Deceased Reporting: Sheffer v. Experian

This Folder Examines Those Cases Where the Credit Reporting Agencies [or Furnishers] Report You as Deceased When You Are Plainly Alive
David A. Szwak

Deceased Reporting: Sheffer v. Experian

Postby David A. Szwak » Mon Jan 16, 2006 6:26 pm

Not Reported in F.Supp.2d, 2003 WL 21710573 (E.D.Pa.)

United States District Court, E.D. Pennsylvania.
Richard L. SHEFFER, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants.
No. CIV.A. 02-7407.
July 24, 2003.


MEMORANDUM AND ORDER

SCHILLER, J.
*1 Plaintiff Richard L. Sheffer commenced this action against Defendants Experian Information Solutions, Inc., Equifax Information Services, LLC ("Equifax"), Trans Union, LLC ("Trans Union"), and Sears Roebuck & Co. ("Sears"). [FN1] Presently before the Court are Trans Union's Motion for Summary Judgment, Equifax's Motion for Partial Summary Judgment, and Sears's Joinder to the Motions for Summary Judgment. For the reasons set forth below, Defendants' motions are denied.


FN1. Plaintiff also named Equifax, Inc. as a Defendant. The parties agree that Equifax should be dismissed from this action.


I. BACKGROUND
Many of the pertinent facts for purposes of ruling on the summary judgment motions are not in dispute. Mr. Sheffer opened a Sears charge account in January 1993. Subsequently, without Plaintiff's consent and unbeknownst to him, Plaintiff's account was merged with that of a former Sears account holder who was deceased. In November 2000, a bank declined to increase Mr. Sheffer's credit line, and he requested a copy of his credit report from Equifax. (Compl., Ex. 1.) He received a report which stated, in connection with the Sears account, "CONSUMER DECEASED." (Pl.'s Resp. to Equifax's Mot. for Part. Summ. J., Ex. A at 2.) The report also indicated that the Sears account had been opened in January 1965, several years prior to Plaintiff's date of birth. (Id.) On November 29, 2000, Plaintiff contacted Equifax by telephone to dispute the statement in the report that he was deceased. (Pl.'s Resp. to Equifax's Mot. for Part. Summ. J., Ex. A (Fluellen Dep.) at 127.) In a letter dated December 4, 2000, Equifax informed Plaintiff that it had "reinvestigate [d]" the disputed information and had "verified" that the information regarding the Sears account was correct. (Pl.'s Resp. to Equifax's Mot. for Part. Summ. J, Ex. C.) Plaintiff again called Equifax (Fluellen Dep. at 141), and Equifax informed Mr. Sheffer that it had "deleted" the Sears account from his Equifax credit report. (Pl.'s Resp. to Equifax's Mot. for Part. Summ. J, Ex. D.) Nevertheless, an Equifax credit report dated December 28, 2001 included information about the Sears account, including the "CONSUMER DECEASED" notation. (Pl.'s Resp. to Equifax's Mot. for Part. Summ. J, Ex. E at 5; Fluellen Dep. at 150-51.)
In April 2002, Mr. Sheffer's attorney sent a letter to Trans Union disputing a similar "DECEASED" statement in his Trans Union credit report. (Compl., Ex. 11.) In correspondence dated May 6, 2002, Trans Union informed Plaintiff that the results of its investigation with respect to the Sears account was that information was "verified, no change." (Compl., Ex. 14.) In June 2002, Plaintiff's attorney informed Trans Union that he "disavow[ed] ownership" of the Sears account (Compl., Ex. 15), and thereafter Trans Union deleted the information related to the Sears account from Plaintiff's credit report.
II. STANDARD OF REVIEW
Summary judgment is appropriate when the record discloses no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In reviewing the record, "a court must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor." Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir.1994). The moving party bears the burden of showing that the record reveals no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. See Fed.R.Civ.P. 56(c); Anderson, 477 U.S. at 247. Once the moving party has met its burden, the non-moving party must go beyond the pleadings to set forth specific facts showing that there is a genuine issue for trial. See Fed.R.Civ.P. 56(e); see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 585-86, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). "There is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party." Anderson, 477 U.S. at 249. "Such affirmative evidence--regardless of whether it is direct or circumstantial--must amount to more than a scintilla, but may amount to less (in the evaluation of the court) than a preponderance." Williams v. Borough of W. Chester, 891 F.2d 458, 460-61 (3d Cir.1989).
III. DISCUSSION
A. Applicable Standards Under §§ 1681i and 1681e
*2 As a general matter, Congress enacted the requirements set forth in the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., to "insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. 1681(a)(4)(2003). [FN2] Particularly relevant to the instant action is the FCRA's requirement that credit reporting agencies investigate consumers' disputes about the information in their credit files. Section 1681i provides:


FN2. Equifax does not contend that it is entitled to summary judgment on Plaintiff's claims under §§ 1681e and 1681i, except to the extent that Plaintiff seeks punitive damages.


