FCRA and FACTA Classmedia.straffordpub.com/.../presentation.pdf · 4/26/2011 · GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006) (cont.) – The Seventh Circuit reversed: Representative

Presenting a live 90‐minute webinar with interactive Q&A

FCRA d FACTA Cl A iFCRA and FACTA Class ActionsLeveraging New Developments in Certification, Damages and Preemption

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1pm Eastern | 12pm Central | 11am Mountain | 10am Pacific

TUESDAY, APRIL 26, 2011

Today’s faculty features:

Donna L. Wilson, Partner, Buckley Sandler, Santa Monica, Calif.

Barry Goheen, Partner, King & Spalding, Atlanta

Leonard A. Bennett, Attorney, Consumer Litigation Associates, Newport News, Va.

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FCRA ANDFCRA AND FACTA CLASS

Legal Counsel to theFinancial Services Industry

FACTA CLASS ACTIONS

Financial Services Industry

DONNA L. WILSON

GENERAL OVERVIEW: FCRA

Fair Credit Reporting Act (“FCRA”), 15 U.S.C. §Fair Credit Reporting Act ( FCRA ), 15 U.S.C. §1681 et seq.– Regulates collection, dissemination, and use of consumer

dit i f ti t t t dit i htcredit information to protect consumer credit rights– Section 1681b(c)(1) prohibits consumer reporting agencies

from furnishing consumer credit information in transactions gnot initiated by a consumer and without the consumer’s consent, except when the request is made in connection with a “firm offer of credit or insurance”

6

GENERAL OVERVIEW: FACTA

Fair and Accurate Credit Transactions ActFair and Accurate Credit Transactions Act (“FACTA”)– Amendment to FCRA (enacted December 4, 2003)– Truncation requirement, 15 U.S.C. § 1681c(g)(1):

“Except as otherwise provided in this subsection, no person that accepts credit cards or debit cards for the transaction of pbusiness shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of sale or transaction.” (Emphasis added.)

7

DAMAGES RECOVERABLE UNDER FCRA AND FACTAUNDER FCRA AND FACTA

Actual damagesg– Under section 1681o(a)(1), a plaintiff may bring an action

and recover actual damages for a negligent violation Statutory damages Statutory damages

– Under section 1681n(a)(1)(A), a plaintiff may bring an action and recovery statutory damages between $100 and $1 000 for a willful violation$1,000 for a willful violation

Punitive damages and attorneys’ fees– Under sections 1681n(a)(2), 1681n(a)(3) and 1681o(a)(2),

a plaintiff may also seek punitive damages, costs and attorneys’ fees

There is NO statutory limit on an aggregate award

8

y gg g

DEVELOPMENTS IN CLASS CERTIFICATIONCERTIFICATION

Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th y g g p , (Cir. 2006)– Lender sent credit solicitation to consumers that allegedly

did not constitute a “firm offer of credit” based ondid not constitute a firm offer of credit based on information obtained from a credit bureau, as required by 15 U.S.C. § 1681b(c)(1)(B)(i)

– Putative class action filed on behalf of 1 2 million recipientsPutative class action filed on behalf of 1.2 million recipients of similar offers from GMAC, demanding statutory damages of $100 to $1,000 per person

– District court denied class certification because, amongDistrict court denied class certification because, among other things, the plaintiff chose to forego compensatory damages in favor of statutory damages, and the potential award would be “ruinously high”

9

y g

DEVELOPMENTS IN CLASS CERTIFICATION (cont )CERTIFICATION (cont.)

Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006) (cont.)– The Seventh Circuit reversed:

Representative plaintiff could choose to forego compensatory damages in order to achieve class certification unless the district court finds that personal injuries of all or almost all of the claimants are large in relation to statutory damages

Rejected GMAC’s argument that a court cannot know ejected G C s a gu e t t at a cou t ca ot owhether a firm offer of credit was made without examining every recipient’s circumstances, making class treatment impractical

With respect to concern about disproportionately high With respect to concern about disproportionately high statutory damages, there is no due process infirmity at the class certification stage of the litigation

10


Murray influenced decisions nationwide– Strictly applied in firm offer cases– Asbury v. People’s Choice Home Loan, Inc., No. 05-5483,

2007 WL 809531 (N.D. Ill. Mar. 12, 2007) demanded defendant show cause as to why it should not be

sanctioned for its arguments running squarely against Murraywith regard to damages

But see Villagran v Central Ford Inc 524 F Supp 2d– But see Villagran v. Central Ford, Inc., 524 F. Supp. 2d 866 (S.D. Tex. 2007) awarded summary judgment to defendant but explained in

dicta that even if it addressed the merits of a motion for class tifi ti tifi ti ld b i i t bcertification, certification would be inappropriate because

defendant sent out several sets of different mailings, and individual inquiries must occur to determine which of several different mailings was sent to each potential class member

11


Receipt cases under FACTAReceipt cases under FACTA– Initially, courts split regarding class certification– Recent cases provide guidance

Bateman v. American Multi-Cinema, Inc., 623 F.3d 708 (9th Cir. 2010)

– Rejected earlier California district courts’ decisions finding that j gRule 23(b)(3)’s superiority requirement allows courts to consider the proportionality of actual damages to actual harm

– Limiting class availability due to potential for “enormous” liability ld b t l i l ti i t t b hi d FACTAwould subvert legislative intent behind FACTA

– Agreed with Murray that the class certification stage is not the appropriate time to evaluate whether damages are excessive

12


Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301 (11th Ci 2009)Cir. 2009)

– Overruled Grimes v. Rave Motion Pictures Birmingham, L.L.C., 552 F. Supp. 2d 1302 (N.D. Ala. 2008), which held that FACTA language “not less than $100 and not more than $1 000” waslanguage not less than $100 and not more than $1,000 was unconstitutionally void for vagueness and because imposition of punitive damages without actual damages was necessarily disproportionateH ld th t C i ibl li it d j i ’ di ti b– Held that Congress permissibly limited juries’ discretion by creating range of statutory damages

– Statutory damages provision did not constitute punitive damages

– Note: On remand, district court denied class certification on the grounds that the plaintiff could not demonstrate an ascertainable class without individualized inquiry into each class member’s case

13

class member s case


Inaccurate credit report cases under FCRA– Most courts have denied class certification on grounds that

individualized inquiries were necessary to determine whether reports contained accurate information

E O O t I d d t D i A i ti I E.g., Owner-Operator Independent Drivers Association, Inc. v. USIS Commercial Services, Inc., 537 F.3d 1184 (10th Cir. 2008)

– Others have expressed concern about greater potential for p g pactual damages E.g., Gardner v. Equifax Info. Services, LLC, No. 06-3102,

