court that the current case falls outside of the "overwhelming majority" in which the plaintiff should be allowed to have the reasonableness issue decided by a jury. For this additional reason, summary judgment as to Plaintiffs' subsection e(b) claim must be denied.

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