If the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency is disputed by the consumer and the consumer notifies the agency directly of such dispute, the agency shall reinvestigate free of charge and record the current status of the disputed information, or delete the item from the file....
15 U.S.C. § 1681i(a)(1)(A). Remarking on the "grave responsibilities" of credit reporting agencies, the Third Circuit has emphasized that such agencies must do more than "merely parrot[ ] information received from other sources. Therefore, a 'reinvestigation' that merely shifts the burden back to the consumer and the credit grantor cannot fulfill the obligations contemplated by the statute." Cushman v. Trans Union Corp., 114 F.3d 220, 225 (3d Cir.1997). Similarly, the Third Circuit has held that "in order to fulfill its obligation under § 1681i(a), a credit reporting agency may be required, in certain circumstances, to verify the accuracy of its initial source of information." Id. As the Third Circuit has indicated, the scope of an agency's duty to go beyond the original source depends on a number of factors, including: (1) whether the consumer has alerted the reporting agency to the possibility that the source may be unreliable or the reporting 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 inaccurately reported information may cause the consumer. See id. "Whatever considerations exist, it is for 'the trier of fact [to] weigh these factors in deciding whether [an agency] violated the provisions of section 1681i." Id. at 225-26 (quoting Henson v. CSC Credit Servs., 29 F.3d 280, 287 (7th Cir.1994)).
Section 1681e(b) provides: "Whenever a consumer reporting agency prepares a consumer 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). In order to succeed on his § 1681e(b) claim, Mr. Sheffer must establish each of the following of four elements: (1) inaccurate information was included in his credit report; (2) the inaccuracy was due to a Defendant's failure to follow reasonable procedures to assure maximum possible accuracy; (3) he suffered injury; and (4) his injury was caused by the inclusion of the inaccurate entry. See Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3d Cir.1996).
A reasonable jury could find that Trans Union violated either or both of these sections. Regarding Plaintiff's § 1681i claim, the evidence suggests that Trans Union merely parroted information provided by other sources, despite the fact that Plaintiff provided information supporting his assertion that the "DECEASED" statement was incorrect (Compl., Ex. 10), and, consequently, there is sufficient evidence for the issue of whether Trans Union violated § 1681i to be decided by a jury. See Cushman, 227 F.3d at 225. Turning to the § 1681e(b) claim, the Third Circuit has discussed three approaches--without endorsing any of the three--for determining whether a plaintiff has presented sufficient evidence to survive summary judgment. See Philbin, 101 F.3d at 964-65. Under the most stringent approach, Mr. Sheffer "must minimally present some evidence from which a trier of fact can infer that the consumer reporting agency failed to follow reasonable procedures in preparing a credit report." Stewart v. Credit Bureau, Inc., 734 F.2d, 47 51 (D.C.Cir.1984); see also Philbin, 101 F.3d at 965 (characterizing Stewart approach as "more stringent"); Cousin v. Trans Union Corp., 246 F.3d 359, 368 (5th Cir.2001) (holding that question of whether agency followed reasonable procedures is typically a fact question reserved for jury) (citing Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir.1991)). Here, the Trans Union report indicated both that Plaintiff was born in 1969 and that the account was opened in 1965. [FN3] Furthermore, the Sears account was the only account among approximately two dozen that included the "deceased" notation. These inconsistencies provide a basis from which a jury could infer that the procedures were unreasonable.


FN3. Trans Union takes the position that this inconsistency does not show that its procedures were unreasonable because in the case of jointly-held accounts the date an account is opened may precede the consumer's date of birth. However, in the instant case it is disputed whether there was a reasonable basis for not acting on this inconsistency, i.e., whether one could have reasonably believed that Plaintiff's account was actually a joint account, and, as such, summary judgment is inappropriate.


