United States: Tenth Circuit Holds No Willful FCRA Violation Given Absence Of Reckless Misconduct

Birmingham v. Experian, 633 F. 3d 1006 (10th Cir. Feb. 7, 2011)

Facts: Plaintiff brought FCRA and Utah state law claims against Experian and Verizon Wireless related to a purported identity theft. Plaintiff claimed that two Verizon accounts were fraudulently opened in his name and that fraudulent charges had appeared on his legitimate Verizon account. He was unable to resolve the issue with Verizon, who closed the accounts and reported the adverse charges to the CRAs. Plaintiff claimed that he made two disputes to Experian, however, neither Plaintiff nor Experian had proof of the first dispute being made. Experian did receive the second dispute, and pursuant to its procedures, requested Plaintiff to verify his identity. Experian had no record of a reply, and Plaintiff could not present proof that he ever responded to the request. Plaintiff subsequently brought suit against Experian for violations of § 1681e(b) and § 1681i of the FCRA. Experian moved for summary judgment, which was granted. On appeal, Plaintiff argued that the district court's grant of summary judgment on the willful violation of the FCRA was improper. The Tenth Circuit held that the district court properly granted summary judgment given the absence of evidence of intentional or reckless misconduct.

• Reinvestigation. Under § 1681i(a)(1), if a consumer notifies a CRA of a dispute concerning the completeness or accuracy of information in the consumer's file, "the CRA shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file . . . before the end of the 30-day period beginning on the date on which the CRA receives the notice of the dispute from the consumer or reseller."
• Punitive Damages. Citing the Supreme Court's Safeco decision, the Tenth Circuit stated that a willful violation is either an intentional violation or a violation committed by an agency in reckless disregard of its duties under the FCRA. "Recklessness" is measured by an objective standard; action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known. A company subject to the 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 the reading that was merely careless. Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007).
• Punitive Damages. Based on the Safeco standard, the Tenth Circuit held that Experian was entitled to summary judgment on the willful misconduct claim, noting that there was no described practice that would be a reckless violation of the FCRA, and there was no evidence that Experian's specific actions with respect to Plaintiff were reckless. The Court further held that even if one believed Plaintiff's vague assertion that he contacted Experian with the first dispute, the most one can reasonably infer from the absence of any record of that contact in Experian's files is that a clerical employee negligently failed to record the complaint. To infer that Experian acted recklessly in response to that dispute would require inappropriate speculation. A reasonable person reviewing the evidence before the district court could not find that Experian committed a willful violation of the FCRA.

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