Bakker v. McKinnon

• Decision Date: 21 August 1998
• Docket Number: No. 97-3267,97-3267
• Citation: 152 F.3d 1007
• Parties: Johnny L. BAKKER, Teresa Bakker, Carrie Ann Bakker, Appellees, v. Laura J. McKINNON, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 1007

152 F.3d 1007

Johnny L. BAKKER, Teresa Bakker, Carrie Ann Bakker, Appellees, v. Laura J. McKINNON, Appellant.

No. 97-3267.

United States Court of Appeals,

Eighth Circuit.

Submitted March 11, 1998.

Decided Aug. 21, 1998.

David D. Stills, Fayetteville, AR, argued (Thomas A. Mars, on the brief), for Appellees.

George Alan Wooten, Fort Smith, AR, argued (Kathryn Stocks Campbell, on the brief), for Appellant.

Before McMILLIAN, FAGG and BOWMAN, ¹ Circuit Judges.

McMILLIAN, Circuit Judge.

Laura J. McKinnon, an attorney, appeals from a final judgment entered in the United States District Court ² for the Western District of Arkansas, following a bench trial, finding that she had intentionally and willfully violated the Fair Credit Reporting Act (FCRA or the Act), 15 U.S.C. § 1681 et seq. Bakker v. McKinnon, Civil No. 96-5112 (W.D.Ark. July 21, 1997) (mem.op.). The district court awarded to each appellee, Dr. Johnny L. Bakker and his two daughters, Teresa Bakker and Carrie Ann Bakker, $500 in compensatory damages and $5,000 in punitive damages. For reversal, appellant contends that the district court erred in finding that she violated the FCRA and in awarding an unreasonable amount for punitive damages.

The district court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331 (federal question). This court has jurisdiction pursuant to 28 U.S.C. § 1291. The notice of appeal was timely filed pursuant to Fed. R.App. P. 4(a). For the reasons given herein, we affirm the judgment of the district court.

I

In September 1996 appellees Dr. Johnny L. Bakker, who is a dentist, and his adult daughters, Teresa Bakker and Carrie Ann Bakker, filed this lawsuit alleging that appellant had requested several consumer credit reports about them from a local credit bureau in violation of the FCRA. Appellant represents several women patients of Dr. Bakker who claimed that Dr. Bakker had committed dental malpractice by improperly touching them during the course of dental treatments. Appellant filed lawsuits in state court on behalf of these women against Dr. Bakker.

The district court found that appellant and her associates had engaged in numerous acts which, in the district court's view, "grossly crossed the line in respect to what is proper in conducting litigation." Mem. op. at 2 (footnote omitted). Basically, the district court concluded that appellant and her associates had requested the credit reports as part of the litigation process to force a settlement. Id. at 3-9. The district court noted that a speaker at a meeting of the Arkansas Trial Lawyer's Association (of which appellant was a member of the board of governors and a former president) had recommended that consumer credit reports be routinely obtained against defendants or prospective defendants. Id. at 7.

Appellant admitted that she (or, more precisely, someone in her office) obtained the credit reports, but she argued that (1) she obtained them for a commercial or a professional purpose and, thus, the credit reports were not consumer credit reports within the meaning of the FCRA, 15 U.S.C. §§ 1681a(d), 1681b, or (2) in the alternative, assuming the credit reports were consumer reports within the meaning of the FCRA, she had a legitimate business need for requesting them, id. § 1681b(3)(E). Dr. Bakker's attorney had informed appellant that CNA Insurance Co. was defending Dr. Bakker under reservation of rights letters. Appellant testified that she obtained the credit reports about Dr. Bakker and his daughters in order to determine whether he was judgment proof and whether he was transferring his assets to his daughters. Appellant filed a motion for summary judgment, alleging that the credit reports were not consumer reports or, in the alternative, they were obtained for a legitimate business need. The district court denied the motion for summary judgment, holding that the credit reports were consumer reports within the meaning of the FCRA. Order at 5-7 (Apr. 25, 1997) (order denying defendant's motion for summary judgment). The district court decided that the key is the purpose for which the information was collected, not the use to which the information contained therein is put. Id. at 6, citing St. Paul Guardian Ins. Co. v. Johnson, 884 F.2d 881, 883 (5th Cir.1989) (St. Paul Guardian ). Here, the credit reports apparently consisted primarily of a listing of outstanding credit card and similar debts. Mem. op. at 9. The district court also rejected appellant's legitimate business need argument because she and appellees were not involved in a business transaction within the meaning of the FCRA. Order at 7. The district court rejected the "broad" interpretation of "business transaction" and instead limited "business transaction" to consumer credit, insurance or employment transactions. Id.; see Ippolito v. WNS, Inc., 864 F.2d 440, 451 (7th Cir.1988), cert. dismissed, 490 U.S. 1061, 109 S.Ct. 1975, 104 L.Ed.2d 623 (1989). The district court also noted that appellant's reason for obtaining the credit reports was not a "business need" within the meaning of the FCRA because "[d]etermining whether an adverse party in litigation will be able to satisfy a judgment is plainly a purpose unrelated to 'an individual's eligibility for credit, insurance or employment.' " Order at 8, citing Mone v. Dranow, 945 F.2d 306, 308 (9th Cir.1991) (per curiam) (citing cases).