2007 WL 2261688 (D. Minn. Aug. 6, 2007) (finding plaintiffs were inadequate because of their choice to forego actualwere inadequate because of their choice to forego actual damages, and individualized inquiry necessary for plaintiffs with actual damages)

14


Inaccurate credit report cases under FCRA (cont.)p ( )– But see Summerfield v. Equifax Information Services, LLC,

264 F.R.D. 133 (D.N.J. 2009) and Chakejian v. Equifax Information Services, LLC, 256 F.R.D. 492 (E.D. Pa. 2009), , ( ) Plaintiffs alleged that Equifax violated FCRA by not disclosing the

name and address of the public records vendor Equifax hired to verify the recordC t h ld th t b ll b f th l b d th i Courts held that because all members of the class based their claims on the fact that Equifax sent them an allegedly misleading form letter, plaintiffs were injured in substantially the same way under substantially similar factual circumstances

Rejected Equifax’s claims that the class representative’s failure to bring claims for actual damages rendered the class representative inadequate

15

PREEMPTION OF STATE LAWS

Generally, FCRA preempts only those state lawsGenerally, FCRA preempts only those state laws dealing with collection, distribution, or use of information about consumers to the extent the state l i i i t t ith f d l l (15 U S C §law is inconsistent with federal law (15 U.S.C. §1681t(a))

Nevertheless FCRA contains a number of Nevertheless, FCRA contains a number of exceptions to the general rule in which a state law is preempted although it is consistent with FCRA (15 U.S.C. § 1681t(b)(1))

16

PREEMPTION OF STATE LAWS (cont )(cont.)

Section 1681(b)(1)(F) vs. Section 1681h(e)Section 1681(b)(1)(F) vs. Section 1681h(e)– 15 U.S.C. § 1681(b)(1)(F): preempts all state law claims

relating to the responsibilities of any persons who furnish information to consumer reporting agenciesinformation to consumer reporting agencies

– 15 U.S.C. § 1681h(e): expressly prohibits any defamation, invasion of privacy or negligence action by a consumer against a consumer reporting agency (CRA), any user of information, or any person who furnishes information to a CRA with respect to reporting of information except as to false information furnished with malice or willful intent to injure consumer

17


Section 1681(b)(1)(F) vs. Section 1681h(e) (cont.)Section 1681(b)(1)(F) vs. Section 1681h(e) (cont.)– Conflicting district court views regarding preemption

Some courts have held that Section 1681(b)(1)(F) rendered S ti 1681h( ) lSection 1681h(e) useless

Other courts have found a distinction between whether the state law at issue is derived from statutory or common law

Still other courts found that the issue turns on when the furnisher of information learns of the possible inaccuracy

18


Recent preemption casesp p– Burrell v. DFS Services, LLC, No. 10-2706, 2011 WL

831923 (D.N.J. Mar. 3, 2011) Plaintiff brought claims alleging violations of FCRA andPlaintiff brought claims alleging violations of FCRA and

various state law claims arising out of defendant’s alleged failure to investigate claims of identity theft

Court dismissed state law claims because they were preempted under Section 1681t(b)(1)(F) as the claims were related to defendant’s responsibilities as an entity that furnishes information to CRAsCourt dismissed state law claims in the amended petition Court dismissed state law claims in the amended petition holding claims were still preempted by FCRA even though the amended petition did not state a claim under FCRA

19


Recent preemption cases (cont.)Recent preemption cases (cont.)– Ross v. Federal Deposit Insurance Corp., 625 F.3d 808

(4th Cir. 2010)Pl i tiff b ht l i f f l ti f dit i f ti Plaintiff brought claims for false reporting of credit information

FCRA claims were barred by two-year statute of limitations State law claims under unfair debt collection practices act,

while timely, were preempted by FCRA Court did not resolve whether plaintiff’s claim fell within scope

of Section 1681h(e), but rejected the argument that plaintiff’s claim was expressly authorized by Section 1681h(e) as the defendant did not act with “malice or willful intent to injure”

20


State laws expressly saved from preemption (15State laws expressly saved from preemption (15 U.S.C. § 1681t(b)(1)(F))– California Civil Code § 1785.25(a), which prohibits a

f f i hi i f ti t tiperson from furnishing information to a consumer reporting agency that the person knows to be incomplete and inaccurate But see Liceaga v. Debt Recovery Solutions, LLC, 86

Cal.Rptr.3d 876 (Cal. Ct. App. 2008) (holding that California exemption to FCRA preemption applied only to § 1785.25(a))

– Massachusetts Annotated Laws, Ch. 93, § 54A(a)

21


State law provisions preempted by FCRA include:State law provisions preempted by FCRA include:– Exchange of information among affiliated companies– Information that may be included in credit reports

R ibiliti f h f i h i f ti t dit– Responsibilities of persons who furnish information to credit bureaus

– Duties of persons providing adverse action notices due to use of dit tcredit reports

– Procedures credit bureaus must follow when responding to consumer disputes

– Prescreening activities based on credit reports– Form and content of the summary of consumer rights distributed

by credit bureaus

22


State law provisions preempted by FCRA includeState law provisions preempted by FCRA include (cont.):

– Fraud alerts in consumer credit files– “Red flag” procedures for identifying possible instances of

identity theft– Blocking information resulting from identity theft– Truncating credit card and debit card account numbers– Truncating social security numbers on credit reports to consumer– Debt collector notice of fraudulent informationDebt collector notice of fraudulent information– Coordination of identity theft complaint investigations– Prohibiting the sale of debt caused by identity theft

23

LITIGATION STRATEGIES AND CONSIDERATIONSCONSIDERATIONS

Many cases will involve mass mailings in theMany cases will involve mass mailings in the millions

Class notice alone could cost millions of dollars Murray v. GMAC Mortgage suggests settlement

funds averaging $1 per class member are per seblunreasonable

Although they provide value to the class, cash alternatives (e g free credit reports) will be highlyalternatives (e.g., free credit reports) will be highly scrutinized under the Class Action Fairness Act (CAFA)

24

LITIGATION STRATEGIES AND CONSIDERATIONS (cont )CONSIDERATIONS (cont.)

Case EvaluationCase Evaluation– Early case assessment: Evaluate the cost of defense versus

chronic settlement of unmeritorious claims and the precedential value of a settlementvalue of a settlement

– How to reach an early and cost-effective resolution of class action claims that will not result in payment of attorneys’ fees that are disproportionately large in relation to the amount that willare disproportionately large in relation to the amount that will benefit or can be achieved by individual plaintiffs participating in a class action

– Control future litigation: identify trends to ward off future lawsuits;Control future litigation: identify trends to ward off future lawsuits; know when to resolve a case and when to to defend a suit

25

LITIGATION STRATEGIES AND CONSIDERATIONS (cont )CONSIDERATIONS (cont.)

