Business-related Damages are Compensable

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Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 9:10 am

It is one thing to say that consumer credit purposes underlie the FCRA but another to say that business related damages are not recoverable as argued by defendants.

Jury's award of actual damages of $20,437.50 to consumer in action against consumer finance company for violation of the Fair Credit Reporting Act (FCRA) was supported by evidence that company's actions resulted in reductions of consumer's credit rating and of his available line of credit on several credit cards, that, because consumer individually paid costs on behalf of his employer in order to expedite projects, the decreased credit line affected his business performance and eligibility for bonuses, that consumer's erroneous credit rating increased his interest rate when, during this period, he refinanced his home mortgage, and that consumer suffered compensable mental pain and anguish, embarrassment, and difficult professional and family relations. 15 U.S.C.A. § 1681 o.

Smith v. Santander Consumer USA, Inc.
703 F.3d 316
C.A.5 (Tex.),2012.
December 20, 2012



Smith did not rest with just the abstract reduction in his credit line, however. He also testified as to how much the decreased credit line affected his business performance and eligibility for bonuses (because he individually paid costs on behalf of his employer in order to expedite projects). He refinanced his home mortgage during this period and suffered an increased interest rate because of his erroneous credit rating. He deferred personal expenditures, which he itemized for the jury, as a cautionary measure until his rating was restored. And he suffered compensable mental pain and anguish, embarrassment, and difficult professional and family relations. Cousin v. Trans Union Corp., 246 F.3d 359 (5th Cir.2001) is not controlling here, because in the absence of a special verdict, the amount of any recovery for Smith's non-economic damages, and therefore its sustainability, is purely speculative. Santander challenged all of these damage contentions at trial. The jury verdict, which is general and un-itemized, reflects considerably less than Smith sought. Because the evidence is sufficient for “reasonable and fair-minded men in the exercise of impartial judgment” to support the ultimate award, whether or not this court would have reached the same result, the Boeing standard requires this court to affirm the jury verdict.FN1

FN1. Boeing Co. v. Shipman, 411 F.2d 365, 374 (5th Cir.1969) (en banc), overruled in part on other grounds, Gautreaux v. Scurlock Marine, Inc., 107 F.3d 331 (5th Cir.1997) (en banc).
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

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Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 9:12 am

On May 12, 2010, Plaintiff Thomas Stich and former Plaintiff Icon Home Health, LLC filed a Complaint asserting the following five claims against Defendant: (1) willful violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 s(b); (2) negligent violation of the FCRA, 15 U.S.C. § 1681 s(b); (3) outrageous conduct; (4) disparagement; and (5) preliminary injunctive relief. On July 26, 2010, Defendant filed a Motion to Dismiss. (Doc. # 15.) On March 29, 2011, the Court granted in part and denied in part the Motion to Dismiss. (Doc. # 33.) Specifically, the Court dismissed Icon Home Health from this action, dismissed in part Plaintiffs first and second claims for violations of the Fair Credit Reporting Act (“FCRA”) to the extent that they concern Defendant's reports about the timeliness of Mr. Stich's September–December 2009 payments and to the extent they are premised on business-related damages, and dismissed the claim for preliminary injunctive relief.

Stich v. BAC Home Loans Servicing, LP
Not Reported in F.Supp.2d, 2011 WL 1637018
D.Colo.,2011.
April 29, 2011
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

Administrator
Site Admin
Posts: 11757
Joined: Tue Jul 26, 2005 4:15 am

Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 9:15 am

Hammer v. JP's Southwestern Foods, L.L.C.
739 F.Supp.2d 1155
W.D.Mo.,2010.
September 13, 2010

ORDER

FERNANDO J. GAITAN, JR., Chief Judge.

Pending before the Court are (1) Defendant JP's Motion for Summary Judgment (Doc. No. 100); and (2) Plaintiff's Motion for Partial Summary Judgment (Doc. No. 98). Both will be considered below. As an initial matter, the parties' requests for oral argument will be denied.


I. Background

In order to assist in the prevention of identity theft as well as credit card and debit card fraud, the Fair and Accurate Credit Transactions Act, 15 U.S.C. § 1681 et seq. (“FACTA”), provides numerous protections for consumers. Of significance in this action is section 1681c(g), which provides that:


[N]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last five digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction.


FACTA required full compliance with its provisions no later than December 4, 2006. 15 U.S.C. § 1681c(g)(3)(A) and (B).


Defendant operates a restaurant in Kansas City, Missouri. Defendant accepts credit cards for payment at its restaurant. Plaintiff made a purchase at Defendant's place of business, and in return, received an electronically printed receipt that appears to not comply with FACTA.


In his Complaint filed May 6, 2008, Plaintiff alleged that Defendants willfully violated FACTA by failing to properly truncate the credit card and debit card numbers on electronically printed receipts provided to their customers. FACTA provides for damages for willful violation of FACTA of “not less than $100 and not more than $1,000” for each aggrieved person. 15 U.S.C. § 1681n(a)(1)(A). Plaintiff seeks statutory damages on behalf of himself and a class of similarly situated individuals pursuant to section 1681n(a)(1)(A), and punitive damages pursuant to section 1681n(a)(2).


II. Facts

Defendant is a corporation that owns and operates a Mexican restaurant called Jose Pepper's Border Grill and Cantina located at 511 N.W. Barry Road, Kansas City, Missouri. Defendant's only business is owning and operating Jose Pepper's. Ed Gieselman is a 50% owner of Defendant. Mr. Gieselman is also the president and 100% owner of Northstar Restaurants, Inc. Currently, Mr. Gieselman owns and operates 10 restaurants. Plaintiff alleges that Northstar Restaurants, Inc. is the agent of JP's; however, defendant denies this assertion, and the record demonstrates that there is a contract between Northstar Restaurants, Inc. and defendant that indicates that Northstar provides managerial and accounting services to JP's, including the collection of sales receipts*1158 and payment of all bills. See Ex. A ¶ 3 to Defendant's Suggestions in Opposition (Doc. No. 178); Management Agreement between Northstar and JP's (Doc. No. 99, Ex. 10). The remaining 50% interest in Defendant is owned by Charles Erwin, who has no involvement in the management of Defendant's business operations.


Defendant is a “person that accepts credit cards or debit cards for the transaction of business” within the meaning of FACTA, 15 U.S.C. § 1681 et seq. In transacting such business, Defendant uses cash registers and/or other machines or devices that electronically print receipts for credit card and debit card transactions. From 2003–2007, Defendant used the services of Heartland Payment Systems, Inc. (“HPS”) for credit card processing. In 2003, Mr. Gieselman executed and entered into the Merchant Services Application and Agreement with HPS on behalf of Defendant. Mr. Gieselman understands that the function of HPS is to process the credit cards and transfer the funds into Defendant's bank account. At the time Mr. Gieselman read and executed the Merchant Services Application and Agreement with UPS, there were policies, procedures, terms, and conditions that Defendant agreed to follow. The Merchant Services Application and Agreement required the following certifications, which were located directly above Mr. Gieselman's signature:


Each of the undersigned certifies as follows: I am an owner or officer authorized by the MERCHANT named above to execute this Application and Merchant Processing Agreement.... I further certify that I have received, read, understand and agree to the Card Acceptance Policies, Procedures, and Terms and Conditions accompanying this Application and that, when approved by Acquirer/HPS, this Application and the accompanying Card Acceptance Policies, Procedures and Terms and Conditions shall constitute the agreement between the parties.


Specifically, the Card Acceptance Policies, Procedures, Terms and Conditions set forth several “Rights, Duties, and Responsibilities of Merchants”—one of which related directly to credit card transactions:


In cases where prompted by the terminal to do so, MERCHANT shall key enter the last four digits of the bankcard to verify the contents of the magnetic stripe and shall deliver a completed copy of the Sales Draft to the Cardholder. However, the Cardholder copy shall not contain the expiration date or more than the last five digits of the Cardholder number.



From 2003–2007, Defendant received regular invoices and/or merchant statements from HPS with respect to its credit card processing services. Northstar is responsible for paying the HPS invoices each month. Northstar received a similar bill each month from HPS for each of the restaurants owned by Mr. Gieselman. Therefore, Northstar received approximately eight statements from HPS for each particular month, one for each restaurant owned by Mr. Gieselman. Mr. Gieselman expects someone at Northstar to read and review the bills and statements received from vendors. An individual at Northstar Restaurants, Inc., is responsible for reading and reviewing the bills and statements that are received from vendors for JP's. Mr. Gieselman expects that before any bills or statements are approved for payment or paid by the corporate office, that those bills are reviewed to confirm the bill is appropriate for payment.


In January 2005, Defendant received, during its regular course of business, a paper statement from HPS that notified and warned Defendant about the truncation requirements. Defendant received HPS invoices containing additional advisories*1159 regarding the truncation requirements in June 2005, July 2005, November 2005, and December 2005. Additionally, defendant received another paper statement from HPS dated May 31, 2006, which included a section entitled “Hints & Tips” discussing the truncation requirements. A paper statement from HPS dated July 31, 2006, contained an “Important Message” regarding truncation of electronically printed customer receipts. Defendant received other statements from HPS discussing truncation requirements dated April 30, 2007, and September 30, 2007.


Mitch Osborn has been employed as the General Manager of defendant since June 2004. As General Manager, Mr. Osborn reported to the District Manager, Matt Hench of Northstar Restaurants, Inc. Mr. Osborn first became aware of a problem with Defendant's credit card receipts after being notified by customers of the problem prior to May 15, 2007. At that time, Mr. Osborn was told by customers that Defendant's receipts were displaying the customer's entire credit card number. Prior to that he was unaware of any requirement that customer credit card numbers be truncated. Mr. Osborn reported this problem to Matt Hench. At that time, Mr. Hench was told that a guest had complained that defendant was printing entire credit card numbers on receipts. Mr. Hench knew at that time that printing credit card numbers on receipts was wrong, and that it needed to be fixed. Mr. Hench informed Mr. Osborn that he would find out what Defendant needed to do to fix the problem of printing credit card numbers on receipts.


Mr. Hench told Mr. Osborn that he would call Retail Data Systems (“RDS”) to find out how to get the problem fixed. RDS was the vendor who sold the computer system to Defendant, and, according to Mr. Hench, would be able to fix the problem. On or about May 15, 2007, Mr. Hench received a quote from RDS to update Defendant's software to fix its credit card problem. Mr. Hench had no authority to approve the RDS quote on his own; it required approval by Defendant's owner, Mr. Gieselman, or by Anita Hance, Mr. Gieselman's sister and Defendant's director of operations. The decision to use the Aloha software, the point-of-sale software employed by Defendant, was a corporate decision. If there was a necessary upgrade to the Aloha software that would be of some significant expense, corporate would be required to approve it. Mr. Gieselman overheard a conversation about customers complaining about their credit card numbers being displayed on receipts prior to May 15, 2007. Mr. Hench knew that until the new software was installed, JP's would not cure the issue of printing receipts with full credit card numbers.


At some time after the customers alerted Mr. Osborn to the issue, until a permanent solution could be implemented, he instituted a procedure at the restaurant that only receipts with the first four digits and the last four digits of the credit card number should be given to the customers. Notably, however, on August 29, 2007, plaintiff received from Defendant, at its establishment located at 511 N.W. Barry Road, Kansas City, Missouri, an electronically printed receipt that contained all the digits of plaintiff's credit card number.


From August 2007 through December 5, 2007, defendant continued to print entire credit card numbers on receipts; however, it is unclear how many of these receipts were provided to customers, given defendant's procedure discussed in the preceding paragraph. Defendant's software was either updated in December 2007 (according to plaintiff's statement of facts), or it received new POS terminals and software in December 2007 (according to defendant's statement of facts); in any event, *1160 after December 5, 2007, defendant's credit card machines printed truncated receipts.


On December 4, 2006, it was defendant's custom and practice (or procedure) to provide consumers a receipt that displayed more than the last five digits of their credit card or debit card number. For a period of time prior to the time JP's instituted its credit card procedure in 2007 it was not in compliance with the requirement that the cardholder copy not contain more than the last five digits of the cardholder number.


Defendant indicates that a portion of Jose Peppers' business is business clientele, which frequently includes visits by business people having business lunches and dinners. As an example of this, defendant point to a receipt dated December 20, 2006, when a person who presented a credit card with the name “Media Professional” purchased items from Jose Peppers.


Hammer filed this lawsuit on May 6, 2008. Including this case, Hammer filed thirteen FACTA lawsuits in this District. No one other than Plaintiff Steven Hammer has ever asserted a claim against JP's for not truncating the number on a credit card receipt; the only other “claims” against JP's were customer complaints in 2007. To plaintiff's knowledge, the non-compliant receipt issued to him by Defendant has not been stolen, and that the receipt is still in his (or his counsel's) possession. Hammer did not suffer any actual damages as a result of receiving the subject credit card receipt from JP's, and he has never been the victim of any type of identity theft.FN1 Hammer knows of no class member that suffered any actual damages or identity theft as a result of receiving a non-compliant receipt from JP's. The class in this matter may consist of more than 45,000 consumers. Thus, defendant argues that plaintiff seeks statutory damages of “not less than $100 and not more than $1000” for each violation and thus seeks statutory damages in the range of between $4.5 million and $45 million, plus punitive damages, attorneys' fees and costs.


FN1. The Court notes that, after discovery closed in this matter, plaintiff claimed in his response to defendant's motion in limine that he had recently been the victim of identity theft ( see Doc. No. 173, filed on August 3, 2010). However, the Court finds that whether plaintiff has recently been the victim of identity theft is immaterial to the considerations presented in the motions for summary judgment.




JP's total equity value as of March 23, 2010 was in the negative, specifically a negative $214,605.08. JP's net income for the time period 2006 through 2009 was as follows: 2006—($36,091.86), 2007—$2,635.09, 2008–$56,865.10, and 2009–$122,471.87. Although plaintiff alleges that defendant has insurance coverage for this dispute, defendant asserts that the claim was turned over to its insurance carrier, and to Mr. Gieselman's knowledge there has been no response.


III. Defendant JP's Motion for Summary Judgment (Doc. No. 100)

Defendant moves for summary judgment, indicating (1) plaintiff does not have Article III standing; (2) the damages sought violate due process; (3) statutory damages are not available to business customers; (4) damages are not available for transactions occurring after December 5, 2007; and (5) damages are not available to class members provided a receipt who were not the cardowner. Each of these grounds will be considered below.


A. Standard

Summary judgment is appropriate if the movant demonstrates that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. *1161 Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The facts and inferences are viewed in the light most favorable to the nonmoving party. Fed.R.Civ.P. 56(c); Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586–590, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The moving party must carry the burden of establishing both the absence of a genuine issue of material fact and that such party is entitled to judgment as a matter of law. Matsushita, 475 U.S. at 586–90, 106 S.Ct. 1348.


Once the moving party has met this burden, the nonmoving party may not rest on the allegations in the pleadings, but by affidavit or other evidence, must set forth facts showing that a genuine issue of material fact exists. Fed.R.Civ.P. 56(e); Lower Brule Sioux Tribe v. South Dakota, 104 F.3d 1017, 1021 (8th Cir.1997). To determine whether the disputed facts are material, courts analyze the evidence in the context of the legal issues involved. Lower Brule, 104 F.3d at 1021. Thus, the mere existence of factual disputes between the parties is insufficient to avoid summary judgment. Id. Rather, “the disputes must be outcome determinative under prevailing law.” Id. (citations omitted).


Furthermore, to establish that a factual dispute is genuine and sufficient to warrant trial, the party opposing summary judgment “must do more than simply show that there is some metaphysical doubt as to the facts.” Matsushita, 475 U.S. at 586, 106 S.Ct. 1348. Demanding more than a metaphysical doubt respects the appropriate role of the summary judgment procedure: “Summary judgment procedure is properly regarded not as a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy, and inexpensive determination of every action.” Celotex, 477 U.S. at 327, 106 S.Ct. 2548.


B. Discussion


1. Has plaintiff suffered harm sufficient to convey standing?

To demonstrate Article III standing, plaintiff must prove: (1) that he suffered an “injury-in-fact”; (2) that a causal relationship exists between the injury and the challenged conduct, and (3) that the injury will likely be addressed by a favorable decision. Amburgy v. Express Scripts, Inc., 671 F.Supp.2d 1046, 1050 (E.D.Mo.2009) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560–61, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992); Steger v. Franco, Inc., 228 F.3d 889, 892 (8th Cir.2000)). Abstract injury is not sufficient; instead, the threat of injury must be concrete and particularized, not conjectural or hypothetical. Id. Actual injury, however, “may exist solely by virtue of ‘statutes creating legal rights, the invasion of which creates standing....’ ” Havens Realty Corp. v. Coleman, 455 U.S. 363, 373, 102 S.Ct. 1114, 71 L.Ed.2d 214 (1982)(quoting Warth v. Seldin, 422 U.S. 490, 500, 95 S.Ct. 2197, 45 L.Ed.2d 343 (1975) (emphasis added)).


[1] Headnote Citing References Defendant argues that no actual harm was alleged by plaintiff, and that plaintiff admitted at his deposition that he has no actual damages. Defendant argues that because plaintiff gave his receipt to his attorney in 2008, there is no possibility that plaintiff will ever be injured by the conduct alleged in his complaint. Defendant, therefore, argues that plaintiff has not demonstrated Article III standing sufficient to maintain this action. Defendant cites to Amburgy v. Express Scripts, Inc., 671 F.Supp.2d 1046 (E.D.Mo.2009) as an example of a case where a court found Article III standing to be absent (finding, instead, that an increased risk of harm from possibly having plaintiff's personal information compromised to be insufficient to state an injury-in-fact). Notably, however, Amburgy was a case involving a data *1162 security breach and alleging a variety of state-law tort and contract claims, not a case alleging a FACTA violation such as the present matter. FN2


FN2. Indeed, the Court in Amburgy noted that there is no private cause of action under Missouri law for a person allegedly aggrieved by the breach of a database containing the person's confidential information. 671 F.Supp.2d at 1055. Obviously, FACTA provides aggrieved individuals a cause of action when they have been provided receipts containing more than five digits from the individual's credit card number.




In response, plaintiff notes that FACTA does not require that a plaintiff suffer actual monetary damages in order to sue for a violation; instead, it states that “Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to the sum of—(1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000.” 15 U.S.C. § 1681n(a). Other courts have found that actual damages are not a prerequisite to recovering statutory damages. See Ehrheart v. Lifetime Brands, Inc., 498 F.Supp.2d 753, 755–56 (E.D.Pa.2007); Korman v. Walking Co., 503 F.Supp.2d 755, 759 (E.D.Pa.2007); Ramirez v. MGM Mirage, Inc., 524 F.Supp.2d 1226, 1230–31 (D.Nev.2007). Plaintiff further notes that statutes may create legal rights, and that FACTA has created a legally protected interest in being handed a receipt that omits certain of plaintiff's credit card information. See Korman, 503 F.Supp.2d at 759; Ehrheart, 498 F.Supp.2d at 755; Ramirez, 524 F.Supp.2d at 1231.


Defendant replies that a federal statute cannot confer standing on plaintiffs who do not meet Article III's requirements. See Rivas v. Rail Delivery Serv., 423 F.3d 1079, 1083 (9th Cir.2005). Defendant also attempts to distinguish the cases relied upon by plaintiff as (1) not binding on this Court; and (2) rulings at the motion to dismiss stage rather than at the summary judgment stage.


The Court does not find defendant's arguments to be persuasive. Instead, the Court finds, as have the other courts mentioned above, that FACTA has created a legally protected interest in being handed a receipt that omits certain of plaintiff's credit card information. Violation of that legally protected interest is a sufficient injury-in-fact to confer standing. Plaintiff further has sufficiently alleged that a causal relationship exists between that injury and defendant's challenged conduct, and that injury would likely be addressed by a favorable decision. Defendant's motion is DENIED in this respect.



2. Do the damages sought violate due process?

[2] Headnote Citing References Defendant argues, in the alternative, that FACTA's damages provisions create a remedy that threatens to drive businesses out of existence or into bankruptcy by imposing damages that are disproportionate to the actual damage suffered by any person. Defendant notes that the statute imposes $100 to $1,000 in statutory damages for willful violations, and a plaintiff may also recover punitive damages plus attorneys' fees and costs. See 15 U.S.C. § 1681n. Defendant states that this is a potential business-ending exposure for defendant doing something where it received absolutely no benefit. Defendant indicates that this is grossly excessive punishment in violation of the Fifth and Eighth Amendments of the United States Constitution. See Parker v. Time Warner Entm't Co., 331 F.3d 13, 22 (2d Cir.2003) (finding that such a minimum per-consumer award of damages in the class-action context may make statutory damages come to resemble punitive damages,*1163 and that, in a sufficiently serious case the due process clause might be invoked, not to prevent certification, but to nullify that effect and reduce the aggregate damage award). Defendant argues that, given the number of potential class members, JP's would be subject to a minimum statutory award in excess of $4,500,000 ($100 per 45,000 class members, plus punitive damages, attorneys' fees and costs), and a possible judgment in excess of $45,000,000 ($1,000 per 45,000 class members). Defendant argues that this sum would be enough to put JP's out of business and its employees out of work, for actions that resulted in no damage to anyone.


In response, plaintiff argues that defendant cannot demonstrate a facial challenge to the constitutionality of the statutory damage provision, as defendant cannot establish that “no set of circumstances exists under which the Act would be valid,” see United States v. Brown, 441 F.3d 1330, 1367 (11th Cir.2006)(quoting United States v. Salerno, 481 U.S. 739, 745, 107 S.Ct. 2095, 95 L.Ed.2d 697 (1987)), and Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1311 (11th Cir.2009)(finding, in an examination of FACTA's damages provisions, that “the mere possibility of a constitutional application is enough to defeat a facial challenge to the statute”). Additionally, plaintiff argues that defendant's “as-applied” challenge to the statutory damages provision is premature, as the Court would have to engage in speculative factual assumptions at this time (i.e., assuming that the defendant will be found to have violated the statute, that the violation was willful, and that the end result will be the imposition of a constitutionally excessive damages award), instead of relying on a developed factual record. See Texas v. United States, 523 U.S. 296, 300, 118 S.Ct. 1257, 140 L.Ed.2d 406 (1998)(finding “A claim is not ripe for adjudication if it rests upon contingent future events that may not occur as anticipated, or indeed may not occur at all”); Harris, 564 F.3d at 1310 (finding an “as-applied” challenge to FACTA's damages provisions to be unripe when there had been no final ruling or verdict on willfulness and no final determination as to the size of the ultimate verdict); Ramirez v. Midwest Airlines, Inc., 537 F.Supp.2d 1161, 1169 (D.Kan.2008) (such an argument is premature when “there is not yet any damage award for the court to review”).


The Court finds plaintiff's position to have merit. Defendant has not demonstrated that no set of circumstances exists under which FACTA's damages provisions would be valid. Additionally, the Court finds that defendant's as-applied challenge is premature, and would be better stated after a verdict has been entered in this case. Defendant's motion will be DENIED on this point as well.



3. Are statutory damages available to business customers?

[3] Headnote Citing References Defendant argues that FACTA limits recovery of statutory damages to consumer cardholders, and does not allow for damages for business card holders or for business related transaction. 15 U.S.C. § 1681n (providing “Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer ...” (emphasis added)); 15 U.S.C. § 1681a(c) (defining a consumer as an “individual”); Pezl v. Amore Mio, 259 F.R.D. 344, 347–48 (N.D.Ill.2009). Defendant indicates that it frequently has customers who visit the restaurant for business purposes. Defendant requests summary judgment in its favor as to all business-related transactions.


In response, plaintiff notes that FACTA provides: “[N]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 *1164 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g). Cardholder is defined as “any person to whom a credit card is issued or any person who has agreed with the card issuer to pay obligations arising from the issuance of a credit card to another person.” 15 U.S.C. § 1602(m). “Person” means “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” 15 U.S.C. § 1681a(b). Plaintiff states that the plain language of the statute indicates that there is no business transaction exception to FACTA.


In reply, defendant indicates that Plaintiff has confused what transactions are covered under FACTA with who may file a lawsuit to recover damages under FACTA. Although FACTA's protections apply to both business and consumer transactions, 15 U.S.C. § 1681n, which supplies the authority to file a lawsuit, applies only to consumers. The Court agrees with defendant's interpretation of the statute. Therefore, only consumers who are members of the class may recover damages. Summary judgment is GRANTED as to the claims of any non-consumer cardholder.FN3


FN3. The Court finds, however, that defendant has not yet demonstrated that the card holder of the “Media Professional” credit card referenced in the statement of facts is not a “consumer” under FACTA's damages provisions.





4. Transactions after December 5, 2007

[4] Headnote Citing References Defendant indicates that summary judgment is proper for all transactions after December 5, 2007, as on December 6, 2007, JP's had its credit card registers and software replaced so that the registers no longer printed more than the last four digits of the customer's credit card number.


In response, plaintiff states that, “While Plaintiff can point to no facts or documents proving that Defendant issued non-compliant receipts to its consumers after December 5, 2007,” the Court should not trust defendant's assertion that the system was fixed after that date, and instead, the Court should view defendant's assertion as suspect. See Doc. No. 106, p. 34. Plaintiff also indicates that the class definition, which was “already approved by the Court,” should control who can and cannot participate in class recovery. The class definition is “All persons to whom Defendant provided an electronically printed receipt at the point of sale or transaction, in a transaction occurring after December 4, 2006, on which Defendant printed more than the last five digits of the person's credit card or debit card number (the “Class”).” See Order, Doc. No. 89. Plaintiff states that the class definition, therefore, would preclude recovery for persons who received a receipt that was compliant with FACTA's provisions.


The Court agrees with defendant that the facts are uncontroverted that JP's fixed its system on December 6, 2007, so that it printed no more than the last four digits of a customer's credit card number on or after that date. The Court agrees the plaintiff has failed to meet its burden on summary judgment by failing to set forth evidence that anyone received a non-compliant receipt after December 5, 2007. Therefore, defendant's motion for summary judgment will be GRANTED in this respect.


Further, the Court is certainly able to amend the class definition in this case, especially given that notice has not yet been provided to members of the class. Accordingly, the Court will AMEND the class definition to be “All persons to whom Defendant provided an electronically printed receipt at the point of sale or transaction,*1165 in transactions occurring between December 4, 2006, and December 5, 2007....”



5. Are damages available to those class members provided a receipt that are not the cardowner?

Defendant argues that the purpose of FACTA is to protect the security of cardowners, not those individuals who were provided receipts who were not cardowners. See 15 U.S.C. § 1681c(g)(1), which provides: “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” (Emphasis added.) Defendant indicates that many of the receipts were signed by individuals who were not the cardowner, and there is no basis to provide relief to those individuals. Plaintiff responds that FACTA's statutory language does not distinguish between cardowners and cardholders, and one could imagine many circumstances where the cardholder was not the actual owner of the card, but who was an authorized and intended user of the card. Defendant replies that any person who was provided a receipt a JP's who was not the card owner is not protected under FACTA and cannot recover damages against JP's.


The Court cannot grant defendant's motion, which cites to no authority for the proposition asserted. The Court, further, is unable to find any authority for this proposition in the research it has conducted. Therefore, defendant's motion as to class members who were provided a receipt but are not the owner of the card is DENIED.FN4


FN4. Further, defendant's concern seems to be the type of concern that would be better addressed at the stage when members of the class are filing claims to receive a portion of a settlement or judgment fund.




IV. Plaintiff's Motion for Partial Summary Judgment (Doc. No. 98)

Plaintiff seeks partial summary judgment as to (1) whether defendant violated the Fair and Accurate Credit Transactions Act (“FACTA”), 15 U.S.C. § 1681c(g), by printing more than the last five digits of plaintiff's credit card number on a receipt that was provided to him at the point of sale; and (2) whether defendant willfully violated FACTA with either knowledge or reckless disregard as to whether its conduct violated the law.


A. Violation of FACTA

[5] Headnote Citing References Plaintiff indicates that it is undisputed that defendant violated FACTA. FACTA provides, in relevant part:


[N]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.


15 U.S.C. § 1681c(g). FACTA gave merchants up to three years to comply with its requirements, requiring full compliance by December 4, 2006. 15 U.S.C. § 1681c(g)(3).


Plaintiff indicates the evidence is uncontroverted that defendant violated FACTA, as defendant admits it provided plaintiff Steven E. Hammer a non-compliant receipt on August 29, 2007. Plaintiff further indicates that defendant has admitted that it did not begin complying with FACTA until approximately December 2007. Plaintiff states that it is entitled to summary judgment as to whether defendant violated FACTA.


*1166 Defendant responds that plaintiff's motion is “hopelessly vague,” in that it does not specify whether plaintiff is seeking summary judgment just for himself, for certain class members, or for the entire class. Defendant indicates this distinction is important, as defendant “implemented a new procedure at some point in 2007 that required its servers to only provide receipts with truncated credit card numbers to its customers.” See Doc. No. 178, p. 18.FN5 Defendant further suggests that plaintiff has failed to introduce into evidence the receipt for any class member except for himself, thereby failing to establish that any class member received a receipt that violated FACTA after defendant implemented this new policy.


FN5. As noted by plaintiff, however, this truncation does not satisfy the requirements of FACTA, as both the first four and last four digits of the credit card number appeared on the “truncated” receipts, exceeding the number required by FACTA.




