1681e[b]: Burden of Proof

Maximum Possible Accuracy
David A. Szwak

1681e[b]: Burden of Proof

Postby David A. Szwak » Wed Oct 26, 2005 5:16 pm

DUTIES OF CRA's REGARDING DATA "FRONT END" POSTING AND REPORT PREPARATION ERRORS:

BURDEN OF PROOF UNDER 15 U.S.C. 1681e(b):

To recover against a credit reporting agency under 15 U.S.C. 1681e(b), Plaintiff must prove:

a) The agency was negligent or wilful in that it failed to follow reasonable procedures to assure maximum possible accuracy of information about the Plaintiff;

b) The agency reported inaccurate information about the Plaintiff;

c) Plaintiff was injured; and

d) The agency's negligence or wilful conduct was the proximate cause of such injury. 15 U.S.C. 1681e(b); Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329 (9th Cir. 1995) [Cal.] [to make out prima facie violation under 15 U.S.C. 1681e(b), the consumer must present evidence tending to show that credit reporting agency prepared report containing inaccurate information. Spence v. TRW, 92 F.3d 380, 382 [6th Cir. 1996] [Mich.]; Guimond v. Trans Union Credit Information Co., 45 F.3d 1329, 1333 [9th Cir. 1995] [Cal.]; Henson v. CSC, 29 F.3d 280, 284 [7th Cir. 1994].]; Colletti v. Credit Bureau Services, 644 F.2d 1148 (5th Cir. 1981); Cahlin v. GMAC, 936 F.2d 1151 (11th Cir. 1991); Bryant v. TRW, Inc., 487 F.Supp. 1234, 1238 (U.S.D.C. E.D. Mich. 1980), affirmed, 689 F.2d 72 (6th Cir. 1982); Morris v. Credit Bureau of Cincinnati, 563 F.Supp. 962, 967 (U.S.D.C. S.D. Ohio 1983); Neptune v. Trans Union Corp., 1993 Westlaw 505601 (unreported) (U.S.D.C. E.D. Pa. 1993); R. Smith, "A Look Inside a Credit Bureau's Operation," Privacy Journal, Vol.22, No.6, p.5 (April 1996), [see appendix "A"].

A consumer reporting agency has a duty to follow reasonable procedures to assure the maximum possible accuracy of information in each consumer's file held by the agency. Koropoulos v. Credit Bureau, Inc., 734 F.2d 37 (C.A. D.C. 1984); Ladner v. Equifax Credit Information Services, Inc., 828 F.Supp. 427 (U.S.D.C. S.D. Miss. 1993); 15 U.S.C. 1681e(b).

David A. Szwak

Postby David A. Szwak » Thu Oct 27, 2005 5:54 pm

To recover against a credit reporting agency under 15 U.S.C. 1681e[b], Plaintiffs must show proof tending to show that:

a] The agency was negligent or wilful in that it failed to follow and use reasonable procedures to assure maximum possible accuracy of information about the Plaintiff;

b] The agency reported inaccurate information about the Plaintiff;

c] Plaintiff was injured; and

d] The agency's negligence or wilful conduct was the proximate cause of such injury.

Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 [9th Cir. 1995] [Cal.]; Cahlin v. GMAC, 936 F.2d 1151 [11th Cir. 1991]; Dalton v. Capital Associated Industries, 257 F.3d 409 [4th Cir. 7/16/01]; Bryant v. TRW, Inc., 487 F.Supp. 1234, 1238 [U.S.D.C. E.D. Mich. 1980], affirmed, 689 F.2d 72 [6th Cir.1982]; Richardson v. Fleet Bank, 190 F.Supp. 2d 81, 87-88 [U.S.D.C. Mass. 2001]; Zala v. Trans Union, LLC, 2001 U.S. Dist. Lexis 549 [U.S.D.C. N.D. Tex. 2001].

