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Fair Credit Reporting: 12.5.2.3.5 Practical tips in establishing intangible damages

It is often not evident to a lawyer when a client has suffered emotional distress. Many consumers will not volunteer the emotional impact that their experience has caused. They may be unaware of its legal relevance, may have suppressed past unpleasantness, or simply may be naturally reticent. It is important to probe the full extent of a client’s emotional distress early, while it is still fresh in their mind.

Fair Credit Reporting: 12.5.2.4 Nominal Damages

An open question is whether an FCRA plaintiff can recover nominal damages for a negligent violation of the Act as an alternative to actual damages. Nominal damages mean a trivial sum, usually one dollar, awarded to recognize the defendant’s violation of the plaintiff’s rights.682 The issue is significant not only because such damages give the plaintiff a sense of vindication, but for other reasons as well.

Fair Credit Reporting: 12.5.3.1 Generally

Any person who willfully fails to comply with the FCRA with respect to any consumer is liable to the consumer for either (a) actual damages sustained or (b) statutory damages ranging from $100 to $1000692 and “such amount of punitive damages as the court may allow.”693 Statutory damage awards are not available for negligent violations.694 Practitioners should normally allege whatever actual damages the violation caused, but in cases

Fair Credit Reporting: 12.5.3.2.1 Willfulness includes reckless disregard: the Supreme Court’s Safeco decision

In order to obtain statutory or punitive damages under the FCRA, the plaintiff must establish a willful violation of the FCRA. Prior to the Supreme Court’s 2007 decision in Safeco Insurance Co. v. Burr,698 courts had split regarding whether willfulness requires a showing that the defendant acted in conscious disregard of or with the intent to thwart the rights of others, on the one hand, or whether a showing of recklessness was sufficient.

Fair Credit Reporting: 12.5.3.2.2 Post-Safeco decisions

Subsequent to Safeco, defense efforts to resolve willfulness on motion practice generally have not been successful when the statute’s meaning and directive on the point in contention are clear, when the statute has been construed by a court of appeals or perhaps several district courts.

Fair Credit Reporting: 12.5.3.2.3 Pre-Safeco decisions may still be relevant

The Supreme Court’s 2007 decision in Safeco changed the willfulness landscape under the FCRA where the interpretation of a statutory requirement is involved, but much less so otherwise. Nevertheless, it is important when reviewing relevant precedent to bear in mind whether the particular case was decided before or after the Court handed down its decision in June 2007. Where the legal standard for the conduct at issue was well-established, these decisions will be unaffected by Safeco.

Fair Credit Reporting: 12.5.3.3 Statutory Damages

Statutory damages for willful violations are available when actual damages are difficult to prove, small, or nonexistent.744 Because actual damages need not be proved, statutory damages are well suited to class treatment.745 However, while actual damages need not be proved, to have standing to bring suit in federal court, the plaintiff must allege sufficient facts to establish that they have suffered a concrete injury.

Fair Credit Reporting: 12.1.3.2.1 Introduction

Discovery in these cases is often difficult and contentious. Defense compliance and willingness to produce information and documents frequently is adapted to the knowledge level of the requesting consumer or attorney. It is thus important early in the case to gather as much information as possible about the types and nature of documents by independent research or consultation with experienced counsel. Counsel should also bear in mind that each of the “Big Three” nationwide CRAs retains a different set of records.

Fair Credit Reporting: 12.1.3.2.2 Consumer-specific Equifax discovery

Equifax maintains its consumer credit file in a system known as Automated Credit Reporting Online (“ACRO”)54, from which it sells “Acrofile” consumer reports to its subscribers.55 Its consumer disputes and contacts are housed in a second system known as “ACIS.” Each consumer dispute or other contact is documented and saved as an “ACIS case.” ACIS was the system that was hacked in the 2017 data security breach of Equifax.56

Fair Credit Reporting: 12.1.3.2.3 Consumer-specific Transunion discovery

TransUnion maintains its documents somewhat similarly, with its historic monthly file snapshots saved in the same manner and entitled “Namescans.” However, while it had previously conceded that it could produce these as late as 2017, Transunion now contends that it updated its database systems in 2016 and can no longer easily produce these. As with Equifax’s “frozen scans,” Transunion continues to resist production of name scans unless pushed to produce them after motions practice.63

Fair Credit Reporting: 12.1.3.2.4 Consumer-specific Experian discovery

Experian’s primary database is FileOne, which is a relational database that warehouses Experian’s consumer reporting data, and from which its subscriber consumer reports are generated. Experian operates a separate system to house its consumer disputes and communications, which it has named the Consumer Assistance Processing System (CAPS).