It is clear that the receipt provided to plaintiff violates FACTA, and so summary judgment as to that single violation can be GRANTED. However, as noted below, the mere technical violation of FACTA does not mean that plaintiff is entitled to statutory damages. Instead, plaintiff must demonstrate that the violation was willful. Further, with respect to other receipts allegedly provided to other customers at other times during the period between December 4, 2006 and December 5, 2007, the Court is not willing to enter summary judgment as to a technical violation of FACTA's requirements, given that plaintiff has provided few receipts to the Court and that a technical violation of FACTA does not automatically mean that the plaintiff class is entitled to damages. Plaintiff's motion will be DENIED IN PART in this respect at this time.


B. Willful Violation of FACTA

Plaintiff further indicates that, in order to recover statutory damages under the provisions of FACTA, he must demonstrate that Defendant's violation of FACTA was “willful.” See 15 U.S.C. § 1681n(a). The Supreme Court has held that “willful,” as used in 15 U.S.C. § 1681n(a) encompasses a knowing or reckless violation of the law. Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 56–58, 71, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). To establish a reckless violation, plaintiff must establish that defendant's actions entailed “an unjustifiably high risk of harm that is either known or so obvious that it should be known.” Id. at 68, 127 S.Ct. 2201.


[6] Headnote Citing References Plaintiff argues that the facts of this matter demonstrate that defendant acted recklessly, if not knowingly, in violation of the statute. Plaintiff notes that defendant received a variety of invoices from HPS that referenced the credit card number truncation requirements of FACTA. Plaintiff indicates that defendant's decision to ignore these notifications demonstrates that its actions were reckless, if not intentional. Further, plaintiff notes that defendant received actual notice about its failure to comply with FACTA by JP's customers at some time prior to May 15, 2007. Even though defendant received a quote from RDS to fix the problem at an earlier time, it continued to print entire credit card numbers on receipts from May 2007 until December 5, 2007, after which time the problem was fixed.


Plaintiff indicates that at the time defendant provided him with a non-compliant receipt in August 2007, (1) defendant had entered into a contract with HPS that required it print no more than the last five digits of the credit card number; (2) defendant received at least 9 invoices containing notices from HPS regarding truncation requirements; (3) defendant *1167 received notice through customer complaints to its General Manager that it was printing the entire credit card number on receipts; (4) defendant's owner and the District Manager at Northstar had been notified of defendant's non-compliance with the truncation requirements; and (5) defendant had received a quote from RDS to cure the truncation problem. Plaintiff states that these facts demonstrate that the issuance of plaintiff's receipt in August 2007 was willful, given defendant's actual knowledge. Plaintiff requests the Court grant plaintiff “partial summary judgment on his claim, and the similar claims of all Class members, that Defendant acted willfully in violation of FACTA as a matter of law.”


[7] Headnote Citing References[8] Headnote Citing References In its response, defendants first note that the relationship between Northstar and defendant presents questions of material fact as to whether Northstar is defendant's agent or whether Northstar is an independent contractor providing services to defendant. This is relevant as plaintiff is attempting to impute the knowledge of Matt Hench, District Manager of Northstar, onto defendant. In plaintiff's suggestions in support of his motion for summary judgment, plaintiff simply presumes that Northstar is defendant's agent, without providing any analysis on this issue at all. “Whether a principal-agent relationship exists is a question of fact.” Bluehaven Funding, LLC v. First American Title Ins. Co., 594 F.3d 1055, 1058 (citing Ritter v. BJC Barnes Jewish Christian Health Sys., 987 S.W.2d 377, 384 (Mo.Ct.App.1999)). “The party asserting an agency relationship has the burden of proving the existence of the relationship and the scope of the agent's authority.” Id. at 1059 (citing Karr–Bick Kitchens & Bath, Inc. v. Gemini Coatings, Inc., 932 S.W.2d 877, 879 (Mo.Ct.App.1996)).


Defendant further argues that the issue of willfulness, like most state-of-mind issues, is a question of fact for the jury. See Cowley v. Burger King Corp., 2008 U.S. Dist. LEXIS 87852, *13 (S.D.Fla., May 23, 2008); Edwards v. Toys “R” Us, 527 F.Supp.2d 1197, 1210 (C.D.Cal.2007); Soualian v. Int'l Coffee & Tea, LLC, 2008 WL 410618, *1–2, 2008 U.S. Dist. LEXIS 91130, *4 (C.D.Cal., Feb. 9, 2008); Lenox v. Equifax Information Services LLC, 2007 WL 1406914, *5–6, 2007 U.S. Dist. LEXIS 34453, *16 (D.Or., May 7, 2007); Cairns v. GMAC Mortgage Corp., 2007 WL 735564, *2–3, 2007 U.S. Dist. LEXIS 16689, *8 (D.Ariz., March 7, 2007). As noted in the Cowley decision:


The motion did not cite, nor did the Court find, any FACTA published case where a court has found there to be willfulness, on summary judgment or through other means, as a matter of law. The absence of such authority compellingly shows that whether or not Defendant knowingly and intentionally violated the statute is for the jury to decide, even in a case where, as here, there may be strong evidence from which the jury could reach that conclusion.



* * * *



A reasonable jury could certainly find that Defendant's actions were merely negligent, as opposed to reckless. We recognize that such a finding would undermine Plaintiff's case because he is not alleging any actual damages. See § 1681o (only actual damages recoverable for negligent violations of the FCRA). Nevertheless, it is up to the jury to pinpoint the negligence/recklessness line and determine whether Defendant's conduct is tantamount to a willful and reckless violation of the FCRA guidelines.


Cowley, 2008 U.S. Dist. LEXIS 87852, *14–17.


Defendant indicates that much of plaintiff's evidence relates to negligence (such *1168 as arguing the defendant should have read certain language in the invoices received by Northstar and paid by Northstar on behalf of defendant). Defendant further indicates that questions exist as to (1) whether defendant's owner was aware of the FACTA requirements that customer credit cards numbers be truncated; (2) whether defendant's temporary solution (after customers complained) of providing receipts that contain only the first four and last four digits of the customer's credit card number demonstrates an attempt to comply with the spirit of FACTA FN6; (3) whether anyone at Northstar should have been aware that defendant had a POS system that was non-compliant with FACTA, given that the software properly truncated credit card numbers at all other restaurants to which Northstar provided services; and (4) whether the receipt given to plaintiff that contained his entire credit card number was the result of human error, if the new procedures were in place at the time of his transaction with defendant.


FN6. Defendant argues that this demonstrates “substantial compliance” with the statute, as the first four digits of a credit card number simply identify the issuer of the credit card, which is publicly available information. See Defendant's Sur–Response, Doc. No. 180. Although the Court does not believe that “substantial compliance” would be a defense to a technical violation of FACTA (such as what plaintiff has alleged happened to him on August 29, 2007), the Court agrees with defendant that an attempt to comply with the spirit of the law to protect customers from identity theft is relevant as to defendant's state of mind in the willfulness inquiry.




The Court agrees with defendant that there are questions of material fact as to whether its conduct was willful, and that there are questions of material fact as to whether Northstar is defendant's agent. The Court further notes that there is a distinct possibility that defendant could be found to have acted willfully at some portions of time and non-willfully at other portions of time. Accordingly, plaintiff's motion for summary judgment will be DENIED on this issue.


V. Conclusion

Therefore, for the foregoing reasons:


1. Defendant JP's Motion for Summary Judgment (Doc. No. 100) is GRANTED IN PART and DENIED IN PART; and



2. Plaintiff's Motion for Partial Summary Judgment (Doc. No. 98) is GRANTED IN PART and DENIED IN PART.



IT IS SO ORDERED.

W.D.Mo.,2010.
Hammer v. JP's Southwestern Foods, L.L.C.
739 F.Supp.2d 1155
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

Administrator
Site Admin
Posts: 11757
Joined: Tue Jul 26, 2005 4:15 am

Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 9:18 am

Merchant could not recover business economic damages from credit card processing service under Fair Credit Reporting Act (FCRA), in action alleging willful and negligent noncompliance with FCRA, related to denials of credit for purchase of bowling alley scoring system and subsequent lost sales and repair costs to current scoring system; merchant's bowling alley business was a limited liability company (LLC), and thus no consumer report was involved in her attempt to obtain credit, and credit denials were business and commercial transactions. Fair Credit Reporting Act, §§ 616, 617, 15 U.S.C.A. §§ 1681n, 1681 o.

Tilley v. Global Payments, Inc.
603 F.Supp.2d 1314
D.Kan.,2009.
March 24, 2009

MEMORANDUM AND ORDER

JAMES P. O'HARA, United States Magistrate Judge.


I. Introduction

The plaintiff, Carol Beth Tilley, alleges the defendant, Global Payments, Inc., acted willfully or negligently in reviewing her credit information and reporting it to credit reporting agencies, in violation of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. § 1681 et seq. This case is now before the court FN1 on defendant's motion for summary judgment (doc. 179). The *1318 instant motion has been fully briefed ( see docs. 180, 188, & 193), and the court is now ready to rule.


FN1. On June 5, 2008, by consent of both parties, this case was reassigned for disposition from Hon. Julie A. Robinson, U.S. District Judge, to the undersigned U.S. Magistrate Judge, James P. O'Hara ( see doc. 194).





II. Facts FN2

FN2. The court, of course, construes the facts in the light most favorable to plaintiff as the nonmoving party pursuant to Fed.R.Civ.P. 56. Immaterial facts and those not properly supported by the record are omitted. When necessary, additional facts are included in the analysis section of this memorandum and order.




In August 2002, plaintiff owned a business called Tilley Sports Apparel, which sold t-shirts, among other things. Plaintiff arranged to have a merchant account with defendant, which enabled Tilley Sports Apparel to accept credit cards for purchases. Tilley Sports Apparel was an unincorporated, sole proprietorship, so plaintiff provided defendant her social security number as the tax identification number for the business.


On or about August 22, 2002, plaintiff received an unsolicited e-mail directed to Tilley Sports Apparel from an individual she had never met. In the e-mail, the sender stated that his name was “Rev Mahmoud Sidi” and that his address was in “Ghana West Africa.” The sender requested plaintiff send him hundreds of t-shirts for a total cost of approximately $10,000, which he asked plaintiff to split over four different credit cards. After receiving the order, plaintiff contacted defendant and told it about the order. Defendant told her to run the credit cards and to call back on the following Monday. Plaintiff then ran the credit cards. Plaintiff called defendant on the following Monday and gave it the approval numbers for the credit cards. Defendant told her the credit cards were fine and that she could process and ship the order. Plaintiff had the money from the order in her account that same Monday and shipped the t-shirts on Thursday.


On September 16, 2002, plaintiff received a sales draft request from defendant, dated September 11, 2002, indicating there was no cardholder authorization for one of the credit cards plaintiff processed. The transaction amount listed on the sales draft request is $2,487.38. Although unable to provide copies of sales draft requests for the other three credit cards, defendant asserted it was entitled to $9,949 from plaintiff.


In October 2002, defendant reported to Experian Information Solutions, Inc. (“Experian”) a debt in the amount of $9,949. The debt was reported for the credit file maintained under plaintiff's social security number.


Defendant sometimes worked with a collection agency, Capstone Financial Management, LLC (“Capstone”). It was defendant's practice that if it did not know if a debt had been paid or if information had been purged from its systems, it would contact the assigned collection agency or person whom it contended was indebted to defendant and ask if the debt had been paid. If the response was the debt had been paid, defendant would have the collection agency or person send written proof of the payment. Defendant's system would identify if a matter had been handed over to a collection agency. Defendant has a contact person at the collection agencies it has referred matters.


On November 11, 2002, Capstone received plaintiff's debt to defendant. In May 2003, defendant approved a settlement of the debt in full for $3,107. Capstone received a check from plaintiff for $3,107 on May 13, 2003.


Defendant's system would identify if a matter had been handed over to a collection agency. But defendant did not have a policy or procedures for governing how the collection agency was to handle the matter, just an expectation that it would act within the law. Nor did defendant have any written*1319 policy or procedures governing how it was to update its records when a collection agency reported back to it that a dispute had been settled. Although defendant's procedure was to update its records to indicate a dispute had been settled, defendant's system (“Oracle”) was not updated to indicate its dispute with plaintiff had been settled.


Defendant purges its merchant account system (“MAS”) after six months of non-activity, except for demographic information about the customer such as name, address, telephone number, merchant identification number, and federal tax identification number. This information is maintained by defendant either in a database or on CD. Besides the MAS, defendant has two other systems, Oracle and Cadre, that are not purged.


In June 2003, TransUnion L.L.C. (“TransUnion”) updated the credit file maintained under plaintiff's social security number to reflect a debt owed to defendant in the amount of $9,949. The debt was initially reported for the credit file maintained under plaintiff's social security number. TransUnion cannot say when it first received the report from defendant, although defendant's documents reveal it made the report on June 1, 2003.


According to Experian, on October 9, 2003, it sent a notice to defendant of a formal dispute from plaintiff that the debt to defendant was showing as unpaid. Experian further states that, having received no timely response from its October 9, 2003 inquiry, it updated defendant's account in plaintiff's credit file on November 7, 2003 to show the debt was paid.


On October 21, 2003, in response to a formal notice of dispute made by plaintiff to TransUnion, which was communicated to defendant, defendant verified the debt information it initially reported to TransUnion regarding plaintiff in October 2002 was still correct.


Capstone sent defendant an e-mail on November 6, 2003 indicating the settlement of plaintiff's account was reported to the credit bureau agencies in June 2003 and the account needed to be removed from her credit bureau information as soon as possible. An analyst with defendant sent an e-mail back to Capstone that same day indicating she mailed the information to the credit bureaus. Capstone forwarded the e-mails to plaintiff on November 7, 2003.


In November 2003, CSC Credit Services, Inc. (“CSC”) and Equifax Information Services, LLC (“Equifax”) updated their credit file maintained under plaintiff's social security number to reflect a debt owed to defendant in the amount of $9,949. CSC and Equifax cannot say when they first received the report from defendant, although defendant's documents reveal it made the report on June 1, 2003. CSC and Equifax documents indicate defendant reported this information to them in November 2003.


CSC, Experian, Equifax, and/or TransUnion were not able to find any document or thing mailed or sent to any of them by defendant in November 2003 requesting them to delete, remove, or correct defendant's entry on plaintiff's credit reports. Defendant has not produced in this litigation a copy of any communication it sent to CSC, Experian, Equifax, and/or TransUnion in November 2003 relating to plaintiff.


On September 6, 2005, in response to a formal notice of dispute made by plaintiff to CSC, which was communicated to defendant, defendant verified the debt information as being reported correctly. Defendant reported plaintiff's debt to CSC as “charged to profit and loss,” meaning it was written off as uncollectible. Defendant has admitted that reporting its entry against plaintiff as charged to profit and loss was incorrect. Rather, defendant *1320 should have reported that plaintiff paid the debt in full and nothing was owed to defendant by plaintiff. Plaintiff contacted defendant on September 24, 2005 regarding the debt and was told a couple of days later that defendant did not have any record of her having paid the debt.


Around October 5, 2005, one of defendant's in-house counsel told plaintiff that defendant's entry against her would be removed with all credit reporting agencies within forty-eight hours. A representative of defendant also told plaintiff around November 7, 8, or 9, 2005 that defendant's entry would be removed within forty-eight hours. On November 9, 2005, the representative indicated in writing she requested all three credit reporting agencies remove the debt, but defendant admits it had not sent requests to Experian and TransUnion.


On November 6, 2005, defendant sent an electronic update to Equifax and CSC asking its account in plaintiff's credit file be deleted. Equifax and CSC deleted defendant's account in plaintiff's credit file by or about November 10, 2005.


On May 1, 2006, TransUnion deleted defendant's entry in the credit file maintained under plaintiff's social security number based upon a letter, dated April 25, 2006, it received from a lawyer for plaintiff. Attached to the letter from plaintiff's lawyer was correspondence from defendant, dated November 9, 2005, showing the debt to defendant had been resolved.


On May 2, 2006, defendant sent an electronic update to Experian asking its account in plaintiff's credit file be deleted. Experian deleted defendant's account in plaintiff's credit file by or about May 3, 2006.


Plaintiff testified she felt humiliated as result of defendant's actions. Specifically, plaintiff felt humiliated when she told her credit card companies multiple times the debt had been paid, settled in full, and should never have appeared on her credit report; when she was told by defendant twice in writing it was going to be removed from her credit reports and it was not; when she was unable to put braces on her son's teeth, take care of her kids, obtain loans to send her son to college who then had to join the military and serve in Iraq; in September 2005 when CSC reported that defendant was still verifying the debt; on November 16, 2005 when she pulled her credit reports and defendant's entry was still there, even though it had assured her on November 9, 2005 it would be removed with all credit reporting agencies within forty-eight hours; and in January 2006 when defendant had still not removed its entry with all of the credit reporting agencies.


Plaintiff claims the interest rates on several of her personal credit cards greatly increased after defendant's entry appeared on her credit history, and then her credit score went down by fifty-one points once defendant's entry was removed from her credit history. Plaintiff spoke with a representative from one of her credit cards who indicated her rate increased due to an item between $9,000 and $10,000 on her credit report, which she asserts must have been defendant's entry. Plaintiff had previously paid payments late with different creditors and had outstanding credit card debt of approximately $33,000.


Plaintiff claims she was denied credit by Cypress Financial Corp., Lamar Bowling Supply, First Priority Acceptance, Financial Pacific Leasing, LLC, and Preferred Lease as a result of her account with defendant. Plaintiff admits all of these credit applications were for a new scoring system at her bowling alley, Jayhawk Bowl, LLC.


On July 25, 2006, plaintiff filed a complaint alleging defendant, and others who have since been dismissed, violated FCRA *1321 ( see docs. 1, 145, & 171–73). Plaintiff also asserted a defamation claim against defendant.



III. Summary Judgment Standards

Summary judgment is appropriate if the moving party demonstrates there is “no genuine issue as to any material fact” and it is “entitled to judgment as a matter of law.” FN3 In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.FN4 A fact is “material” if, under the applicable substantive law, it is “essential to the proper disposition of the claim.” FN5 An issue of fact is “genuine” if “there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way.” FN6


FN3. Fed.R.Civ.P. 56(c).




FN4. Adler v. Wal–Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)).




FN5. Id. (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).




FN6. Id. (citing Anderson, 477 U.S. at 248, 106 S.Ct. 2505).




The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. FN7 In attempting to meet that standard, a movant that does not bear the ultimate burden of persuasion at trial need not negate the other party's claim; rather, the movant need simply point out to the court a lack of evidence for the other party on an essential element of that party's claim. FN8 “On the other hand, if the movant has the burden of proof on a claim or defense raised in a summary judgment motion, it must show that the undisputed facts establish every element of the claim or defense.” FN9


FN7. Id. at 670–71.




FN8. Id. at 671 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).




FN9. Media Servs. Group, Inc. v. Lesso, Inc., 45 F.Supp.2d 1237, 1239 (D.Kan.1999).




Once the movant has met this initial burden, the burden shifts to the nonmoving party to “set forth specific facts showing that there is a genuine issue for trial.” FN10 The nonmoving party may not simply rest upon its pleadings to satisfy its burden.FN11 Rather, the nonmoving party must “set forth specific facts that would be admissible in evidence in the event of trial from which a rational trier of fact could find for the nonmovant.” FN12 “To accomplish this, the facts must be identified by reference to affidavits, deposition transcripts, or specific exhibits incorporated therein.” FN13


FN10. Anderson, 477 U.S. at 256, 106 S.Ct. 2505; see Adler, 144 F.3d at 671 n. 1 (concerning shifting burdens on summary judgment).




FN11. Anderson, 477 U.S. at 256, 106 S.Ct. 2505.




FN12. Adler, 144 F.3d at 671 (internal quotation omitted).




FN13. Id.




Finally, the court notes that summary judgment is not a “disfavored procedural shortcut,” rather, it is an important procedure “designed ‘to secure the just, speedy and inexpensive determination of every action.’ ” FN14


FN14. Celotex, 477 U.S. at 327, 106 S.Ct. 2548 (quoting Fed.R.Civ.P. 1).





IV. Analysis

A. FCRA Liability


1. Duties of Furnishers of Information


[1] Headnote Citing References FCRA was enacted “to require that consumer reporting agencies adopt reasonable*1322 procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information.” FN15 “FCRA places distinct obligations on three types of entities: (1) consumer reporting agencies; (2) users of consumer reports; and (3) furnishers of information to consumer reporting agencies.” FN16 Although FCRA does not define it, courts have defined the term furnisher of information “as an entity which transmits information concerning a particular debt owed by a particular consumer to consumer reporting agencies.” FN17 Defendant does not dispute it is a furnisher of information within the meaning under § 1681s–2 of FCRA.


FN15. 15 U.S.C. § 1681(b).




FN16. Aklagi v. NationsCredit Fin. Servs. Corp., 196 F.Supp.2d 1186, 1192 (D.Kan.2002).




FN17. Jarrett v. Bank of Am., 421 F.Supp.2d 1350, 1352 n. 1 (D.Kan.2006).




[2] Headnote Citing References Section 1681s–2 imposes two sets of duties on furnishers of information. First, under § 1681s–2(a), furnishers of information have a general duty to provide accurate information to a consumer reporting agency. Significantly, Congress did not create a private right of action for violations of § 1681s–2(a).FN18 These duties can only be enforced by governmental agencies and officials.FN19


FN18. § 1681s–2(c)(1) & (d); Lowe v. Surpas Res. Corp., 253 F.Supp.2d 1209, 1253 (D.Kan.2003); Aklagi, 196 F.Supp.2d at 1192.




FN19. Pinson v. Equifax Credit Info. Servs., Inc., No. 06–CV–162–GKF–SAJ, 2008 WL 906222, at *2 (N.D.Okla. Mar.31, 2008).




Second, under § 1681s–2(b), furnishers of information have a duty, after receiving notice from a consumer reporting agency of a dispute by a consumer regarding the completeness or accuracy of an account, to: (1) conduct an investigation with respect to the disputed information; (2) review all relevant information provided by the consumer reporting agency; (3) report the results of the investigation to the consumer reporting agency; (4) if the investigation finds the information is incomplete or inaccurate, report those results to all other consumer reporting agencies to which it furnished the information and that compile and maintain files on consumers on a nationwide basis; and (5) to promptly modify, delete, or permanently block the reporting of information to consumer reporting agencies that is disputed by a consumer and found to be inaccurate or incomplete or cannot be verified after the required reinvestigation.


[3] Headnote Citing References This second component of § 1681s–2 does create a private cause of action by a consumer against a furnisher of credit information.FN20 Specifically, a consumer may obtain her actual damages, costs of the action, and attorney's fees if a furnisher of information is negligent in failing to comply with a requirement of § 1681s–2(b).FN21 FCRA also provides that a consumer may obtain statutory and punitive damages, as well as costs and attorney's fees, against a furnisher of information who willfully fails to comply with any requirement of § 1681s–2(b).FN22


FN20. Aklagi, 196 F.Supp.2d at 1193.




FN21. § 1681 o (a).




FN22. § 1681(n)(a).




[4] Headnote Citing References It is important to keep in mind that the duties of furnishers of information imposed under § 1681s–2(b) are only triggered after the furnisher receives notice of a consumer's dispute from a consumer reporting agency.FN23 As alluded to earlier, *1323 regardless of which consumer reporting agency notified a furnisher of information of a consumer dispute, a furnisher may have duties related to the other consumer reporting agencies, such as reporting that information was found to be incomplete or inaccurate or modifying, deleting, or blocking the reporting of the information. The court therefore flatly rejects defendant's implied arguments that it can only be liable for its response to the credit agency which received plaintiff's dispute.FN24


FN23. Pinson, 2008 WL 906222, at *3; Aklagi, 196 F.Supp.2d at 1193.




FN24. The court declines to address defendant's argument that it did not have the authority to correct TransUnion credit reports. Under FCRA, defendant may have been required to at least report that information was inaccurate to all consumer reporting agencies to which it furnished the information. § 1681s–2(b)(1)(D). Regardless, plaintiff has presented evidence that defendant reported inaccuracies to TransUnion regarding other customers.




2. Statute of Limitations

As earlier indicated, plaintiff filed this case on July 25, 2006. Defendant argues that FCRA's statute of limitations bars all of its conduct from being actionable, except for its September 6, 2005 response to plaintiff's dispute to CSC. Defendant relies on the current version of FCRA's statute of limitations section, 15 U.S.C. § 1681p. Because § 1681p was amended in 2003, in the middle of the events surrounding this case, the court will briefly address the previous version's applicability.


The previous version of § 1681p stated that an action must be brought


within two years from the date on which the liability arises, except that where a defendant has materially and willfully misrepresented any information required under this title to be disclosed to an individual and the information so misrepresented is material to the establishment of the defendant's liability to that individual under this title, the action may be brought at any time within two years after discovery by the individual of the misrepresentation. FN25



FN25. Fair Credit Reporting Act, Pub.L. No. 91–508, 84 Stat. 1134 (1970) (current version at 15 U.S.C. § 1681p).



Under the current § 1681p, an action to enforce liability under FCRA must be brought “two years after the date of discovery by the plaintiff of the violation that is the basis for such liability.” FN26


FN26. 15 U.S.C. § 1681p. Alternatively, the current FCRA section provides the statute 26 e of limitations is five years after the date on which the violation that is the basis for the liability occurs when that date is earlier than two years after the date of discovery. Id. Plaintiff does not contend the five-year statute of limitation applies to the case at bar.




The current version of § 1681p became effective March 31, 2004. The prior version of § 1681p is applicable to claims that arose prior to March 31, 2004.FN27 Although both versions include a two-year time limit, the prior version includes only a limited discovery rule, whereas the current version includes a general discovery rule, i.e., the prior version is more restrictive of what conduct can form the basis for plaintiff's claims. In any event, because neither party saw fit to address the earlier version of the statute of limitations in their voluminous briefing, the court will simply apply the current version of the section to all of defendant's conduct, regardless if it occurred before March 31, 2004.


FN27. See Miller v. Wells Fargo & Co., Civil Action No. 3:05–CV–42–S, 2008 WL 793683, at *4 (W.D.Ky. Mar. 24, 2008).




[5] Headnote Citing References Because plaintiff filed her complaint on July 25, 2006, conduct she discovered since July 25, 2004 may be considered for purposes of plaintiff's FCRA claims, pursuant to the current § 1681p. Initially, *1324 the court notes that plaintiff previously stated she is making no claims based on any conduct prior to her May 2003 settlement with defendant.FN28


FN28. Doc. 174, at 4 n. 3.




Defendant concedes its September 6, 2005 response to Equifax/CSC's notification that plaintiff disputed the debt is within the statute of limitations period. Plaintiff lists various actions defendant took between July 25, 2004 and July 25, 2006, including that defendant verified the debt to Equifax/CSC, failed to conduct a reasonable investigation before doing so, failed to delete its entry from TransUnion, and failed to send a delete instruction to Experian until May 2, 2006. As stated above, once defendant received notice of plaintiff's dispute to Equifax/CSC, defendant had duties to all consumer reporting agencies, not just Equifax/CSC. The court finds all of the alleged violations stemming from plaintiff's dispute to Equifax/CSC fall within FCRA statute of limitations and therefore are not time-barred.


Defendant argues plaintiff may not rely on the discovery rule because she was aware of the alleged misreporting as early as October 2003. Unfortunately, plaintiff fails to address § 1681p's discovery rule much less assert any violations that occurred prior to July 25, 2004 and that she first discovered between July 25, 2004 and July 25, 2006. Because plaintiff did not dispute defendant's argument that the discovery rule does not apply, the court grants defendant's motion for summary judgment as to all of its alleged violations occurring before July 25, 2004. As stated above, however, all of defendant's alleged violations stemming from plaintiff's formal dispute to Equifax/CSC fall within FCRA's statute of limitations.


3. Plaintiff's Claimed Damages

[6] Headnote Citing References Although plaintiff addresses the issue, defendant does not argue it is entitled to judgment as a matter of law on the issue of whether it acted negligently. Defendant does, however, seek summary judgment on the basis that plaintiff did not sustain any actual damages, barring her claim for negligent noncompliance with FCRA.FN29


FN29. In a footnote, defendant does recognize that actual damages are not required to prove willful noncompliance with FCRA. See Ramirez v. Midwest Airlines, Inc., 537 F.Supp.2d 1161, 1168 (D.Kan.2008) (noting that a showing of actual damages is not required to recover statutory damages under § 1681n(a)(1)(A) for willful noncompliance).




[7] Headnote Citing References[8] Headnote Citing References Damages are an element of plaintiff's negligent noncompliance claim and, without evidence of damages, summary judgment is appropriate. FN30 Attorney's fees and the costs of an action are recoverable in a negligent noncompliance action only in the event of a “successful action to enforce any liability.” FN31 Plaintiff must therefore first establish actual damages sustained to be successful on her negligent noncompliance claim and then be entitled to attorney's fees and costs.FN32


FN30. Jordan v. Equifax Info. Servs., LLC, 410 F.Supp.2d 1349, 1355–56 (N.D.Ga.2006); see also McKinley v. CSC Credit Servs., Inc., No. 05–2340 ADM/JJG, 2007 WL 1412555, at *6 (D.Minn. May 10, 2007) (granting summary judgment on negligent violation claim where plaintiff proffered insufficient evidence of actual damages).




FN31. § 1681 o (a)(2).