*3 Trans Union also argues that it is entitled to summary judgment because Plaintiff has not produced any evidence of actual damages. This argument is unpersuasive. At the very least, Plaintiff may be entitled to damages for the emotional distress he may have suffered in connection with his efforts to correct the error in his Trans Union consumer file and in obtaining credit from a jewelry store around the time he was attempting to have the error corrected. Cf. Philbin, 101 F.3d at 963 n. 3 (noting that plaintiff in FCRA case is not required to produce evidence of emotional damages with high degree of specificity); Fischl v. Gen. Motors Acceptance Corp., 708 F.3d 143, 151 (5th Cir.1983) ("Even where no pecuniary or out-of-pocket loss has been shown, the FCRA permits recovery for humiliation and mental distress.").
B. Punitive Damages
Under § 1681n, "[a]ny person who willfully fails to comply with any requirement imposed under [the FCRA] with respect to any consumer is liable to that consumer in an amount equal to the sum of ... such amount of punitive damages as the court may allow." 15 U.S.C. § 1681n. "To show willful noncompliance with the FCRA, [a plaintiff] must show that defendants 'knowingly and intentionally committed an act in conscious disregard for the rights of others,' but need not show 'malice or evil motive.' " Philbin, 101 F.3d at 970 (quoting Pinner v. Schmidt, 805 F.2d 1258, 1263 (5th Cir.1986)). "[T]o justify an award of punitive damages, a defendant's actions must be on the same order as willful concealments or misrepresentations [such as the adoption of a] reinvestigation policy either knowing that policy to be in contravention of the rights possessed by consumers pursuant to the FCRA or in reckless disregard of whether the policy contravened those rights." Cushman, 115 F.3d at 226.
Equifax and Trans Union contend that Plaintiff cannot show "wilfulness" under the FCRA. I disagree with both Defendants. As another court has held, punitive damages may be warranted where the evidence shows that inaccuracies in credit reports arise from something more than "an isolated instance of human error which [the agency] promptly cure[s]." Boris v. Choicepoint Servs., 249 F.Supp.2d 851, 862 (W.D.Ky.2003). Here, there is evidence regarding the conduct of Equifax and Trans Union suggesting that the problems that Mr. Sheffer experienced were not the result of mere human error and that the errors were not promptly cured. (Fluellen Dep. at 85-85; 97-99, 150; Pl.'s Resp. to Trans Union's Mot. for Summ. J., Ex. E at 61-64.) On this basis, a jury may be able to find that Defendants acted with conscious or reckless disregard to the rights of consumers. For these reasons, I reject Defendants' arguments that they are entitled to summary judgment on Plaintiff's punitive damages claims. However, I note that I will be in a better position to assess the merits of these claims when they are put into a fuller context at trial, and, consequently, I deny Defendants' motions without prejudice to their rights to reassert their arguments regarding punitive damages in an appropriate motion under Federal Rule of Civil Procedure 50.
C. Credit Defamation
*4 Defendants Sears, Equifax, and Trans Union argue that they are entitled to the summary judgment on Plaintiff's claims for defamation under Pennsylvania law. Although there is relatively little discussion of defamation claims under Pennsylvania law in cases involving credit reports, precedent suggests that a false statement in a credit report may qualify as defamatory if it tends to deter third persons from dealing with the plaintiff. See McCain v. Pennbank, 379 Pa.Super. 313, 549 A.2d 1311, 1314 (Pa.Super.Ct.1988). Moreover, because the parties have not addressed the defamation claims in detail and such claims are preempted by the FCRA absent a showing of malice or willfulness, 15 U.S.C. § 1681h(e), I will deny Defendants' motions with respect to the defamation claims without prejudice to their rights to raise their arguments again at trial.
IV. CONCLUSION
Accordingly, I deny Defendants' motions for summary judgment. An appropriate Order follows.

ORDER
AND NOW, this 24th day of July, 2003, upon consideration of Trans Union, LLC's Motion for Summary Judgment, Equifax Information Services, LLC's Motion for Partial Summary Judgment, Plaintiff Richard L. Sheffer's responses thereto, and Defendant Sears Roebuck & Co.'s Joinder to Motions for Summary Judgment, and for the foregoing reasons, it is hereby ORDERED that:
1. By agreement of the parties, Equifax, Inc. is DISMISSED as a Defendant in this action.
2. Trans Union, LLC's Motion for Summary Judgment (Document No. 37) is DENIED.
3. Equifax Information Services, LLC's Motion for Partial Summary Judgment (Document No. 38) is DENIED.
4. Defendant Sears Roebuck & Co.'s Joinder to Motions for Summary Judgment (Document No. 44) is DENIED.
E.D.Pa.,2003.
Sheffer v. Experian Information Solutions, Inc.
Not Reported in F.Supp.2d, 2003 WL 21710573 (E.D.Pa.)

David A. Szwak

Postby David A. Szwak » Mon Jan 16, 2006 6:26 pm

249 F.Supp.2d 560

United States District Court,
E.D. Pennsylvania.
Richard L. SHEFFER, Plaintiff,
v.
EXPERIAN INFORMATION SOLUTIONS, INC., et al., Defendants.
No. CIV.A. 02-7407.
Feb. 14, 2003.