David A. Szwak

Postby David A. Szwak » Sun Oct 30, 2005 1:09 pm

Liability under the FCRA attaches for both negligent violations, which require a showing of actual damages, see 15 U.S.C. § 1681o, and willful violations, for which statutory and punitive damages are available, see 15 U.S.C. § 1681n. Willful violations require "conscious disregard" or "deliberate and purposeful" conduct. Casella v. Equifax Credit Info. Servs., 56 F.3d 469, 476 (2d Cir.1995). It is premature to conclude that any alleged failure to investigate was not willful. (See Recommended Ruling, at 9 ("The defendant has not offered any evidence regarding what, if anything, it did to investigate the dispute.")). Thus, defendant's argument for summary judgment on the ground of absence of damages under the FRCA also fails (again this is relevant only insofar as it informs plaintiff's CUTPA claim).

Rosenberg v. Cavalry Investments, LLC
Slip Copy, 2005 WL 2490353
D.Conn.,2005.

David A. Szwak

Postby David A. Szwak » Sun Oct 30, 2005 1:36 pm

A case of negligent noncompliance with § 1681e(b) consists of four elements: (1) inaccurate information was included in a consumer's credit report; (2) the inaccuracy was due to defendant's failure to follow reasonable procedures to assure maximum possible accuracy; (3) the consumer suffered injury; and (4) the consumer's injury was caused by the inclusion of the inaccurate entry. Philbin, 101 F.3d at 962-63.

Vrlaku v. Citibank
Slip Copy, 2005 WL 2338852
D.N.J.,2005.

David A. Szwak

Postby David A. Szwak » Tue Nov 01, 2005 5:07 am

Whelan v. Trans Union,
[1994, E.D. N.Y.]
862 F.Supp. 824

Credit reporting agency whose report contained inaccurate information was entitled to summary judgment in plaintiffs' claim under 1681e[b], because plaintiffs presented no evidence that agency was notified before action was filed that report contained inaccurate information. To succeed on claim brought under 1681e[b], plaintiff must establish that [1] consumer reporting agency negligently failed to follow reasonable procedure to ensure accuracy of credit report; [2] agency reported inaccurate information about plaintiff; [3] plaintiff was injured; and [4] agency's negligence proximately caused plaintiff's injury.

David A. Szwak

Postby David A. Szwak » Tue Dec 06, 2005 6:08 pm

Slip Copy, 2005 WL 3262954 (N.D.Ohio)
United States District Court,
N.D. Ohio, Eastern Division.
John SCIRIA, Plaintiff,
v.
HUNTINGTON BANK, et al., Defendants.
No. 1:05CV0533.
Dec. 1, 2005.

MEMORANDUM OPINION

NUGENT, J.
*1 This matter is before the Court on Defendant, Huntington National Bank's ("Huntington") Motion to Dismiss or, in the Alternative, Motion for Summary Judgment (ECF # 31), and Defendant, Equifax Information Services LLC's ("Equifax") Motion for Summary Judgment. (ECF # 30). Plaintiff, John Sciria, claims that he was injured because the Defendants misreported information on his credit report and in doing so, negligently and/or willfully violated the Fair Credit Reporting Act ("FCRA"). Defendants have both moved for summary judgment on the grounds that Mr. Sciria can present no evidence in support of his allegations. Mr. Sciria filed combined responses to both of these motions. For the reasons set forth below, Defendants' Motions for Summary Judgment are both GRANTED.

A. Claims Against Equifax
Mr. Sciria raises three claims against Equifax in his second Amended Complaint. (ECF # 27-2). [FN1] The first claim alleges that Equifax did not maintain reasonable procedures to assure the maximum possible accuracy of the information contained in a credit report, in violation of 15 U.S.C. § 1681e(b), and that as a result Mr. Sciria suffered compensatory damages in the amount of fifty thousand dollars ($50,000), plus costs and attorney fees. A credit reporting agency is not liable under 15 U.S.C. § 1681e(b) for reporting inaccurate information, so long as the agency follows reasonable procedures to prevent such an occurrence. See, e.g., Spence v. TRW, Inc., 92 F.3d 380, 381 (6th Cir.1996); Bryant v. TRW, Inc., 689 F.2d 72, 78 (6th Cir.1982); Sepulvado v. CSC Credit Services, Inc., 158 F.3d 890, 896 (5th Cir.1998); Hauser v. Equifax, Inc., 602 F.2d 811, 814-15 (8th Cir.1979). In order to state a prima facie case for a violation, a plaintiff must show:


FN1. Equifirst argues that this Amended Complaint has not been properly filed. The Amended Complaint was attached as an Exhibit to Mr. Sciria's Motion for Leave to File an Amended Complaint (ECF # 27). Although it was not captioned as a motion for leave to file instanter, in order to provide every benefit of the doubt to the plaintiff as the non-moving party in this case, the Court will treat the Amended Complaint as having been filed at the time the Motion for Leave to do so was granted.


