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Fair Credit Reporting: 12.2 Right to Jury Trial; Jury Instructions

The FCRA is silent on whether the consumer has a right to a jury trial. Although no decision directly addresses whether parties have a Seventh Amendment right to a jury trial in FCRA actions, cases involving the Fair Debt Collection Practices Act294 and the Truth in Lending Act295 afford strong support for the argument that under the Supreme Court’s reasoning in Curtis v.

Fair Credit Reporting: 12.3.1.1 Pleadings Standards for Defenses

Defendants typically raise boilerplate defenses in their answers, including to FCRA claims. Often, many of these are completely inapplicable to the claims asserted in the complaint. Prior to the Supreme Court’s decisions in Bell Atlantic v. Twombly308 and Ashcroft v.

Fair Credit Reporting: 12.3.1.2 Statutory Defenses

Unlike other titles of the Consumer Credit Protection Act, there are no separate general defenses in the FCRA itself, such as the bona fide error defense set forth in the FDCPA and TILA.313 This is not to say that there are no affirmative defenses to FCRA claims, both specific to the statute and of generalized applicability.

Fair Credit Reporting: 12.3.1.3.1.1 Generally

Prior to the enactment of the FACTA amendments in 2003, the FCRA provided that claims needed to be brought within two years of the “date on which the liability arises,” regardless of the date the consumer discovered the violation, unless a willful misrepresentation was involved.321 FACTA eased the harshness of this rule by providing that, effective March 31, 2004, a suit must be filed within two years of the “discovery by the plaintiff of the violation that is the basis for . . .

Fair Credit Reporting: 12.3.1.3.1.3 New, repeated, or continuing violations

The limitations period for some claims under the FCRA, such as those alleging inadequate procedures to ensure maximum possible accuracy, runs from each transmission of an inaccurate consumer report giving rise to potential liability under section 1681e(b).336 Similarly, where the claim is that a CRA failed to block the reporting of information resulting from identity theft, the violation does not occur only on the date that the duty arose, but rather continues thereafter until cured.337

Fair Credit Reporting: 12.3.1.3.1.4 Discovery rule

In Merck & Co. v. Reynolds, the United States Supreme Court, interpreting the discovery rule in securities fraud cases, held as a matter of first impression that discovery of the violation occurs when the plaintiff actually discovers the facts constituting the violation, or when a reasonably diligent plaintiff would have discovered the facts constituting the violation, whichever comes first.344 The Court’s analysis includes several observations that should apply with equal force in the context of an FCRA violation.

Fair Credit Reporting: 12.3.1.3.1.5 Equitable tolling

The Supreme Court has recognized equitable tolling of a federal statute of limitations “in situations where the claimant has actively pursued his judicial remedies by filing a defective pleading during the statutory period or where the complainant has been induced or tricked by his adversary’s misconduct into allowing the filing deadline to pass.”370The plaintiff’s exercise of due diligence may be important to a finding of equitable tolling.371 However, at least one court has held that the a

Fair Credit Reporting: 12.3.1.3.2 Limitations period for state law FCRA and other legal claims

The limitations period for a common law tort claim will vary by state and may differ for different types of torts, but will often be one or two years. In some states, the tort limitations period will begin when the liability first arose, not when the consumer discovered or should have discovered the violation. Consequently, in many situations, a tort limitations period will be less than for an FCRA claim, which is two years from the date of discovery, but a maximum of five years from the date of the violation that is the basis for liability.

Fair Credit Reporting: 12.3.1.5 Equitable Defenses

Equitable defenses, such as unclean hands, are improperly asserted as they do not provide an excuse for failure to comply with statutory obligations and do not bar a claim for damages. For example, a consumer can bring an FCRA claim against a user even if the consumer had submitted a fraudulent insurance claim to the user.