Before trial, the district court had advised the attorneys that, in light of its previous rulings, the only issue left for trial was damages. Mem. op. at 12. Appellees testified about how appellant's wrongful requests for their credit reports had violated their privacy. The district court found that appellant and her associates had willfully violated the FCRA, 15 U.S.C. § 1681q, by requesting consumer reports on appellees in "a blatant attempt to extract a settlement from the insurance carrier for Dr. Bakker by whatever means were at hand." Id. at 14. The district court characterized the multiple requests for credit reports as part of a "vendetta" pursued by appellant and her associates against Dr. Bakker and his family to harass and coerce them into settling the litigation. The district court awarded each appellee actual damages in the amount of $500 and punitive damages in the amount of $5,000. Id. at 16-17. Subsequently, the district court awarded appellees attorney's fees and costs. Order at 1-2 (Aug. 12, 1997) (order granting plaintiffs' motion for attorney's fees and costs). This appeal followed.

II

Appellant first argues that the district court erred in denying her motion for summary judgment because she did not violate the FCRA as a matter of law. Although we do not believe appellant properly preserved this issue for appellate review, we need not decide that issue because the denial of summary judgment is interlocutory in nature and not appealable after a full trial on the merits; judgment after a full trial on the merits supersedes earlier summary judgment proceedings. Metropolitan Life Ins. Co. v. Golden Triangle, 121 F.3d 351, 354 (8th Cir.1997), citing Johnson Int'l Co. v. Jackson Nat'l Life Ins. Co., 19 F.3d 431, 434 (8th Cir.1994).

III.

Appellant argues the district court erred in finding that she violated the FCRA. Appellant argues she requested the credit reports in the course of a commercial or professional transaction, that is, in her capacity as an attorney representing clients in litigation, and not in connection with any type of consumer transaction involving appellees' credit, insurance or employment. Appellant argues that credit reports obtained in connection with commercial or professional transactions are not covered by the FCRA. Appellant also argues that there was no evidence that she obtained the credit reports under false pretenses. In the alternative, appellant argues that, assuming for purposes of analysis that the credit reports are consumer reports within the meaning of the FCRA, she did not violate the FCRA because she had a legitimate "business need" for obtaining them within the meaning of 15 U.S.C. § 1681b(3)(E). We do not agree.

The underlying facts are not substantially disputed. Whether the credit reports were consumer reports and, if so, whether the business need exception applies are questions of statutory interpretation of the FCRA. The district court found that appellant had engaged in numerous acts, which in its view, grossly crossed the line in respect to what is proper in conducting litigation; during the litigation against Dr. Bakker, appellant had attempted to "dig up as much dirt" as possible about appellees without regard to its relevance; appellant had threatened to destroy and ruin Dr. Bakker's dental practice through litigation and publicity; and appellant had improperly accused Dr. Bakker of being a child molester. Mem. op. at 2-8 (citing letters dated January 23, 1992, and February 14, 1992). The district court found that appellant's reason for obtaining the credit reports was a blatant attempt to coerce a settlement from Dr. Bakker's insurance carrier.

When appellant obtained the credit reports in September 1995 and April 1996, 15 U.S.C. § 1681b(3) provided in part that

any consumer reporting agency may furnish a consumer report under the following circumstances and no other:

....

(3) To a person which it has reason to believe--

(A) intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer; or

(B) intends to use the information for employment purposes; or

(C) intends to use the information in connection with the underwriting of insurance involving the consumer; or

(D) intends to use the information in connection with a determination of the consumer's eligibility for a license or other benefit granted by a governmental instrumentality required by law to...