1. inaccurate information was included in a consumer's credit report;
2. the inaccuracy was due to the agency's failure to follow reasonable procedures;
3. the plaintiff suffered injury; and
4. the consumer's injury was caused by the inclusion of the inaccurate entry.
Philbin v. Trans Union Corp., 101 F.3d 957, 963 (3rd Cir.1996). Equifax has submitted evidence in the form of an affidavit from its Officer of Consumer Affairs that shows that it has in place reasonable procedures to prevent inaccurate disclosure of credit information. Mr. Sciria has offered no evidence, whatsoever, that would contradict this information. Therefore, he has not met his burden of showing that there is a material fact in dispute on this issue, and summary judgment on this claim is warranted.

David A. Szwak

Postby David A. Szwak » Sun Dec 25, 2005 9:50 pm

Sampson v. Equifax Information Services, LLC
Slip Copy, 2005 WL 2095092 (S.D.Ga.)

Whether Equifax is Liable Under § 1681e(b) is a Question of Fact
THE FCRA provides: "Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 1. 15 U.S.C.A. § 1681e(b) (1998).
If a consumer satisfies her initial burden by presenting evidence tending to show that the reporting agency published a credit report containing inaccurate data, "[t]he agency can escape liability if it establishes that an inaccurate report was generated by following reasonable procedures, which will be a jury question in the overwhelming majority of cases." Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir.1991). Consequently, under Cahlin, "following reasonable procedures" is an affirmative defense that must be proven by the reporting agency. See also Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir.1995); but see Philbin v. Trans Union Corp., 101 F.3d 957, 964-65 (3d Cir.1996).
*3 In Philbin, the Third Circuit considered the appellate decisions in Cahlin and Guimond, and determined that the more plausible reading of the cases does not shift the burden of proving "reasonable procedures" to the credit reporting agency. Instead, it interpreted Cahlin and Guimond as allowing the jury to infer that reasonable procedures were not followed based upon the showing of some inaccuracy. Analogizing to the doctrine of res ipsa loquitur, Philbin construed these decisions as allowing the jury to reject such an inference, and the burden of proof remains with the plaintiff. Id. at 965.
The Court concludes that Philbin, perhaps in trying to narrow the divide between Cahlin and Guimond, on the one hand, and contrary decisions describing the plaintiff's burden of proof under § 1681e(b), [FN1] on the other, has placed an unnatural strain on Cahlin' s language. The Court reads Cahlin (and, less importantly, Guimond ) as requiring the reporting agency to bear the burden of proof on this point. Indeed, Philbin appears to have conceded the desirability of this approach, when it recognized that the reporting agency is "in a far better position to prove that reasonable procedures were followed than a plaintiff is to prove the opposite." Id.

FN1. E.g., Sepulvado v. CSC Credit Servs., Inc., 158 F.3d 890,

896 (5th Cir.1998); Dalton v. Capital Associated Indus. Inc., 257 F.3d 409, 416 (4th Cir.2001); Stewart v. Credit Bureau, Inc., 734 F.2d 47, 51 & n. 5 (D.C.Cir.1984) (consumer bears burden of proving failure to follow reasonable procedures).