Use Safeco Insurance Co. v. Burr, 551 U.S. 47 (2007), to argue that there was not a “willful” violation– In Safeco, the Supreme Court clarified the “willfulness”

standard “Reckless” conduct entails “conduct violating an objective

standard: action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known”that is either known or so obvious that it should be known

“Thus, a company subject to 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 greatercompany ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless”

26

CONTACT INFORMATION

Donna L. Wilson, Esq.dwilson@buckleysandler [email protected]

424-203-1010

www.buckleysandler.comy

27

DISPROPORTIONATE OR BANKRUPTING DISPROPORTIONATE OR BANKRUPTING LIABILITY IN FCRA CLASS ACTIONSLIABILITY IN FCRA CLASS ACTIONS

April 26, 2011

Barry GoheenBarry GoheenKING & SPALDING LLP1180 Peachtree Street N E1180 Peachtree Street N E1180 Peachtree Street, N.E.1180 Peachtree Street, N.E.

Atlanta, GA 30309Atlanta, GA 30309--35213521(404) 572(404) 572--46004600

bgoheen@kslaw combgoheen@kslaw [email protected]@kslaw.com

FAIR CREDIT REPORTING ACTFAIR CREDIT REPORTING ACT

• Enacted in 1970, intended to promote efficiency in the nation’s banking system and to protectthe nation’s banking system and to protect consumer privacy. See TRW Inc. v. Andrews, Inc., 534 U.S. 19, 24 (2001), ( )

• FCRA “was crafted to protect consumers from the transmission of inaccurate information about them and to establish credit reporting practices that utilize accurate, relevant, and current information in

fid ti l d ibl ” C ta confidential and responsible manner.” Cortez v. Trans Union, LLC, 617 F.3d 688,707 (3d Cir. 2010).

295

FAIR AND ACCURATE CREDIT FAIR AND ACCURATE CREDIT TRANSACTIONS ACTTRANSACTIONS ACT

• Enacted December 2003, amended FCRA effective

TRANSACTIONS ACTTRANSACTIONS ACT

December 2006

• Among other things, FACTA provides that “no person that accepts credit or debit cards for the transaction of business shall [electronically] print more than the last 5 digits of the card number . . . upon any receipt provided to the cardholder at the

i t f l f t ti ” 15 U S Cpoint of sale of transaction.” 15 U.S.C. §1681c(g)(1).

305

REMEDIES UNDER FCRA/FACTAREMEDIES UNDER FCRA/FACTA

• Claims for negligent violations: actual damages

• Claims for willful violations: actual or statutory ydamages in range of $100 to $1,000; punitive damages

• No injunctive relief in private actions

• Reasonable attorneys’ fees for successful plaintiff• Reasonable attorneys’ fees for successful plaintiff

• No cap on damages in class actions certified under FCRA/FACTAFCRA/FACTA

315

TWO ISSUESTWO ISSUES

1) DISPROPORTIONATE LIABILITY: Should a court consider or compare the potential damages to the p p gclass to the actual harm to the class in deciding class certification?

2) BANKRUPTING LIABILITY: Should an otherwise tifi bl l b d i d tifi ti if th t ti lcertifiable class be denied certification if the potential

damages award would put the defendant out of business?

325

LEADING OPINIONS REJECTING, LEADING OPINIONS REJECTING, DISPROPORTIONALLY THEORY THATDISPROPORTIONALLY THEORY THATDISPROPORTIONALLY THEORY THAT DISPROPORTIONALLY THEORY THAT

JUSTIFIES DENIAL OF CLASS CERTIFICATIONJUSTIFIES DENIAL OF CLASS CERTIFICATION

1. Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006)

2. Stillmock v. Weis Markets, Inc., 385 Fed. Appx. 267 (4th Cir. 2010)

3. Bateman v. American Multi-Cinema, Inc., 623 F.3d 708 (9th Cir. 2010)

335

MURRAYMURRAY

• Class action involving whether letter mailed to 1.2 million persons constituted “firm offer of credit” within FCRAFCRA

• Denial of certification reversed: “The reason that damages can be substantial . . . does not line in andamages can be substantial . . . does not line in an ‘abuse’ of Rule 23; it lies in the legislative decision to authorize awards as high as $1,000 per person, . . . combined with GMACM’s decision to obtain the creditcombined with GMACM s decision to obtain the credit scores of more than a million persons.” 434 F.3d at 953.

• “The district judge sought to curtail the aggregate• The district judge sought to curtail the aggregate damages for violations he deemed trivial. Yet it is not appropriate to use procedural devices to undermine l f hi h j d di ” Id t 953 54

34

laws of which a judge disapproves.” Id. at 953-54.

5

THE 2010 OPINIONSTHE 2010 OPINIONS

• Stillmock

• FACTA “truncated receipt” case; defendant• FACTA truncated receipt case; defendant printed nearly 15 million non-complying receipts

• Denial of certification reversed: “The Court is not convinced that the fact that an individual plaintiff can recover attorney’s fees in addition p yto statutory damages of up to $1,000 will result in enforcement of the FCRA by individual actions of a scale comparable to the potential p penforcement by way of class action.” 385 Fed. Appx. at 275 (quoting Tchoboian v. Parking Concepts, Inc., 2009 WL 2169883, *9

35

g p , , ,(C.D. Cal. July 16, 2009))

5

• Bateman

THE 2010 OPINIONSTHE 2010 OPINIONS• Bateman

• FACTA “truncated receipt” case; defendant printed over 290,000 non-complying receipts, thus possible damages

d f $29 illi t $290 illiaward of $29 million to $290 million

• Denial of certification reversed: “None of the[] enumerated factors [in the superiority portion of Rule 23(b)(3)] appear to authorize a court to consider whether certifying a class would result in disproportionate damages.” 623 F.3d at 713.

• “There is no indication in the statute, nor any indication in the legislative history, that Congress provided for judicial discretion to depart from the $100 to $1000 j prange where a district judge finds that damages are disproportionate to harm.” 623 F.3d at 719.

365

• Bateman (cont )

THE 2010 OPINIONSTHE 2010 OPINIONSBateman (cont.)

• “To the extent that statutory damages serve a deterrent purpose, a court undermines that purpose in denying class certification on the basis of the proportionality ofclass certification on the basis of the proportionality of actual harm and statutory liability.” 623 F.3d at 719.

• “Allowing denial of class certification because of the sheer number of violations and amounts of potential statutory damages would allow the largest violators of FACTA to escape the pressure of defending class

ti d i ll lik lih d t li bilit f tactions and, in all likelihood, to escape liability for most violations. In other words, whatever risk of over deterrence class certification poses, refusing to certify a class on these grounds poses the risk of significantclass on these grounds poses the risk of significant under deterrence.” 623 F.3d at 719.

