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Ramirez v. Trans Union, LLC

United States District Court, N.D. California

March 27, 2017

TRANS UNION, LLC, Defendant.


          JACQUELINE SCOTT CORLEY United States Magistrate Judge.

         Plaintiff contends that between January and July 2011 Trans Union violated three Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681 et seq., requirements: (1) that credit reporting agencies establish “reasonable procedures” to ensure the “maximum possible accuracy” of information provided about consumers under 15 U.S.C. §1681e(b); (2) that credit reporting agencies “clearly and accurately” disclose “all information in the consumers file at the time of [a] request” under § 1681g(a), and (3) that credit reporting agencies provide a statement of consumer rights with each such disclosure under § 1681g(c). Trans Union argues that summary judgment is appropriate on all of Plaintiff's claims because Plaintiff cannot establish that Trans Union willfully violated the FCRA. Because a reasonable jury could find otherwise, summary judgment is inappropriate. The Court declines to reconsider Trans Union's Article III standing arguments as the Court has considered-and rejected-these arguments in multiple previous orders.

         A. Willful Violations under the FCRA

         Plaintiff's FCRA claims are all premised on a “willful” violation. A willful violation entitles a consumer to statutory damages ranging from $100 to $1, 000, as well as punitive damages, and attorney's fees and costs. See 15 U.S.C. § 1681n. A violation of the FCRA is willful if it is either knowing or reckless. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007). “[A] company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Id. at 69. “That is, the defendant must have taken action involving ‘an unjustifiably high risk of harm that is either known or so obvious that it should be known.'” Bateman v. American Multi-Cinema, 623 F.3d 708, 711 n.1 (9th Cir. 2010) (quoting Safeco, 551 U.S. at 68). Trans Union contends that its conduct was not willful as a matter of law and therefore it is entitled to summary judgment.

         1.Clearly Established Law is not Required

         Trans Union first insists that the FCRA willfulness analysis mirrors qualified immunity; that is, to get to a jury a plaintiff must show that the defendant's conduct violated “clearly established” law-provided by “controlling authority within the Circuit, or an overwhelming body of authority outside the Circuit.” (Dkt. No. 218-5 at 28:10-13.) Not so.

         First, in Syed v. M-I, LLC, 846 F.3d 1034 (9th Cir. 2017), opinion amended and superseded on denial of reh'g, No. 14-17186, ___ F.3d ___, 2017 WL 1050586 (9th Cir. Mar. 20, 2017), the Ninth Circuit considered a question of first impression under the FCRA. In ruling that the defendant's FCRA violation was willful as a matter of law, the court squarely rejected defendant's argument that its “interpretation of the statute [wa]s objectively reasonable in light of the dearth of guidance from federal appellate courts and administrative agencies. Id. at *8. Instead, the court held that “[a] lack of guidance [] does not itself render [defendant's] interpretation reasonable.” Id. “Notwithstanding that we are the first federal appellate court to construe Section 1681b(b)(2)(A), this is not a ‘borderline case. An employer ‘whose conduct is first examined under [a] section of the act should not receive a pass because the issue has never been decided.” Id. at *9 (quoting Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010)). It follows, then, that a plaintiff need not show that a defendant's conduct violated clearly established law to prove a willful violation of the FCRA.

         Second, even apart from Syed's controlling holding, no court has held that a defendant can be found to have willfully violated the FCRA only when its conduct violates clearly established law. Safeco did not so hold; instead, after reviewing the FCRA statutory language at issue, the Supreme Court held that given the lack of prior authority interpreting the statute contrary to defendant Safeco's interpretation, and given the statute's ambiguity, Safeco's interpretation of the statute was not reckless as a matter of law. 551 U.S. at 70-71. In other words, an FCRA defendant's conduct cannot be willful if it involves an objectively reasonable interpretation of the statute and there is no prior authority to the contrary. Such a conclusion is a far cry from holding that the law must first be clearly established that the defendant's conduct violates the FCRA before it can be found willful. See Heaton v. Soc. Fin., Inc., No. 14-CV-05191-TEH, 2015 WL 6744525, at *6 (N.D. Cal. Nov. 4, 2015) (rejecting defendants' contention “that if a statute is unclear and there is no precedential guidance as to what a valid interpretation may be, a violation may not be considered willful” as an overstatement of Safeco's holding). The cases Trans Union relies on are similar to Safeco. For example, in Redman v. RadioShack Corp., 768 F.3d 622 (7th Cir. 2014), the court described the violation there as not “willful because it consisted of a permissible interpretation of an ambiguous statute” and there were no previous cases to alert the company of its erroneous interpretation. Id. at 639 (citing Safeco, 551 U.S. at 68).

         2. The Section 1681g Disclosure Claims

         Plaintiff makes two 1681g claims. First, that when Plaintiff requested his consumer file, that is, his credit report, Trans Union unlawfully failed to disclose that Plaintiff was identified as a potential OFAC match, even though that information was communicated to customers who asked for Plaintiff's credit report. (Dkt. No. 221-25.) Second, that when Trans Union did disclose to Plaintiff that he is identified as a potential match, Trans Union did not provide Plaintiff with a summary of rights as required by section 1681g(c). (Dkt. No 221-24.) Trans Union contends that no reasonable trier of fact could find that it willfully violated either FCRA provision.

         a) 1681g(a) Claim

         The FCRA, 15 U.S.C. § 1681g(a), provides in part that “[e]very consumer reporting agency shall, upon request, ... clearly and accurately disclose to the consumer: (1) All information in the consumer's file at the time of the request.” (emphasis added). Trans Union argues that its conduct was not willful as a matter of law because the FCRA did not require Trans Union to disclose the OFAC Alert to a consumer and, even if it did apply, Trans Union did disclose the information in compliance, or arguable compliance, with the FCRA.

         i. The FCRA Applies to the OFAC Alert Trans Union advances two arguments in support of its theory that the FCRA does not apply to OFAC information or its OFAC Alert product. Neither is availing.

         First, Trans Union's interpretation of “consumer file” as not including information about a consumer having an OFAC Alert is not objectively reasonable for the reasons explained by the Third Circuit in Cortez. The FCRA defines “consumer file” as “all of the information on that consumer recorded and retained by a consumer reporting agency regardless of how the information is stored.” 15 U.S.C. § 1681a(g). Trans Union argues that because the OFAC Alert information was not part of its own database, and was instead maintained by Accuity, it was not part of Plaintiff's “consumer file, ” or at least its interpretation of consumer file as not including information so maintained was not unreasonable. As the Cortez court explained, however, Trans Union's interpretation ignores that the FCRA expressly provides that a credit reporting agency has a duty of disclosure to a consumer of all “information on [a] consumer . . . regardless of how the information is stored.” 617 F.3d at 711 (quoting 15 U.S.C. § 1681a(g)). Congress did not “intend[] to allow credit reporting companies to escape the disclosure requirement in § 1681a(g) by simply contracting with a third party to store and maintain information that would otherwise clearly be part of the consumer's file and is included in a consumer report.” Id. ‚ÄúCongress clearly intended the protections of the FCRA to apply to all information furnished or that might be furnished in a consumer ...

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