Consumer brought action against credit card issuer under Fair Credit Reporting Act (FCRA). On issuer's motion to dismiss, the District Court, Schiller, J., addressing an issuer of first impression, held that: (1) FCRA provision governing responsibilities of furnishers of information to consumer reporting agencies provides consumers with a private right of action against a furnisher of credit information, and (2) allegations that issuer failed to adequately respond to credit reporting agencies' investigatory inquiries after issuer mistakenly reported that consumer was deceased were sufficient to state claim against issuer.
Motion denied.


MEMORANDUM AND ORDER

SCHILLER, District Judge.
Plaintiff Richard L. Sheffer commenced this action against Defendants Experian Information Solutions, Inc., Equifax Information Services, LLC, Equifax, Inc., Trans Union, LLC, and Sears Roebuck & Co. ("Sears"). Defendant Sears has moved to dismiss the claims against it pursuant to Federal Rule of Civil Procedure 12(b)(6). This case presents an issue under the Fair Credit Reporting Act that has not been addressed in a reported opinion by this Court or the United States Court of Appeals for the Third Circuit, and I hold that 15 U.S.C. § 1681s-2(b) provides consumers with a private right of action against credit furnishers. Consistent with this holding and for the additional reasons set forth below, I deny Sears's motion.
I. BACKGROUND
According to the allegations in Plaintiff's Complaint, [FN1] Mr. Sheffer opened a Sears charge account in January 1993. (Compl.¶ 17.) Without obtaining Mr. Sheffer's consent, Sears subsequently converted this charge account to a Sears Mastercard account and closed the charge account. (Com pl.¶¶ 19-21.) Moreover, Sears later merged Plaintiff's Sears Mastercard account with that of a former Sears customer who was deceased. (Compl.¶ 24.) Because of this error, Plaintiff's credit reports, prepared by the other Defendants in this action, included a notation that Mr. Sheffer was deceased. (Compl.¶¶ 30, 35, 40, 45.) Plaintiff alleges that this error created difficulties with his creditors, harmed his credit rating, and caused him to expend considerable effort in attempting to have the error corrected. (Com pl.¶¶ 130-31, 135-36.) In addition to bringing claims against certain credit reporting agencies, Plaintiff is suing Sears for violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 (2002) et seq., and defamation.


FN1. In ruling on Sears's motion to dismiss pursuant to Rule 12(b)(6), the Court is required to accept the truth of the allegations set forth in Plaintiff's Complaint.


II. STANDARD OF REVIEW
In considering a motion to dismiss for failure to state a claim upon which relief can be granted, courts must accept as true all of the factual allegations pleaded in the complaint and draw all reasonable inferences in favor of the non-moving party. See Bd. of Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs., Inc., 237 F.3d 270, 272 (3d Cir.2001). Furthermore, a motion to dismiss will only be granted if it is clear that relief cannot be granted to the plaintiff under any set of facts that could be proven consistent with the complaint's allegations. See Hishon v. King & Spalding, 467 U.S. 69, 73, 104 S.Ct. 2229, 81 L.Ed.2d 59 (1984) (citing Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957)).
III. DISCUSSION
In its motion, Sears contends that Plaintiff's claim under the FCRA should be dismissed because consumers have no private right of action against a credit furnisher under 15 U.S.C. § 1681s-2(b). In the alternative, Sears argues that Mr. Sheffer's allegations are legally insufficient because Plaintiff has failed to allege that a credit reporting agency has sent a dispute verification form to Sears. Sears also *562 moves for the dismissal of Mr. Sheffer's defamation claim, arguing that the claim is preempted by the FCRA.
[1] With respect to the issue of whether § 1681s-2(b) creates a cause of action for a consumer against a furnisher of credit information, Sears correctly notes that courts have reached different conclusions. [FN2] However, a clear majority of courts that have addressed this issue has "effectively recognized Congress' obvious intent [to] create a private cause of action through § 1681s-2." Vazquez-Garcia v. Trans Union De P.R., Inc., 222 F.Supp.2d 150, 155 (D.P.R.2002); see also Nelson v. Chase Manhattan Mortg. Corp., 282 F.3d 1057, 1058 (9th Cir.2002) (describing purpose of § 1681s-2(b) as "provid[ing] some private remedy to injured consumers"). The reasoning in support of the majority view has been aptly summarized:


FN2. Sears principally relies on Carney v. Experian Information Solutions, Inc., 57 F.Supp.2d 496 (W.D.Tenn.1999). This decision has been described as "baffling." DiMezza, 103 F.Supp.2d at 1301.