375

THE 2010 OPINIONSTHE 2010 OPINIONS

• Hammer v. JP’s Southwestern Foods, 267 F.R.D. 284 (W.D. Mo. 2010):( )

• FACTA truncated receipt case approx 45 000• FACTA truncated receipt case, approx. 45,000 class members

• Class certification granted: “[T]he potential forClass certification granted: [T]he potential for a large damage award should not be considered in assessing the superiority of class certification ” 267 F R D at 290certification. 267 F.R.D. at 290.

385

COURTS HOLDING THAT PROPORTIONALITY COURTS HOLDING THAT PROPORTIONALITY OF DAMAGES TO HARM IS A FACTOROF DAMAGES TO HARM IS A FACTOROF DAMAGES TO HARM IS A FACTOROF DAMAGES TO HARM IS A FACTOR

• Ratner v. Chemical Bank N.Y. Trust Co., 54 F.R.D. 412 (S.D.N.Y. 1972)

• Wilcox v. Commerce Bank of K.C., 474 F.2d 336 (10th Cir. 1973)

L d W l M t St 340 F 3d 1246 (11th Ci• London v. Wal-Mart Stores, 340 F.3d 1246 (11th Cir. 2003)

• Leysoto v Mama Mia I 255 F R D 693 (S D Fla 2009)• Leysoto v. Mama Mia I, 255 F.R.D. 693 (S.D. Fla. 2009)

• The Stillmock Concurrence

395

COURTS HOLDING THAT PROPORTIONALITY COURTS HOLDING THAT PROPORTIONALITY OF DAMAGES TO HARM IS A FACTOROF DAMAGES TO HARM IS A FACTOR

• Ratner

OF DAMAGES TO HARM IS A FACTOROF DAMAGES TO HARM IS A FACTOR

Ratner

• Truth in Lending Act case, certification sought on behalf of 130,000 cardholders

• Class certification denied: plaintiff had alleged only “technical” violations of TILA; “allowance of thousands of minimum recoveries like plaintiff’sthousands of minimum recoveries like plaintiff s would carry to an absurd and stultifying extreme the specific and essentially inconsistent remedy Congress prescribed as the means of privateCongress prescribed as the means of private enforcement.” 54 F.R.D. at 414, 416.

405


• Wilcox:


Certification inappropriate in TILA case where “the Wilcox: Ce t cat o app op ate case e e t ecomplaint contains no indication of any actual damages in substantial or provable amount” and “aggregated relief would be oppressive in consequence and difficult to justify.”

London

474 F.2d at 347.

“[E]ven though economic harm is not an element of the• London: “[E]ven though economic harm is not an element of the ... common law claim for restitution, it may be required for superiority under the Federal Rules of Civil Procedure. This is especially likely when as in the present suit theThis is especially likely when, as in the present suit, the defendants’ potential liability would be enormous and completely out of proportion to any harm suffered by the plaintiff.” 340 F.3d at 1255 n.5.

415

p a t 3 0 3d at 55 5


• Leysoto


• FACTA “truncated receipt” class action with approximately 46,000 members, thus potential statutory damages range of between $4,600,000 and $46 000 000 d f d t’ t th$46,000,000; defendant’s net worth was approximately $40,000

• Certification denied: if certification were granted, g ,“Mama Mia would face almost certain insolvency, despite the fact that its conduct caused no actual damages. … Such an outcome would not be a fair, ffi i t t ff ti dj di ti f thefficient, or cost-effective adjudication of the

controversy.” 255 F.R.D. at 698.

425


• Leysoto (cont.)

• “[T]o grant the requested class relief would allow this Plaintiff, and his


counsel, to dangle the Sword of Damocles over Defendant, without any showing of actual economic harm.” 255 F.R.D. at 699.

• Helms v. Consumerinfo.com, Inc., 236 F.R.D. 561, 569 (N.D. Ala. 2005) ( f C O “G(denying certification in Credit Reporting Organizations Act case: “Given that Defendant does not offer fraudulent services, considering that Plaintiff has exhibited little if any actual damages, and with an eye to the likelihood that class damages would be disproportionately large when compared toclass damages would be disproportionately large when compared to Defendant’s actual conduct, the Court concludes that allowing the action to proceed in class form is not superior.”).

• Hillis v. Equifax Consumer Services, Inc., 237 F.R.D. 491, 506 (N.D. Ga. q , , , (2006), (denying certification in Credit Reporting Organizations Act case where potential damages would “approach[] $200 million”: “[T]he damages would be far out of proportion to the violations alleged.”).

435


• Stillmock concurring opinion


• “Ordinarily, a company that violates FACTA will do so not once or twice, but instead thousands or even millions of times. … And because FACTA provides for statutory damages of at least p y g$100, such suits almost by definition expose companies to liability that is orders of magnitude beyond their income or net worth, regardless of the size of the corporation.” 385 Fed. Appx. at 280 (Wilkinson, J., concurring).

• “FACTA class actions threaten businesses of every size with devastating classwide liability for what may be harmless g y ystatutory violations.” Id. (quoting 1 McLaughlin on Class Actions§ 2:38).

445

SUMMARY ON DISPROPORTIONATE LIABILITYSUMMARY ON DISPROPORTIONATE LIABILITY

• Under Murray and Bateman, considerations of large damage awards are merely hypothetical at class certification stage; if the class trial results in a disproportionate damages award, “[a]n award p p g , [ ]that would be unconstitutionally excessive may be reduced, … but constitutional limits are best applied after a class has been certified.” Murray, 434 F.3d at 954; see also Bateman, 623 F.3d at 723 (“We … conclude that it is not appropriate to evaluate the excessiveness of the award at this [class certification] stage of the litigation.”).

• Under Ratner, London, and others, the potentially disproportionate damages award when compared with the actual harm sustained by the class members is a proper consideration in assessing the superiority component of class certification; an award that would be out of all proportion to the harm would suggest that class treatment is not the superior method of adjudication.

455

BANKRUPTING OR ANNIHILATING LIABILITYBANKRUPTING OR ANNIHILATING LIABILITY

• Leysoto

• Stillmock concurrence

• Concurrence in Parker v. Time Warner Entertainment Co., 331 F.3d 13 (2d Cir. 2003)

• Bateman

465


• Leysoto

• “[C]ourts generally reason that FACTA certification would permit potentially annihilating statutory damages to be awardedpotentially annihilating statutory damages to be awarded against a defendant business, without any requirement or proof of actual harm. … The Court shares this concern.” 255 F.R.D. at 698at 698.