Sampson's affidavit provides some evidence to support her contention that the credit report contained inaccurate information. According to her affidavit, The Money Tree was unsuccessful, in three different lawsuits against her, to collect her alleged indebtedness to it. Sampson Aff. ¶ 7. She also related that she has been denied credit on several occasions as a result of the false statements contained in her Equifax credit report. Sampson Aff. ¶¶ 4-5.
Contrary to Equifax's arguments, the Court cannot credit Willis' contrary representations regarding the accuracy of the report on a motion for summary judgment. See also Philbin, 101 F.3d at 968 (the plaintiff need not depose, or take affidavits from, "those responsible for the decision" to make out a prima facie case under § 1681e(b)). The Court cannot find the report was "accurate" as a matter of law. Cahlin, 936 F.2d at 1156 (indicating that summary judgment would be proper on such a claim only if the court could so conclude). At trial, presuming that Sampson marshals enough evidence to survive a directed verdict on the inaccuracy of a credit item in her report, the burden will then shift to Equifax to prove to the jury that it followed reasonable procedures in assuring "maximum possible accuracy" in the preparation of Sampson's credit report. 15 U.S.C.A. § 1681e(b) (1998); Cahlin, 936 F.2d at 1156.
Equifax also challenges Sampson's proof of causation and damages. According to the company, any harm that Sampson suffered was not its fault, but was a result of her own habit of failing to pay her bills in a timely fashion, if at all. [FN2] Consequently, Equifax argues, Sampson cannot prove that it caused her harm.

FN2. Willis stated that Sampson's "consumer credit file contains numerous derogatory entries," in addition to the disputed accounts, "including multiple charged of accounts, collections accounts and a repossession." Willis Aff. ¶ 12. Willis, as a supervisor in Equifax's Office of Consumer Affairs, could be a person with personal knowledge of the contents of Sampson's credit report, as she contends in her affidavit.


*4 Yet, a plaintiff does not have to show that the inaccurate information was the only reason she was denied credit. Rather, the consumer only needs to produce evidence from which a reasonable trier of fact could infer that the inaccurate entry played a part in a decision to deny credit. Id. at 1161 (plaintiff must show that inaccuracy was "a causal factor"). The consumer need not eliminate the possibility that correct, derogatory entries also factored into the decision. See also Philbin, 101 F.3d at 969-70 (finding support for such an approach in tort and employment discrimination cases). [FN3]

FN3. Equifax's reliance on Enwonwu v. Trans Union, LLC, 364 F.Supp.2d 1361, 1367 (N.D.Ga.2005), is misplaced, insofar as the Enwonwu court was able to determine, as a matter of law, that the inaccuracy was not a substantial factor in the denial of credit. Equifax has produced no evidence from which the Court could make such a determination.


Equifax also faults Sampson for failing to prove that she suffered damages. Defendant protests that Plaintiff's affidavit is conclusory, because she has not produced evidence of any credit denials, or even the names of the businesses that refused to extend her credit. In Cahlin, the court granted summary judgment because the consumer had not produced any evidence of harm. 936 F.2d at 1160-61.
Sampson argues that Cahlin is inapplicable because her affidavit shows that she suffered harm due to Equifax's conduct. Indeed, the Eleventh Circuit noted that "Cahlin produced no documentary or testimonial evidence to support" his allegations that he had been denied credit as a result of inaccurate information contained in his credit report. Id. at 1156. Here, Sampson has produced a sworn statement that she was denied credit, and has suffered emotional distress, as a result of Equifax's conduct. [FN4]

FN4. In addition, Sampson asserts that the loss of credit opportunities can constitute compensable harm under § 1681e(b). Under this theory, Plaintiff claims that she was deterred from seeking credit because of the derogatory errors in her report. See Guimond, 45 F.3d at 1332 n. 2 & 1333.