FN32. See McKinley, 2007 WL 1412555, at *6.





a. Non-economic Damages

In addition to the economic damages discussed below, plaintiff seeks damages for embarrassment and humiliation.FN33 Plaintiff withdrew her previous claim of damages for mental and emotional pain *1325 and anguish.FN34 Defendant argues plaintiff has not met her burden for recovering humiliation damages. The court assumes defendant is suggesting plaintiff's evidence consists of conclusory statements.


FN33. Doc. 174, at 22. Plaintiff also seeks attorney's fees and costs, which alone are insufficient for her to meet the damages element of her negligent noncompliance claim, as explained above. Additionally, plaintiff seeks statutory and punitive damages in conjunction with her willful noncompliance claim.




FN34. Doc. 154.




[9] Headnote Citing References[10] Headnote Citing References Actual damages under FCRA may include humiliation and embarrassment, even if the consumer suffered no out-of-pocket losses.FN35 A plaintiff must present evidence beyond conclusory allegations; FN36 however, a plaintiff's own testimony is sufficient evidence to establish emotional damages.FN37


FN35. Stevenson v. TRW Inc., 987 F.2d 288, 296 (5th Cir.1993).




FN36. Cole v. Am. Family Mut. Ins. Co., 410 F.Supp.2d 1020, 1025 (D.Kan.2006).




FN37. See Stevenson, 987 F.2d at 297; King v. Asset Acceptance, LLC, 452 F.Supp.2d 1272, 1281 (N.D.Ga.2006).




[11] Headnote Citing References The court rejects defendant's argument that plaintiff's evidence consists of merely conclusory statements. Indeed, plaintiff set forth many statements she made at her deposition regarding her feeling humiliated in various ways, including telling creditors multiple times the debt had been paid, being told by defendant multiple times the debt would be removed when it was not even several months later, and being unable to care for her children. The court denies defendant's motion for summary judgment on the issue of plaintiff's claim for damages based on humiliation and embarrassment.



b. Personal Economic Damages

[12] Headnote Citing References Defendant argues that plaintiff has not shown the increases in the interest rates on her personal credit cards were based upon defendant's entry on her credit report. Specifically, defendant argues plaintiff has presented no evidence the increases were based on defendant's entry, as opposed to the fact she had made late payments previously and had an outstanding credit card debt of approximately $33,000. Further, defendant argues that plaintiff has no personal knowledge defendant's entry was a factor in the decisions and may not speculate as to the reasons. Defendant also argues plaintiff's deposition testimony regarding the reasons a representative with one of the credit companies gave her is hearsay, which may not be considered on a motion for summary judgment.


Plaintiff fails to even address her claim for economic damages based on increased interest rates on personal credit cards in the analysis section of her summary judgment brief. Plaintiff did set forth facts that her interest rate increased after defendant's entry appeared on her credit report and her credit score went up after the entry was removed. As mentioned above, plaintiff also relies on a statement by a representative of a credit card company giving the reason for the interest rate increase.


[13] Headnote Citing References For summary judgment purposes, a “plaintiff need only produce evidence from which a reasonable trier of fact could infer that the inaccurate items on the plaintiff's credit report were a substantial factor in the potential creditors' decisions to deny his applications for credit.” FN38 The plaintiff in a FCRA case need not eliminate the possibility that other factors, including correct adverse entries, also entered into the decision.FN39 But “mere speculation*1326 is not evidence of damages.” FN40


FN38. Frost v. Experian, No. 98 CIV. 2106 JGK JCP, 1999 WL 287373, at *8 (S.D.N.Y. May 6, 1999).




FN39. Id.




FN40. McKinley, 2007 WL 1412555, at *4.




One court found that a FCRA plaintiff, who was a mortgage loan officer, had insufficient evidence to avoid summary judgment on his claim for damages due to a higher interest rate, when he only provided his testimony about discussions with the creditor's representatives and testimony from his co-worker and himself.FN41 There, the plaintiff applied for a mortgage while in the midst of his dispute with a credit reporting agency and claimed that, if the credit entry at issue had not been on his account, he would have received a lower interest rate.FN42 The court noted the plaintiff did not have personal knowledge that the higher interest rate was due to the credit entry at issue and found his evidence too speculative.FN43


FN41. Id.




FN42. Id. at *2.




FN43. Id. at *4.




[14] Headnote Citing References Plaintiff did not address defendant's argument that the credit card representative's statement is hearsay. Of course, hearsay testimony may not be considered in ruling on a motion for summary judgment.FN44 The court will therefore not consider plaintiff's deposition testimony regarding what a credit card representative told her about the interest rate increase.


FN44. Starr v. Pearle Vision, Inc., 54 F.3d 1548, 1555 (10th Cir.1995); Apodaca v. Discover Fin. Servs., 417 F.Supp.2d 1220, 1226 (D.N.M.2006).




Plaintiff's evidence that defendant's entry on her credit report caused her interest rates on her personal credit cards to increase is very weak. The court, however, finds plaintiff's evidence of multiple rates increasing relatively soon after the entry was made on her reports, and the subsequent increase in her credit score when it was removed, is sufficient evidence from which a reasonable trier of fact could infer the defendant's entry on plaintiff's credit report was a substantial factor in the creditors' decisions to increase plaintiff's interest rates.


Although plaintiff admits she had made late credit payments and she had credit card debt of approximately $33,000, the court finds she need not eliminate the possibility that other factors, including correct adverse entries, also entered into the decision. The court finds that, given plaintiff's multiple interest rate increases, and the timing of the increases, plaintiff's evidence is distinguishable from the evidence presented by the plaintiff in the McKinley case cited above. The court therefore denies defendant's motion for summary judgment on the issue of plaintiff's claim for damages related to increased interest rates on her personal credit cards.



c. Business Economic Damages

[15] Headnote Citing References Plaintiff seeks damages to her businesses relating to denials of credit for a bowling alley scoring system and subsequent lost sales and repair costs to her current scoring system. Defendant requests the court grant summary judgment on plaintiff's claim for damages related to her businesses, including from denials of credit for business purposes, lost sales, and repair costs. Plaintiff interprets defendant's argument as a contention that she cannot recover any damages under FCRA because she operates a business. Notably, defendant does not argue plaintiff cannot recover any damages simply because she is a sole proprietor. Instead, defendant merely argues that plaintiff may not recover damages related to her businesses.


Plaintiff argues sole proprietors may maintain actions under FCRA for violations*1327 of the statute and damages they have sustained individually. Defendant does not dispute this.FN45 Plaintiff failed to otherwise address her claim for business damages, and the court could find that she does not contest defendant's argument regarding business damages. However, because plaintiff may be attempting to argue by implication that damages related to her sole proprietorship are damages sustained individually, the court will address defendant's argument.


FN45. In arguing plaintiff is not entitled to recover damages to her business, defendant states plaintiff's account with it was related to Tilley Sports Apparel, a business venture, rather than plaintiff's personal uses. However, it fails to argue how the commercial nature of the original debt relates to the damages plaintiff may seek.


Although damages related to commercial transactions are not recoverable, it does not follow that just because the information at issue (i.e., plaintiff's alleged debt to defendant) was regarding a commercial transaction, defendant is somehow insulated from all liability under FCRA with regard to that transaction. Johnson v. Wells Fargo Home Mortgage, Inc. (Johnson I), No. 3:05–CV–0321–RAM, 2007 WL 3226153, at *8 (D.Nev. Oct. 29, 2007). Indeed, “[s]ubsequent credit reports issued for ‘consumer purposes' containing the inaccurate information arguably do fall under the coverage of the FCRA.” Id.

FCRA applies only to “consumer reports.” The statute defines consumer reports as:


any written, oral, or other communication of any information by a consumer reporting agency bearing on a consumer's credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer's eligibility for (A) credit or insurance to be used primarily for personal, family, or household purposes; (B) employment purposes; or (C) any other purpose authorized under section 1681b of this title.FN46



FN46. 15 U.S.C. § 1681a(d)(1).



Although not explicit, defendant seems to argue that any credit reports furnished to potential creditors when plaintiff was seeking credit for business purposes were not consumer reports within the meaning of FCRA, and therefore she may not obtain damages to her businesses.


One court explained the necessity of a consumer report to a FCRA plaintiff's ability to recover economic damages claims as follows:


[T]he court turns to Plaintiff's alleged damages resulting from a third-party's decision to deny Plaintiff credit, increase his interest rates and cancel or reduce his existing lines of credit due to Defendant's erroneous reporting. In order to be recoverable as actual damages under the FCRA, those decisions must have been made based on the erroneous information reported by Defendant. In order to show the decisions were made based on that erroneous information, the decision-makers must necessarily have had knowledge of the erroneous information. In order to acquire such knowledge, the decision-makers must have obtained a credit report containing the erroneous information. And, in order to be subject to the FCRA, the credit report obtained must have been a consumer report as defined under the FCRA. Thus, a consumer report is vital to Plaintiff's claim. Without the consumer report, a plaintiff would essentially be able to claim every undesirable financial event he encountered since the defendant's violation without actually proving the event occurred because of defendant's violation, rather than due to some other reason. Accordingly, the *1328 definition of a consumer report is crucial because it controls the FCRA's applicability.FN47



FN47. Johnson v. Wells Fargo Home Mortgage, Inc. (Johnson II), 558 F.Supp.2d 1114, 1123 (D.Nev.2008).



In determining whether a particular report is a consumer report, some courts have limited consideration to examining the purpose for which a particular report is requested by the report's user. Other courts have applied FCRA more broadly, focusing on the purpose for which the credit report was sought and the purpose for which the credit reporting agency believed it was collecting the information.FN48


FN48. Id. at 1123–24 (citing cases); Breed v. Nationwide Ins. Co., No. 3:05CV–547–H, 2007 WL 1231558, at *1–*2 (W.D.Ky. Apr. 24, 2007).




Here, plaintiff does not dispute the denials of credit related to her bowling alley scoring system and subsequent lost sales and repair costs were business and commercial transactions.FN49 She also does not allege a consumer report was involved in any of the transactions related to credit for the scoring system, either because the purpose of the report was consumer in nature or that the credit reporting agency issuing the report believed it was collecting information for other than business or commercial purposes. FN50


FN49. Cf. Apodaca, 417 F.Supp.2d at 1228 (finding an issue of fact existed as to whether the plaintiff applied for a credit card in her capacity as a consumer or as an agent for her or her husband's business).




FN50. Cf. Johnson II, 558 F.Supp.2d at 1127 (analyzing plaintiff's claimed business damages because, although plaintiff did not present evidence a consumer report was used in the transactions, defendant attached evidence that consumer reports may have been used in certain transactions).




“[S]everal courts have held that where the purpose of a plaintiff's credit application was to secure credit for business purposes, as opposed to personal, family or household purposes, the reporting agency's conduct was not covered by the [FCRA].” FN51 One court, however, withdrew its previous order dismissing the plaintiff's FCRA claims for actual damages because such damages arose from commercial transactions. The court noted most circuits suggest the expectations of the credit reporting agency at the time it prepared the credit reports and at the time it collected the information contained in the reports should be considered, and no evidence had been presented as to those prongs. The court therefore allowed the plaintiff to pursue his FCRA claims “at least through trial.” FN52


FN51. Natale v. TRW, Inc., No. C 97–3661 CRB, 1999 WL 179678, at *3 (N.D.Cal. Mar. 30, 1999) (citing cases); see also Apodaca, 417 F.Supp.2d at 1228; Frost v. Experian, No. 98 CIV. 2106 JGK JCP, 1999 WL 287373, at *5 (S.D.N.Y. May 6, 1999); Yeager v. TRW, Inc., 961 F.Supp. 161, 162–63 (E.D.Tex.1997).




FN52. Breed, 2007 WL 1231558, at *2.




The court respectfully disagrees with the Breed Court's cautious approach to wait until trial to see if the plaintiff can present any evidence of a consumer report. Here, plaintiff has provided no evidence a consumer report was involved in her attempts to obtain credit for the scoring system. The court agrees with defendant that plaintiff has not set forth any specific facts showing there is a genuine issue for trial regarding the existence of a consumer report in conjunction with plaintiff's attempts to obtain business credit.


[16] Headnote Citing References One plaintiff attempting to seek business damages argued that because his businesses were sole proprietorships, his case was distinguishable from cases holding plaintiffs could not seek business damages.*1329 FN53 Although plaintiff does not explicitly make this argument, Tilley Sports Apparel is a sole proprietorship. The court holds that the form of ownership of plaintiff's business is immaterial.FN54 Further, plaintiff's bowling alley appears to be a limited liability company. “Because the FCRA only protects individual consumers, losses to [p]laintiff's limited liability compan [y] are not recoverable under the FCRA.” FN55


FN53. Natale, 1999 WL 179678, at *4.




FN54. Id.




FN55. Johnson II, 558 F.Supp.2d at 1132.




The court therefore grants defendant summary judgment on plaintiff's claim for damages from the denials of credit for business purposes, including lost sales and repair costs. As stated above, the court denies defendant's motion on the issue of plaintiff's claimed emotional damages and damages relating to her personal credit cards.


4. Evidence of Willfulness

In its memorandum in support of the instant motion, defendant seeks summary judgment on plaintiff's defamation claim on the basis it did not act willfully and therefore plaintiff's defamation claim is preempted by FCRA. This argument is addressed below. In making this argument, defendant states that no evidence shows it acted maliciously or with willful intent to injure plaintiff. Defendant then argues in a footnote that plaintiff's claim for willful noncompliance with FCRA is also barred by undisputed evidence. Plaintiff does address defendant's argument that it did not act willfully. In its reply, defendant then explicitly argues that plaintiff has no evidence to allow a jury to consider a willful violation of FCRA and punitive damages.


[17] Headnote Citing References The phrase “willfully fails to comply” in § 1681n(a) includes reckless violations of FCRA, as well as knowing violations.FN56 Plaintiff claims defendant willfully violated FCRA because it only looked at its Oracle system, which it had failed to update, did not follow its alleged procedure, and verified the debt despite its knowledge of the settlement.


FN56. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 2208–09, 167 L.Ed.2d 1045 (2007); Ramirez v. Midwest Airlines, Inc., 537 F.Supp.2d 1161, 1169 (D.Kan.2008)




[18] Headnote Citing References Defendant argues it did not willfully violate FCRA because plaintiff did not contact defendant about the debt being reported until September 24, 2005. Plaintiff states she contacted Capstone in November 2003 about defendant's credit entry against her. Plaintiff argues that Capstone was defendant's agent and therefore the knowledge of Capstone was the knowledge of its principal, defendant. Defendant argues Capstone was an independent contractor and plaintiff's notice to Capstone did not equate notice to defendant. For the reasons stated below, the court need not decide the issue of whether Capstone was defendant's agent.


Capstone e-mailed defendant in November 2003 regarding the debt appearing on plaintiff's credit reports. Plaintiff argues this created actual knowledge on the part of defendant that the debt was being reported to the credit agencies. Further, plaintiff notes defendant had approved the settlement before she paid it. In addition to claiming defendant failed to fully reinvestigate the debt or follow its own practices, plaintiff argues defendant failed to consider the information available to it, including its knowledge of the settlement and that the debt was appearing on plaintiff's credit reports. Plaintiff therefore *1330 concludes defendant acted willfully by recklessly conducting its reinvestigation.


Although defendant admits it learned of the settlement in the middle of November 2003,FN57 defendant fails to even address plaintiff's argument that the approval of the settlement and the notice defendant received from Capstone's e-mail form the basis of a willful violation. Defendant argues that the most plaintiff can show is defendant could have updated its Oracle system sooner. Defendant concludes this is an insufficient showing of willfulness as a matter of law.


FN57. Doc. 193, at 12.




The court rejects defendant's argument. Defendant's approval of the settlement of the debt and its receipt of the e-mail from Capstone create a genuine issue of material fact as to what information defendant had available when it reinvestigated the debt in 2005. It is therefore for a jury to decide whether defendant recklessly conducted its reinvestigation, in willful violation of FCRA.


B. Defamation Claim

1. Statute of Limitations

[19] Headnote Citing References Defendant argues that only one of its contacts with the credit reporting agencies can form the basis of plaintiff's defamation claim, because the other contacts are barred by the statute of limitations. Defendant only cites to the one-year Kansas statute of limitation for libel and slander actions FN58 and ignores the choice of law issue. In the pretrial order, the parties agreed plaintiff's common law defamation claim was governed by Georgia, Kansas, or Maryland law.FN59 Fortunately, like Kansas, both Georgia and Maryland have one-year statute of limitations for defamation actions,FN60 and the court does not need to address the choice of law issue.


FN58. K.S.A. § 60–514(a).




FN59. Doc. 174, at 2, para. 3(d).




FN60. Ga.Code Ann. § 9–3–33; Md.Code Ann., Cts. & Jud. Proc. § 5–105.




Defendant also did not address when the statute of limitations begins in any of the three states. The one-year statute of limitations in Kansas and Georgia begins when the alleged defamatory statement is published.FN61 The Maryland statute of limitations, however, begins when the plaintiff knows or reasonably should know of the alleged defamatory statement.FN62


FN61. Geolas v. Boy Scouts of Am., 23 F.Supp.2d 1254, 1258 (D.Kan.1998); Clark v. Clark, 969 F.Supp. 1319, 1327 (S.D.Ga.1997).




FN62. King v. Marriot Int'l, Inc., 195 F.Supp.2d 720, 728 (D.Md.2002); Shepard v. Nabb, 84 Md.App. 687, 581 A.2d 839, 843–44 (Md.Ct.Spec.App.1990).




Because plaintiff filed the instant case on July 25, 2006, defendant states no conduct occurring before July 25, 2005 can form the basis for plaintiff's defamation claim. Defendant concludes the only contact it had with the credit reporting agencies during this one-year period was its September 6, 2005 response to Equifax/CSC's notification that plaintiff disputed the debt. This response included the debt information was being reported correctly and that the debt was “charged to profit and loss.”


Plaintiff failed to even address the statute of limitations for her defamation claim. Plaintiff therefore did not dispute the applicability of a one-year statute of limitations. Plaintiff also failed to set forth any other false statement defendant made to the credit reporting agencies between July 25, 2005 and July 25, 2006, or any false statement defendant made prior to July 25, 2005 that she first discovered or should have discovered between July 25, 2005 and July 25, 2006. The court therefore finds the only communication defendant had *1331 with the credit reporting agencies that can form a basis for plaintiff's defamation claim is its September 6, 2005 response to Equifax/CSC's notification that plaintiff disputed the debt. To the extent plaintiff's defamation claim is based on any other statement defendant made to the credit reporting agencies, it is barred by the statute of limitations.


2. Preemption by FCRA

[20] Headnote Citing References Defendant argues plaintiff's defamation claim is preempted by FCRA. Although defendant did not throughly address both provisions, the statute contains two separate preemption provisions that arguably apply in this case: (1) § 1681t(b)(1)(F), which provides furnishers of credit information with absolute immunity; and (2) § 1681h(e), which provides furnishers of credit information with qualified immunity. Plaintiff failed to even mention § 1681t(b)(1)(F), let alone address its applicability to her defamation claim.


Section 1681t(b)(1)(F), the absolute immunity provision, provides that “[n]o requirement or prohibition may be imposed under the laws of any State-with respect to any subject matter regulated under ... section 1681s–2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies.” Section 1681h(e), the qualified immunity provision, states:


no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against ... any person who furnishes information to a consumer reporting agency ... except as to false information furnished with malice or willful intent to injure such consumer.


Courts are split on how to reconcile FCRA's two immunity provisions and follow three distinct approaches.FN63 Neither the Tenth Circuit nor any other circuit court has addressed the issue.FN64 Notably, plaintiff failed to even address the applicability of § 1681t(b)(1)(F), although defendant briefly addressed it. Regardless, the court will follow the undersigned's previous opinion reconciling FCRA's two immunity provisions.


FN63. See Greene v. Capital One Bank, No. 2:07–CV–687 TS, 2008 WL 1858882, at *5–*6 (D.Utah Apr. 23, 2008); Jarrett v. Bank of Am., 421 F.Supp.2d 1350, 1354 n. 4 (D.Kan.2006); Barnhill v. Bank of Am., N.A., 378 F.Supp.2d 696, 699–703 (D.S.C.2005).




FN64. Holland v. GMAC Mortgage Corp., No. 03–2666, 2006 WL 1133224, at *11–*12 (D.Kan. Apr. 26, 2006); see also Lofton–Taylor v. Verizon Wireless, 262 Fed.Appx. 999, 1002–03 (11th Cir.2008) (declining to decide the issue); Beyer v. Firstar Bank N.A., 447 F.3d 1106, 1108 (8th Cir.2006) (same).




Pursuant to § 1681t(b)(1)(F), to the extent defendant's conduct falls within the “subject matter regulated under ... section 1681s–2,” plaintiff's state law defamation claim against defendant is preempted. Defendant's conduct must be broken down into two discrete time periods: (1) the time period between plaintiff's May 2003 settlement of the debt and when defendant first received notice of plaintiff's dispute to CSC; and (2) the period after defendant received notice of plaintiff's dispute to C SC.FN65 Conduct falling in the second time period is regulated by § 1681s–2(b)(1), and is therefore completely preempted by § 1681t(b)(1)(F).FN66


FN65. See Aklagi v. NationsCredit Fin. Servs. Corp., 196 F.Supp.2d 1186, 1194 (D.Kan.2002).




FN66. See id. at 1194–95.




Defendant's only communication not barred by the statute of limitations occurred after it received notice of plaintiff's dispute and therefore falls within the second time period. Accordingly, any state *1332 law defamation claim predicated on defendant furnishing inaccurate information to a consumer reporting agency after it received notice of plaintiff's dispute to CSC is completely preempted by § 1681t(B)(1)(F). Because the statute of limitations barred any defamation claims based on defendant's other communications to the consumer reporting agencies, the court need not address the applicability of § 1681h(e) and whether defendant's conduct was willful. The court therefore grants defendant summary judgment on plaintiff's defamation claim.



V. Order

In consideration of the foregoing,


IT IS HEREBY ORDERED:


1. Defendant's motion for summary judgment (doc. 179) is granted in part and denied in part. Specifically, defendant's motion is granted with respect to plaintiff's defamation claim. With respect to plaintiff's claims for negligent and willful noncompliance with FCRA, defendant's motion is granted only as to the alleged violations that are barred by the statute of limitations and to the extent plaintiff seeks damages related to her businesses. In all other respects, defendant's motion is denied.


2. As discussed during the informal telephone status conference among counsel and the court on February 27, 2009, this case is now specially set for jury trial on May 5, 2009, at 9:00 a.m., with an estimated trial time of 2–3 days. The court will conduct a limine and status conference on May 4, 2009, at 3:00 p.m. See doc. 199.


3. The parties confirmed they unsuccessfully mediated this case with Warren McCamish.


4. Plaintiff did not supplement her economic damages, as required by the pretrial order (doc. 174, at 22 n. 10), and is therefore not seeking more than $111, 652, 97 in economic damages. As stated above, however, plaintiff may not recover any damages related to her businesses. Defendant expects to file a motion in limine precluding plaintiff from presenting evidence at trial of damages related to her businesses.


5. The parties have confirmed that neither party has any expert witnesses.


6. The May 2, 2008 deadline in paragraph 4(b) of the pretrial order for the parties to file business records stipulations is extended to April 2, 2009.


7. The deadline in paragraph 18(d)(2) of the pretrial order for the parties to file their jury instructions FN67 is amended to April 14, 2009. Any objections to proposed jury instructions shall be filed no later than April 21, 2009.


FN67. Without limitation of the specific language in the pretrial order, counsel are reminded that proposed jury instructions must be submitted in compliance with Fed.R.Civ.P. 51 and D. Kan. Rule 51.1. Under D. Kan. Rule 51.1, the parties and the attorneys have the joint responsibility to attempt to submit one agreed set of preliminary and final instructions that specifically focuses on the parties' factual contentions, the controverted essential elements of any claims or defenses, damages, and any other instructions unique to this case. In the event of disagreement, each party shall submit its own proposed instructions with a brief explanation, including legal authority as to why its proposed instruction is appropriate, or why its opponent's proposed instruction is inappropriate, or both.



D.Kan.,2009.
Tilley v. Global Payments, Inc.
603 F.Supp.2d 1314
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

Administrator
Site Admin
Posts: 11757
Joined: Tue Jul 26, 2005 4:15 am

Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 11:16 am

Wisdom v. Wells Fargo Bank NA
Not Reported in F.Supp.2d, 2012 WL 243380
D.Ariz.,2012.
January 25, 2012

ORDER

G. MURRAY SNOW, District Judge.

*1 Pending before the Court is Plaintiffs' Motion for Reconsideration. (Doc. 94). For the reasons discussed below, the motion is denied.



BACKGROUND

The facts in this case are set forth in the order granting Defendant Wells Fargo Bank's Motion for Partial Dismissal. (Doc. 93). In that Order, the Court found that losses sustained by Stand World, Plaintiff Don Wisdom's business entity, could not be recovered in a claim alleging violations under the Fair Credit Reporting Act (“FCRA”) because a business is not a “consumer” under the FCRA, and because Stand World is not a party to this action. ( Id.). Plaintiff now claims that “Stand World and Don Wisdom operate as one entity,” that “[t]here isn't any realistic separation of interests, finances or objectives,” and that “[n]one of the customary formalities are observed.” (Doc. 94 at 2–3). Plaintiff alleges that because he fails to observe the corporate formalities, “[a]ny losses suffered by Stand World were also direct losses to Don Wisdom” and should be recoverable as consumer losses under FCRA ( Id.).



DISCUSSION

1. Legal Standard

Under Rule 59(e), a motion for reconsideration may be granted only on one of four grounds, “1) the motion is necessary to correct manifest errors of law or fact upon which the judgment is based; 2) the moving party presents newly discovered or previously unavailable evidence; 3) the motion is necessary to prevent manifest injustice or 4) there is an intervening change in controlling law.” Turner v. Burlington N. Santa Fe R.R. Co., 338 F.3d 1058, 1063 (9th Cir.2003) (internal quotations and emphasis omitted). Motions for reconsideration are disfavored and are not the place for parties to make new arguments not raised in their original briefs and arguments. See Northwest Acceptance Corp. v. Lynnwood Equip., Inc., 841 F.2d 918, 925–26 (9th Cir.1988). Nor should such motions ask the Court to “rethink what the court has already thought through-rightly or wrongly.” See United States v. Rezzonico, 32 F.Supp.2d 1112, 1116 (D.Ariz.1998) (quoting Above the Belt, Inc. v. Mel Bohannon Roofing, Inc., 99 F.R.D. 99, 101 (E.D.Va.1983)).


2. Analysis

Plaintiff cites case law allowing direct claims against the shareholders of corporations who fail to observe the corporate formalities, or in circumstances where a small number of shareholders “operated more as partners than in strict compliance with the corporate form.” Johnson v. Gilbert, 127 Ariz. 410, 412, 621 P.2d 916, 918 (App.1980). Plaintiff does not allege that he operated Stand World more as a partnership than a corporation; he alleges that he failed to respect the corporate form at all. In his declaration, he acknowledges that he failed to appoint directors, failed to hold director or shareholder meetings, and co-mingled his personal funds with Stand World's. He states, for example, that if Stand World is unable to pay the rent it owes Plaintiff as Plaintiff's tenant, it simply does not pay, and “no accounting is made of delinquent rent.” (Doc. 94–1). Plaintiff acknowledges “loaning” money to and “borrowing” money from Stand World, although “[t]he loans are not ‘formalized’ by documents” and are only repaid, if at all, “to me and occasionally to Brandon as salary.” ( Id.).


*2 If Plaintiff's description of his business is accurate, he is undoubtedly correct that “if a judgment were entered against Stand World and Stand World could not pay the judgment, the creditor could collect from Don Wisdom in an alter ego claim.” (Doc. 94). Abuse of the corporate form grants creditors the right to recover from the abusing shareholder. Plaintiffs offer no authority, however, suggesting that an abusing shareholder has the right to recover the corporation's losses as though they were personal losses. Plaintiff cannot recover Stand World's losses based upon the theory that he has misused the corporate form. The motion for reconsideration is denied.


IT IS THEREFORE ORDERED that Plaintiffs' Motion for Reconsideration (Doc. 94) is denied.

D.Ariz.,2012.
Wisdom v. Wells Fargo Bank NA
Not Reported in F.Supp.2d, 2012 WL 243380 (D.Ariz.)
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

Administrator
Site Admin
Posts: 11757
Joined: Tue Jul 26, 2005 4:15 am

Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 11:18 am

Wisdom v. Wells Fargo Bank NA
Not Reported in F.Supp.2d, 2012 WL 170900
D.Ariz.,2012.
January 20, 2012

ORDER

G. MURRAY SNOW, District Judge.

*1 Pending before the Court is Defendant Wells Fargo Bank, NA's Motion for Partial Dismissal. (Doc. 36).FN1 For the reasons stated below, the motion is granted.


FN1. Defendants have also filed a Motion for Summary Judgment (Doc. 91), which is not yet fully briefed and has not been considered.





BACKGROUND

According to the Complaint, at some time in the past, Plaintiffs' son Brandon Wisdom, not a party to this action, obtained a credit card from Defendant Wells Fargo. Plaintiffs did not guarantee or co-sign the card. Brandon Wisdom was unable to make payments on the card, and Plaintiff Don Wisdom offered to pay a portion of the balance in exchange for a cancellation of the remainder. Defendant declined the offer and instead sued Plaintiffs and Brandon in state court. The suit was dismissed with prejudice when Plaintiffs demonstrated they had no liability on Brandon's card. After dismissal, Defendants reported to various Credit Reporting Agencies (“CRAs”) that it had charged off over $16,000 of bad debt to Plaintiff Don Wisdom.