• “And while there is no indication of misconduct or malicious intent in this dispute, the threat of annihilation associated with

tifi ti d t th f th l i l ti dcertification does not serve the purpose of the legislation, and moreover, is simply unnecessary to effectively enforce the Act and compensate victims of identity theft. As such, the Court finds based on the facts presented in this matter that individualfinds, based on the facts presented in this matter, that individual actions against Mama Mia are a superior method to adjudicate any remaining FACTA disputes.” Id. at 699.

475

Stillmock Conc rrence

BANKRUPTING OR ANNIHILATING LIABILITYBANKRUPTING OR ANNIHILATING LIABILITY• Stillmock Concurrence:

• “I see nothing in the statute, however, that mandates class treatment of FACTA claims or precludes a district court from considering the prospect of annihilative liability in the certification calculus.” 385 Fed. Appx. at 276 (Wilkinson, J., concurring)

• “Rather than considering annihilative damages as they bear on due process, … it is preferable for a district court to address them in the context of Rule 23(b)(3)’s superiority requirement. Doing so … permits a district court to declare that a device is not superior when a plaintiff whose members suffered no identity theft of any sort still threatens to wipe an entire

ff h ” Id 2 8company off the map.” Id. at 278.

485

Still k C ( t )

BANKRUPTING OR ANNIHILATING LIABILITYBANKRUPTING OR ANNIHILATING LIABILITY• Stillmock Concurrence (cont.):

• “I worry that the exponential expansion of statutory damages through the aggressive use of the classdamages through the aggressive use of the class action device is a real jobs killer that Congress has not sanctioned.” Id. at 276. “It is doubtful that Congress intended to cause these thousands of innocent employees to lose their jobs and paychecks by bankrupting their employer, in a situation where y p g p y ,no plaintiff suffered identity theft.” Id. at 280.

495

P k C

BANKRUPTING OR ANNIHILATING LIABILITYBANKRUPTING OR ANNIHILATING LIABILITY• Parker Concurrence:

• Case involved statutory damages for cable subscribers with $1 000 minimum payment; “I do notsubscribers with $1,000 minimum payment; I do not believe that in specifying a $1,000 minimum payment for … violations, Congress intended to expose [violators] to liability for billions of dollars.” 331 F.3d at 27 (Newman, J., concurring).

“A l i f thi t t t i b t th• “A claim of this sort creates a tension between the statutory provisions for minimum damages and the Rule 23 provisions for class actions that probably was not within the contemplation of those who promulgated either the statute or the rule.” Id. at 26.

505


• Murray did not address bankrupting or annihilating damages

• Stillmock panel opinion did not address but directed the district t t dd dcourt to address upon remand

• Bateman did not address the issue: “We reserve judgment as to whether a showing of ‘ruinous liability’ would warrant denial of class certification in a FACTA or similar action.” 623 F.3d at 723.

• The district court in Hammer rejected the defendants’ argument: “[T]he court is not persuaded that Defendants’ concerns about the[T]he court is not persuaded that Defendants concerns about the potentially ruinous effects of a judgment, settlement or other resolution regarding damages outweighs the benefit of certifying a class at this stage of the litigation.” 267 F.R.D. at 290.g g

515

• Greater consensus at present than disproportionate

SUMMARY ON BANKRUPTING/ANNIHILATING LIABILITYSUMMARY ON BANKRUPTING/ANNIHILATING LIABILITY

• Greater consensus at present than disproportionate liability cases: defendants have stronger ground to defeat class certification where they can demonstrate that the potential damages award would bankrupt thethat the potential damages award would bankrupt the company

• “It staggers the imagination to believe that Congress gg g gintended to impose annihilating damages on an entire company and the people who work for it for lapses of a somewhat technical nature and in a case where not a single class member suffered actual harm due to identity theft.” Stillmock, 385 Fed. Appx. at 279 (Wilkinson, J., concurring)concurring)

• Better argument for smaller companies than large corporations

525

CONCLUSIONCONCLUSION

• Trend in federal appellate courts is to reject disproportion between potential damages and actual harm sustained by class as a basis to deny certification: “allowing consideration of the potential enormity y g yof any damages award would undermine the compensatory and deterrent purposes of FACTA.” Bateman, 623 F.3d at 722.

• This potential for “enormous” damages “does not lie in an ‘abuse’ ofThis potential for enormous damages does not lie in an abuse of Rule 23; it lies in the legislative decision to authorize awards as high as $1,000 per person, combined with multiple violations of the statute.” Bateman, 623 F.3d at 722; Murray, 434 F.3d at 953., ; y,

• FACTA and FCRA cases can present “a perfect storm in which two independent provisions combine to create commercial wreckage far greater than either could alone ” Stillmock 385 Fed Appx at 276greater than either could alone. Stillmock, 385 Fed. Appx. at 276 (Wilkinson, J., concurring).

535

Barry Goheen is a partner in King & Spalding's Business Litigation Practice Group. He practices in the firm's general and commercial litigation area and focuses on class actions and other multi-party litigation.

Mr. Goheen has served as lead or co-counsel in over 40 class actions in all areas of the law,

Barry Goheen

,including antitrust, securities fraud, consumer protection, financial services and products, product liability, privacy, and general commercial disputes in state and federal courts representing such clients as The Coca-Cola Company, Wal-Mart, SunTrust Banks, Bank of America, Countrywide, Fifth Third, Brown & Williamson Tobacco Corporation, Jefferson-Pilot Life Insurance Company, Equifax, and Lockheed Martin Corporation.

Barry Goheen

[email protected]

404.572.4618

His class action matters include:

• Participation in several phases of a multi-phase trial of a product liability class action in Miami, Florida.

• Co-counsel in the defense of nationwide class action brought against insurance companyCo-counsel in the defense of nationwide class action brought against insurance company alleging unfair insurance practices.

• Lead counsel in the defense of a proposed nationwide RICO class action brought against automobile manufacturer alleging misrepresentation of horsepower in the vehicles.

• Co-counsel in the defense of nationwide antitrust class action brought by purchasers of souvenirs at NASCAR events.

• Lead or co-counsel in defense of over 30 proposed class actions brought by consumers of cigarette products, obtaining dismissal or denial of class certification in all but two cases.

• Lead counsel in numerous class actions arising out of services and products affecting the financial services industry, including for Equifax, SunTrust, Bank of America, Countrywide, Fifth Third, Advance America, and Harland Financial Solutions.