Fair Credit Reporting: 12.3.1.7 Exhaustion

In general, the consumer is under no duty to exhaust other FCRA remedies or rights before filing suit.407 For example, there is no obligation to dispute the information in the CRA’s files before bringing suit for a violation of the Act against the CRA.408 While the FCRA explicitly provides for the consumer’s right to dispute information, and provides remedies where the CRA does not agree with the consumer, such as the consumer’s right to have the consumer’s own statement included in the file

Fair Credit Reporting: 12.3.1.8 Litigation Privilege

There is no litigation privilege or immunity which can serve as a defense to a claim based on improperly using a consumer report during litigation.411 The issue has more frequently arisen in Fair Debt Collection Act cases, where it has uniformly failed.412

Fair Credit Reporting: 12.3.1.10 Exclusive Bankruptcy Remedy Defense

Contrary to some defendants’ contention, the Bankruptcy Code does not displace the FCRA nor preclude an FCRA claim.438 While the elements of each may overlap, they are not identical, and the objectives and remedies available may differ.439 Similarly, the availability of an FCRA suit does not bar a chapter 13 debtor’s contempt motion.440

Fair Credit Reporting: 12.3.1.11 Contractual Waiver of Rights

In some circumstances a consumer may enter into a contract that includes a waiver of rights under the FCRA. Any such purported waiver of rights under the FCRA is void as against public policy. As one court has noted in the context of a rental application, permitting CRAs to hide behind such a waiver would improperly exempt them from the FCRA’s mandate to ensure the accuracy of private, sensitive, and potentially stigmatizing information.441

Fair Credit Reporting: 12.3.2 Counterclaims

If the case is in state court, there is no bar to a defendant’s counterclaim. In federal court, however, such a counterclaim raises a jurisdictional issue; it must either meet the statutory supplemental jurisdiction requirements442 or fulfill the demands of diversity jurisdiction, including the requisite $75,000 amount in controversy.443

Fair Credit Reporting: 12.3.3.1 Overview

Where more than one entity may be liable to plaintiff, the relationship among such entities can give rise to issues of offset, contribution, indemnity, insurance and third-party claims. Each of these will be discussed in turn below.

Fair Credit Reporting: 12.3.3.2 Offset; Indemnity

“[T]here is no right to offset or contribution under the FCRA.”453 In general, a primary wrongdoer under the FCRA may not “lay off its own liability” onto another defendant.454 Similarly, a defendant in an FCRA case should not be permitted to implead a third party for the purpose of obtaining indemnification.455 Nevertheless, if a plaintiff sues both the CRA that prepared a report and the user that requested it, these defendants may seek to f

Fair Credit Reporting: 12.3.3.3 Insurance

Although collateral to the main event, insurance coverage issues occasionally arise that may impact the damages that, as a practical matter, can be collected by a consumer who brings an FCRA claim.

Fair Credit Reporting: 12.3.3.4 Third-Party Complaints

In a case involving alleged identity theft or misrepresentation by a third party that the plaintiff was a co-applicant for credit, the defendant may seek to file a third -party complaint against the wrongdoer. Many times, a plaintiff prefers to avoid having the third party added to the action, perhaps because they are a family member.

Fair Credit Reporting: 12.4.1 Overview

Mandatory arbitration provisions are pervasive in consumer contracts. Companies insist on this requirement because it significantly limits their exposure to class-wide damages, punitive damages awards, discovery, publicity, and even individual damage claims. As a general rule, consumer litigants will want to avoid arbitration requirements for these very reasons.

Fair Credit Reporting: 12.4.2.1 Generally

Arbitration is a matter of agreement between the parties. If there is no agreement to arbitrate disputes, then there is no arbitration requirement. Before a CRA, furnisher, or user can force litigation into arbitration, it must produce a binding arbitration clause applicable to the parties. While in many cases the defendant will be able to produce an arbitration clause, in a surprising number of situations there will be no such agreement, or the defendant cannot produce the actual arbitration agreement that applies to the consumer.