Plaintiffs notified the CRAs that the information was false, but Defendant has not corrected the report of a charge-off. As a result, Plaintiffs' ability to obtain credit has been hampered. The credit limits on their cards have been reduced and the line of credit on their otherwise debt-free house has been lowered. Plaintiff Don Wisdom runs a business where he purchases secondhand office equipment for resale.FN2 His business requires ready access to credit, and he had previously used his high-limit personal credit card and the line of credit on his home for this purpose. Plaintiffs allege that Defendants violated the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (2006) ( “FCRA”), the Truth in Lending Act, 15 U.S.C. § 1601 et seq. (2006) ( “TILA”), and the Arizona Fair Credit Reporting Act, Ariz.Rev.Stat. (“A.R.S.”) § 44–1591 et seq. (2003) (“AFCRA”), and that Defendant intentionally interfered with Plaintiffs' business relationships.


FN2. The Plaintiffs do not state the name of the business in question in their complaint, but in their response write that “Don Wisdom is the President, CEO, Director and sole shareholder of Stand World, Inc. a local dealer in used business machines.” (Doc. 37 at 2). Stand World Inc. is not a party to this action.




Plaintiffs state that their damages include but are not limited to the following: “humiliation, embarrassment, anxiety, credit and reputation damage, credit denial, credit reduction, lost business and profits, loss of prospective economic advantage.” (Doc. 1 ¶ 56). They further state that “[w]ith the loss of the benefit of the available credit, Mr. Wisdom's business has been drastically damaged.” ( Id. at 34).


Defendant moves to dismiss damages claims predicated upon Don Wisdom's business losses, claiming that business losses are not actionable under the FCRA or the AFCRA.



DISCUSSION

1. Legal Standard

When analyzing a complaint for failure to state a claim under Rule 12(b)(6), “[a]ll allegations of material fact are taken as true and construed in the light most favorable to the nonmoving party.” Smith v. Jackson, 84 F.3d 1213, 1217 (9th Cir.1996). Legal conclusions couched as factual allegations are not given a presumption of truthfulness, and “conclusory allegations of law and unwarranted inferences are not sufficient to defeat a motion to dismiss.” Pareto v. FDIC, 139 F.3d 696, 699 (9th Cir.1998). While “a complaint need not contain detailed factual allegations ... it must plead ‘enough facts to state a claim to relief that is plausible on its face.’ “ Clemens v. DaimlerChrysler Corp., 534 F.3d 1017, 1022 (9th Cir.2008) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).


2. Analysis

*2 The FCRA defines a “consumer” as “an individual,” 15 U.S.C. § 1681a(c), and provides for the recovery of “any actual damages sustained by the consumer.” 15 U.S.C. § 1681 o(a)(1). It does not provide for protection for business entities, and courts have held since its initial passage that “both the legislative history of the Act and the official administrative interpretation of the statutory terminology involved compel the conclusion that the Act does not extend coverage to a consumer's business transactions.” Sizemore v. Bambi Leasing Co., 360 F.Supp. 252, 254 (D.C.Ga.1973) (a credit report issued in connection with a commercial lease application not protected by the FCRA). The FTC has interpreted the FCRA to deny protection for credit reports requested for commercial purposes, writing that “[a] report on a consumer for credit or insurance in connection with a business operated by the consumer is not a consumer report and the Act does not apply to it.” FTC Interpretation under the Fair Credit Reporting Act, 16 C.F.R. Pt. 600, App. § 603 cmt. (6)(B).


Plaintiffs may not claim as damages any actual losses sustained by a business that is not a party to this action, regardless of the cause of those losses. Plaintiffs include among their damages “lost business and profits,” and state that “Mr. Wisdom's business has been drastically damaged.” (Doc. 1 ¶¶ 34, 56). Neither Stand World Inc. nor any other business entity is a party to this action. Losses suffered by Stand World Inc. or any other business entity predicated upon the fact that Plaintiffs could not supply them with credit are simply not Plaintiffs' losses, and cannot be recovered in this lawsuit. FN3 Nor can Plaintiffs claim personal damages predicated upon the losses of an independent corporation which it was their custom to supply with personal credit. Therefore, to the extent losses described in the complaint as “lost business and profits,” or attributed to “Mr. Wisdom's business” are in fact the losses of a non-party corporation, they cannot be recovered in this action regardless of their root cause.


FN3. Neither Stand World, Inc. nor any other corporate entity could be added as a plaintiff in this action because no corporation would qualify as a “consumer” under the FCRA, which defines a “consumer” as “an individual.” 15 U.S.C. § 1681a(c).




Plaintiffs go to some lengths to argue that FCRA authorizes recovery of commercial losses, particularly after the 1996 amendments regarding furnishers were added. (Doc. 36 at 3–5). Even were this the case, it would not grant them the right to recover losses sustained by a non-party corporation. The Ninth Circuit has found that a consumer could recover for loss of credit when he had obtained that credit because he “hoped to start a business and ... [hoped to] have a clean credit history when he sought financing for the venture.” Dennis v. BEH–1, LLC, 520 F.3d 1066, 1069 (9th Cir.2008). In Dennis, however, the losses were sustained in fact by the consumer. The business which he hoped to start did not yet exist, and he was not suing for losses it had sustained. The Ninth Circuit has further found that when a consumer requests what appears to be a credit report from a CRA, “the report is a consumer report within the meaning of FCRA,” even if the credit is put to a different purpose. Comeaux v. Brown & Williamson Tobacco Co., 915 F.2d 1264, 1274 (9th Cir.1990). Nevertheless, it has not granted any consumer the right to recover damages sustained by a third-party entity that is not itself a “consumer” under FCRA.


*3 As Defendant notes, “[i]n relevant respects, [Arizona's Fair Credit Reporting Act] is textually identical to FCRA.” (Doc. 36 at 6); see A.R.S. § § 44–1691–98. The Arizona statutes therefore likewise do not apply to commercial loans or loan applications by individuals designated as being for a commercial purpose. See, e.g., State ex rel. Corbin v. Weaver, 140 Ariz. 124, 128 680 P.2d 833, 837 (App.1984) (the substantive decisions of federal courts are persuasive in constructing identically-worded state laws). Plaintiffs may claim personal losses based upon the loss of their credit under AFCRA, but they once again may not claim damages on behalf of a non-party to this litigation.



CONCLUSION

Plaintiffs allege that they suffered damages because their personal credit card limit was lowered and their home equity line of credit was diminished, and they may seek recovery of their own “actual damages” under the FCRA, regardless of their intended use of the credit. To the extent that they are seeking damages based upon the losses of a non-party corporation, however, their damages claims are dismissed.


IT IS THEREFORE ORDERED that Defendant's Motion for Partial Dismissal (Doc. 36) is granted. Plaintiffs may seek to recover losses that they individually suffered based upon their damaged credit, whether they were intending to put that credit to personal or commercial use. They may not claim any damages suffered by Stand World Inc. or any other non-party corporation.


Since Plaintiffs' claims seek recovery of losses other than business losses, none of their claims are dismissed.

D.Ariz.,2012.
Wisdom v. Wells Fargo Bank NA
Not Reported in F.Supp.2d, 2012 WL 170900 (D.Ariz.)
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association

Administrator
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Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 11:22 am

Gorman v. Wolpoff & Abramson, LLP
584 F.3d 1147
C.A.9 (Cal.),2009.
October 21, 2009

Appeal from the United States District Court for the Northern District of California, James Ware, District Judge, Presiding. D.C. No. CV–04–04507–JW.
Before: RICHARD A. PAEZ and MARSHA S. BERZON, Circuit Judges, and HAROLD BAER,FN* District Judge.


FN* The Honorable Harold Baer, Jr., Senior United States District Judge for the Southern District of New York, sitting by designation.



ORDER

The opinion filed January 12, 2009, is hereby amended. The amended opinion is attached hereto.


With these amendments, the panel unanimously has voted to deny Appellant's petition for rehearing en banc and Appellee's petition for panel rehearing and petition for rehearing en banc.


The full court has been advised of the petitions for rehearing en banc, and no judge has requested a vote on whether to rehear the matter en banc. Fed. R.App. P. 35.


The petition for panel rehearing is DENIED and the petitions for rehearing en banc are DENIED. No further petitions for rehearing or rehearing en banc may be filed.



*1151 OPINION
BERZON, Circuit Judge:

John Gorman tried to buy a satellite television system using his credit card, issued by MBNA America Bank. He was unsatisfied with the system purchased, and lodged a challenge with MBNA to dispute the charge. Unhappy with MBNA's response, Gorman instituted this lawsuit against MBNA, alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681–1681x, libel, and violations of California Civil Code section 1785.25(a). The district court dismissed his California statutory claim and granted MBNA summary judgment on the other causes of action. Gorman v. Wolpoff & Abramson, LLP (“ Gorman I ”), 370 F.Supp.2d 1005 (N.D.Cal.2005); Gorman v. Wolpoff & Abramson, LLP (“ Gorman II ”), 435 F.Supp.2d 1004 (N.D.Cal.2006). We affirm in part and reverse in part.



I. BACKGROUND

In December 2002, John Gorman paid for the delivery and installation of a new satellite TV system on a Visa credit card issued by MBNA America Bank (“MBNA”). The charge, $759.70, was posted on his January 2003 credit card statement. According to Gorman, the merchant, Four Peaks Home Entertainment (“Four Peaks”), delivered a used and defective TV system and botched the installation, damaging his house in the process. Gorman told Four Peaks he was refusing delivery of the goods and asked for a refund, but Four Peaks refused to refund the charges unless Gorman arranged to return the TV system. The defective equipment is still in Gorman's possession.FN1


FN1. MBNA claims that Four Peaks shipped Gorman new, replacement equipment and that Gorman retains both the defective and replacement equipment. Gorman disputes having received any replacement system. Gorman also claims that he made the merchandise available to Four Peaks for pickup, and that doing so was sufficient to require a refund under Cal. Com.Code section 2602(2)(b) (“If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this division (subdivision (3) of Section 2711), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them.”). He also testified in his deposition that Four Peaks never sent him pre-paid shipping labels. It is not clear whether he would have shipped the merchandise back had he received such labels.




In February 2003, Gorman notified MBNA that he was disputing the charges and submitted copies of emails between himself and Four Peaks. The attached emails showed that Gorman had informed a Four Peaks representative that the delivered goods were “unacceptable and [were] rejected.” He also noted damage from the installation and notified Four Peaks that he “plan[ned] to dispute the credit card charges in their entirety, as the damage exceeds the amount of the charges.”


MBNA responded to the dispute notice with a request for additional information from Gorman about the dispute, including proof that the merchandise had been returned. A month passed, and MBNA wrote Gorman again, stating that as he had not responded, it assumed the charge was no longer disputed. Gorman answered that he continued to dispute the charge, and referred MBNA to his original notice of dispute. He did not claim to have returned the equipment, but stated that the merchandise “has been available for the merchant to pick up.” MBNA again requested proof that the goods had been returned; Gorman did not reply.


In April 2003, MBNA informed Gorman that it was “unable to assist [him] because the merchandise has not been returned to *1152 the merchant.” Gorman called an MBNA representative saying, again, that all relevant information was in his original letter. MBNA then contacted Four Peaks, which told MBNA that it had shipped replacement equipment to Gorman but that he had not sent the old equipment back to them.


In July 2003, MBNA again informed Gorman that it could not obtain a credit on his behalf without further information from him. Gorman, who is a lawyer, responded in writing on his law firm's letterhead, stating that MBNA had all the information it needed, that he had left several unanswered messages with MBNA asking to speak with someone about the dispute, and that he would “never” pay the disputed charge. He further stated that MBNA had violated the Fair Credit Billing Act, that he was “entitled to recover attorneys' fees for MBNA's violation,” and that he was offsetting his legal fees against his current account balance and so would make no more payments on the card, for the TV system or anything else.FN2 The balance at that time was more than $6,000.FN3


FN2. Gorman has not indicated any specific basis for his fees claim. He refused to answer questions at his deposition about whether these fees were for services he had personally performed, claiming attorney-client and work product privilege. No suit had been filed at the time Gorman claimed entitlement to these fees.




FN3. As far as the record reveals, the entire balance remains unpaid.




Gorman's letter to MBNA worked, at least temporarily. In August 2003, MBNA removed the Four Peaks charge and related finance charges and late fees from Gorman's credit card bill. Over the next two months, MBNA again contacted Four Peaks, which once more informed MBNA that it would not issue a credit for Gorman's charge until he returned the refused equipment. When MBNA called Gorman, he informed them he had the merchandise and “ha[d] no intention of ever [returning] it.” In October, MBNA reposted the charge to Gorman's account.


After he stopped making payments on his card, Gorman claims, he received numerous harassing phone calls. During one of these calls, Gorman alleges, an MBNA representative told him, “We're a big bank. You either pay us or we'll destroy your credit.”


In January 2004, MBNA reported Gorman's account to the credit reporting agencies (“CRAs”) as “charged-off.” FN4 Between May 2004 and November 2005, Gorman informed the three major credit reporting agencies (Equifax, TransUnion, and Experian) that their credit reports included inaccurate information.


FN4. MBNA also referred the debt to a law firm, Wolpoff & Abramson, for collection. The firm's attempt to collect the debt gave rise to unfair debt collection practices claims in Gorman's complaint. Gorman does not appeal the district court's entry of judgment against him on these claims.




As required by federal law, the CRAs sent MBNA notices of dispute containing descriptions of Gorman's complaints (as understood by the CRAs) and asking the bank to verify the accuracy of his account records. MBNA responded by reviewing the account records and notes. After ascertaining that its prior investigation did not support Gorman's claimed dispute, MBNA notified the CRAs that the delinquency was not an error. According to Gorman, MBNA did not notify the CRAs that the charges remained in dispute, and the CRAs did not list the charges as disputed.FN5


FN5. Gorman did not initially supply the district court with his credit reports. In support of his motion to reconsider the district court's summary judgment order, however, Gorman submitted copies of his credit reports, which include no indication that the MBNA account is disputed.




*1153 Since his credit reports began listing his MBNA account as delinquent, Gorman has been denied credit altogether or offered only high interest rates on at least three occasions. He contends that the MBNA account is the only negative entry on his credit report.


In September 2004, Gorman sued MBNA. The complaint alleges violations of the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681–1681x and a California credit reporting law, California Civil Code section 1785.25(a), and also alleges a claim for libel. Gorman seeks injunctive relief, damages resulting from MBNA's reporting of his account, and damages from lost wages for the time he spent dealing with his credit that he would have otherwise spent billing clients. The district court dismissed Gorman's California statutory claim as preempted and granted MBNA summary judgment on all other claims. Gorman timely appeals.


For the reasons stated below, we affirm in part and reverse in part the district court's grant of summary judgment on the FCRA claims; we affirm the district court's grant of summary judgment on Gorman's libel claim; and we reverse the district court's dismissal of Gorman's California statutory claim.



II. ANALYSIS

This case comes to us on summary judgment. We review a grant of summary judgement de novo. Bodett v. CoxCom, Inc., 366 F.3d 736, 742 (9th Cir.2004). Summary judgement is appropriate where, “drawing all reasonable inferences supported by the evidence in favor of the non-moving party,” the court finds “that no genuine disputes of material fact exist and that the district court correctly applied the law.” Id. (internal quotation omitted). The non-moving party “must make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial.” Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir.2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 321–23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).


[1] Headnote Citing References Questions of statutory interpretation and federal preemption are, of course, reviewed de novo. J & G Sales Ltd. v. Truscott, 473 F.3d 1043, 1047 (9th Cir.2007); Davis v. Yageo Corp., 481 F.3d 661, 673 (9th Cir.2007).



A. Fair Credit Reporting Act Claims


1. Statutory Background

Congress enacted the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681–1681x,FN6 in 1970 “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 2205, 167 L.Ed.2d 1045 (2007). As an important means to this end, the Act sought to make “consumer reporting agencies exercise their grave responsibilities [in assembling and evaluating consumers' credit, and disseminating information about consumers' credit] with fairness, impartiality, and a respect for the consumer's right to privacy.” 15 U.S.C. § 1681(a)(4). In addition, to ensure that credit reports are accurate, the FCRA imposes some duties on the sources that provide credit information to CRAs, called “furnishers” in the statute.FN7 *1154 Section 1681s–2 sets forth “[r]esponsibilities of furnishers of information to consumer reporting agencies,” delineating two categories of responsibilities.FN8 Subsection (a) details the duty “to provide accurate information,” and includes the following duty:


FN6. All references to the FCRA hereafter are to 15 U.S.C.




FN7. “The most common ... furnishers of information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies.” H.R.Rep. No. 108–263, at 24 (2003).




FN8. This section was added by the Consumer Credit Reporting Reform Act of 1996, Pub.L. No. 104–208, § 2413, 110 Stat. 3009–447. Additional amendments, not relevant here, were made by the Fair and Accurate Credit Transactions Act of 2003, Pub.L. No. 108–159, 117 Stat.1952.




(3) Duty to provide notice of dispute

If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.


§ 1681s–2(a)(3).

Section 1681s–2(b) imposes a second category of duties on furnishers of information. These obligations are triggered “upon notice of dispute”—that is, when a person who furnished information to a CRA receives notice from the CRA that the consumer disputes the information. See § 1681i(a)(2) (requiring CRAs promptly to provide such notification containing all relevant information about the consumer's dispute). Subsection 1681s–2(b) provides that, after receiving a notice of dispute, the furnisher shall:


(A) conduct an investigation with respect to the disputed information;



(B) review all relevant information provided by the [CRA] pursuant to section 1681i(a)(2) ...;



(C) report the results of the investigation to the [CRA];



(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other [CRAs] to which the person furnished the information ...; and



(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1) ... (i) modify ... (ii) delete[or] (iii) permanently block the reporting of that item of information [to the CRAs].


§ 1681s–2(b)(1). These duties arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b). See id.; Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1059–60 (9th Cir.2002).


The FCRA expressly creates a private right of action for willful or negligent noncompliance with its requirements. §§ 1681n & o; see also Nelson, 282 F.3d at 1059. However, § 1681s–2 limits this private right of action to claims arising under subsection (b), the duties triggered upon notice of a dispute from a CRA. § 1681s–2(c) (“Except[for circumstances not relevant here], sections 1681n and 1681 o of this title do not apply to any violation of ... subsection (a) of this section, including any regulations issued thereunder.”). Duties imposed on furnishers under subsection (a) are enforceable only by federal or state agencies.FN9 See § 1681s–2(d).


FN9. Nelson explained the likely reason for allowing private enforcement of subsection (b) but not subsection (a) as follows:
Congress did not want furnishers of credit information exposed to suit by any and every consumer dissatisfied with the credit information furnished. Hence, Congress limited the enforcement of the duties imposed by § 1681s–2(a) to governmental bodies. But Congress did provide a filtering mechanism in § 1681s–2(b) by making the disputatious consumer notify a CRA and setting up the CRA to receive notice of the investigation by the furnisher. See 15 U.S.C. § 1681i(a)(3) (allowing CRA to terminate reinvestigation of disputed item if CRA “reasonably determines that the dispute by the consumer is frivolous or irrelevant”). With this filter in place and opportunity for the furnisher to save itself from liability by taking the steps required by § 1681s–2(b), Congress put no limit on private enforcement under §§ 1681n & o.



Nelson, 282 F.3d at 1060.

*1155 Gorman alleges that MBNA violated several of the FCRA “furnisher” obligations. We hold that some of the alleged violations survive summary judgment and some do not.



2. MBNA's “investigation” upon notice of dispute

Gorman's first allegation is that MBNA did not conduct a sufficient investigation after receiving notice from the CRAs that he disputed the charges, as required by § 1681s–2(b)(1)(A). As Gorman's claim arises under subsection (b), it can be the basis for a private lawsuit. See Nelson, 282 F.3d at 1059–60. We must decide (1) whether § 1681s–2(b)(1)(A) requires a furnisher to conduct a “reasonable” investigation, and if so, (2) whether a disputed issue of material fact exists as to the reasonableness of MBNA's investigation.



a. Must an Investigation be Reasonable?

[2] Headnote Citing References The text of the FCRA states only that the creditor shall conduct “an investigation with respect to the disputed information.” § 1681s–2(b)(1)(A). MBNA urges that because there is no “reasonableness” requirement expressly enunciated in the text, the FCRA does not require an investigation of any particular quality; any investigation into a consumer's dispute—even an entirely unreasonable one—satisfies the statute.


This court has not addressed MBNA's contention about the FCRA's investigation requirement.FN10 But, MBNA made—and lost—the same argument before the Fourth Circuit. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429–31 (4th Cir.2004). Concluding that the statute includes a requirement that a furnisher's investigation not be unreasonable, the Fourth Circuit first noted that the plain meaning of the term “investigation” is a “ ‘detailed inquiry or systematic examination,’ ” which necessarily “requires some degree of careful inquiry.” Id. at 430 (quoting Am. Heritage Dictionary 920 (4th ed.2000)). Second, the Fourth Circuit reasoned that because the purpose of the provision is “to give consumers a means to dispute—and, ultimately, correct—inaccurate information on their credit reports,” id. at 430–31, a “superficial, un reasonable inquir[y]” would hardly satisfy Congress' objective. Id. at 431. The Seventh Circuit, without discussing the issue, has also found an implicit reasonableness requirement. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir.2005) (“Whether a defendant's investigation [pursuant to § 1681s–2(b)(1)(A)] is reasonable is a factual question normally reserved for trial.”); see also Johnson, 357 F.3d at 430 n. 2 (“[D]istrict courts that have considered the issue have consistently recognized that the creditor's investigation must be a reasonable one.” (citing cases)).


FN10. District courts in this circuit have assumed that § 1681s–2(b)(1)(A) requires a reasonable investigation. See, e.g., Smith v. Ohio Sav. Bank, No. 2:05–cv–1236, 2008 WL 2704719, at *2 (D.Nev. July 7, 2008); Thomas v. U.S. Bank, N.A., No. CV 05–1725, 2007 WL 764312, at *4 (D.Or. Mar. 8, 2007).




The Fourth Circuit's reasoning in Johnson is entirely persuasive. By its ordinary meaning, an “investigation” requires an inquiry likely to turn up information about the underlying facts and positions of the parties, not a cursory or sloppy review of the dispute. Moreover, like the Fourth Circuit, we have observed that “a primary purpose for the FCRA [is] to protect consumers against inaccurate and incomplete *1156 credit reporting.” Nelson, 282 F.3d at 1060. A provision that required only a cursory investigation would not provide such protection; instead, it would allow furnishers to escape their obligations by merely rubber stamping their earlier submissions, even where circumstances demanded a more thorough inquiry. MBNA counters by pointing to § 1681i(a)(1)(A), which provides, in relevant part (with emphasis added):


[I]f 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, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate....


Thus, MBNA argues, Congress specified a “reasonable” investigation in another part of the statute, and purposely chose not to do so for furnishers of information.


[3] Headnote Citing References It is most often the case that “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (internal quotation and citation omitted). But we should be careful not to read too much into the apparent disparity in language upon which MBNA relies. Where, as here, there are convincing alternative explanations for a difference in statutory language, the presumption applies with much less force. See Field v. Mans, 516 U.S. 59, 67–69, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) (“Without more, the [negative] inference might be a helpful one. But [where] there is more ... the negative pregnant argument should not be elevated to the level of interpretive trump card.”).


As we have noted, the term “investigation” on its own force implies a fairly searching inquiry. It is thus likely that, if anything, the “reasonable” qualifier with regard to re investigations by CRAs signals a limitation on the CRAs' duty, not an expansion of it beyond what “investigation” itself would signal. And, indeed, the statute goes on to spell out the CRA's investigative duty in some detail, requiring, inter alia, that the CRA provide notification of the dispute within five business days of receipt of notice of a dispute. The furnisher's investigation obligation under § 1681 is triggered by receiving the CRA notification, required as a central aspect of the CRA's own investigation, and includes the obligation to “report the results of [its] investigation to the [CRA].” § 1681s2–(b)(1)(C). In other words, the CRA's “reasonable reinvestigation” consists largely of triggering the investigation by the furnisher. It would make little sense to deem the CRA's investigation “reasonable” if it consisted primarily of requesting a superficial, unreasonable investigation by the furnisher of the information.


Nevertheless, MBNA urges that “Congress intended to impose a more rigorous duty of investigation on CRAs than on furnishers of information.” But MBNA does not tell us why Congress would mandate shoddy or superficial furnisher investigations, not calculated to resolve or to explain the actual disagreement or to aid in the CRA's “reasonable reinvestigation.” Indeed, as the statute recognizes, the furnisher of credit information stands in a far better position to make a thorough investigation of a disputed debt than the CRA does on reinvestigation. With respect to the accuracy of disputed information, the CRA is a third party, lacking any direct relationship with the consumer, and its *1157 responsibility is to “ re investigate” a matter once already investigated in the first place. § 1681i(a)(1) (emphasis added). It would therefore make little sense to impose a more rigorous requirement on the CRAs than the furnishers. Instead, the more sensible conclusion is that, if anything, the “reasonable” qualifier attached to a CRA's duty to reinvestigate limits its obligations on account of its third-party status and the fact that it is repeating a task already completed once. Requiring furnishers, on inquiry by a CRA, to conduct at least a reasonable, non-cursory investigation comports with the aim of the statute to “protect consumers from the transmission of inaccurate information about them.” Kates v. Crocker Nat'l Bank, 776 F.2d 1396, 1397 (9th Cir.1985).


We thus follow the Fourth and Seventh Circuits and hold that the furnisher's investigation pursuant to § 1681s–2(b)(1)(A) may not be unreasonable.



b. MBNA's Investigation was Reasonable

[4] Headnote Citing References As discussed, a furnisher's obligation to conduct a reasonable investigation under § 1681s–2(b)(1)(A) arises when it receives a notice of dispute from a CRA. Such notice must include “all relevant information regarding the dispute that the [CRA] has received from the consumer.” § 1681i(a)(2)(A). It is from this notice that the furnisher learns the nature of the consumer's challenge to the reported debt, and it is the receipt of this notice that gives rise to the furnisher's obligation to conduct a reasonable investigation. The pertinent question is thus whether the furnisher's procedures were reasonable in light of what it learned about the nature of the dispute from the description in the CRA's notice of dispute.FN11 See Westra, 409 F.3d at 827 (“[The furnisher's] investigation in this case was reasonable given the scant information it received regarding the nature of [the consumer's] dispute.”).


FN11. In deciding that the notice determines the nature of the dispute to be investigated, we do not suggest that it also cabins the scope of the investigation once undertaken.




MBNA received four notices of dispute regarding Gorman's account. Gorman argues that the district court erred in granting summary judgment as to the reasonableness of MBNA's investigation in response to these notices because triable issues of fact remain. We have held that “summary judgment is generally an inappropriate way to decide questions of reasonableness because ‘the jury's unique competence in applying the ‘reasonable man’ standard is thought ordinarily to preclude summary judgment.' ” In re Software Toolworks Inc., 50 F.3d 615, 621 (9th Cir.1994) (quoting TSC Indus. v. Northway, Inc., 426 U.S. 438, 450 n. 12, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). However, summary judgment is not precluded altogether on questions of reasonableness. It is appropriate “when only one conclusion about the conduct's reasonableness is possible.” Id. at 622; see also Westra, 409 F.3d at 827. We thus consider the sufficiency of MBNA's investigation with respect to each of the notices.



i. “Claims Company will Change”

[5] Headnote Citing References In a notice of dispute received May 13, 2004, TransUnion provided the following information concerning Gorman's MBNA account: “Claims company will change. Verify all account information.” The notice provided no further information about the nature of the dispute. In response to this notice, MBNA “review[ed] the account notes to determine whether MBNA had agreed to delete any charges or to modify the account information in any way.” It concluded that “[n]o such commitment had been made.” MBNA's review of the account information provided *1158 by TransUnion did reveal “some minor differences.” As a result, MBNA submitted updated address, date of birth, and account delinquency information to TransUnion.


The cursory notation, “[c]laims company will change,” provided no suggestion of the nature of Gorman's dispute with Four Peaks. We conclude therefore that a jury could not find MBNA's response unreasonable. MBNA reasonably read the vague notice as indicating that MBNA had previously agreed to change certain account information. MBNA's review of its internal account files to determine whether any such agreement had been reached was all that was required to respond reasonably to this notice of dispute. The account notes reveal that MBNA had communicated with Four Peaks several times and do not reveal any agreement by MBNA to credit those charges, or any others. MBNA could not have reasonably been expected to undertake a more thorough investigation of the Four Peaks incident based on the scant information contained in this notice.



ii. “Fraudulent Charges”

MBNA received two notices disputing “fraudulent charges” on Gorman's account. A notice of dispute from Experian, dated May 18, 2004, stated: “Consumer claims account takeover fraudulent charges made on account. Verify Signature provide complete ID.” In response to this notice, MBNA “verif[ied] that the name, address, date of birth and social security number reported by Experian matched the information that was contained in MBNA's records concerning the account.” It also “review[ed] the account notes and check[ed] with the fraud department to determine whether there had ever been a fraud claim submitted with respect to the account.” Because the identification information matched and no fraud claim had been submitted, MBNA reported to Experian that the information it previously reported was accurate and requested that Experian tell Gorman to contact MBNA if he suspected fraud.


