By Gerald L. Maatman, Jr., Zachary J. McCormack, and Emilee N. Crowther
Duane Morris Takeaways: In Nelson v. Experian Information Solutions, Inc., No. 4:21-CV-894, 2023 WL 5284831 (N.D. Ala. Aug. 16, 2023), Judge Corey L. Maze of the U.S. District Court for the Northern District of Alabama granted Defendant Experian Information Solutions, Inc.’s (“Experian”) Motion for Summary Judgment, and denied as moot Plaintiff’s Motion for Class Certification. Judge Maze reasoned that summary judgment was appropriate because it was not objectively unreasonable for Experian to believe it was not required to reinvestigate the accuracy of Nelson’s name, addresses, and social security number (“SSN”) on her credit report under Section 1681i of the Fair Credit Reporting Act (“FCRA”). This ruling not only provides guidance into the duties of Credit Reporting Agencies (“CRA”) in the Eleventh Circuit to conduct “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report, but also demonstrates how an effectively timed summary judgment motion can preclude class certification.
Case Background
Experian is a multinational data analytics and CRA company that collects and aggregates credit information for millions of individual consumers and businesses. Nelson discovered inaccuracies in her Experian credit report, namely, that her maiden name was misspelled, two addresses that were not hers were listed on her report, and the last digit of her SSN was incorrect. Nelson made three attempts to contact Experian to correct the inaccurate information, and even though Experian removed all of the inaccurate information aside from one address (associated with an open credit account), Experian did not inform Nelson, or the furnishers of the information, that the inaccurate information had been removed. Thereafter, Nelson filed a class action against Experian in 2021 for negligent and willful non-compliance with the FCRA.
Following discovery Experian moved for summary judgment against Nelson under several theories, including: (1) it accurately reported the inaccurate information it received; (2) it did not cause Nelson’s injury, if any; (3) 15 U.S.C. § 1681i’s reinvestigation requirement does not apply to personal identification information; and (4) Experian is not liable for its employees’ unauthorized acts. Nelson concurrently moved for class certification under Rule 23.
The Court’s Decision
The Court denied Nelson’s motion for class certification. Instead, it granted Experian’s motion for summary judgment.
The FRCA’s Reinvestigation Requirement
Section 1681i of the FRCA requires a CRA to conduct a reasonable reinvestigation only if a consumer disputes “the completeness or accuracy of any item of information contained in a consumer’s file.” 15 U.S.C. § 1681i. Both Nelson and Experian agreed that the Court must grant summary judgment if it found 15 U.S.C. § 1681i imposed no duty on Experian to reinvestigate Nelson’s dispute over inaccurate personal identification information.
Nelson asserted “any item of information contained in a consumer’s file” included, at the very least, her name, address, and SSN, because the term “file” as defined by the FRCA includes “all of the information on that consumer recorded and retained by a [CRA].” Id. at 5; 15 U.S.C. § 1681a(g). However, Experian countered that the FRCA’s disclosure provision requires CRAs to disclose six categories of information if requested by the consumer, including the first category of “all information in the consumer’s file.” Id.; 15 U.S.C. § 1681g(a). Experian argued, and the Court agreed, that Congress’ addition of five subcategories of information after the broad phrase “all information in the consumer’s file” established that “Congress did not literally mean all information in the consumer’s file when it defined ‘file’ to mean ‘all information in the consumer’s file.’” Id. at 6.
Experian further argued that under 15 U.S.C. § 1681a(g), the word “any” in “any item of information contained in a consumer’s file” is limited to information that might be, or has been, furnished in a consumer report. Id. at 6-7. Since personal identification information like a consumer’s name, address, and SSN do not bear on an individual’s creditworthiness, Experian contended that such information did not itself constitute a credit report. Id. at 7. The Court disagreed with Experian’s argument. It held that the FRCA’s plain language and canons of construction “forbid the use of credit worthiness as the limitation on information contained in both the consumer’s credit report and the consumer’s file.” Id. at 8.
Ultimately, the Court found that, according to 15 U.S.C. §§1681c(h), 1681g(a)(1), and 1681u, names, addresses, and SSNs fit within the phrase “any item of information contained in a consumer’s file,” and Experian thus had a duty to reinvestigate the accuracy of Nelson’s name, addresses, and SSN when Nelson filed a direct dispute under that provision. Id. at 9-10.
Reasonable Belief
The Court noted that the existence of a duty to reinvestigate “is not enough to prove a violation of the FCRA” — Nelson also had to establish that Experian either negligently or willfully failed to satisfy its duty to reinvestigate by showing that Experian’s interpretation of the FCRA was objectively unreasonable. Id. at 10; see also, Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 68-70 (2007).
Experian argued that its understanding of 15 U.S.C. § 1861i counseled that disclosures and reinvestigations should be limited to information that bared on the consumer’s credit worthiness. In support of its position, Experian pointed to two federal circuit opinions, as well as regulations from the Consumer Financial Protection Bureau and the Federal Trade Commission, all establishing that the term “file” should only contain what was included in a consumer report.
Considering no case law told Experian that its interpretation was wrong, and other circuits’ precedent and CFPB and FTC regulations suggested that Experian could be right, the Court ruled that no jury could find that Experian negligently or willfully violated the FCRA, and that Experian’s interpretation of the FCRA was objectively reasonable.
Implications For CRAs
This ruling provides guidance for CRAs regarding how the Eleventh Circuit will treat “reasonable reinvestigations” of “the completeness or accuracy” of items on an individual’s credit report. Considering Experian’s favorable ruling precluded class certification, Experian avoided expensive litigation and numerous claims involving issues similar to Nelson’s class action. Considering this is the first case of its kind, other federal courts may take note in FCRA class actions.