The U.S. Court of Appeals for the Ninth Circuit recently affirmed a trial court's grant of summary judgment in favor of a credit reporting agency, holding that the plaintiff consumer failed to present sufficient evidence that the agency violated the federal Fair Credit Reporting Act ("FCRA") willfully or negligently, as required for liability.
A copy of the opinion is available at: Link to Opinion
The Ninth Circuit previously held that the defendant credit reporting agency violated the FCRA when, in 2010, it issued a tenant screening report that disclosed a criminal charge that was filed against the consumer in 2000 but dismissed in 2004. The FCRA prohibits the disclosure in a credit report of any adverse item of information that antedates the report by more than seven years. 15 U.S.C. § 1681c(a)(5). The FCRA imposes liability for negligent or willful violations of its terms. §§ 1681n(a), 1681o.
On remand, the trial court granted summary judgment to the agency, holding that the consumer failed to present evidence that the CRA violated the FCRA willfully or negligently, as required for liability by §§ 1681n(a) and 1681o(a). The consumer timely appealed.
At issue on appeal was whether the defendant was negligent or willful in adopting an interpretation of § 1681c(a)(5), which the Ninth Circuit subsequently held was erroneous, that permitted the reporting of a dismissal of a charge that had been filed more than seven years from the date of the report, where the dismissal occurred within seven years of the report.
"To prove a negligent violation [of the FCRA], a plaintiff must show that the defendant acted pursuant to an objectively unreasonable interpretation of the statute." Marino, 978 F.3d at 673–74 (citing Syed v. M-I LLC, 853 F.3d 492, 505 (9th Cir. 2017)).
A plaintiff can prove a willful violation by showing a knowing or a reckless violation of a standard. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007). To prove a willful violation in the absence of knowing disregard, "a plaintiff must show not only that the defendant's interpretation was objectively unreasonable, but also that the defendant ran a risk of violating the statute that was substantially greater than the risk associated with a reading that was merely careless." Marino, 978 F.3d at 673 (citing Safeco, 551 U.S. at 69).
The consumer argued on appeal that because a 1998 amendment removed the phrase "the date of disposition" from what was previously §1681c(a)(5), that indicated that Congress no longer wished to calculate the reporting period from the date of disposition.
However, the Ninth Circuit noted that even though Congress removed "the date of disposition" as the reference date, it did not replace that phrase with another reference date in § 1681c(a)(5), even though a different provision of the statute, §1681c(a)(2), explicitly measures a reporting window "from the date of entry."
Furthermore, the Ninth Circuit recalled that when it held that the seven-year reporting window in §1681c(a)(5) regarding a dismissal of a charge is measured from the date the criminal charge was filed, not when it was dismissed, the panel was not unanimous.
The consumer also argued that it was reckless for the defendant to rely on an "outdated" 1990 commentary by the Federal Trade Commission ("FTC"), the agency responsible for enforcing the FCRA, which stated "if charges are dismissed at or before trial, or the consumer is acquitted, the date of such dismissal or acquittal is the date of disposition." FTC, Commentary on the Fair Credit Reporting Act, 55 Fed. Reg. 18,818 (May 4, 1990) (former 16 C.F.R. pt. 600).
In response, the Ninth Circuit countered that, although the 1990 Commentary necessarily did not address the change in the statutory language as it was written before the 1998 amendment, it was the only guidance from the FTC on this issue in 2010 when the agency issued the tenant screening report.
Furthermore, the Court observed that the defendant had introduced evidence that the statute had "been interpreted for decades to permit" credit reporting agencies to report the dismissal of a charge where the dismissal occurred within seven years from the report.
Thus, the Ninth Circuit concluded that a reasonable fact finder could not find on this record that the defendant's violation of § 1681c(a)(5) was negligent, much less willful.
Accordingly, the Ninth Circuit affirmed the trial court's grant of summary judgment to the defendant on the consumer's claims under the FCRA.
Ralph T. Wutscher
Maurice Wutscher LLP
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