MBNA received another dispute notice from TransUnion, dated November 29, 2005, that listed two disputes: (1) “Disputes present/previous Account Status History. Verify accordingly;” (2) “Consumer claims account take-over fraudulent charges made on account. Verify Signature provide or confirm complete ID.” MBNA conducted the following inquiry:


[V]erif[ied] that the account history that was being reported matched the account history data in MBNA's records, including the balance, the amount past due, the high credit and credit limit for the account.... [V]erif[ied] that the name, address, date of birth and social security number reported by TransUnion matched the information that was contained in MBNA's records concerning the account.... [R]eview[ed] the account notes and check[ed] with the fraud department to determine whether there had ever been a fraud claim submitted with respect to the account.


Because this investigation did not reveal that any information was inaccurate, MBNA verified the information previously submitted to TransUnion.


Neither notice identified the nature of Gorman's dispute as centering on the Four Peaks charge or indicated that the dispute concerned rejection of the goods charged for. Indeed, the notices did not describe the fraudulent transactions in any detail; they were silent as to the approximate date of the charges, their amount, and the identity of the merchant. Moreover, Gorman has never contended that the disputed charges were initially unauthorized or were the result of identity theft, as the dispute notices indicated. Not surprisingly, MBNA's review of its internal account *1159 notes showed no evidence of fraudulent activity, and all previous account data reported by the CRAs matched MBNA's records. We conclude that, as in the case of the first notice of dispute, MBNA could not reasonably have been expected to investigate Gorman's challenge to the Four Peaks charge based on the vague and inaccurate information it received from the CRAs in these notices.FN12


FN12. Gorman complains that he had no control over the information the CRAs gave MBNA, and that MBNA should have asked the CRAs for more detail on Gorman's complaints. But Gorman's letters to the CRAs do not provide much more detail concerning his dispute than the CRAs' description to MBNA. Two of the dispute notices were prompted by letters from Gorman to the CRAs stating:
MBNA posted certain fraudulent credit card charges to a former VISA account in or about early 2003. I timely notified MBNA that the charges were disputed and should be removed from my account yet MBNA failed to removed [sic] them and is wrongfully claiming that my account is delinquent. No money is owed to MBNA. Moreover, MBNA has been repeatedly advised by me, both orally and in writing, that the debt is disputed but is unlawfully refusing to note the existence of the dispute on my credit record.



The November 2005 dispute notice was prompted by an on-line complaint form filled out by Gorman stating: “I have never made a late payment,” and “Fraudulent charges were made on my account.”



It is the duty of the CRA—not the furnisher—to ensure that the furnisher has all relevant information about the dispute. See § 1681i(a)(2)(A) (the CRA's notice to furnisher “shall include all relevant information regarding the dispute that the agency has received from the consumer ....”). Moreover, as it is not hard to see why the CRAs interpreted Gorman's messages as they did, MBNA likely would have interpreted them in the same way had it obtained them, and so would have made the same, limited investigation.


iii. “Promised Goods/Services Not Delivered”

[6] Headnote Citing References One notice of dispute did provide more accurate and specific information relating to Gorman's dispute with MBNA. A December 2004 notice from Experian stated: “Claims inaccurate information. Did not provide specific dispute. Provide complete ID and verify account information.” The notice further provided, in a section for “FCRA Relevant Information”: “PROMISED GOODS/SERVICES NOT DELIVERED. I TIMELY DISPUTED THE CHARGES UNDER THE TIL ACT.” FN13 In response to this notice, MBNA


FN13. This is likely referring to the Truth in Lending Act, Pub.L. No. 90–321, Title I, 82 Stat. 146 (1968) (codified at 15 U.S.C. § 1601 et seq.).




review[ed] its records to confirm that all of the account information that was being reported by Experian matched MBNA's records. MBNA also reviewed the account notes to determine if any dispute submitted by Gorman concerning the account had been resolved in his favor. Since the reported information matched the information in MBNA's records, and because the prior investigation of the charge with Four Peaks Entertainment had not been resolved in favor of Gorman, MBNA verified all the information that it had reported about the account as accurate.
Unlike the other three notices of dispute, the December 2004 notice contained enough information to alert MBNA to the specific nature of Gorman's actual claim: the reported debt was not owed because he had not received the goods he was promised. Simply verifying that the basic reported account data matched MBNA's internal records may not have been a reasonably sufficient investigation of this particular dispute.


But MBNA's investigation was more thorough than simply a review of bare account data. The review of internal records revealed that MBNA had previously *1160 investigated the Four Peaks charge and that the dispute had not been resolved in Gorman's favor.


Nevertheless, Gorman claims that a jury could still find MBNA's efforts unreasonable, because it failed to re investigate the dispute. As an initial matter, there is no evidence that MBNA's original investigation of the Four Peaks incident was deficient or unreliable.FN14 MBNA contacted both Gorman and Four Peaks several times as part of the investigation. Its requests that Gorman provide more information were met with refusals to supply additional information or no response at all. MBNA's correspondence with Four Peaks also evidences a diligent attempt to ascertain the validity of the charges. For example, MBNA asked about Gorman's opportunity to return the merchandise and was told that Gorman received shipping labels to return the merchandise.


FN14. The reasonableness of MBNA's initial investigation is not directly before us. That investigation was conducted before MBNA reported Gorman's account to the CRAs. To the extent that it is governed by the FCRA at all, it falls under § 1681s–2(a)(1), the duty of furnishers to provide accurate information to CRAs. Although MBNA is required under § 1681s–2(a)(1) to provide accurate information, Gorman cannot enforce that obligation in a private cause of action. See § 1681s–2(c), (d).




Importantly, the CRA notice of dispute that triggered MBNA's duty to investigate did not identify any reason to doubt the veracity of the initial investigation. Furthermore, the notice of dispute did not provide any new information that would have prompted MBNA to supplement the initial investigation with any additional procedures or inquiries.


[7] Headnote Citing References We agree that “[w]hether a reinvestigation conducted by a furnisher in response to a consumer's notice of dispute is reasonable ... depends in large part on ... the allegations provided to the furnisher by the credit reporting agency.” Krajewski v. Am. Honda Fin. Corp., 557 F.Supp.2d 596, 610 (E.D.Pa.2008). Without any indication in the allegations that the initial investigation lacked reliability or that new information was available to discover, MBNA's decision not to repeat a previously-conducted investigation cannot have been unreasonable. Congress could not have intended to place a burden on furnishers continually to reinvestigate a particular transaction, without any new information or other reason to doubt the result of the earlier investigation, every time the consumer disputes again the transaction with a CRA because the investigation was not resolved in his favor. Thus, although reliance on a prior investigation can be unreasonable, cf. Bruce v. First U.S.A. Bank, Nat'l Ass'n, 103 F.Supp.2d 1135, 1143–44 (E.D.Mo.2000) (concluding that a furnisher's investigation was not necessarily reasonable when an initial investigation was deficient for, among other reasons, failing to contact the consumer), that was not the case here.


Gorman disputes this conclusion, insisting that under the Fourth Circuit's opinion in Johnson, it is per se unreasonable for a furnisher to rely solely on internal account records when investigating a consumer dispute. Gorman misreads Johnson, which recognized that the reasonableness of an investigation depends on the facts of the particular case, most importantly the CRA's description of the dispute in its notice. See Johnson, 357 F.3d at 431 (noting that confining the investigation to internal computer notes was not necessarily reasonable in light of the specificity of the description of the dispute in the notice).


In Johnson, the CRA's notice to MBNA read: “CONSUMER STATES BELONGS TO HUSBAND ONLY;” “WAS NEVER A SIGNER ON ACCOUNT. WAS AN AUTHORIZED USER.” Id. at 429. The underlying*1161 facts were that Johnson's future husband opened an MBNA credit card account. Some years later, after they were married, Johnson's husband filed for bankruptcy, and MBNA told Johnson she was responsible for the balance, maintaining that she was a co-applicant, and therefore a co-obligor, on the account. Johnson, 357 F.3d at 428–29. Johnson argued that she was merely an authorized user. Id.


In response to the notice to the CRAs, MBNA only confirmed Johnson's identifying information and confirmed that its internal computer system indicated she was the sole responsible party on the account. Id. at 431. At no time did MBNA try to ascertain whether Johnson's information—that she had not signed the application form—was correct. The Fourth Circuit held this investigation unreasonable:


The MBNA agents also testified that, in investigating consumer disputes generally, they do not look beyond the information contained in the CIS [MBNA's internal computer system] and never consult underlying documents such as account applications. Based on this evidence, a jury could reasonably conclude that MBNA acted unreasonably in failing to verify the accuracy of the information contained in the CIS.


Id.


In contrast to Johnson, in Gorman's case MBNA did review all the pertinent records in its possession, which revealed that an initial investigation had taken place in which MBNA contacted both Gorman and the merchant. Thus, unlike in Johnson, MBNA had—albeit earlier—gone outside its own records to investigate the allegations contained in the CRA notice, and on reading the notice, did consult the relevant information in its possession. Johnson does not indicate that a furnisher has an obligation to repeat an earlier investigation, the record of which is in the furnisher's records.


[8] Headnote Citing References We emphasize that the requirement that furnishers investigate consumer disputes is procedural. An investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.


In short, although “reasonableness” is generally a question for a finder of fact, summary judgment in this case was appropriate.



3. MBNA's failure to provide notice of dispute

Gorman next argues that MBNA failed to notify the CRAs that he continued to dispute the delinquent charges on his account. He contends that in reporting the delinquency without also reporting his ongoing dispute, MBNA violated its obligations under 12 C.F.R. § 226.13,FN15 and thus furnished “incomplete or inaccurate” credit information in violation of the FCRA. MBNA neither concedes nor disputes that it was so obligated,FN16 but argues on summary judgment that the statute *1162 does not permit Gorman to raise this claim. Also, in the alternative, MBNA contends that Gorman did not submit enough evidence to show whether his credit reports included a notice that the delinquency was disputed or whether MBNA did not so notify the CRAs. We must decide (1) whether the failure to notify the CRAs that the delinquent debt was disputed is actionable under § 1681s–2(b), and if so, (2) whether Gorman introduced sufficient evidence on summary judgment to show that MBNA so notified the CRAs.


FN15. This requirement is imposed by Regulation Z, promulgated pursuant to the Truth in Lending Act, 15 U.S.C. § 1601 et seq. The regulation provides that, if a consumer timely disputes a charge with a creditor but the creditor concludes that the charge is valid, the creditor “[m]ay not report that an amount or account is delinquent because the amount due ... remains unpaid, if the creditor receives [within a specific time period] further written notice from the consumer that any portion of the billing error is still in dispute, unless the creditor also ... [p]romptly reports that the amount or account is in dispute.” 12 C.F.R. § 226.13(g)(4).




FN16. Gorman does not bring a claim under either Regulation Z or the pertinent section of the Truth in Lending Act. We therefore need not decide whether in this case MBNA violated its obligations under those provisions.





a. Gorman's Claim is Actionable

[9] Headnote Citing References If a consumer disputes the accuracy of credit information, the FCRA requires furnishers to report that fact when reporting the disputed information. Section 1681s–2(a)(3) provides: “If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.” As noted, however, the statute expressly provides that a claim for violation of this requirement can be pursued only by federal or state officials, and not by a private party. § 1681s–2(c)(1) (“Except [for circumstances not relevant here], sections 1681n and 1681o of this title[providing private right of action for willful and negligent violations] do not apply to any violation of ... subsection (a) of this section, including any regulations issued thereunder.”); see also Nelson, 282 F.3d at 1059. Thus, Gorman has no private right of action under § 1681s–2(a)(3) to proceed against MBNA for its initial failure to notify the CRAs that he disputed the Four Peaks charges.


Gorman does have a private right of action, however, to challenge MBNA's subsequent failure to so notify the CRAs after receiving notice of Gorman's dispute under § 1681s–2(b). In addition to requiring that a furnisher conduct a reasonable investigation of a consumer dispute, § 1681s–2(b) also requires a creditor, upon receiving notice of such dispute, to both report the results of the investigation and, “if the investigation finds that the information is incomplete or inaccurate, report those results” to the CRAs. § 1681s–2(b)(1)(C), (D). Gorman argues that MBNA's reporting of the Four Peaks charge and delinquency, without a notation that the debt was disputed, was an “incomplete or inaccurate” entry on his credit file that MBNA failed to correct after its investigation. As this claim alleges that obligations imposed under § 1681s–2(b) were violated, it is available to private individuals.


The Fourth Circuit has recently held that after receiving notice of dispute, a furnisher's decision to continue reporting a disputed debt without any notation of the dispute presents a cognizable claim under § 1681s–2(b). See Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 150 (4th Cir.2008). In Saunders, a consumer alleged that he incurred late fees and penalties as a result of a creditor's own admitted accounting errors; the creditor, Branch Banking & Trust (BB & T), refused to waive the fees, and the consumer responded by withholding payments on the loan. Id. at 145–46. BB & T reported the loan to the CRAs as “in repossession status,” and, after suffering adverse credit decisions, the consumer contacted the CRAs to report the dispute. Id. at 146. The CRAs sent a notice of dispute to BB & T, triggering its obligations to investigate and verify the accuracy of the reported information under § 1681s–2(b)(1). BB & T responded by updating the consumer record to reflect that it had written off the debt as uncollectible, but failed to indicate that the consumer still disputed the validity of the obligation. Id. The consumer *1163 brought suit under § 1681s–2(b) and a jury found that BB & T had violated its obligations.


The Fourth Circuit affirmed. The court reasoned that in enacting § 1681s–2(b)(1)(D), “Congress clearly intended furnishers to review reports not only for inaccuracies in the information reported but also for omissions that render the reported information misleading.” Id. at 148. Although the report may have been “technically accurate” in the sense that it reflected the consumer's failure to make any payments on the loan, the court noted that it had previously held that “a consumer report that contains technically accurate information may be deemed ‘inaccurate’ if the statement is presented in such a way that it creates a misleading impression.” Id. (citing Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415–16 (4th Cir.2001)). The Fourth Circuit went on to note that a consumer's failure to pay a debt that is not really due “does not reflect financial irresponsibility,” and thus the omission of the disputed nature of a debt could render the information sufficiently misleading so as to be “incomplete or inaccurate” within the meaning of the statute. Id. at 150. Saunders went on to reject the contention that Congress meant to exempt furnishers of information from private liability by placing the initial obligation to report disputes in subsection (a), stating that “[n]o court has ever suggested that a furnisher can excuse its failure to identify an inaccuracy when reporting pursuant to § 1681s–2(b) by arguing that it should have already reported the information accurately under § 1681s–2(a).” Id. at 149–50.


This reasoning is persuasive. Like Saunders, several other courts have held that a credit entry can be “incomplete or inaccurate” within the meaning of the FCRA “because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir.1998); see also Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 40 (D.C.Cir.1984) (“Certainly reports containing factually correct information that nonetheless mislead their readers are neither maximally accurate nor fair to the consumer....”). As the Fourth Circuit observed, holding otherwise would create a rule that, as a matter of law, an omission of the disputed nature of a debt never renders a report incomplete or inaccurate. See Saunders, 526 F.3d at 150. Not only might such a rule intimidate consumers into giving up bona fide disputes by paying debts not actually due to avoid damage to their credit ratings, but it also contravenes the purpose of the FCRA, to protect against “unfair credit reporting methods.” See 15 U.S.C. § 1681(a)(1).


[10] Headnote Citing References Holding that there is a private cause of action under § 1681s–2(b) does not mean that a furnisher could be held liable on the merits simply for a failure to report that a debt is disputed. The consumer must still convince the finder of fact that the omission of the dispute was “misleading in such a way and to such an extent that [it] can be expected to have an adverse effect.” Saunders, 526 F.3d at 150 (quotation omitted). In other words, a furnisher does not report “incomplete or inaccurate” information within the meaning of § 1681s–2(b) simply by failing to report a meritless dispute, because reporting an actual debt without noting that it is disputed is unlikely to be materially misleading. It is the failure to report a bona fide dispute, a dispute that could materially alter how the reported debt is understood, that gives rise to a furnisher's liability under § 1681s–2(b). Cf. id. at 151 (“[W]e assume, without deciding that a furnisher incurs liability under § 1681s–2(b) only if it fails to report a meritorious dispute.”).


*1164 It is true, as we have said, that a furnisher's initial failure to comply with this requirement is not privately enforceable. But as the Fourth Circuit noted, this does not excuse the furnisher's failure to correct the omission after investigating pursuant to § 1681s–2(b). See Saunders, 526 F.3d at 150. The purpose of § 1681s–2(b) is to require furnishers to investigate and verify that they are in fact reporting complete and accurate information to the CRAs after a consumer has objected to the information in his file. See Johnson, 357 F.3d at 431 (“[Congress] create [d] a system intended to give consumers a means to dispute—and, ultimately, correct—inaccurate information on their credit reports.”). A disputed credit file that lacks a notation of dispute may well be “incomplete or inaccurate” within the meaning of the FCRA, and the furnisher has a privately enforceable obligation to correct the information after notice. § 1681s–2(b)(1)(D). We thus conclude that the statute permits Gorman to bring his claim regarding MBNA's failure to report the charge still disputed.



b. Evidentiary Challenges

[11] Headnote Citing References MBNA argues that summary judgment is nevertheless appropriate on this claim because Gorman failed to introduce sufficient admissible evidence that (1) his credit reports lacked a notation that the Four Peaks debt was disputed and (2) MBNA failed to report the account as disputed in this respect to the CRAs.


Gorman did not submit his credit reports to the district court until after the court issued its summary judgment order.FN17 We ordinarily will not consider on appeal “[p]apers submitted to the district court after the ruling that is challenged.” Kirshner v. Uniden Corp. of Am., 842 F.2d 1074, 1077 (9th Cir.1988). We need not decide, however, whether the credit reports are properly before us, because Gorman has submitted other admissible evidence that creates a triable issue of fact as to whether his credit reports lacked a notice of dispute.


FN17. Gorman submitted the credit reports in support of his motion for leave to file a motion for reconsideration.




[12] Headnote Citing References Gorman previously stated in his declaration that he had reviewed many of his personal credit reports, and that none of them included a notice that he disputed the delinquent charges. This statement is admissible evidence. Gorman has personal knowledge, having seen the reports. The evidence is not inadmissible hearsay, as Gorman does not rely on the credit reports for the truth of the matter asserted therein; in fact, as he notes, he disputes the truth of their contents. Instead, Gorman offers them to prove that no statement noticing the dispute was made. “If the significance of an offered statement lies solely in the fact that it was made ... the statement is not hearsay.” United States v. Dorsey, 418 F.3d 1038, 1044 (9th Cir.2005) (quoting Fed.R.Evid. 801 advisory committee's note). He thus submitted sufficient evidence for a jury to conclude that his credit reports contained no notice of dispute.


There is also sufficient evidence from which a jury could infer that MBNA did not notify the CRAs that the debt was disputed. Gorman himself has no personal knowledge of what MBNA actually submitted to the CRAs in response to its investigations.FN18 However, the dispute verification*1165 forms MBNA returned to the CRAs contained no notice that the debt was disputed; rather, they indicated that the information previously provided was “accurate as reported.” Yet, MBNA's review of Gorman's account notes revealed that he continued to dispute the debt even after MBNA concluded its initial investigation and reposted the Four Peaks charges. Moreover, according to MBNA's witness's declaration, MBNA told the CRAs that all of the information reported on Gorman's account was accurate, and Gorman has produced sufficient evidence that no notice of dispute appeared on the credit reports. Gorman has thus submitted sufficient evidence to create an issue of fact concerning whether MBNA failed to inform the CRAs, in response to the dispute notice, that Gorman still disputed the debt.


FN18. The only evidence he submitted was his sworn declaration that MBNA “report[ed] my account as delinquent without indicating that some or all of the debt was disputed by the account holder.” Gorman Decl. ¶ 12, Apr. 12, 2006. But Gorman provided no indication that he had personal knowledge of the contents of MBNA's report.




In sum, we hold that any investigation under § 1681s–2(b)(1)(A) must be reasonable; that any reasonable trier of fact would conclude that MBNA's investigation was reasonable; that § 1681s–2(b) permits Gorman to bring his claim that MBNA failed to inform the CRAs that the information about his delinquency was “incomplete or inaccurate” after investigating the December 2004 notice from the CRAs; and that Gorman has submitted sufficient evidence to survive summary judgment on this claim.FN19


FN19. Because the district court held that there was no private right of action under § 1681s–2(b), it did not reach the merits of Gorman's claim. Gorman II, 435 F.Supp.2d at 1008–09. On appeal, MBNA's arguments as to this claim are only that there is no private right of action, and, in the alternative, that Gorman has failed to introduce admissible evidence that MBNA failed to report the debt as disputed. We do not go beyond the arguments made, and so conclude only that Gorman can go forward with his claim, having produced admissible evidence that MBNA failed to report the debt as disputed. We take no position as to whether MBNA's failure to report the debt as disputed violated § 1681s–2(b). sections of the Act. Section 1681h(e) sets forth, in relevant part, the following “[l]imitation of liability” (with emphasis added):





B. Libel Claim

Gorman also advanced a state law libel claim on which the district court made two rulings. On MBNA's motion to dismiss, the court held that the FCRA did not preempt Gorman's libel claim because he alleged malice or willful intent to injure, satisfying the requirements of § 1681h(e). Gorman I, 370 F.Supp.2d at 1009–10. MBNA contests this conclusion. The district court granted MBNA's motion for summary judgment on the libel claim however, holding that Gorman failed to submit evidence creating a disputed issue of material fact with respect to malice or willful intent. Gorman II, 435 F.Supp.2d at 1009–10. Gorman appeals this ruling.



1. Preemption

The preemption question presents a difficult issue of first impression. The difficulty arises from the interaction of two provisions of the FCRA. Section 1681h governs the “[c]onditions and form of disclosure to consumers,” disclosures that CRAs are required or permitted to make under other


Except as provided in sections 1681n and 1681 o of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g, [ FN20] 1681h,[ FN21] *1166 or 1681m [ FN22] of this title or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report except as to false information furnished with malice or willful intent to injure such consumer



FN20. Section 1681g addresses “[d]isclosures to consumers.” It provides in detail the information CRAs must disclose to consumers, the rights of consumers to obtain credit reports and scores and to dispute information in credit reports, and the information that must be made available to identity theft victims and mortgage applicants.




FN21. Section 1681h, as noted above, deals with the “[c]onditions and form” of these disclosures.




FN22. Section 1681m addresses the duties of “users of consumer reports.” In essence, it imposes certain responsibilities on persons who take adverse actions based on credit reports or another source of information about a person's credit, or who make solicitations on the basis of credit reports.



Section 1681t addresses more generally the FCRA's “[r]elation to State laws.” In general, the FCRA does not preempt any state law “except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency.” § 1681t(a). But this general rule has several exceptions, added in 1996, including the following:


No requirement or prohibition may be imposed under the laws of any State ... with respect to any subject matter regulated under ... section 1681s–2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply—



(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on September 30, 1996); or



(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996).


§ 1681t(b)(1)(F).[ FN23] No changes were made to § 1681h(e) with these amendments.


FN23. The parties assume that, if § 1681t(b)(1)(F) applies, it bars Gorman's libel claim. We note, however, that the application of that section to any given common law claim is not self-evident. In Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992), the Supreme Court discussed whether a preemption provision containing the same “No requirement or prohibition ... shall be imposed” language applied to some, but not all, common law claims. A plurality of the Court analyzed the question as follows: “we ask whether the legal duty that is the predicate of the common-law damages action constitutes a ‘requirement or prohibition based on smoking and health ... imposed under State law with respect to ... advertising or promotion,’ giving that clause a fair but narrow reading.” Id. at 523–24, 112 S.Ct. 2608 (alterations in original). See also Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (applying a “ ‘presumption against the preemption of state police power regulations' to support a narrow interpretation of such an express [statutory] command.”). Assuming this is the right inquiry, libel law probably entails a “prohibition ... with respect to” what a furnisher of information can report to a CRA. We do not decide the question, however, given our conclusion that Gorman has not presented sufficient evidence to state a libel claim.




Although § 1681t(b)(1)(F) appears to preempt all state law claims based on a creditor's responsibilities under § 1681s–2, § 1681h(e) suggests that defamation claims can proceed against creditors as long as the plaintiff alleges falsity and malice. Attempting to reconcile the two sections has left district courts in disarray. The district court in this case held that § 1681h(e), the more specific preemption provision, trumped the more general preemption provision of § 1681t(b)(1)(F).FN24 *1167 Gorman I, 370 F.Supp.2d at 1009–10 (citing Gordon v. Greenpoint Credit, 266 F.Supp.2d 1007, 1013 (S.D.Iowa 2003)). Other district courts have followed different approaches. Some have concluded that the later-enacted § 1681t(b)(1)(F) effectively repeals the earlier preemption provision, § 1681h(e). Jaramillo v. Experian Info. Solutions, Inc., 155 F.Supp.2d 356, 361 (E.D.Pa.2001) (footnote omitted) (the “total preemption” approach). Attempting to give meaning to both sections, other courts have observed that § 1681t(b)(1)(F) relates to “any subject matter regulated under section 1681s–2,” the section which regulates the responses of furnishers to notices of dispute. Hence, these courts apply a “temporal approach,” holding that “causes of action predicated on acts that occurred before a furnisher of information had notice of any inaccuracies are not preempted by § 1681t(b)(1)(F), but are instead governed by § 1681h(e).” Kane v. Guar. Residential Lending, Inc., 2005 WL 1153623, at *8 (E.D.N.Y. May 16, 2005).


FN24. We note that both provisions are specific in different ways: § 1681t(b)(1)(F) is specific as to the target of suits, governing requirements placed on furnishers of information; § 1681h(e) is specific as to the nature of the claim, permitting certain common law claims if falsity and malice is shown. So, in some sense, both provisions are “specific.” But § 1681h(e) may be more specific for preemption purposes, because the tension is the nature of the claims preempted, and § 1681h(e) specifies certain claims that can be brought.




Gorman advocates a still different “statutory” analysis, under which “t(b)(1)(F) preempts only state law claims against credit information furnishers brought under state statutes, just as 1681h(e) preempts only state tort claims.” Manno v. Am. Gen. Fin. Co., 439 F.Supp.2d 418, 425 (E.D.Pa.2006) (describing the approach).FN25 Finally, MBNA argues that § 1681h(e) is not a broad preemption provision at all, but simply a “grant of protection for statutorily required disclosures.” (quoting McAnly v. Middleton & Reutlinger, P.S.C., 77 F.Supp.2d 810, 814 (W.D.Ky.1999)). But, of course, granting entities immunity from state law tort suits in exchange for making required disclosures is just another way of saying that certain state law claims are preempted.FN26


FN25. Support for this view rests on the proposition that “Congress seems to have been most concerned with protecting credit information furnishers from state statutory obligations inconsistent with their duties under the FCRA.” Manno, 439 F.Supp.2d at 425. Section 1681t(b)(1)(F) exempts two specific state statutes from preemption, suggesting, some courts say, that Congress “had state statutes in mind.” Id. Other subsections of § 1681t also exempt state statutes; none addresses common law claims. Yet, this distinction does not appear in the text of the statute. In fact, “[t]he phrase ‘[n]o requirement or prohibition’ sweeps broadly and suggests no distinction between positive enactments and common law; to the contrary, those words easily encompass obligations that take the form of common-law rules.” Cipollone, 505 U.S. at 521, 112 S.Ct. 2608 (1992) (plurality opinion) (second alteration in original); see also Riegel v. Medtronic, Inc., 552 U.S. 312, 128 S.Ct. 999, 1008, 169 L.Ed.2d 892 (2008) (adopting this position for a majority of the Court).




FN26. McAnly offers one reason why Congress may have chosen to preempt such state law claims:
Since various parts of the federal statute require consumer reporting agencies and information users to disclose information to consumers under certain circumstances, this section guarantees that the agencies or users cannot be sued for those required disclosures under state tort law. It makes sense that acts required to be done by the FCRA are immunized from state tort liability.



77 F.Supp.2d at 814–15. However illuminating this explanation may be, it does not help resolve the apparent conflict between §§ 1681h(e) and 1681t(b)(1)(F).

In the end, we need not decide this issue. As we conclude below, even if Gorman could bring a state law libel claim under § 1681h(e), and such a claim were not preempted by § 1681t(b)(1)(F), he has not introduced sufficient evidence to survive summary judgment on this claim.



2. Evidence

Under California law, “[l]ibel is a false and unprivileged publication ... which exposes*1168 any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.” Cal. Civ.Code § 45. Even if Gorman's libel claim is not preempted by § 1681t(b)(1)(F), it is still subject to § 1681h(e), and so he must prove, in addition to the common law elements of libel, that the information was “false” and “furnished with malice or willful intent to injure.”


[13] Headnote Citing References The FCRA does not define the appropriate standard for “malice.” The two circuits that have interpreted § 1681h(e) have applied the standard enunciated in New York Times v. Sullivan, 376 U.S. 254, 279–80, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), requiring the publication be made “with knowledge that it was false or with reckless disregard of whether it was false or not.” See Morris v. Equifax Info. Servs., LLC, 457 F.3d 460, 471 (5th Cir.2006); Thornton v. Equifax, Inc., 619 F.2d 700, 705 (8th Cir.1980). Under New York Times, to show “reckless disregard,” a plaintiff must put forth “sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.” St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968); see also Morris, 457 F.3d at 471 (applying St. Amant ). We agree with the courts that have adopted the New York Times standard for purposes of § 1681h(e), and so apply it here.


