January 12, 2009; see amended opinion filed 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.
The opinion of the court was delivered by: Berzon, Circuit Judge
Argued and Submitted July 17, 2008 -- San Francisco, California
Before: Richard A. Paez and Marsha S. Berzon, Circuit Judges, and Harold Baer,*fn1 District 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 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.
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.*fn2
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 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.*fn3
The balance at that time was more than $6,000.*fn4
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."*fn5
Between May 2004 and November 2005, Gorman informed the three major credit reporting agencies (Equifax, Trans-Union, and Experian) that their credit reports included inaccurate information.
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.*fn6
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.
This case comes to us on summary judgment. We review a grant of summary judgment de novo. Bodett v. CoxCom, Inc., 366 F.3d 736, 742 (9th Cir. 2004). Summary judgment 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 (1986)).
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
Congress enacted the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. §§ 1681-1681x,*fn7 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, 127 S.Ct. 2201, 2205 (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.*fn8 Section 1681s-2 sets forth "[r]esponsibilities of furnishers of information to consumer reporting agencies," delineating two categories of responsibilities.*fn9 Subsection (a) details the duty "to provide accurate information," and includes the following duty:
(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.
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 1681o 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.*fn10 See § 1681s-2(d).
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 ...