The civil liability sections, 15 U.S.C. § 1681n and 1681o, explicitly provide a private right of action for consumers wishing to enforce any provision of the Fair Credit Reporting Act against "any person" who either "willfully fails to comply" or is "negligent in failing to comply." Absent any explicit limitation, the plain language of 15 U.S.C. §§ 1681n, 1681o, 1681s-2(b) and (c) provide a private right of action for a consumer against furnishers of information who have willfully or negligently failed to perform their duties upon notice of a dispute. Furthermore, the negative inference of explicitly precluding a consumer's right of action for violations of § 1681s-2(a) is that they are preserved in § 1681s-2(b). Accordingly, the plain language of the Fair Credit Reporting Act compels the conclusion that there is a private right of action for consumers to enforce the investigation and reporting duties imposed on furnishers of information.
DiMezza v. First USA Bank, Inc., 103 F.Supp.2d 1296, 1300 (D.N.M.2000). Consistent with this reasoning, I conclude that § 1681s-2(b) provides consumers with a private right of action against a furnisher of credit information.
[2] Sears also argues that the facts Plaintiff has pleaded in his Complaint are insufficient to state a claim for a violation of § 1681s-2(b). Specifically, Sears argues that under § 1681s-2(b) Plaintiff must allege that Sears failed to respond to a credit agency's notification that Plaintiff disputed certain information. With respect to Plaintiff's factual allegations, Sears states that "[t]he only direct allegations directed at Sears state that Plaintiff advised Sears directly of the error in Plaintiff's credit report, and that Sears failed to respond." (Def. Sears's Mot. to Dismiss at 6 (emphasis in original).) Sears's argument mischaracterizes Mr. Sheffer's allegations. In his Complaint, one of Mr. Sheffer's overriding assertions is that he contacted several credit agencies to dispute the "deceased" notation, and those credit reporting agencies informed him that they had investigated the disputed information. The notation, however, was not initially removed from his credit report. (Compl.¶¶ 28-59, 75-76.) That is, Plaintiff's FCRA claim does not turn solely on the fact that Plaintiff contacted Sears directly, but includes allegations that, at the very least, create the reasonable inference that Sears failed to adequately respond to the credit reporting agencies' investigatory inquiries. [FN3] For purposes of *563 ruling on a motion to dismiss, courts "must accept as true all of the factual allegations in the complaint as well as the reasonable inferences that can be drawn from them," Doe v. Delie, 257 F.3d 309, 313 (3d Cir.2001), and, thus, Sears's argument cannot succeed.


FN3. Under the FCRA, a credit reporting agency that has received a notice of a dispute from a consumer is required to promptly provide notification of that dispute to the furnisher of the relevant credit information. See 15 U.S.C. § 1681i(a)(2). Thus, in light of
Plaintiff's allegations, it appears that Sears would have been notified by the Defendants about the disputed information in Plaintiff's credit report unless those credit reporting agencies were acting in violation of the FCRA. In any event, this issue is one appropriately resolved after discovery has been completed. See Sullivan v. Equifax, Inc., Civ. A. No. 01-4336, 2002 WL 799856, at *2 n. 3, 2002 U.S. Dist. LEXIS 7884, at * 6 n. 3 (E.D.Pa. April 19, 2002).


[3] [4] Lastly, Sears contends that Plaintiff's defamation claim is preempted by the FCRA's immunity provisions. See 15 U.S.C. §§ 1681h(e) and 1681t(b)(1). These immunities, however, may not apply when "false information [is] furnished with malice or willful intent to injure." Vazquez-Garcia, 222 F.Supp.2d at 162 (quoting 15 U.S.C. § 1681h(e)). Here, Mr. Sheffer has alleged such willfulness (Compl.¶¶ 129, 131-32), and, as such, his defamation cannot be dismissed at this stage of the proceedings.
IV. CONCLUSION
Accordingly, I deny Defendant Sears's motion to dismiss. An appropriate Order follows.

ORDER
AND NOW, this day of February, 2003, upon consideration of Defendant Sears Roebuck & Co.'s Motion to Dismiss, Plaintiff Richard L. Sheffer's response thereto, and Defendant's reply thereto, and for the foregoing reasons, it is hereby ORDERED that:
1. Defendant Sears Roebuck & Co.'s Motion to Dismiss (Document No. 25) is DENIED.
2. Defendant Sears Roebuck & Co.'s Motion to Strike Exhibits to Plaintiff's Opposition to Defendant's Motion to Dismiss is DENIED as moot.
E.D.Pa.,2003.
Sheffer v. Experian Information Solutions, Inc.
249 F.Supp.2d 560


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