Gorman's libel claim is based on two pieces of information reported by MBNA: the underlying debt itself and the reporting of the debt without a notation that it was disputed.


[14] Headnote Citing References As to the debt itself, there is no evidence that MBNA knew the debt was false or acted with reckless disregard as to its falsity. As an initial matter, the bulk of the delinquent debt—about $5,000—derives from non-disputed credit card purchases, unrelated to the disputed Four Peaks charge. Gorman contends that he does not owe these charges, claiming an offset for his attorneys' fees incurred in the dispute over the Four Peaks debt. But he has presented no authority whatever supporting his entitlement to these fees, nor any evidence that these fees are reasonable. Absent any evidence or colorable argument that this portion of the debt to MBNA was invalid, no reasonable jury could find that MBNA acted maliciously in reporting this portion of the debt to the CRAs.


Gorman has also failed to introduce sufficient evidence of malice with respect to the remaining portion of the debt, the roughly $750 disputed Four Peaks charge. Even assuming that the debt was indeed invalid, we cannot say that a reasonable jury could conclude that MBNA acted with “reckless disregard” as to the invalidity of the debt.FN27


FN27. We do not decide whether the debt related to the Four Peaks charge is valid, as the question is not before us.




MBNA conducted an investigation into Gorman's dispute in which it contacted both Gorman and Four Peaks. As a result of the investigation, it initially agreed to remove the charges, reinstating them only after learning that Gorman had failed to return the merchandise. The remaining controversy involves a legal and factual disagreement between Gorman and Four Peaks.FN28 MBNA did not act recklessly by *1169 failing to wade through this complex legal and factual debate. See Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1069 (9th Cir.1992) (concluding that a furnisher does not act with malice when it takes “reasonable steps to verify the information” in its credit report). That it reposted the debt in reliance on Four Peaks's version rather than resolving the dispute in Gorman's favor does not demonstrate that MBNA “entertained serious doubts as to the truth of [its] publication.” St. Amant, 390 U.S. at 731, 88 S.Ct. 1323.


FN28. Gorman's essential claim is that in rejecting the goods and making them available to Four Peaks for pickup, he has done all that is required under California law. See Cal. Com.Code § 2602 (“If the buyer has before rejection taken physical possession of the goods ... he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them.”). Four Peaks claimed to have sent Gorman pre-paid shipping labels for the defective merchandise's return, but insisted that Gorman would have to pay to return the replacement equipment it claims to have sent. Gorman insists that he did not receive any replacement merchandise or shipment labels and, in any event, he refuses to pay any shipping costs.




Additionally, even if MBNA violated its obligations to report that Gorman disputed the debt, this failure does not render the information that was reported “false” so as to support a libel claim meeting the § 1681h(e) malice standard. The obligation to report a disputed debt is a protective regulatory requirement imposed by the FCRA. § 1681s–2(a)(3); see also 12 C.F.R. § 226.13. Any failure by MBNA to meet this requirement may render its reporting deficient under the statute, but it does not render the information MBNA did furnish maliciously or wilfully false. So long as the creditor has a good faith reason for believing that the debt is in fact owed, reporting the debt without reporting the dispute does not convey “false” information “with malice or willful intent to injure the consumer.” See Francis v. Dun & Bradstreet, Inc., 3 Cal.App.4th 535, 4 Cal.Rptr.2d 361, 364 (1992) (holding that a defamation claim cannot be sustained for truthful information in a credit report, even if the information reported supports misleading inferences).


Gorman has offered no evidence that MBNA seriously doubted that the debt was owed, or that MBNA believed Gorman had a meritorious dispute. The record suggests instead that MBNA investigated the debt and determined that it was valid. Despite its conclusion, MBNA may still have faced a regulatory obligation to report the continuing dispute, but its failure to do so was not malicious.


Gorman's sole evidence of MBNA's malice or intent to injure is the statement in his declaration that an MBNA representative told him, during a collection call, “We're a big bank. You either pay us or we'll destroy your credit.” But this incident does not evidence a knowledge on MBNA's part that the debt was not valid. In the context of other evidence in the record—including Gorman's refusal to pay any of his credit card bill because of supposed attorneys' fees owed him by MBNA—there is no basis for concluding that MBNA issued that threat knowing no debt was due or recklessly disregarding the invalidity of the debt.


As Gorman cannot state a claim for libel consistent with the limited exception contained in § 1681h(e) of the FCRA, we affirm the district court's grant of summary judgment to MBNA on Gorman's libel claim.



C. California Civil Code § 1785.25(a)

[15] Headnote Citing References Finally, Gorman brings a claim under California Civil Code section 1785.25(a), which provides:


A person shall not furnish information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate.


Section 1681t(b)(1)(F), the FCRA's preemption provision, expressly exempts this subsection—California Civil Code section 1785.25(a)—from its general exclusion of state law claims on matters governed by § 1681s–2.FN29


FN29. As noted above, § 1681t(b)(1)(F) provides:
No requirement or prohibition may be imposed under the laws of any State ... with respect to any subject matter regulated under ... section 1681s–2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply—




(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on September 30, 1996); or




(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996).



The Massachusetts statute sets forth procedures to ensure accuracy of information reported to consumer reporting agencies.

*1170 On MBNA's motion to dismiss, the district court nevertheless held the California statutory claim preempted, because the private right of action to enforce California Civil Code section 1785.25(a) is found in other sections not specifically exempted from the federal preemption provision, namely, California Civil Code sections 1785.25(g) FN30 and 1785.31. FN31 Because these specific sections were not excluded from the preemption section of the FCRA, the district court concluded, violations of California Civil Code section 1785.25(a) could only be enforced by federal or state officials. Gorman I, 370 F.Supp.2d at 1010–11.


FN30. Section 1785.25(g) provides:
A person who furnishes information to a consumer credit reporting agency is liable for failure to comply with this section, unless the furnisher establishes by a preponderance of the evidence that, at the time of the failure to comply with this section, the furnisher maintained reasonable procedures to comply with those provisions.




FN31. Section 1785.31 provides that “[a]ny consumer who suffers damages as a result of a violation of this title by any person may bring an action” to recover damages.




We do not find the district court's reasoning persuasive. As an initial matter, the court did not cite any provision of California law authorizing enforcement of section 1785.25(a) by state officials. Lin v. Universal Card Services Corp., 238 F.Supp.2d 1147 (N.D.Cal.2002), on which the district court relied, similarly fails to identify authorization for enforcement by state officials. Such authorization may reside elsewhere in California law, but if it does, it almost surely lies in provisions also not specifically excluded by the FCRA preemption provision. The district court's analysis would thus lead to the conclusion that Congress explicitly retained the portions of the California statutory scheme that create obligations, without leaving in place any enforcement mechanism. This would be an unlikely result at best. FN32


FN32. In Islam v. Option One Mortgage Corp., 432 F.Supp.2d 181 (D.Mass.2006), the court examined the Massachusetts provision, Mass. Gen. Law 93 § 54A(a), that is also excluded from § 1681t(b)(1)(F). As with the California statute, the FCRA explicitly identifies the portion of the Massachusetts statute that creates the reporting obligations for furnishers, but does not expressly mention the section that provides for private enforcement. Id. at 185–86. The court held that absent any evidence that state officials were authorized to enforce this provision, the construction urged by the district court here could not stand: “it is absurd to conclude that Congress would have explicitly excepted [Mass. Gen. Law 93 § 54A(a) ] while not leaving an enforcement mechanism.” Id. at 189. Finding that the parties stipulated to the Attorney General's authority, however, Islam held the private state claim preempted. Id.


The Islam court also felt itself constrained by the First Circuit's affirmance of Gibbs v. SLM Corp., 336 F.Supp.2d 1 (D.Mass.2004), aff'd, Gibbs v. SLM Corp., No. 05–1057, 2005 WL 5493113 (1st Cir. Aug.23, 2005), which also construed § 1681t(b)(1)(F) as preempting private causes of action under the Massachusetts statute, and was summarily affirmed by the First Circuit without analysis. As we engage in more thorough statutory construction analysis, we reach a different conclusion.

Moreover, the district court construed the statutory exception in isolation, disregarding the affirmative preemption language of the statute that “ [n]o requirement*1171 or prohibition may be imposed” with respect to subjects regulated under § 1681s–2. (emphasis added). Neither California Civil Code section 1785.25(g) nor section 1785.31 imposes a “requirement or prohibition.” Rather, these sections merely provide a vehicle for private parties to enforce other sections, which do impose requirements and prohibitions. In other words, Congress had no need to include these enforcement provisions in the § 1681t(b)(1)(F) exception to save the California statutory scheme from preemption, because those provisions were not preempted by the affirmative language of the preemption provision. By the plain language of the statute, therefore, these sections are not preempted by § 1681t(b)(1)(F).


MBNA argues that this plain reading of the statute is foreclosed by the Supreme Court's decision in Cipollone. Interpreting the phrase “any requirement or prohibition” in the Federal Cigarette Label and Advertising Act, a majority of the Cipollone Court held that common law damages actions can impose “requirement[s] or prohibition[s],” because “regulation can be as effectively exerted through an award of damages as through some form of preventive relief.” 505 U.S. at 521, 112 S.Ct. 2608 (plurality opinion) (citation omitted).FN33 But, as the court later made clear in a majority opinion relying on the Cipollone plurality's discussion on this point, it is not the common law enforcement mechanisms that are requirements or prohibitions, but the “common law duties ” underlying such actions. Riegel v. Medtronic, Inc., 552 U.S. 312, 128 S.Ct. 999, 1008, 169 L.Ed.2d 892 (2008) (emphasis added). As Riegel went on to explain, again relying on the Cipollone plurality, “common-law liability is premised on the existence of a legal duty, and a tort judgment therefore establishes that a defendant has violated a state-law obligation.” Id. (quoting Cipollone, 505 U.S. at 522, 112 S.Ct. 2608) (emphasis added). Thus, a “requirement” is “a rule of law that must be obeyed,” Bates v. Dow Agrosciences LLC, 544 U.S. 431, 445, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005), whether it arises from common law principles enforceable in damages actions or in a statute. But the damages remedy itself is not a “requirement or prohibition.”


FN33. Although only a plurality of the Court signed onto the portion of the opinion containing this specific language, a majority of justices adopted the position that the language “requirement or prohibition” sweeps broadly enough to encompass state common-law rules. See Cipollone, 505 U.S. at 548–49, 112 S.Ct. 2608 (Scalia and Thomas, JJ., concurring in the judgment in part and dissenting in part).




Here, it is California Civil Code section 1785.25(a), and only section 1785.25(a), that imposes legal duties—“rule[s] of law that must be obeyed”—on furnishers of information. Congress explicitly saved this section from preemption in the FCRA. Private enforcement of these obligations does not impose “requirement[s] or prohibition[s]” but, instead, provides enforcement mechanisms for “requirement[s] or prohibition[s] imposed separately.” Sections 1785.25(g) and 1785.31 do not impose any additional standards “designed to be ... potent method[s] of governing conduct and controlling policy,” Riegel, 128 S.Ct. at 1008, nor do these sections require furnishers to obey any additional rules of law. The rules that must be obeyed already exist in the reporting obligations specified by section 1785.25(a) and saved in the FCRA. See Bates, 544 U.S. at 445, 125 S.Ct. 1788.


MBNA's argument that Congress's desire for uniformity and consistency compels an alternative construction is also unpersuasive in this context. MBNA maintains that the FCRA preemption provision evidences a desire for uniform *1172 credit reporting obligations, and that the California statute was saved only because it was not inconsistent with obligations imposed by the federal statute. The legislative history surrounding § 1681t(b)(1)(F) is murky, but there is evidence that the statutory scheme, which establishes national requirements and preempts most state regulation, was motivated at least in part by a desire for uniformity of reporting obligations. See S.Rep. No. 103–209, at 7 (1993) (“Recognizing the national scope of the consumer reporting industry and the benefits of uniformity, the Committee bill includes provisions preempting state law in several key areas of the FCRA.”). It is also true that the excepted state law provisions are largely consistent with obligations imposed in the FCRA; indeed, the requirements imposed in the California and Massachusetts laws appear, in nearly identical fashion, in § 1681s–2(a).FN34


FN34. Compare Cal. Civ.Code section 1785.25(a) (“A person shall not furnish information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate.”), and Mass. Gen. Law 93 § 54A(a) (“Every person who furnishes information to a consumer reporting agency shall follow reasonable procedures to ensure that the information reported to a consumer reporting agency is accurate and complete. No person may provide information to a consumer reporting agency if such person knows or has reasonable cause to believe such information is not accurate or complete.”), with § 1681s–2(a)(1)(A) (“A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.”).
As MBNA indicates, when the California exception was added in 1996, the relevant portion of the FCRA was worded differently. See 15 U.S.C. § 1681s–2(a)(1)(A) (1996) (prohibiting furnishing of information that furnisher “knows or consciously avoids knowing” is inaccurate). Congress later amended the FCRA to more closely track the language of the California statute. MBNA argues that it was originally reasonable for Congress expressly to exclude the California statute from preemption simply because it imposed broader, and potentially inconsistent, obligations on furnishers. Although this may be true, when Congress later amended the FCRA essentially to match the California statute, it did not then remove the California exception, as it could have done. The decision to retain the exception for California Civil Code section 1785.25(a) thus suggests that Congress likely intended to preserve the remaining unique provisions of the California scheme, including the private enforcement provisions.




But the difference between the California statute and the FCRA regarding remedies does not offend the purported goal of uniformity of credit reporting obligations. The enforcement sections do not impose inconsistent or conflicting obligations on furnishers of information; as we have noted, they impose no such requirements or prohibitions at all. As such, the enforcement provisions do not add to a patchwork of confusing obligations with which a furnisher must struggle to comply. They instead allow for additional avenues through which consumers can ensure that furnishers are complying with the obligations Congress specifically meant to impose.


Moreover, exempting specific state statutes from preemption is very unusual in federal statutes. To suppose Congress would do so for little or no purpose—as would be the case if the private cause of action under California law were preempted—is simply not plausible. See Geier v. Am. Honda Motor Co., 529 U.S. 861, 868, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000) (“The saving clause assumes that there are some significant number of ... cases to save.”).


[16] Headnote Citing References Because the plain language of the preemption provision does not apply to private rights of action, and because the *1173 likely purpose of the express exclusion was precisely to permit private enforcement of these provisions, we hold that the private right of action to enforce California Civil Code section 1785.25(a) is not preempted by the FCRA.FN35


FN35. On petition for rehearing en banc, MBNA raises for the first time an argument that allowing private enforcement of California Civil Code section 1785.25(a) is inconsistent with the purpose of the FCRA and thus is preempted under both FCRA § 1681t(a) and ordinary conflict preemption provisions. MBNA did not advance this contention before us initially, so the argument is waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir.1999).


Even if we were to entertain MBNA's conflict preemption argument, however, we would reject it for several reasons. First, a complete reading of the statutory language continues to convince us that Congress intended to except the California statute—including the private enforcement provisions—from preemption. As we note, the remedial provisions do not impose any “requirement[s] or prohibition[s]” on furnishers of information as those terms are ordinarily understood, and so the private enforcement provisions do not fall within the statute's express preemption provision. Even more importantly, the savings provision, § 1681t(b)(1)(F)(ii), provides that FCRA's preemption provisions do not apply “with respect to” California Civil Code section 1785.25(a). Unlike other state laws expressly saved by the exceptions to the express preemption provision, which, for example, state that the FCRA “shall not apply to any State law in effect on September 30, 1996,” see § 1681t(b)(1)(E) (emphasis added), Congress used the broader “with respect to” language to refer to the California statute.



The most sensible understanding of this difference is that Congress intended for the exception to apply not only to the specific subsection mentioned in the statute, but also to California laws that operate “with respect to” that subsection, which would include the private enforcement sections. Where Congress saves a particular state law from preemption, it would be incoherent to hold that the state law is otherwise preempted because it was somehow “inconsistent” with an overarching congressional purpose.



Second, MBNA directs us to FCRA § 1681s(c) to support its contention that the FCRA preserves state law enforcement officials' powers to enforce California Civil Code section 1785.25(a).



Section 1681s(c) provides, in relevant part, “In addition to other remedies as are provided under State law, if the chief law enforcement officer of a State ... has reason to believe that any person has violated or is violating this subchapter, the State [may bring actions to enjoin the violation and recover damages].”



We think this provision supports, rather than undermines, the position that the FCRA does not preempt private enforcement of the California statute. If anything, section 1681s(c) provides authorization for state officials to enforce violations of the FCRA, while at the same time preserving “other remedies as are provided under State law,” including private enforcement remedies for state law violations: Importantly, section 1681s(c) does not refer to “other remedies as are provided to chief law enforcement officers under State law.” In other words, to the extent that Congress saved a state liability rule from preemption, it intended also to save “other remedies as are provided under State law” to enforce those liability rules.



Third, the available legislative history and administrative interpretation of the FCRA supports our holding concerning the scope of the FCRA preemption provisions. The Senate report concluded that “no State law would be preempted [by the FCRA] unless compliance would involve a violation of Federal law.” S.Rep. No. 97–517, at 12 (1969). The Federal Trade Commission, charged with enforcing the FCRA, similarly understands the “basic rule” governing preemption under the FCRA: Section 1681t(a) preempts state law “only when compliance with inconsistent state law would result in a violation of the FCRA.” 16 C.F.R. pt. 600 appx. § 622 ¶ 1. As we note, permitting private enforcement of state law obligations that are nearly identical to the FCRA's obligations would not require furnishers to violate the FCRA to comply with state law.


D. Evidence of Causation/Damages

Finally, MBNA proposes an alternative ground on which to affirm all claims: that Gorman failed in the summary judgment proceedings to submit admissible*1174 evidence of causation or damages. In Dennis v. BEH–1, LLC, 520 F.3d 1066, 1069–70 (9th Cir.2008), this court found sufficient evidence of causation and damages to survive summary judgment where:


Dennis [the plaintiff] testified that he hoped to start a business and that he diligently paid his bills on time for years so that he would have a clean credit history when he sought financing for the venture. The only blemish on his credit report in April 2003 was the erroneously reported judgment. According to Dennis, that was enough to cause several lenders to decline his applications for credit, dashing his hopes of starting a new business. Dennis also claims that Experian's error caused his next landlord to demand that Dennis pay a greater security deposit.


Here, Gorman submitted evidence that he was refused credit or offered higher than advertised interest rates; the explanations given by the creditors were delinquencies on his credit report; and the only delinquency is the MBNA account. Gorman maintains that he had to borrow money at inflated interest rates, and that he lost wages from the time spent dealing with his credit problems. Under Dennis, this is sufficient to establish causation and damages.



III. CONCLUSION

For the foregoing reasons, we AFFIRM in part and REVERSE in part the district court's order.


584 F.3d 1147, 09 Cal. Daily Op. Serv. 12,858, 2009 Daily Journal D.A.R. 15,027
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Re: Business-related Damages are Compensable

Postby Administrator » Tue Sep 23, 2014 11:24 am

Gorman v. Wolpoff & Abramson, LLP
552 F.3d 1008
C.A.9 (Cal.),2009.
January 12, 2009

Appeal from the United States District Court for the Northern District of California; James Ware, District Judge, Presiding. D.C. No. CV-04-04507-JW.
Before: RICHARD A. PAEZ and MARSHA S. BERZON, Circuit Judges, and HAROLD BAER,FN* District Judge.


FN* The Honorable Harold Baer, Jr., Senior United States District Judge for the Southern District of New York, sitting by designation.

BERZON, Circuit Judge:

John Gorman tried to buy a satellite television system using his credit card, *1011 issued by MBNA America Bank. He was unsatisfied with the system purchased, and lodged a challenge with MBNA to dispute the charge. Unhappy with MBNA's response, Gorman instituted this lawsuit against MBNA, alleging violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x, libel, and violations of Cal. Civ.Code section 1785.25(a). The district court dismissed his California statutory claim and granted MBNA summary judgment on the other causes of action. Gorman v. Wolpoff & Abramson, LLP (“ Gorman I ”), 370 F.Supp.2d 1005 (N.D.Cal.2005); Gorman v. Wolpoff & Abramson, LLP (“ Gorman II ”), 435 F.Supp.2d 1004 (N.D.Cal.2006). We affirm in part and reverse in part.



I. BACKGROUND

In December 2002, John Gorman paid for the delivery and installation of a new satellite TV system on a Visa credit card issued by MBNA America Bank (“MBNA”). The charge, $759.70, was posted on his January 2003 credit card statement. According to Gorman, the merchant, Four Peaks Home Entertainment (“Four Peaks”), delivered a used and defective TV system and botched the installation, damaging his house in the process. Gorman told Four Peaks he was refusing delivery of the goods and asked for a refund, but Four Peaks refused to refund the charges unless Gorman arranged to return the TV system. The defective equipment is still in Gorman's possession.FN1


FN1. MBNA claims that Four Peaks shipped Gorman new, replacement equipment and that Gorman retains both the defective and replacement equipment. Gorman disputes having received any replacement system. Gorman also claims that he made the merchandise available to Four Peaks for pickup, and that doing so was sufficient to require a refund under Cal. Com.Code section 2602(2)(b) (“If the buyer has before rejection taken physical possession of goods in which he does not have a security interest under the provisions of this division (subdivision (3) of Section 2711), he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them.”). He also testified in his deposition that Four Peaks never sent him pre-paid shipping labels. It is not clear whether he would have shipped the merchandise back had he received such labels.




In February 2003, Gorman notified MBNA that he was disputing the charges and submitted copies of emails between himself and Four Peaks. The attached emails showed that Gorman had informed a Four Peaks representative that the delivered goods were “unacceptable and [were] rejected.” He also noted damage from the installation and notified Four Peaks that he “plan[ned] to dispute the credit card charges in their entirety, as the damage exceeds the amount of the charges.”


MBNA responded to the dispute notice with a request for additional information from Gorman about the dispute, including proof that the merchandise had been returned. A month passed, and MBNA wrote Gorman again, stating that as he had not responded, it assumed the charge was no longer disputed. Gorman answered that he continued to dispute the charge, and referred MBNA to his original notice of dispute. He did not claim to have returned the equipment, but stated that the merchandise “has been available for the merchant to pick up.” MBNA again requested proof that the goods had been returned; Gorman did not reply.


In April 2003, MBNA informed Gorman that it was “unable to assist [him] because the merchandise has not been returned to the merchant.” Gorman called an MBNA *1012 representative saying, again, that all relevant information was in his original letter. MBNA then contacted Four Peaks, which told MBNA that it had shipped replacement equipment to Gorman but that he had not sent the old equipment back to them.


In July 2003, MBNA again informed Gorman that it could not obtain a credit on his behalf without further information from him. Gorman, who is a lawyer, responded in writing on his law firm's letterhead, stating that MBNA had all the information it needed, that he had left several unanswered messages with MBNA asking to speak with someone about the dispute, and that he would “never” pay the disputed charge. He further stated that MBNA had violated the Fair Credit Billing Act, that he was “entitled to recover attorneys' fees for MBNA's violation,” and that he was offsetting his legal fees against his current account balance and so would make no more payments on the card, for the TV system or anything else.FN2 The balance at that time was more than $6,000.FN3


FN2. Gorman has not indicated any specific basis for his fees claim. He refused to answer questions at his deposition about whether these fees were for services he had personally performed, claiming attorney-client and work product privilege. No suit had been filed at the time Gorman claimed entitlement to these fees.




FN3. As far as the record reveals, the entire balance remains unpaid.




Gorman's letter to MBNA worked, at least temporarily. In August 2003, MBNA removed the Four Peaks charge and related finance charges and late fees from Gorman's credit card bill. Over the next two months, MBNA again contacted Four Peaks, which once more informed MBNA that it would not issue a credit for Gorman's charge until he returned the refused equipment. When MBNA called Gorman, he informed them he had the merchandise and “ha[d] no intention of ever [returning] it.” In October, MBNA reposted the charge to Gorman's account.


After he stopped making payments on his card, Gorman claims, he received numerous harassing phone calls. During one of these calls, Gorman alleges, an MBNA representative told him, “We're a big bank. You either pay us or we'll destroy your credit.”


In January 2004, MBNA reported Gorman's account to the credit reporting agencies (“CRAs”) as “charged-off.” FN4 Between May 2004 and November 2005, Gorman informed the three major credit reporting agencies (Equifax, TransUnion, and Experian) that their credit reports included inaccurate information.


FN4. MBNA also referred the debt to a law firm, Wolpoff & Abramson, for collection. The firm's attempt to collect the debt gave rise to unfair debt collection practices claims in Gorman's complaint. Gorman does not appeal the district court's entry of judgment against him on these claims.




As required by federal law, the CRAs sent MBNA notices of dispute containing descriptions of Gorman's complaints (as understood by the CRAs) and asking the bank to verify the accuracy of his account records. MBNA responded by reviewing the account records and notes. After ascertaining that its prior investigation did not support Gorman's claimed dispute, MBNA notified the CRAs that the delinquency was not an error. According to Gorman, MBNA did not notify the CRAs that the charges remained in dispute, and the CRAs did not list the charges as disputed.FN5


FN5. Gorman did not initially supply the district court with his credit reports. In support of his motion to reconsider the district court's summary judgment order, however, Gorman submitted copies of his credit reports, which include no indication that the MBNA account is disputed.




*1013 Since his credit reports began listing his MBNA account as delinquent, Gorman has been denied credit altogether or offered only high interest rates on at least three occasions. He contends that the MBNA account is the only negative entry on his credit report.


In September 2004, Gorman sued MBNA. The complaint alleges violations of the federal Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681x and a California credit reporting law, Cal. Civ.Code section 1785.25(a), and also alleges a claim for libel. Gorman seeks injunctive relief, damages resulting from MBNA's reporting of his account, and damages from lost wages for the time he spent dealing with his credit that he would have otherwise spent billing clients. The district court dismissed Gorman's California statutory claim as preempted and granted MBNA summary judgment on all other claims. Gorman timely appeals.


For the reasons stated below, we affirm in part and reverse in part the district court's grant of summary judgment on the FCRA claims; we affirm the district court's grant of summary judgment on Gorman's libel claim; and we reverse the district court's dismissal of Gorman's California statutory claim.



II. ANALYSIS

This case comes to us on summary judgment. We review a grant of summary judgement de novo. Bodett v. CoxCom, Inc., 366 F.3d 736, 742 (9th Cir.2004). Summary judgement is appropriate where, “drawing all reasonable inferences supported by the evidence in favor of the non-moving party,” the court finds “that no genuine disputes of material fact exist and that the district court correctly applied the law.” Id. (internal quotation omitted). The non-moving party “must make a showing sufficient to establish a genuine dispute of material fact regarding the existence of the essential elements of his case that he must prove at trial.” Galen v. County of Los Angeles, 477 F.3d 652, 658 (9th Cir.2007) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 321-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)).


[1] Questions of statutory interpretation and federal preemption are, of course, reviewed de novo. J & G Sales Ltd. v. Truscott, 473 F.3d 1043, 1047 (9th Cir.2007); Davis v. Yageo Corp., 481 F.3d 661, 673 (9th Cir.2007).



A. Fair Credit Reporting Act Claims


1. Statutory Background

Congress enacted the Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §§ 1681-1681x,FN6 in 1970 “to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 2205, 167 L.Ed.2d 1045 (2007). As an important means to this end, the Act sought to make “consumer reporting agencies exercise their grave responsibilities [in assembling and evaluating consumers' credit, and disseminating information about consumers' credit] with fairness, impartiality, and a respect for the consumer's right to privacy.” 15 U.S.C. § 1681(a)(4). In addition, to ensure that credit reports are accurate, the FCRA imposes some duties on the sources that provide credit information to CRAs, called “furnishers” in the statute.FN7 *1014 Section 1681s-2 sets forth “[r]esponsibilities of furnishers of information to consumer reporting agencies,” delineating two categories of responsibilities.FN8 Subsection (a) details the duty “to provide accurate information,” and includes the following duty:


FN6. All references to the FCRA hereafter are to 15 U.S.C.




FN7. “The most common ... furnishers of information are credit card issuers, auto dealers, department and grocery stores, lenders, utilities, insurers, collection agencies, and government agencies.” H.R.Rep. No. 108-263, at 24 (2003).




FN8. This section was added by the Consumer Credit Reporting Reform Act of 1996, Pub.L. No. 104-208, § 2413, 110 Stat. 3009-447. Additional amendments, not relevant here, were made by the Fair and Accurate Credit Transactions Act of 2003, Pub.L. No. 108-159, 117 Stat. 1952.




(3) Duty to provide notice of dispute

If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.


§ 1681s-2(a)(3).

Section 1681s-2(b) imposes a second category of duties on furnishers of information. These obligations are triggered “upon notice of dispute”-that is, when a person who furnished information to a CRA receives notice from the CRA that the consumer disputes the information. See § 1681i(a)(2) (requiring CRAs promptly to provide such notification containing all relevant information about the consumer's dispute). Subsection 1681s-2(b) provides that, after receiving a notice of dispute, the furnisher shall:


(A) conduct an investigation with respect to the disputed information;



(B) review all relevant information provided by the [CRA] pursuant to section 1681i(a)(2) ...;



(C) report the results of the investigation to the [CRA];



(D) if the investigation finds that the information is incomplete or inaccurate, report those results to all other [CRAs] to which the person furnished the information ...; and



(E) if an item of information disputed by a consumer is found to be inaccurate or incomplete or cannot be verified after any reinvestigation under paragraph (1) ... (i) modify ... (ii) delete[or] (iii) permanently block the reporting of that item of information [to the CRAs].