Fair Credit Reporting: 12.1.3.2.6 Pitfalls to avoid

The CRA records usually produced in litigation can be incomplete, and defense counsel either collusively or unwittingly mislead plaintiff’s counsel when disclosing the same. For example, it is not uncommon for a CRA to retain multiple files that relate to the same consumer. An inquiry might show up on one file, but not on another. It may even be that you cannot ultimately determine where data was omitted or changed. But circumstantial or indirect proof through third party credit denial evidence or by other means may be sufficient.

Fair Credit Reporting: 12.1.3.2.7 Discovery relating to CRA matching rules and mixed file materials

One of the most egregious and complex FCRA fact patterns is the mixed file case, where the CRA systems and procedures incorrectly match the information, or even files, pertaining to one consumer into the file of another consumer.86 Basic information regarding how and why the mixed file occurred, when it was discovered, and what was done to correct it is, of course, discoverable.87 In addition, when litigating a mixed file case, the consumer will seek to show that the procedures used by the C

Fair Credit Reporting: 12.1.3.2.8 Discovery relating to CRA handling of consumer disputes

When the claim is related to a consumer’s dispute of information in their file, practitioners should inquire into the CRA’s general practices for the handling of such disputes, including how all disputes are logged, both manually and by computer. Request copies of CRA manuals for reinvestigation of consumer disputes, including all forms and other documents relating to the CRA’s compliance with the FCRA.

Fair Credit Reporting: 12.1.3.2.10 Discovery relating to CRA blocking procedures

Another context in which plaintiff may seek discovery from a CRA is where plaintiff, a victim of identity theft, asserts claims relating to the CRA’s blocking practices. In one case, Experian was ordered to produce most of the documents that plaintiff sought to support its claim that Experian makes it difficult to block information in order to sell more credit monitoring services and keep its business subscribers happy.119

Fair Credit Reporting: 12.1.3.2.12 Discovery of public record CRAs

In recent years, FCRA litigation has developed against public records CRAs that sell criminal background checks and employment history reports to employers. Unlike the credit reporting CRAs, employment or criminal history CRAs do not yet offer a standard or predictable set of discoverable documents. The procedures, policies, archived documents, and witnesses will vary greatly between one such CRA and another. Still, several consistent discovery issues may arise.

Fair Credit Reporting: 12.1.3.3.1 Introduction

Much of the discovery available and regularly sought in litigation against CRAs is also available from creditors, debt collectors, and other furnishers. The advice to practitioners suggested above applies equally to claims against furnishers. In addition, furnishers may have discoverable recordings of conversations with the plaintiff.123

Fair Credit Reporting: 12.1.3.3.2 Discovery concerning consumer disputes

As in litigation against CRA defendants, when prosecuting a furnisher case, practitioners should seek discovery from the specific employees that received and processed the consumer’s disputes. For furnishers, the dispute process may include earlier direct communications from the consumer as well as ACDV disputes made through the “Big Three” nationwide CRAs.

Fair Credit Reporting: 12.1.3.3.3 Discovery of furnisher relationship to CRA

Discovery should be sought regarding the relationship and business history between the furnisher and important credit reporting industry entities. Every furnisher will have a subscriber agreement between it and each “Big Three” CRA. In addition, there will be related correspondence with the CRA and billing records sent to the furnisher that detail the volume of reporting and credit report purchases involved. The CRAs also provide various training tools or documents related to the products they sell.

Fair Credit Reporting: 12.1.3.4 Discovery from Employers and Other Users

Employers are required to provide a notice to job applicants and employees before taking any adverse employment action based, even in part, based on a consumer report.143 In a class action alleging an employer’s failure to comply with this requirement, the plaintiff will need to conduct discovery regarding terminations and rejections of job applicants.

Fair Credit Reporting: 12.1.3.5 Discovery Regarding Willfulness

If willfulness is alleged in the action, and the court has not found that the defendant’s reading of a controlling statutory provision was “objectively reasonable,” the subjective intent of the defendant should be explored by counsel in discovery. Intent is not, in this context, rendered irrelevant by the holding in Safeco Ins. Co. v.

Fair Credit Reporting: 12.1.3.6 Document and Electronic Data Preservation

Upon commencing litigation, if not before, practitioners should send a letter to opposing counsel requesting preservation of specified categories of current and ongoing data that ultimately will be requested in discovery. The case law is clear that each party has a duty to preserve unique, relevant evidence that might be useful to an adversary. Issues regarding the scope of the duty to preserve documents and electronically stored information (ESI), as well as costs associated with doing so, arise most frequently in the context of class actions.