54

Leonard A. BennettLeonard A. BennettNewport News, Virginia

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THE FCRA IS A PLAINTIFF’S STATUTE

Statutory Damage remedies, 15 U.S.C. §1681n, $100-$1,000

L Willf l Th h ld Low Willfulness Threshold

Range of potential violations Range of potential violations

Availability of clients Availability of clients

56

DEVELOPMENT OF FCRA CLASS JURISPRUDENCE

Class experience into FCRA vs. Individual experience into Class litigation

FACTA C i l FCRA FACTA vs. Conventional FCRA

Seventh Ninth Third and Fourth Circuits Seventh, Ninth, Third and Fourth Circuits

California Chicago Pennsylvania and Virginia California, Chicago, Pennsylvania and Virginia

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CASE SELECTION: CLASS PROOFS

Damages

CASE SELECTION: CLASS PROOFS

Willfulness

Class membership

Standard procedures

Form notices

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FCRA DEFENDANTS

Consumer Reporting Agencies

FCRA DEFENDANTS

Creditor-furnishers

Employers

Users

59

FCRA INDIVIDUAL CASES Accuracy driven

FCRA INDIVIDUAL CASES

Dispute/reinvestigation claims

Often larger damages

Very individualized

60

TYPES OF FCRA CLASS CASESTYPES OF FCRA CLASS CASES

FACTA Truncation Cases, § 1681

Adverse Action Notice Cases, §1681m

61

TYPES OF FCRA CLASS CASES

Disclosure violations- 1681g


Seary v. eFunds Corp., 08 C 985, 2010 WL 183362 (N.D. Ill. Jan. 20, 2010) on reconsideration sub nom. Searcy v. eFunds Corp., 08 C 985, 2010 WL 1337684 (N.D. Ill. Mar. 31, 2010) (SCAN – Banking CRA failed to provide full files to consumers on request)

Domonoske v. Bank of Am., N.A., 705 F. Supp. 2d 515, 516 (W.D. Va. 2010) (Mortgage lender’s failure to provide credit score disclosures “as soon as reasonably practicable ”)reasonably practicable. )

Gillespie v. Equifax Info. Services, LLC, 05 C 138, 2008 WL 4614327 (N.D. Ill. Oct. 15, 2008) (CRAalleged to have violated the Fair Credit Reporting Act ( ) ( )( ) b f l d l l l d l(FCRA), 15 U.S.C. § 1681g(a)(1), by failing to disclose clearly and accurately the date of first delinquency in the consumer files of persons with reported delinquent credit accounts.)

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Impermissible Purpose - 1681bI T U i C P i Liti 00 C 4729 2005 WL 2007157 (N D Ill A


In re Trans Union Corp. Privacy Litig., 00 C 4729, 2005 WL 2007157 (N.D. Ill. Aug. 17, 2005) (Target marketing list constitutes a credit report and cannot be sold for target marketing purposes.)

Cappetta v GC Services Ltd P'ship 654 F Supp 2d 453 455 (E D Va 2009) Cappetta v. GC Services Ltd. P ship, 654 F. Supp. 2d 453, 455 (E.D. Va. 2009) (Credit card Debt collector obtained consumer reports of non-obligated spouse)

In re Countrywide Fin. Corp. Customer Data Sec. Breach Litig., MDL 1998, 2009 WL 5184352 (W.D. Ky. Dec. 22, 2009) (Personal information was involved in an 5 8 35 ( y ec , 009) ( e so a o at o as o ed aalleged theft committed by a Countrywide employee.)

Washington v. CSC Credit Services, Inc., 178 F.R.D. 95, 99 (E.D. La. 1998) order amended on denial of reconsideration, 180 F.R.D. 309 (E.D. La. 1998) vacated sub nom. Washington v. CSC Credit Services Inc., 199 F.3d 263 (5th Cir. 1900) and rev'd sub nom. Washington v. CSC Credit Services Inc., 199 F.3d 263 (5th Cir. 1900) (“Apart from obtaining an initial blanket certification from the insurance companies, defendants have exercised no oversight over the insurance companies to ensure that the reports are being used for proper purposes.”)p g p p p p )

63


Pre-screening/ Firm Offer Cases - §1681b


Murray v. GMAC Mortg. Corp., 434 F.3d 948, 951 (7th Cir. 2006) (“GMACM had not made the “firm offer of credit” that is essential when a potential lender accesses someone's credit history without that person's consent, see 15 U.S.C. § 1681b(c)(1)(B)(i); second, GMACM's offer did not include a “clear and conspicuous” notice of the recipient's right to close her credit information to all who lacked her prior consent, see 15 U.S.C. §1681m(d)(1)(D).”)

White v. E-Loan, Inc., C05-02080SI, 2006 WL 2411420 (N.D. Cal. Aug. 18, 2006) (“White may establish that the four corners of the E-Loan offer were too vague to constitute a firm offer of credit.”)

Stawski v. Secured Funding Corp., 06-CV-0918, 2008 WL 647024 (E.D. Wis. Mar. 6, 2008)

Kudlicki v. Capital One Auto Fin., Inc., 241 F.R.D. 603 (N.D. Ill. 2006)

64


Conventional Credit Reporting - §1681e(b)


Acosta v. Trans Union, LLC, 243 F.R.D. 377, 379 (C.D. Cal. 2007) (“Claims against consumer credit reporting agencies deriving from the procedures by which these agencies produce credit reports for individuals with credit reports discharged through Chapter 7 bankruptcy proceedings ”) See alsoreports discharged through Chapter 7 bankruptcy proceedings. ) See also White v. Experian, 05cv1070 (C.D. Cal. August 19, 2008)

Soutter v. Equifax Info. Services, LLC, 3:10CV107, 2011 WL 1226025 (E.D. Va Mar 30 2011) (“Soutter alleges that Equifax systematically ignoredVa. Mar. 30, 2011) ( Soutter alleges that Equifax systematically ignored hundreds of thousands of public records showing that Virginia civil judgments had been satisfied, vacated, or appealed.”)

Clark v Experian Info Solutions Inc CIV A 8:00 1217 24 2002 WL Clark v. Experian Info. Solutions, Inc., CIV.A.8:00-1217-24, 2002 WL 2005709 (D.S.C. June 26, 2002) (Defendants produced consumer credit reports that inaccurately stated that the consumer’s account had been “included in bankruptcy” when only the non-party co-obligor had filed.)