§ 1681s-2(b)(1). These duties arise only after the furnisher receives notice of dispute from a CRA; notice of a dispute received directly from the consumer does not trigger furnishers' duties under subsection (b). See id.; Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1059-60 (9th Cir.2002).


The FCRA expressly creates a private right of action for willful or negligent noncompliance with its requirements. §§ 1681n & o; see also Nelson, 282 F.3d at 1059. However, § 1681s-2 limits this private right of action to claims arising under subsection (b), the duties triggered upon notice of a dispute from a CRA. § 1681s-2(c) (“Except[for circumstances not relevant here], sections 1681n and 1681 o of this title do not apply to any violation of ... subsection (a) of this section, including any regulations issued thereunder.”). Duties imposed on furnishers under subsection (a) are enforceable only by federal or state agencies.FN9 See § 1681s-2(d).


FN9. Nelson explained the likely reason for allowing private enforcement of subsection (b) but not subsection (a) as follows:
Congress did not want furnishers of credit information exposed to suit by any and every consumer dissatisfied with the credit information furnished. Hence, Congress limited the enforcement of the duties imposed by § 1681s-2(a) to governmental bodies. But Congress did provide a filtering mechanism in § 1681s-2(b) by making the disputatious consumer notify a CRA and setting up the CRA to receive notice of the investigation by the furnisher. See 15 U.S.C. § 1681i(a)(3) (allowing CRA to terminate reinvestigation of disputed item if CRA “reasonably determines that the dispute by the consumer is frivolous or irrelevant”). With this filter in place and opportunity for the furnisher to save itself from liability by taking the steps required by § 1681s-2(b), Congress put no limit on private enforcement under §§ 1681n & o.



Nelson, 282 F.3d at 1060.

*1015 Gorman alleges that MBNA violated several of the FCRA “furnisher” obligations. We hold that some of the alleged violations survive summary judgment and some do not.



2. MBNA's “investigation” upon notice of dispute

Gorman's first allegation is that MBNA did not conduct a sufficient investigation after receiving notice from the CRAs that he disputed the charges, as required by § 1681s-2(b)(1)(A). As Gorman's claim arises under subsection (b), it can be the basis for a private lawsuit. See Nelson, 282 F.3d at 1059-60. We must decide (1) whether § 1681s-2(b)(1)(A) requires a furnisher to conduct a “reasonable” investigation, and if so, (2) whether a disputed issue of material fact exists as to the reasonableness of MBNA's investigation.



a. Must an Investigation be Reasonable?

[2] The text of the FCRA states only that the creditor shall conduct “an investigation with respect to the disputed information.” § 1681s-2(b)(1)(A). MBNA urges that because there is no “reasonableness” requirement expressly enunciated in the text, the FCRA does not require an investigation of any particular quality; any investigation into a consumer's dispute-even an entirely unreasonable one-satisfies the statute.


This court has not addressed MBNA's contention about the FCRA's investigation requirement.FN10 But, MBNA made-and lost-the same argument before the Fourth Circuit. Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429-31 (4th Cir.2004). Concluding that the statute includes a requirement that a furnisher's investigation not be unreasonable, the Fourth Circuit first noted that the plain meaning of the term “investigation” is a “ ‘detailed inquiry or systematic examination,’ ” which necessarily “requires some degree of careful inquiry.” Id. at 430 (quoting Am. Heritage Dictionary 920 (4th ed.2000)). Second, the Fourth Circuit reasoned that because the purpose of the provision is “to give consumers a means to dispute-and, ultimately, correct-inaccurate information on their credit reports,” id. at 430-31, a “superficial, un reasonable inquir[y]” would hardly satisfy Congress' objective. Id. at 431. The Seventh Circuit, without discussing the issue, has also found an implicit reasonableness requirement. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir.2005) (“Whether a defendant's investigation [pursuant to § 1681s-2(b)(1)(A) ] is reasonable is a factual question normally reserved for trial.”); see also Johnson, 357 F.3d at 430 n. 2 (“[D]istrict courts that have considered the issue have consistently recognized that the creditor's investigation must be a reasonable one.” (citing cases)).


FN10. District courts in this circuit have assumed that § 1681s-2(b)(1)(A) requires a reasonable investigation. See, e.g., Smith v. Ohio Sav. Bank, No. 2:05-cv-1236, 2008 WL 2704719, at *2 (D.Nev. July 7, 2008); Thomas v. U.S. Bank, N.A., No. CV 05-1725, 2007 WL 764312, at *4 (D.Or. Mar. 8, 2007).




The Fourth Circuit's reasoning in Johnson is entirely persuasive. By its ordinary meaning, an “investigation” requires an inquiry likely to turn up information about the underlying facts and positions of the parties, not a cursory or sloppy review of the dispute. Moreover, like the Fourth Circuit, we have observed that “a primary purpose for the FCRA [is] to protect consumers against inaccurate and incomplete *1016 credit reporting.” Nelson, 282 F.3d at 1060. A provision that required only a cursory investigation would not provide such protection; instead, it would allow furnishers to escape their obligations by merely rubber stamping their earlier submissions, even where circumstances demanded a more thorough inquiry.


MBNA counters by pointing to § 1681i(a)(1)(A), which provides, in relevant part (with emphasis added):


[I]f 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, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate....


Thus, MBNA argues, Congress specified a “reasonable” investigation in another part of the statute, and purposely chose not to do so for furnishers of information.


[3] It is most often the case that “[w]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (internal quotation and citation omitted). But we should be careful not to read too much into the apparent disparity in language upon which MBNA relies. Where, as here, there are convincing alternative explanations for a difference in statutory language, the presumption applies with much less force. See Field v. Mans, 516 U.S. 59, 67-69, 116 S.Ct. 437, 133 L.Ed.2d 351 (1995) (“Without more, the [negative] inference might be a helpful one. But [where] there is more ... the negative pregnant argument should not be elevated to the level of interpretive trump card.”).


As we have noted, the term “investigation” on its own force implies a fairly searching inquiry. It is thus likely that, if anything, the “reasonable” qualifier with regard to re investigations by CRAs signals a limitation on the CRAs' duty, not an expansion of it beyond what “investigation” itself would signal. And, indeed, the statute goes on to spell out the CRA's investigative duty in some detail, requiring, inter alia, that the CRA provide notification of the dispute within five business days of receipt of notice of a dispute. The furnisher's investigation obligation under § 1681 is triggered by receiving the CRA notification, required as a central aspect of the CRA's own investigation, and includes the obligation to “report the results of [its] investigation to the [CRA].” § 1681s2-(b)(1)(C). In other words, the CRA's “reasonable reinvestigation” consists largely of triggering the investigation by the furnisher. It would make little sense to deem the CRA's investigation “reasonable” if it consisted primarily of requesting a superficial, unreasonable investigation by the furnisher of the information.


Nevertheless, MBNA urges that “Congress intended to impose a more rigorous duty of investigation on CRAs than on furnishers of information.” But MBNA does not tell us why Congress would mandate shoddy or superficial furnisher investigations, not calculated to resolve or to explain the actual disagreement or to aid in the CRA's “reasonable reinvestigation.” Indeed, as the statute recognizes, the furnisher of credit information stands in a far better position to make a thorough investigation of a disputed debt than the CRA does on reinvestigation. With respect to the accuracy of disputed information, the CRA is a third party, lacking any direct relationship with the consumer, and its *1017 responsibility is to “ reinvestigate” a matter once already investigated in the first place. § 1681i(a)(1) (emphasis added). It would therefore make little sense to impose a more rigorous requirement on the CRAs than the furnishers. Instead, the more sensible conclusion is that, if anything, the “reasonable” qualifier attached to a CRA's duty to reinvestigate limits its obligations on account of its third-party status and the fact that it is repeating a task already completed once. Requiring furnishers, on inquiry by a CRA, to conduct at least a reasonable, non-cursory investigation comports with the aim of the statute to “protect consumers from the transmission of inaccurate information about them.” Kates v. Crocker Nat'l Bank, 776 F.2d 1396, 1397 (9th Cir.1985).


We thus follow the Fourth and Seventh Circuits and hold that the furnisher's investigation pursuant to § 1681s-2(b)(1)(A) may not be unreasonable.



b. MBNA's Investigation was Reasonable

[4] As discussed, a furnisher's obligation to conduct a reasonable investigation under § 1681s-2(b)(1)(A) arises when it receives a notice of dispute from a CRA. Such notice must include “all relevant information regarding the dispute that the [CRA] has received from the consumer.” § 1681i(a)(2)(A). It is from this notice that the furnisher learns the nature of the consumer's challenge to the reported debt, and it is the receipt of this notice that gives rise to the furnisher's obligation to conduct a reasonable investigation. Accordingly, the reasonableness of the furnisher's investigation is measured by its response to the specific information provided by the CRA in the notice of dispute. The pertinent question is thus whether the furnisher's procedures were reasonable in light of what it learned about the dispute from the description in the CRA's notice of dispute. See Westra, 409 F.3d at 827 (“[The furnisher's] investigation in this case was reasonable given the scant information it received regarding the nature of[the consumer's] dispute.”).


MBNA received four notices of dispute regarding Gorman's account. Gorman argues that the district court erred in granting summary judgment as to the reasonableness of MBNA's investigation in response to these notices because triable issues of fact remain. We have held that “summary judgment is generally an inappropriate way to decide questions of reasonableness because ‘the jury's unique competence in applying the ‘reasonable man’ standard is thought ordinarily to preclude summary judgment.' ” In re Software Toolworks Inc., 50 F.3d 615, 621 (9th Cir.1994) (quoting TSC Indus. v. Northway, Inc., 426 U.S. 438, 450 n. 12, 96 S.Ct. 2126, 48 L.Ed.2d 757 (1976)). However, summary judgment is not precluded altogether on questions of reasonableness. It is appropriate “when only one conclusion about the conduct's reasonableness is possible.” Id. at 622; see also Westra, 409 F.3d at 827. We thus consider the sufficiency of MBNA's investigation with respect to each of the notices.



i. “Claims Company will Change”

[5] In a notice of dispute received May 13, 2004, TransUnion provided the following information concerning Gorman's MBNA account: “Claims company will change. Verify all account information.” The notice provided no further information about the nature of the dispute. In response to this notice, MBNA “review[ed] the account notes to determine whether MBNA had agreed to delete any charges or to modify the account information in any way.” It concluded that “[n]o such commitment had been made.” MBNA's review of the account information provided by TransUnion did reveal “some minor *1018 differences.” As a result, MBNA submitted updated address, date of birth, and account delinquency information to TransUnion.


The cursory notation, “[c]laims company will change,” provided no suggestion of the nature of Gorman's dispute with Four Peaks. We conclude therefore that a jury could not find MBNA's response unreasonable. MBNA reasonably read the vague notice as indicating that MBNA had previously agreed to change certain account information. MBNA's review of its internal account files to determine whether any such agreement had been reached was all that was required to respond reasonably to this notice of dispute. The account notes reveal that MBNA had communicated with Four Peaks several times and do not reveal any agreement by MBNA to credit those charges, or any others. MBNA could not have reasonably been expected to undertake a more thorough investigation of the Four Peaks incident based on the scant information contained in this notice.



ii. “Fraudulent Charges”

MBNA received two notices disputing “fraudulent charges” on Gorman's account. A notice of dispute from Experian, dated May 18, 2004, stated: “Consumer claims account take-over fraudulent charges made on account. Verify Signature provide complete ID.” In response to this notice, MBNA “verif[ied] that the name, address, date of birth and social security number reported by Experian matched the information that was contained in MBNA's records concerning the account.” It also “review[ed] the account notes and check[ed] with the fraud department to determine whether there had ever been a fraud claim submitted with respect to the account.” Because the identification information matched and no fraud claim had been submitted, MBNA reported to Experian that the information it previously reported was accurate and requested that Experian tell Gorman to contact MBNA if he suspected fraud.


MBNA received another dispute notice from TransUnion, dated November 29, 2005, that listed two disputes: (1) “Disputes present/previous Account Status History. Verify accordingly;” (2) “Consumer claims account take-over fraudulent charges made on account. Verify Signature provide or confirm complete ID.” MBNA conducted the following inquiry:


[V]erif[ied] that the account history that was being reported matched the account history data in MBNA's records, including the balance, the amount past due, the high credit and credit limit for the account.... [V]erif[ied] that the name, address, date of birth and social security number reported by TransUnion matched the information that was contained in MBNA's records concerning the account.... [R]eview[ed] the account notes and check[ed] with the fraud department to determine whether there had ever been a fraud claim submitted with respect to the account.


Because this investigation did not reveal that any information was inaccurate, MBNA verified the information previously submitted to TransUnion.


Neither notice identified the nature of Gorman's dispute as centering on the Four Peaks charge or indicated that the dispute concerned rejection of the goods charged for. Indeed, the notices did not describe the fraudulent transactions in any detail; they were silent as to the approximate date of the charges, their amount, and the identity of the merchant. Moreover, Gorman has never contended that the disputed charges were initially unauthorized or were the result of identity theft, as the dispute notices indicated. Not surprisingly, MBNA's review of its internal account notes showed no evidence of fraudulent *1019 activity, and all previous account data reported by the CRAs matched MBNA's records. We conclude that, as in the case of the first notice of dispute, MBNA could not reasonably have been expected to investigate Gorman's challenge to the Four Peaks charge based on the vague and inaccurate information it received from the CRAs in these notices.FN11


FN11. Gorman complains that he had no control over the information the CRAs gave MBNA, and that MBNA should have asked the CRAs for more detail on Gorman's complaints. But Gorman's letters to the CRAs do not provide much more detail concerning his dispute than the CRAs' description to MBNA. Two of the dispute notices were prompted by letters from Gorman to the CRAs stating:
MBNA posted certain fraudulent credit card charges to a former VISA account in or about early 2003. I timely notified MBNA that the charges were disputed and should be removed from my account yet MBNA failed to removed [sic] them and is wrongfully claiming that my account is delinquent. No money is owed to MBNA. Moreover, MBNA has been repeatedly advised by me, both orally and in writing, that the debt is disputed but is unlawfully refusing to note the existence of the dispute on my credit record.



The November 2005 dispute notice was prompted by an on-line complaint form filled out by Gorman stating: “I have never made a late payment,” and “Fraudulent charges were made on my account.”



It is the duty of the CRA-not the furnisher-to ensure that the furnisher has all relevant information about the dispute. See § 1681i(a)(2)(A) (the CRA's notice to furnisher “shall include all relevant information regarding the dispute that the agency has received from the consumer ....”). Moreover, as it is not hard to see why the CRAs interpreted Gorman's messages as they did, MBNA likely would have interpreted them in the same way had it obtained them, and so would have made the same, limited investigation.


iii. “Promised Goods/Services Not Delivered”

[6] One notice of dispute did provide more accurate and specific information relating to Gorman's dispute with MBNA. A December 2004 notice from Experian stated: “Claims inaccurate information. Did not provide specific dispute. Provide complete ID and verify account information.” The notice further provided, in a section for “FCRA Relevant Information”: “PROMISED GOODS/SERVICES NOT DELIVERED. I TIMELY DISPUTED THE CHARGES UNDER THE TIL ACT.” FN12 In response to this notice, MBNA


FN12. This is likely referring to the Truth in Lending Act, Pub.L. No. 90-321, Title I, 82 Stat. 146 (1968) (codified at 15 U.S.C. § 1601 et seq.).




review[ed] its records to confirm that all of the account information that was being reported by Experian matched MBNA's records. MBNA also reviewed the account notes to determine if any dispute submitted by Gorman concerning the account had been resolved in his favor. Since the reported information matched the information in MBNA's records, and because the prior investigation of the charge with Four Peaks Entertainment had not been resolved in favor of Gorman, MBNA verified all the information that it had reported about the account as accurate.


Unlike the other three notices of dispute, the December 2004 notice contained enough information to alert MBNA to the specific nature of Gorman's actual claim: the reported debt was not owed because he had not received the goods he was promised. Simply verifying that the basic reported account data matched MBNA's internal records may not have been a reasonably sufficient investigation of this particular dispute.


But MBNA's investigation was more thorough than simply a review of bare account data. The review of internal records revealed that MBNA had previously investigated the Four Peaks charge and *1020 that the dispute had not been resolved in Gorman's favor.


Nevertheless, Gorman claims that a jury could still find MBNA's efforts unreasonable, because it failed to reinvestigate the dispute. As an initial matter, there is no evidence that MBNA's original investigation of the Four Peaks incident was deficient or unreliable.FN13 MBNA contacted both Gorman and Four Peaks several times as part of the investigation. Its requests that Gorman provide more information were met with refusals to supply additional information or no response at all. MBNA's correspondence with Four Peaks also evidences a diligent attempt to ascertain the validity of the charges. For example, MBNA asked about Goman's opportunity to return the merchandise and was told that Gorman received shipping labels to return the merchandise.


FN13. The reasonableness of MBNA's initial investigation is not directly before us. That investigation was conducted before MBNA reported Gorman's account to the CRAs. To the extent that it is governed by the FCRA at all, it falls under § 1681s-2(a)(1), the duty of furnishers to provide accurate information to CRAs. Although MBNA is required under § 1681s-2(a)(1) to provide accurate information, Gorman cannot enforce that obligation in a private cause of action. See § 1681s-2(c), (d).




Importantly, the CRA notice of dispute that triggered MBNA's duty to investigate did not identify any reason to doubt the veracity of the initial investigation. Furthermore, the notice of dispute did not provide any new information that would have prompted MBNA to supplement the initial investigation with any additional procedures or inquiries.


[7] We agree that “[w]hether a reinvestigation conducted by a furnisher in response to a consumer's notice of dispute is reasonable ... depends in large part on ... the allegations provided to the furnisher by the credit reporting agency.” Krajewski v. Am. Honda Fin. Corp., 557 F.Supp.2d 596, 610 (E.D.Pa.2008). Without any indication in the allegations that the initial investigation lacked reliability or that new information was available to discover, MBNA's decision not to repeat a previously-conducted investigation cannot have been unreasonable. Congress could not have intended to place a burden on furnishers continually to reinvestigate a particular transaction, without any new information or other reason to doubt the result of the earlier investigation, every time the consumer disputes again the transaction with a CRA because the investigation was not resolved in his favor. Thus, although reliance on a prior investigation can be unreasonable, cf. Bruce v. First U.S.A. Bank, Nat'l Ass'n, 103 F.Supp.2d 1135, 1143-44 (E.D.Mo.2000) (concluding that a furnisher's investigation was not necessarily reasonable when an initial investigation was deficient for, among other reasons, failing to contact the consumer), that was not the case here.


Gorman disputes this conclusion, insisting that under the Fourth Circuit's opinion in Johnson, it is per se unreasonable for a furnisher to rely solely on internal account records when investigating a consumer dispute. Gorman misreads Johnson, which recognized that the reasonableness of an investigation depends on the facts of the particular case, most importantly the CRA's description of the dispute in its notice. See Johnson, 357 F.3d at 431 (noting that confining the investigation to internal computer notes was not necessarily reasonable in light of the specificity of the description of the dispute in the notice).


In Johnson, the CRA's notice to MBNA read: “CONSUMER STATES BELONGS TO HUSBAND ONLY;” “WAS NEVER A SIGNER ON ACCOUNT. WAS AN AUTHORIZED USER.” Id. at 429. The underlying facts were that Johnson's future *1021 husband opened an MBNA credit card account. Some years later, after they were married, Johnson's husband filed for bankruptcy, and MBNA told Johnson she was responsible for the balance, maintaining that she was a co-applicant, and therefore a co-obligor, on the account. Johnson, 357 F.3d at 428-29. Johnson argued that she was merely an authorized user. Id.


In response to the notice to the CRAs, MBNA only confirmed Johnson's identifying information and confirmed that its internal computer system indicated she was the sole responsible party on the account. Id. at 431. At no time did MBNA try to ascertain whether Johnson's information-that she had not signed the application form-was correct. The Fourth Circuit held this investigation unreasonable:


The MBNA agents also testified that, in investigating consumer disputes generally, they do not look beyond the information contained in the CIS [MBNA's internal computer system] and never consult underlying documents such as account applications. Based on this evidence, a jury could reasonably conclude that MBNA acted unreasonably in failing to verify the accuracy of the information contained in the CIS.


Id.


In contrast to Johnson, in Gorman's case MBNA did review all the pertinent records in its possession, which revealed that an initial investigation had taken place in which MBNA contacted both Gorman and the merchant. Thus, unlike in Johnson, MBNA had-albeit earlier-gone outside its own records to investigate the allegations contained in the CRA notice, and on reading the notice, did consult the relevant information in its possession. Johnson does not indicate that a furnisher has an obligation to repeat an earlier investigation, the record of which is in the furnisher's records.


[8] We emphasize that the requirement that furnishers investigate consumer disputes is procedural. An investigation is not necessarily unreasonable because it results in a substantive conclusion unfavorable to the consumer, even if that conclusion turns out to be inaccurate.


In short, although “reasonableness” is generally a question for a finder of fact, summary judgment in this case was appropriate.



3. MBNA's failure to provide notice of dispute

Gorman next argues that MBNA failed to notify the CRAs that he continued to dispute the delinquent charges on his account. He contends that in reporting the delinquency without also reporting his ongoing dispute, MBNA violated its obligations under 12 C.F.R. § 226.13,FN14 and thus furnished “incomplete or inaccurate” credit information in violation of the FCRA. MBNA neither concedes nor disputes that it was so obligated,FN15 but argues on summary judgment that the statute does not permit Gorman to raise this claim. Also, in the alternative, MBNA contends*1022 that Gorman did not submit enough evidence to show whether his credit reports included a notice that the delinquency was disputed or whether MBNA did not so notify the CRAs. We must decide (1) whether the failure to notify the CRAs that the delinquent debt was disputed is actionable under § 1681s-2(b), and if so, (2) whether Gorman introduced sufficient evidence on summary judgment to show that MBNA so notified the CRAs.


FN14. This requirement is imposed by Regulation Z, promulgated pursuant to the Truth in Lending Act, 15 U.S.C. § 1601 et seq. The regulation provides that, if a consumer timely disputes a charge with a creditor but the creditor concludes that the charge is valid, the creditor “[m]ay not report that an amount or account is delinquent because the amount due ... remains unpaid, if the creditor receives [within a specific time period] further written notice from the consumer that any portion of the billing error is still in dispute, unless the creditor also ... [p]romptly reports that the amount or account is in dispute.” 12 C.F.R. § 226.13(g)(4).




FN15. Gorman does not bring a claim under either Regulation Z or the pertinent section of the Truth in Lending Act. We therefore need not decide whether in this case MBNA violated its obligations under those provisions.





a. Gorman's Claim is Actionable

[9] If a consumer disputes the accuracy of credit information, the FCRA requires furnishers to report that fact when reporting the disputed information. Section 1681s-2(a)(3) provides: “If the completeness or accuracy of any information furnished by any person to any consumer reporting agency is disputed to such person by a consumer, the person may not furnish the information to any consumer reporting agency without notice that such information is disputed by the consumer.” As noted, however, the statute expressly provides that a claim for violation of this requirement can be pursued only by federal or state officials, and not by a private party. § 1681s-2(c)(1) (“Except [for circumstances not relevant here], sections 1681n and 1681o of this title[providing private right of action for willful and negligent violations] do not apply to any violation of ... subsection (a) of this section, including any regulations issued thereunder.”); see also Nelson, 282 F.3d at 1059. Thus, Gorman has no private right of action under § 1681s-2(a)(3) to proceed against MBNA for its initial failure to notify the CRAs that he disputed the Four Peaks charges.


Gorman does have a private right of action, however, to challenge MBNA's subsequent failure to so notify the CRAs after receiving notice of Gorman's dispute under § 1681s-2(b). In addition to requiring that a furnisher conduct a reasonable investigation of a consumer dispute, § 1681s-2(b) also requires a creditor, upon receiving notice of such dispute, to both report the results of the investigation and, “if the investigation finds that the information is incomplete or inaccurate, report those results” to the CRAs. § 1681s-2(b)(1)(C), (D). Gorman argues that MBNA's reporting of the Four Peaks charge and delinquency, without a notation that the debt was disputed, was an “incomplete or inaccurate” entry on his credit file that MBNA failed to correct after its investigation. As this claim alleges that obligations imposed under § 1681s-2(b) were violated, it is available to private individuals.


The Fourth Circuit has recently held that after receiving notice of dispute, a furnisher's decision to continue reporting a disputed debt without any notation of the dispute presents a cognizable claim under § 1681s-2(b). See Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 150 (4th Cir.2008). In Saunders, a consumer alleged that he incurred late fees and penalties as a result of a creditor's own admitted accounting errors; the creditor, Branch Banking & Trust (BB & T), refused to waive the fees, and the consumer responded by withholding payments on the loan. Id. at 145-46. BB & T reported the loan to the CRAs as “in repossession status,” and, after suffering adverse credit decisions, the consumer contacted the CRAs to report the dispute. Id. at 146. The CRAs sent a notice of dispute to BB & T, triggering its obligations to investigate and verify the accuracy of the reported information under § 1681s-2(b)(1). BB & T responded by updating the consumer record to reflect that it had written off the debt as uncollectible, but failed to indicate that the consumer still disputed the validity of the obligation. Id. The consumer brought suit under § 1681s-2(b) and a jury found that BB & T had violated its obligations.


*1023 The Fourth Circuit affirmed. The court reasoned that in enacting § 1681s-2(b)(1)(D), “Congress clearly intended furnishers to review reports not only for inaccuracies in the information reported but also for omissions that render the reported information misleading.” Id. at 148. Although the report may have been “technically accurate” in the sense that it reflected the consumer's failure to make any payments on the loan, the court noted that it had previously held that “a consumer report that contains technically accurate information may be deemed ‘inaccurate’ if the statement is presented in such a way that it creates a misleading impression.” Id. (citing Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 415-16 (4th Cir.2001)). The Fourth Circuit went on to note that a consumer's failure to pay a debt that is not really due “does not reflect financial irresponsibility,” and thus the omission of the disputed nature of a debt could render the information sufficiently misleading so as to be “incomplete or inaccurate” within the meaning of the statute. Id. at 150. Saunders went on to reject the contention that Congress meant to exempt furnishers of information from private liability by placing the initial obligation to report disputes in subsection (a), stating that “[n]o court has ever suggested that a furnisher can excuse its failure to identify an inaccuracy when reporting pursuant to § 1681s-2(b) by arguing that it should have already reported the information accurately under § 1681s-2(a).” Id. at 149-50.


This reasoning is persuasive. Like Saunders, several other courts have held that a credit entry can be “incomplete or inaccurate” within the meaning of the FCRA “because it is patently incorrect, or because it is misleading in such a way and to such an extent that it can be expected to adversely affect credit decisions.” Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890, 895 (5th Cir.1998); see also Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 40 (D.C.Cir.1984) (“Certainly reports containing factually correct information that nonetheless mislead their readers are neither maximally accurate nor fair to the consumer....”). As the Fourth Circuit observed, holding otherwise would create a rule that, as a matter of law, an omission of the disputed nature of a debt never renders a report incomplete or inaccurate. See Saunders, 526 F.3d at 150. Not only might such a rule intimidate consumers into giving up bona fide disputes by paying debts not actually due to avoid damage to their credit ratings, but it also contravenes the purpose of the FCRA, to protect against “unfair credit reporting methods.” See 15 U.S.C. § 1681(a)(1).


[10] Holding that there is a private cause of action under § 1681s-2(b) does not mean that a furnisher could be held liable on the merits simply for a failure to report that a debt is disputed. The consumer must still convince the finder of fact that the omission of the dispute was “misleading in such a way and to such an extent that [it] can be expected to have an adverse effect.” Saunders, 526 F.3d at 150 (quotation omitted). In other words, a furnisher does not report “incomplete or inaccurate” information within the meaning of § 1681s-2(b) simply by failing to report a meritless dispute, because reporting an actual debt without noting that it is disputed is unlikely to be materially misleading. It is the failure to report a bona fide dispute, a dispute that could materially alter how the reported debt is understood, that gives rise to a furnisher's liability under § 1681s-2(b). Cf. id. at 151 (“[W]e assume, without deciding that a furnisher incurs liability under § 1681s-2(b) only if it fails to report a meritorious dispute.”).


It is true, as we have said, that a furnisher's initial failure to comply with this *1024 requirement is not privately enforceable. But as the Fourth Circuit noted, this does not excuse the furnisher's failure to correct the omission after investigating pursuant to § 1681s-2(b). See Saunders, 526 F.3d at 150. The purpose of § 1681s-2(b) is to require furnishers to investigate and verify that they are in fact reporting complete and accurate information to the CRAs after a consumer has objected to the information in his file. See Johnson, 357 F.3d at 431 (“[Congress] create[d] a system intended to give consumers a means to dispute-and, ultimately, correct-inaccurate information on their credit reports.”). A disputed credit file that lacks a notation of dispute may well be “incomplete or inaccurate” within the meaning of the FCRA, and the furnisher has a privately enforceable obligation to correct the information after notice. § 1681s-2(b)(1)(D). We thus conclude that the statute permits Gorman to bring his claim regarding MBNA's failure to report the charge still disputed.



b. Evidentiary Challenges

[11] MBNA argues that summary judgment is nevertheless appropriate on this claim because Gorman failed to introduce sufficient admissible evidence that (1) his credit reports lacked a notation that the Four Peaks debt was disputed and (2) MBNA failed to report the account as disputed in this respect to the CRAs.