Rule 56(e) of the Federal Rules of Civil Procedure contemplates the use of affidavits in opposition to motions for summary judgment. As a result of Sampson's affidavit, Cahlin is distinguishable from the facts presented in this case. Sampson's sworn averments regarding her purported indebtedness to The Money Tree are "specific facts showing that there is a genuine issue for trial." Fed.R.Civ.P. 56(e). Again, contrary to Equifax's arguments, the Court is not empowered to judge Sampson's credibility, based on what Equifax perceives as her lack of detail in her affidavit, on a motion for summary judgment.
Moreover, Equifax questions Sampson's ability to recover for humiliation and embarrassment. Mental anguish constitutes a compensable harm under the FCRA, and emotional distress damages may be recovered even absent a denial of credit. Philbin, 101 F.3d at 963 n. 3; Crane v. Transunion, LLC, 282 F.Supp.2d 311, 319 (E.D.Pa.2003); Guimond, 45 F.3d at 1333; Morris v. Credit Bureau of Cincinnati, Inc., 563 F.Supp. 962, 969 (S.D.Ohio 1983) (consumer awarded $10,000 for emotional distress even though he explained inaccuracies and discrepancies in his credit report and obtained credit eventually).
Nonetheless, Equifax contends that Sampson cannot recover emotional distress damages based solely on her own testimony. In Carey v. Piphus, the Supreme Court held that a plaintiff could not recover compensatory damages for emotional distress resulting from a procedural due process violation "without proof that such injury was actually caused." 435 U.S. 247, 264, 98 S.Ct. 1042, 55 L.Ed.2d 252 (1978). In Cousin v. Trans Union Corp., the Fifth Circuit extended Carey to hold that "evidence of genuine injury, such as the evidence of the injured party's conduct and the observations of others" was required before a consumer could recover compensatory damages under the FCRA for emotional distress. 246 F.3d 359, 371 (5th Cir.2001); Carey, 435 U.S. at 264 n. 20. Accordingly, Equifax asserts that Sampson's mental anguish claim fails because she has not produced independent evidence of emotional distress, such as medical or psychological consultations.
*5 While Sampson need not prove that she confided her distress to a medical professional, the Court agrees that she must produce some form of independent, corroborating evidence of her humiliation and embarrassment at trial to recover compensatory damages for emotional distress. Numerous decisions have upheld a range of damages based on varying evidence in such cases. See Guimond, 45 F.3d at 1333; Stevenson v. TRW Inc., 987 F.2d 288, 297 (5th Cir.1993) (collecting cases); Pinner v. Schmidt, 805 F.2d 1258, 1265 (5th Cir.1986)($25,000 for embarrassment engendered by three credit denials and protracted dealings with reporting agency); Millstone v. O'Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir.1976) ($2,500 awarded after insurer cancelled policy due to an erroneous credit report); Thompson v. San Antonio Retail Merchs. Ass'n, 682 F.2d 509, 514 (5th Cir.1982) ($10,000 awarded for humiliation caused by the reporting agency taking several months to correct the report, and by three credit denials).
Because genuine issues of material fact remain in dispute regarding the accuracy of Sampson's credit report, the reasonableness of Equifax's procedures, causation, and the extent of Sampson's harm, summary judgment is inappropriate as to Sampson's § 1681e(b) claim.

David A. Szwak

Postby David A. Szwak » Tue Feb 14, 2006 6:15 pm

Slip Copy, 2006 WL 227585 (11th Cir.(Ga.))
Only the Westlaw citation is currently available.

This case was not selected for publication in the Federal Reporter.

Please use FIND to look at the applicable circuit court rule before citing this opinion. Eleventh Circuit Rule 36-2. (FIND CTA11 Rule 36-2.)



United States Court of Appeals,
Eleventh Circuit.
Leopold O.V. ENWONWU, Plaintiff-Appellant,
v.
TRANS UNION, LLC, d.b.a. Trans Union Consumer Relations, Equifax Information
Services, L.L.C., Winding River Village Condominium Association, Inc., Alan
Armstrong, Joyce Weems, Richard M. Howe, Defendants-Appellees.
No. 05-13695
Non-Argument Calendar.
D.C. Docket No. 03-00282-CV-ODE-1.
Jan. 31, 2006.

Section 1681e(b) provides that "[w]henever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 15 U.S.C. § 1681e(b). To establish a prima facie case of a violation of § 1681e(b), a consumer must present evidence that a credit reporting agency's report was inaccurate and was a causal factor in the denial of his credit application. Cahlin v. Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156, 1161 (11th Cir.1991). The FCRA, however, "does not make reporting agencies strictly liable for all inaccuracies." Id. "The agency can escape liability if it establishes that an inaccurate report was generated by following reasonable procedures...." Id.


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