65


Conventional Credit Reporting - §1681i


Chakejian v. Equifax Info. Services LLC, 256 F.R.D. 492, 495 (E.D. Pa. 2009) When a consumer disputes a civil judgment, the CRA provided consumers with the name and address of the courthouse where the disputed public record originated rather than the vendor from whom it actually obtained the data.) See also Summerfield v.than the vendor from whom it actually obtained the data.) See also Summerfield v. Equifax Info. Services LLC, 264 F.R.D. 133 (D.N.J. 2009), reconsideration denied (Jan. 4, 2010)

Williams v. LexisNexis Risk Mgmt. Inc., CIV A 306CV241, 2007 WL 2439463 (E.D. Va. Aug. 23, 2007) (“If the consumer does not provide copies of two forms of identification with the initial request for a reinvestigation, LexisNexis does not begin a reinvestigation immediately, but instead sends the consumer a form requesting that the consumer prove his or her identity by sending LexisNexis photocopies of two forms of identification.”)p otocop es o t o o s o de t cat o )

Gardner v. Equifax Info. Services, LLC, CIV.06-3102ADM/AJB, 2007 WL 2261688 (D. Minn. Aug. 6, 2007) (“Equifax generally does not perform reinvestigation of disputes initiated by consumers located in CSC's zip codes.”)

66


Employment Reports- §1681b(b)(3)


Beverly v. Wal-Mart Stores, Inc., CIV.A. 3:07CV469, 2008 WL 149032 (E.D. Va. Jan. 11, 2008) (“According to plaintiff, defendant took adverse action against him based on his criminal background report before it had providedagainst him based on his criminal background report before it had provided him with a copy of the report.”)

Anderson v. National Notary Association (E.D. Va.); Daily v. NCO (E.D. Va.); Black v Winn Dixie (N D FL); Hall v Vitran (N D Ohio)Black v. Winn Dixie (N.D. FL); Hall v. Vitran (N.D. Ohio).

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Employment Reports- §1681k Willi L i N i Ri k M t I CIV A 306CV241 2007 WL 2439463 (E D


Williams v. LexisNexis Risk Mgmt. Inc., CIV A 306CV241, 2007 WL 2439463 (E.D. Va. Aug. 23, 2007) (“If the consumer does not provide copies of two forms of identification with the initial request for a reinvestigation, LexisNexis does not begin a reinvestigation immediately, but instead sends the consumer a form requesting that the consumer prove his or her identity by sending LexisNexis photocopies of two forms of identification.”)

Beverly v. Wal-Mart Stores, Inc., CIV.A. 3:07CV469, 2008 WL 149032 (E.D. Va. Jan. 11, 2008) (“According to plaintiff, defendant took adverse action against him b d hi i i l b k d t b f it h d id d hi ith fbased on his criminal background report before it had provided him with a copy of the report.”)

Smith v. HireRight Solutions, Inc., 711 F. Supp. 2d 426, 429 (E.D. Pa. 2010) (“The action is brought on behalf of the thousands of employment applicantsaction is brought on behalf of the thousands of employment applicants throughout the country who have purportedly been the subject of prejudicial, misleading, and inaccurate background reports performed by Defendant and sold to employers.”)

68

“[W]here willfulness is a statutory condition of civilliability, we have generally taken it to cover not onlyknowing violations of a standard, but reckless ones aswell ”well . . .

Safeco Ins. Co. of Am. v. Burr, U.S., 127 S.Ct. 2201,f f2208-09 (2007) (emphasis added).

Th C t d fi d kl “ ti t ili ‘The Court defined recklessness as “action entailing ‘anunjustifiably high risk of harm that is either known or soobvious that it should be known.’” Id. at 2215.

69

obv ous a s ou d be ow . d. a 5.

Whether:1) The CRA’s Compliance Department establishes internalcompliance procedures and ensures that those complianceprocedures are properly and consistently followed by thep p p y y yCRA’s Compliance officers.

2) Th CRA id ffi i t fi i l f it2) The CRA provides sufficient financial resources for itsCompliance Department.

Murray v. Indymac Bank, F.S.B., No. 04 C 7669, 2007 WL2741650, at *4 (N.D. Ill. Sept. 13, 2007)

70

3) The Compliance Department employees have FCRAknowledge, through:g , g

- Consultation with attorneys.- Keeping abreast of current developments in FCRA law relating to their dutiesrelating to their duties.

4) The CRA regularly trains its employees on FCRArequirements and compliance.q p

- Employees attend yearly training.- Employees have specific credentials or experienceregarding their compliance dutiesregarding their compliance duties.

Murray v. Indymac Bank, F.S.B., No. 04 C 7669, 2007 WL2741650, at *4 (N.D. Ill. Sept. 13, 2007)

71

Experian argued that Levine could not prove a willful violation because the Act was unclear about sales of reports forbecause the Act was unclear about sales of reports for consumers with closed accounts, and an interpretation that the sales were permitted was reasonable. Experian relied on the intervening decision in Safeco Insurance Company ofthe intervening decision in Safeco Insurance Company of America v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 2208-09, 2215-16, 167 L.Ed.2d 1045 (2007), to support its argument that a company does not willfully violate the Act by p y y yinterpreting it erroneously so long as its interpretation is not “objectively unreasonable.”

Levine v. World Fin. Network Nat. Bank, 554 F.3d 1314, 1317 (11th Cir. 2009)

72

Trans Union correctly reminds us that we are the first court of appeals to address whether the FCRA applies tocourt of appeals to address whether the FCRA applies to information from OFAC's SDN List in the form of an alert reported by a credit reporting agency. This does not, however, result in a borderline case of liability as Transhowever, result in a borderline case of liability as Trans Union suggests. It merely establishes that the issue has not been presented to a court of appeals before. The credit agency whose conduct is first examined under that section of the Act should not receive a pass because the issue has never been decided. The statute is far too clear to support any such license.

Cortez v. Trans Union, LLC, 617 F.3d 688, 722 (3d Cir. 2010)

73

PREDOMINANCE OF INDIVIDUAL ISSUES

Liability factors individualized?

◦ Dispute letters vs. Notice letters

◦ Accuracy an element?

◦ Uniformity of procedures

74

PREDOMINANCE OF INDIVIDUAL ISSUES

Damages individualized?◦ Actual Damages?◦ Actual Damages? Liquidated (e.g. cost of credit report or score) Objectively determinable (e.g. cost of correcting file or of

higher interest rate) Smaller class size

Strategies attempted:St t t d ( $1 000 <)◦ Statutory damages (or $1,000 <)

◦ Individual damage trials◦ Formula for damages◦ Issue only certification (See e g Pella Corp v SaltzmanIssue only certification (See e,g. Pella Corp. v. Saltzman,

606 F.3d 391, 395 (7th Cir. 2010) cert. denied, 131 S. Ct. 998, 178 L. Ed. 2d 826 (U.S. 2011))

◦

75

STATUTORY DAMAGES ARE NOT INDIVIDUALIZED

A determination of statutory damages in a federal statute is linked only to the amount necessary to achieve deterrence and may be

d d if l i iff b i i h h d fawarded on a uniform, per-plaintiff basis without the need for any “fact specific calculations of actual injury.” Six (6) Mexican Worker v. Ariz. Citrus Growers, 904 F.2d 1301, 1309-10 (9th Cir. 1990).