Gorman did not submit his credit reports to the district court until after the court issued its summary judgment order.FN16 We ordinarily will not consider on appeal “[p]apers submitted to the district court after the ruling that is challenged.” Kirshner v. Uniden Corp. of Am., 842 F.2d 1074, 1077 (9th Cir.1988). We need not decide, however, whether the credit reports are properly before us, because Gorman has submitted other admissible evidence that creates a triable issue of fact as to whether his credit reports lacked a notice of dispute.


FN16. Gorman submitted the credit reports in support of his motion for leave to file a motion for reconsideration.




Gorman previously stated in his declaration that he had reviewed many of his personal credit reports, and that none of them included a notice that he disputed the delinquent charges. This statement is admissible evidence. Gorman has personal knowledge, having seen the reports. The evidence is not inadmissible hearsay, as Gorman does not rely on the credit reports for the truth of the matter asserted therein; in fact, as he notes, he disputes the truth of their contents. Instead, Gorman offers them to prove that no statement noticing the dispute was made. “If the significance of an offered statement lies solely in the fact that it was made ... the statement is not hearsay.” United States v. Dorsey, 418 F.3d 1038, 1044 (9th Cir.2005) (quoting Fed.R.Evid. 801 advisory committee's note). He thus submitted sufficient evidence for a jury to conclude that his credit reports contained no notice of dispute.


There is also sufficient evidence from which a jury could infer that MBNA did not notify the CRAs that the debt was disputed. Gorman himself has no personal knowledge of what MBNA actually submitted to the CRAs in response to its investigations.FN17 However, the dispute verification forms MBNA returned to the CRAs *1025 contained no notice that the debt was disputed; rather, they indicated that the information previously provided was “accurate as reported.” Yet, MBNA's review of Gorman's account notes revealed that he continued to dispute the debt even after MBNA concluded its initial investigation and reposted the Four Peaks charges. Moreover, according to MBNA's witness's declaration, MBNA told the CRAs that all of the information reported on Gorman's account was accurate, and Gorman has produced sufficient evidence that no notice of dispute appeared on the credit reports. Gorman has thus submitted sufficient evidence to create an issue of fact concerning whether MBNA failed to inform the CRAs, in response to the dispute notice, that Gorman still disputed the debt.


FN17. The only evidence he submitted was his sworn declaration that MBNA “report[ed] my account as delinquent without indicating that some or all of the debt was disputed by the account holder.” Gorman Decl. ¶ 12, Apr. 12, 2006. But Gorman provided no indication that he had personal knowledge of the contents of MBNA's report.




In sum, we hold that any investigation under § 1681s-2(b)(1)(A) must be reasonable; that any reasonable trier of fact would conclude that MBNA's investigation was reasonable; that § 1681s-2(b) permits Gorman to bring his claim that MBNA failed to inform the CRAs that the information about his delinquency was “incomplete or inaccurate” after investigating the December 2004 notice from the CRAs; and that Gorman has submitted sufficient evidence to survive summary judgment on this claim.FN18


FN18. Because the district court held that there was no private right of action under § 1681s-2(b), it did not reach the merits of Gorman's claim. Gorman II, 435 F.Supp.2d at 1008-09. On appeal, MBNA's arguments as to this claim are only that there is no private right of action, and, in the alternative, that Gorman has failed to introduce admissible evidence that MBNA failed to report the debt as disputed. We do not go beyond the arguments made, and so conclude only that Gorman can go forward with his claim, having produced admissible evidence that MBNA failed to report the debt as disputed. We take no position as to whether MBNA's failure to report the debt as disputed violated § 1681s-2(b).





B. Libel Claim

Gorman also advanced a state law libel claim on which the district court made two rulings. On MBNA's motion to dismiss, the court held that the FCRA did not preempt Gorman's libel claim because he alleged malice or willful intent to injure, satisfying the requirements of § 1681h(e). Gorman I, 370 F.Supp.2d at 1009-10. MBNA contests this conclusion. The district court granted MBNA's motion for summary judgment on the libel claim however, holding that Gorman failed to submit evidence creating a disputed issue of material fact with respect to malice or willful intent. Gorman II, 435 F.Supp.2d at 1009-10. Gorman appeals this ruling.



1. Preemption

The preemption question presents a difficult issue of first impression. The difficulty arises from the interaction of two provisions of the FCRA. Section 1681h governs the “[c]onditions and form of disclosure to consumers,” disclosures that CRAs are required or permitted to make under other sections of the Act. Section 1681h(e) sets forth, in relevant part, the following “[l]imitation of liability” (with emphasis added):


Except as provided in sections 1681n and 1681o of this title, no consumer may bring any action or proceeding in the nature of defamation, invasion of privacy, or negligence with respect to the reporting of information against any consumer reporting agency, any user of information, or any person who furnishes information to a consumer reporting agency, based on information disclosed pursuant to section 1681g, [ FN19] 1681h,[ FN20] *1026 or 1681m [ FN21] of this title or based on information disclosed by a user of a consumer report to or for a consumer against whom the user has taken adverse action, based in whole or in part on the report except as to false information furnished with malice or willful intent to injure such consumer



FN19. Section 1681g addresses “[d]isclosures to consumers.” It provides in detail the information CRAs must disclose to consumers, the rights of consumers to obtain credit reports and scores and to dispute information in credit reports, and the information that must be made available to identity theft victims and mortgage applicants.




FN20. Section 1681h, as noted above, deals with the “[c]onditions and form” of these disclosures.




FN21. Section 1681m addresses the duties of “users of consumer reports.” In essence, it imposes certain responsibilities on persons who take adverse actions based on credit reports or another source of information about a person's credit, or who make solicitations on the basis of credit reports.




Section 1681t addresses more generally the FCRA's “[r]elation to State laws.” In general, the FCRA does not preempt any state law “except to the extent that those laws are inconsistent with any provision of this subchapter, and then only to the extent of the inconsistency.” § 1681t(a). But this general rule has several exceptions, added in 1996, including the following:


No requirement or prohibition may be imposed under the laws of any State ... with respect to any subject matter regulated under ... section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply-



(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on September 30, 1996); or



(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996).


§ 1681t(b)(1)(F).FN22 No changes were made to § 1681h(e) with these amendments.


FN22. The parties assume that, if § 1681t(b)(1)(F) applies, it bars Gorman's libel claim. We note, however, that the application of that section to any given common law claim is not self-evident. In Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112 S.Ct. 2608, 120 L.Ed.2d 407 (1992), the Supreme Court discussed whether a preemption provision containing the same “No requirement or prohibition ... shall be imposed” language applied to some, but not all, common law claims. A plurality of the Court analyzed the question as follows: “we ask whether the legal duty that is the predicate of the common-law damages action constitutes a ‘requirement or prohibition based on smoking and health ... imposed under State law with respect to ... advertising or promotion,’ giving that clause a fair but narrow reading.” Id. at 523-24, 112 S.Ct. 2608 (alterations in original). See also Medtronic, Inc. v. Lohr, 518 U.S. 470, 485, 116 S.Ct. 2240, 135 L.Ed.2d 700 (1996) (applying a “ ‘presumption against the pre-emption of state police power regulations' to support a narrow interpretation of such an express [statutory] command.”). Assuming this is the right inquiry, libel law probably entails a “prohibition ... with respect to” what a furnisher of information can report to a CRA. We do not decide the question, however, given our conclusion that Gorman has not presented sufficient evidence to state a libel claim.




Although § 1681t(b)(1)(F) appears to preempt all state law claims based on a creditor's responsibilities under § 1681s-2, § 1681h(e) suggests that defamation claims can proceed against creditors as long as the plaintiff alleges falsity and malice. Attempting to reconcile the two sections has left district courts in disarray. The district court in this case held that § 1681h(e), the more specific preemption provision, trumped the more general preemption provision of § 1681t(b)(1)(F).FN23 *1027 Gorman I, 370 F.Supp.2d at 1009-10 (citing Gordon v. Greenpoint Credit, 266 F.Supp.2d 1007, 1013 (S.D.Iowa 2003)). Other district courts have followed different approaches. Some have concluded that the later-enacted § 1681t(b)(1)(F) effectively repeals the earlier preemption provision, § 1681h(e). Jaramillo v. Experian Info. Solutions, Inc., 155 F.Supp.2d 356, 361 (E.D.Pa.2001) (footnote omitted) (the “total preemption” approach). Attempting to give meaning to both sections, other courts have observed that § 1681t(b)(1)(F) relates to “any subject matter regulated under section 1681s-2,” the section which regulates the responses of furnishers to notices of dispute. Hence, these courts apply a “temporal approach,” holding that “causes of action predicated on acts that occurred before a furnisher of information had notice of any inaccuracies are not preempted by § 1681t(b)(1)(F), but are instead governed by § 1681h(e).” Kane v. Guar. Residential Lending, Inc., 2005 WL 1153623, at *8 (E.D.N.Y. May 16, 2005).


FN23. We note that both provisions are specific in different ways: § 1681t(b)(1)(F) is specific as to the target of suits, governing requirements placed on furnishers of information; § 1681h(e) is specific as to the nature of the claim, permitting certain common law claims if falsity and malice is shown. So, in some sense, both provisions are “specific.” But § 1681h(e) may be more specific for preemption purposes, because the tension is the nature of the claims preempted, and § 1681h(e) specifies certain claims that can be brought.




Gorman advocates a still different “statutory” analysis, under which “t(b)(1)(F) preempts only state law claims against credit information furnishers brought under state statutes, just as 1681h(e) preempts only state tort claims.” Manno v. Am. Gen. Fin. Co., 439 F.Supp.2d 418, 425 (E.D.Pa.2006) (describing the approach).FN24 Finally, MBNA argues that § 1681h(e) is not a broad preemption provision at all, but simply a “grant of protection for statutorily required disclosures.” (quoting McAnly v. Middleton & Reutlinger, P.S.C., 77 F.Supp.2d 810, 814 (W.D.Ky.1999)). But, of course, granting entities immunity from state law tort suits in exchange for making required disclosures is just another way of saying that certain state law claims are preempted.FN25


FN24. Support for this view rests on the proposition that “Congress seems to have been most concerned with protecting credit information furnishers from state statutory obligations inconsistent with their duties under the FCRA.” Manno, 439 F.Supp.2d at 425. Section 1681t(b)(1)(F) exempts two specific state statutes from preemption, suggesting, some courts say, that Congress “had state statutes in mind.” Id. Other subsections of § 1681t also exempt state statutes; none addresses common law claims. Yet, this distinction does not appear in the text of the statute. In fact, “[t]he phrase ‘[n]o requirement or prohibition’ sweeps broadly and suggests no distinction between positive enactments and common law; to the contrary, those words easily encompass obligations that take the form of commonlaw rules.” Cipollone, 505 U.S. at 521, 112 S.Ct. 2608 (1992) (plurality opinion) (second alteration in original); see also Riegel v. Medtronic, Inc., 552 U.S. 312, 128 S.Ct. 999, 1008, 169 L.Ed.2d 892 (2008) (adopting this position for a majority of the Court).




FN25. McAnly offers one reason why Congress may have chosen to preempt such state law claims:
Since various parts of the federal statute require consumer reporting agencies and information users to disclose information to consumers under certain circumstances, this section guarantees that the agencies or users cannot be sued for those required disclosures under state tort law. It makes sense that acts required to be done by the FCRA are immunized from state tort liability.



77 F.Supp.2d at 814-15. However illuminating this explanation may be, it does not help resolve the apparent conflict between §§ 1681h(e) and 1681t(b)(1)(F).

In the end, we need not decide this issue. As we conclude below, even if Gorman could bring a state law libel claim under § 1681h(e), and such a claim were not preempted by § 1681t(b)(1)(F), he has not introduced sufficient evidence to survive summary judgment on this claim.



*1028 2. Evidence

Under California law, “[l]ibel is a false and unprivileged publication ... which exposes any person to hatred, contempt, ridicule, or obloquy, or which causes him to be shunned or avoided, or which has a tendency to injure him in his occupation.” Cal. Civ.Code § 45. Even if Gorman's libel claim is not preempted by § 1681t(b)(1)(F), it is still subject to § 1681h(e), and so he must prove, in addition to the common law elements of libel, that the information was “false” and “furnished with malice or willful intent to injure.”


[12] The FCRA does not define the appropriate standard for “malice.” The two circuits that have interpreted § 1681h(e) have applied the standard enunciated in New York Times v. Sullivan, 376 U.S. 254, 279-80, 84 S.Ct. 710, 11 L.Ed.2d 686 (1964), requiring the publication be made “with knowledge that it was false or with reckless disregard of whether it was false or not.” See Morris v. Equifax Info. Servs., LLC, 457 F.3d 460, 471 (5th Cir.2006); Thornton v. Equifax, Inc., 619 F.2d 700, 705 (8th Cir.1980). Under New York Times, to show “reckless disregard,” a plaintiff must put forth “sufficient evidence to permit the conclusion that the defendant in fact entertained serious doubts as to the truth of his publication.” St. Amant v. Thompson, 390 U.S. 727, 731, 88 S.Ct. 1323, 20 L.Ed.2d 262 (1968); see also Morris, 457 F.3d at 471 (applying St. Amant ). We agree with the courts that have adopted the New York Times standard for purposes of § 1681h(e), and so apply it here.


Gorman's libel claim is based on two pieces of information reported by MBNA: the underlying debt itself and the reporting of the debt without a notation that it was disputed.


[13] As to the debt itself, there is no evidence that MBNA knew the debt was false or acted with reckless disregard as to its falsity. As an initial matter, the bulk of the delinquent debt-about $5,000-derives from non-disputed credit card purchases, unrelated to the disputed Four Peaks charge. Gorman contends that he does not owe these charges, claiming an offset for his attorneys' fees incurred in the dispute over the Four Peaks debt. But he has presented no authority whatever supporting his entitlement to these fees, nor any evidence that these fees are reasonable. Absent any evidence or colorable argument that this portion of the debt to MBNA was invalid, no reasonable jury could find that MBNA acted maliciously in reporting this portion of the debt to the CRAs.


Gorman has also failed to introduce sufficient evidence of malice with respect to the remaining portion of the debt, the roughly $750 disputed Four Peaks charge. Even assuming that the debt was indeed invalid, we cannot say that a reasonable jury could conclude that MBNA acted with “reckless disregard” as to the invalidity of the debt.FN26


FN26. We do not decide whether the debt related to the Four Peaks charge is valid, as the question is not before us.




MBNA conducted an investigation into Gorman's dispute in which it contacted both Gorman and Four Peaks. As a result of the investigation, it initially agreed to remove the charges, reinstating them only after learning that Gorman had failed to return the merchandise. The remaining controversy involves a legal and factual disagreement between Gorman and Four Peaks.FN27 MBNA did not act recklessly by *1029 failing to wade through this complex legal and factual debate. See Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1069 (9th Cir.1992) (concluding that a furnisher does not act with malice when it takes “reasonable steps to verify the information” in its credit report). That it reposted the debt in reliance on Four Peaks's version rather than resolving the dispute in Gorman's favor does not demonstrate that MBNA “entertained serious doubts as to the truth of [its] publication.” St. Amant, 390 U.S. at 731, 88 S.Ct. 1323.


FN27. Gorman's essential claim is that in rejecting the goods and making them available to Four Peaks for pickup, he has done all that is required under California law. See Cal. Com.Code § 2602 (“If the buyer has before rejection taken physical possession of the goods ... he is under a duty after rejection to hold them with reasonable care at the seller's disposition for a time sufficient to permit the seller to remove them.”). Four Peaks claimed to have sent Gorman pre-paid shipping labels for the defective merchandise's return, but insisted that Gorman would have to pay to return the replacement equipment it claims to have sent. Gorman insists that he did not receive any replacement merchandise or shipment labels and, in any event, he refuses to pay any shipping costs.




Additionally, even if MBNA violated its obligations to report that Gorman disputed the debt, this failure does not render the information that was reported “false” so as to support a libel claim meeting the § 1681h(e) malice standard. The obligation to report a disputed debt is a protective regulatory requirement imposed by the FCRA. § 1681s-2(a)(3); see also 12 C.F.R. § 226.13. Any failure by MBNA to meet this requirement may render its reporting deficient under the statute, but it does not render the information MBNA did furnish maliciously or wilfully false. So long as the creditor has a good faith reason for believing that the debt is in fact owed, reporting the debt without reporting the dispute does not convey “false” information “with malice or willful intent to injure the consumer.” See Francis v. Dun & Bradstreet, Inc., 3 Cal.App.4th 535, 4 Cal.Rptr.2d 361, 364 (1992) (holding that a defamation claim cannot be sustained for truthful information in a credit report, even if the information reported supports misleading inferences).


Gorman has offered no evidence that MBNA seriously doubted that the debt was owed, or that MBNA believed Gorman had a meritorious dispute. The record suggests instead that MBNA investigated the debt and determined that it was valid. Despite its conclusion, MBNA may still have faced a regulatory obligation to report the continuing dispute, but its failure to do so was not malicious.


Gorman's sole evidence of MBNA's malice or intent to injure is the statement in his declaration that an MBNA representative told him, during a collection call, “We're a big bank. You either pay us or we'll destroy your credit.” But this incident does not evidence a knowledge on MBNA's part that the debt was not valid. In the context of other evidence in the record-including Gorman's refusal to pay any of his credit card bill because of supposed attorneys' fees owed him by MBNA-there is no basis for concluding that MBNA issued that threat knowing no debt was due or recklessly disregarding the invalidity of the debt.


As Gorman cannot state a claim for libel consistent with the limited exception contained in § 1681h(e) of the FCRA, we affirm the district court's grant of summary judgment to MBNA on Gorman's libel claim.



C. California Civil Code § 1785.25(a)

[14] Finally, Gorman brings a claim under Cal. Civ.Code section 1785.25(a), which provides:


A person shall not furnish information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate.


Section 1681t(b)(1)(F), the FCRA's preemption provision, expressly exempts this *1030 subsection-Cal. Civ.Code section 1785.25(a)-from its general exclusion of state law claims on matters governed by § 1681s-2.FN28


FN28. As noted above, § 1681t(b)(1)(F) provides:
No requirement or prohibition may be imposed under the laws of any State ... with respect to any subject matter regulated under ... section 1681s-2 of this title, relating to the responsibilities of persons who furnish information to consumer reporting agencies, except that this paragraph shall not apply-




(i) with respect to section 54A(a) of chapter 93 of the Massachusetts Annotated Laws (as in effect on September 30, 1996); or

(ii) with respect to section 1785.25(a) of the California Civil Code (as in effect on September 30, 1996).



The Massachusetts statute sets forth procedures to ensure accuracy of information reported to consumer reporting agencies.

On MBNA's motion to dismiss, the district court nevertheless held the California statutory claim preempted, because the private right of action to enforce Cal. Civ.Code section 1785.25(a) is found in other sections not specifically exempted from the federal preemption provision, namely, Cal Civ.Code sections 1785.25(g) FN29 and 1785.31.FN30 Because these specific sections were not excluded from the preemption section of the FCRA, the district court concluded, violations of Cal. Civ.Code section 1785.25(a) could only be enforced by federal or state officials. Gorman I, 370 F.Supp.2d at 1010-11.


FN29. Section 1785.25(g) provides:
A person who furnishes information to a consumer credit reporting agency is liable for failure to comply with this section, unless the furnisher establishes by a preponderance of the evidence that, at the time of the failure to comply with this section, the furnisher maintained reasonable procedures to comply with those provisions.




FN30. Section 1785.31 provides that “[a]ny consumer who suffers damages as a result of a violation of this title by any person may bring an action” to recover damages.




We do not find the district court's reasoning persuasive. As an initial matter, the court did not cite any provision of California law authorizing enforcement of section 1785.25(a) by state officials. Lin v. Universal Card Services Corp., 238 F.Supp.2d 1147 (N.D.Cal.2002), on which the district court relied, similarly fails to identify authorization for enforcement by state officials. Such authorization may reside elsewhere in California law, but if it does, it almost surely lies in provisions also not specifically excluded by the FCRA preemption provision. The district court's analysis would thus lead to the conclusion that Congress explicitly retained the portions of the California statutory scheme that create obligations, without leaving in place any enforcement mechanism. This would be an unlikely result at best. FN31


FN31. In Islam v. Option One Mortgage Corp., 432 F.Supp.2d 181 (D.Mass.2006), the court examined the Massachusetts provision, Mass. Gen. Law 93 § 54A(a), that is also excluded from § 1681t(b)(1)(F). As with the California statute, the FCRA explicitly identifies the portion of the Massachusetts statute that creates the reporting obligations for furnishers, but does not expressly mention the section that provides for private enforcement. Id. at 185-86. The court held that absent any evidence that state officials were authorized to enforce this provision, the construction urged by the district court here could not stand: “it is absurd to conclude that Congress would have explicitly excepted [Mass. Gen. Law 93 § 54A(a) ] while not leaving an enforcement mechanism.” Id. at 189. Finding that the parties stipulated to the Attorney General's authority, however, Islam held the private state claim preempted. Id.


The Islam court also felt itself constrained by the First Circuit's affirmance of Gibbs v. SLM Corp., 336 F.Supp.2d 1 (D.Mass.2004), aff'd, Gibbs v. SLM Corp., No. 05-1057, 2005 WL 5493113 (1st Cir. Aug.23, 2005), which also construed § 1681t(b)(1)(F) as preempting private causes of action under the Massachusetts statute, and was summarily affirmed by the First Circuit without analysis. As we engage in more thorough statutory construction analysis, we reach a different conclusion.

*1031 Moreover, the district court construed the statutory exception in isolation, disregarding the affirmative preemption language of the statute that “ [n]o requirement or prohibition may be imposed” with respect to subjects regulated under § 1681s-2. (emphasis added). Neither Cal. Civ.Code section 1785.25(g) nor section 1785.31 impose a “requirement or prohibition.” Rather, these sections merely provide a vehicle for private parties to enforce other sections, which do impose requirements and prohibitions. In other words, Congress had no need to include these enforcement provisions in the § 1681t(b)(1)(F) exception to save the California statutory scheme from preemption, because those provisions were not preempted by the affirmative language of the preemption provision. By the plain language of the statute, therefore, these sections are not preempted by § 1681t(b)(1)(F).


MBNA argues that this plain reading of the statute is foreclosed by the Supreme Court's decision in Cipollone. Interpreting the phrase “any requirement or prohibition” in the Federal Cigarette Label and Advertising Act, a majority of the Cipollone Court held that common law damages actions can impose “requirement[s] or prohibition[s],” because “regulation can be as effectively exerted through an award of damages as through some form of preventive relief.” 505 U.S. at 521, 112 S.Ct. 2608 (plurality opinion) (citation omitted).FN32 But, as the court later made clear in a majority opinion relying on the Cipollone plurality's discussion on this point, it is not the common law enforcement mechanisms that are requirements or prohibitions, but the “common law duties ” underlying such actions. Riegel v. Medtronic, Inc., 552 U.S. 312, 128 S.Ct. 999, 1008, 169 L.Ed.2d 892 (2008) (emphasis added). As Riegel went on to explain, again relying on the Cipollone plurality, “common-law liability is premised on the existence of a legal duty, and a tort judgment therefore establishes that a defendant has violated a state-law obligation.” Id. (quoting Cipollone, 505 U.S. at 522, 112 S.Ct. 2608) (emphasis added). Thus, a “requirement” is “a rule of law that must be obeyed,” Bates v. Dow Agrosciences LLC, 544 U.S. 431, 445, 125 S.Ct. 1788, 161 L.Ed.2d 687 (2005), whether it arises from common law principles enforceable in damages actions or in a statute. But the damages remedy itself is not a “requirement or prohibition.”


FN32. Although only a plurality of the Court signed onto the portion of the opinion containing this specific language, a majority of justices adopted the position that the language “requirement or prohibition” sweeps broadly enough to encompass state common-law rules. See Cipollone, 505 U.S. at 548-49, 112 S.Ct. 2608 (Scalia and Thomas, JJ., concurring in the judgment in part and dissenting in part).




Here, it is Cal. Civ.Code section 1785.25(a), and only section 1785.25(a), that imposes legal duties-“rule[s] of law that must be obeyed”-on furnishers of information. Congress explicitly saved this section from preemption in the FCRA. Private enforcement of these obligations does not impose “requirement[s] or prohibition[s]” but, instead, provides enforcement mechanisms for “requirement[s] or prohibition[s]” imposed separately. Sections 1785.25(g) and 1785.31 do not impose any additional standards “designed to be ... potent method[s] of governing conduct and controlling policy,” Riegel, 128 S.Ct. at 1008, nor do these sections require furnishers to obey any additional rules of law. The rules that must be obeyed already exist in the reporting obligations specified by section 1785.25(a) and saved in the FCRA. See Bates, 544 U.S. at 445, 125 S.Ct. 1788.


MBNA's argument that Congress's desire for uniformity and consistency compels*1032 an alternative construction is also unpersuasive in this context. MBNA maintains that the FCRA preemption provision evidences a desire for uniform credit reporting obligations, and that the California statute was saved only because it was not inconsistent with obligations imposed by the federal statute. The legislative history surrounding § 1681t(b)(1)(F) is murky, but there is evidence that the statutory scheme, which establishes national requirements and preempts most state regulation, was motivated at least in part by a desire for uniformity of reporting obligations. See S.Rep. No. 103-209, at 7 (1993) (“Recognizing the national scope of the consumer reporting industry and the benefits of uniformity, the Committee bill includes provisions preempting state law in several key areas of the FCRA.”). It is also true that the excepted state law provisions are largely consistent with obligations imposed in the FCRA; indeed, the requirements imposed in the California and Massachusetts laws appear, in nearly identical fashion, in § 1681s-2(a).FN33


FN33. Compare Cal. Civil Code section 1785.25(a) (“A person shall not furnish information on a specific transaction or experience to any consumer credit reporting agency if the person knows or should know the information is incomplete or inaccurate.”), and Mass. Gen. Law 93 § 54A(a) (“Every person who furnishes information to a consumer reporting agency shall follow reasonable procedures to ensure that the information reported to a consumer reporting agency is accurate and complete. No person may provide information to a consumer reporting agency if such person knows or has reasonable cause to believe such information is not accurate or complete.”), with § 1681s-2(a)(1)(A) (“A person shall not furnish any information relating to a consumer to any consumer reporting agency if the person knows or has reasonable cause to believe that the information is inaccurate.”).




The only real inconsistency arises between the private enforcement provisions of the California and Massachusetts statutes and § 1681s-2(c) and (d), which prohibit private enforcement of the obligations under § 1681s-2(a). But this is an inconsistency that does not offend the purported goal of uniformity of credit reporting obligations. The enforcement sections do not impose inconsistent or conflicting obligations on furnishers of information; as we have noted, they impose no such requirements or prohibitions at all. As such, the enforcement provisions do not add to a patchwork of confusing obligations with which a furnisher must struggle to comply. They instead allow for additional avenues through which consumers can ensure that furnishers are complying with the obligations Congress specifically meant to impose.


Moreover, exempting specific state statutes from preemption is very unusual in federal statutes. To suppose Congress would do so for little or no purpose-as would be the case if the private cause of action under California law were preempted-is simply not plausible. See Geier v. Am. Honda Motor Co., 529 U.S. 861, 868, 120 S.Ct. 1913, 146 L.Ed.2d 914 (2000) (“The saving clause assumes that there are some significant number of ... cases to save.”).


Because the plain language of the preemption provision does not apply to private rights of action, and because the likely purpose of the express exclusion was precisely to permit private enforcement of these provisions, we hold that the private right of action to enforce Cal. Civ.Code section 1785.25(a) is not preempted by the FCRA.



D. Evidence of Causation/Damages

[15] Finally, MBNA proposes an alternative ground on which to affirm all *1033 claims: that Gorman failed in the summary judgment proceedings to submit admissible evidence of causation or damages. In Dennis v. BEH-1, LLC, 520 F.3d 1066, 1069-70 (9th Cir.2008), this court found sufficient evidence of causation and damages to survive summary judgment where:


Dennis [the plaintiff] testified that he hoped to start a business and that he diligently paid his bills on time for years so that he would have a clean credit history when he sought financing for the venture. The only blemish on his credit report in April 2003 was the erroneously reported judgment. According to Dennis, that was enough to cause several lenders to decline his applications for credit, dashing his hopes of starting a new business. Dennis also claims that Experian's error caused his next landlord to demand that Dennis pay a greater security deposit.


Here, Gorman submitted evidence that he was refused credit or offered higher than advertised interest rates; the explanations given by the creditors were delinquencies on his credit report; and the only delinquency is the MBNA account. Gorman maintains that he had to borrow money at inflated interest rates, and that he lost wages from the time spent dealing with his credit problems. Under Dennis, this is sufficient to establish causation and damages.



III. CONCLUSION

For the foregoing reasons, we AFFIRM in part and REVERSE in part the district court's order.

C.A.9 (Cal.),2009.
Gorman v. Wolpoff & Abramson, LLP
552 F.3d 1008, 09 Cal. Daily Op. Serv. 354, 209 Daily Journal D.A.R. 528
David A. Szwak
Bodenheimer, Jones & Szwak, LLC
416 Travis Street, Suite 1404, Mid South Tower
Shreveport, Louisiana 71101
318-424-1400 / Fax 221-6555
President, Bossier Little League
Chairman, Consumer Protection Section, Louisiana State Bar Association


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