See e g Acosta v Trans Union LLC 240 F R D 564 571 (C D Cal See, e.g., Acosta v. Trans Union, LLC, 240 F.R.D. 564, 571 (C.D. Cal. 2007); Bonner v. Home123 Corp., 2006 U.S. Dist. LEXIS 54418, at *18-19 (N.D. Ind. Aug. 4, 2006); White v. Imperial Adjustment Corp., 2002 U.S. Dist. LEXIS 26610, at *56-57 (E.D. La. 2002); In re Farmers Ins. Co., FCRA Litig., 2006 U.S. Dist. LEXIS 27290, at *38-39 a e s s Co , C t g , 006 U S st S 90, at 38 39(W.D. Okla. Apr. 13, 2006); Cavin v. Home Loan Ctr., Inc., 236 F.R.D. 387, 393 (N.D. Ill. 2006) ; Ashby v. Farmers Ins. Co., 2004 U.S. Dist. LEXIS 21053 at *14 (D. Or. Oct. 18, 2004); Braxton v. Farmer’s Ins. Group, 209 F.R.D. 654, 661 (N.D. Ala. 2002); Hernandez v. Midland Credit Mgmt 236 F R D 406 412 (N D Ill 2006); Wollert v ClientCredit Mgmt., 236 F.R.D. 406, 412 (N.D. Ill. 2006); Wollert v. Client Servs., Inc., 2000 U.S. Dist. LEXIS 6485, at *5-6 (N.D. Ill. Mar. 24, 2000).

76

STATUTORY DAMAGES ARE INDIVIDUALIZED

“Under these circumstances, it strains credulity to conclude that the individual damages issues presented by the g p ypurported class which Plaintiffs seek to certify would be anything other than simple and straightforward. Pragmatically, the only substantive difference between putative class members for purposes of affixing the statutory p p p g ydamages figure within the statutory damages range of $100 to $1,000 or in awarding punitive damages is the number of receipts received by a single class member during the approximately eighteen months at issue. And indeed, this pp y g ,difference does not complicate matters very much at all given that the class can be broken down into subcategories based upon the number of violating receipts received per putative class member.”

Stillmock v. Weis Markets, Inc., 385 F. App'x. 267, 273 (4th Cir. 2010)

77

INDIVIDUALIZED ISSUES FOR PUNITIVE DAMAGES?

“In sum, many class members appear to have real, viable claims , y pp ,for actual damages suffered as a result of TI's failure to comply with the FCRA. These actual damages are often ten, and up to twenty times greater than the statutory damages for which each class member is eligible. If punitive damages are tried i di id ll h th ld b d f tit ti lindividually, where they would be measured for constitutional reasonableness against each individual plaintiff's full range of compensatory damages, these individual class members might permissibly be entitled to punitive remedies many times greater than they would be were punitive damages measured onlythan they would be were punitive damages measured only against statutory damages, as they would have to be in the proposed class action.”

Willi T l t I CIV A 3 05CV853 2007 WL Williams v. Telespectrum, Inc., CIV.A.3:05CV853, 2007 WL 6787411 (E.D. Va. June 1, 2007)

78

Possibly, if Actual damages are significant:

Preston, 2004 U.S. Dist. LEXIS 28914 at *12, n.14 (“[T]he Plaintiffs’ contention that actual damages cannot, therefore exceed the value of a $9.00 credit report is incorrect.”);

Gardner v. Equifax Info. Servs., LLC, 2007 WL 2261688, at *5 (D. Minn. 2007) (distinguishing and citing Murray, “[T]his Court finds that in the instant case, it is not clear ‘[t]hat actual loss is small and hard to quantify ”);and hard to quantify. );

Clark v. Experian Info. Solutions, Inc., 2002 WL 2005709 (D.S.C. 2002) (finding from the evidence before it that the respective FCRA allegation the erroneous reporting of a bankruptcy in theFCRA allegation—the erroneous reporting of a bankruptcy in the credit files of a “bankruptcy innocent” co-obligor—presented claims with provable actual damages.)

79

But see:

The district court's second reason-that Murray should have sought compensatory damages for herself and all class members rather than relying on the statutory-damages remedy-would make consumer class actions impossible. What each person's injury may be is a question that must be resolved one consumer at a time Although compensatorymust be resolved one consumer at a time. Although compensatory damages may be awarded to redress negligence, while statutory damages require wilful conduct, introducing the “easier” negligence theory would preclude class treatment. Common questions no longer would predominate, and an effort to determine a million consumers' i di id l l ld k h i bl Y i di id lindividual losses would make the suit unmanageable. Yet individual losses, if any, are likely to be small-a modest concern about privacy, a slight chance that information would leak out and lead to identity theft. That actual loss is small and hard to quantify is why statutes such as the Fair Credit Reporting Act provide for modest damages without proof of p g p g pinjury.

Murray v. GMAC Mortg. Corp., 434 F.3d 948, 952-53 (7th Cir. 2006)

80

But see:

The district court's second reason-that Murray should have sought compensatory damages for herself and all class members rather than relying on the statutory-damages remedy-would make consumer class actions impossible. What each person's injury may be is a question that must be resolved one consumer at a time Although compensatorymust be resolved one consumer at a time. Although compensatory damages may be awarded to redress negligence, while statutory damages require wilful conduct, introducing the “easier” negligence theory would preclude class treatment. Common questions no longer would predominate, and an effort to determine a million consumers' i di id l l ld k h i bl Y i di id lindividual losses would make the suit unmanageable. Yet individual losses, if any, are likely to be small-a modest concern about privacy, a slight chance that information would leak out and lead to identity theft. That actual loss is small and hard to quantify is why statutes such as the Fair Credit Reporting Act provide for modest damages without proof of p g p g pinjury.

Murray v. GMAC Mortg. Corp., 434 F.3d 948, 952-53 (7th Cir. 2006)

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National Association of Consumer Advocates◦ Membership assistance◦ FCRA Conference◦ www NACA net◦ www.NACA.net

National Consumer Law Center (NCLC)C C ( C C)◦ Fair Credit Reporting, Seventh Edition◦ Training, Conferences and Staff consulting

C L◦ www.ConsumerLaw.org

82

C d f NACA Board of Directors LawDragon Top 500 Plaintiffs Attorney Virginia SuperLawyer

Virginia Leaders in the Law Virginia Leaders in the Law Contributing Author, Fair Credit Reporting Congressional testimony National Practice National Practice

83

Documents

FCRA and FACTA Classmedia.straffordpub.com/.../presentation.pdf · 4/26/2011 · GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006) (cont.) – The Seventh Circuit reversed: Representative