Guimond v. Trans Union Credit Information Co., 93-15800

• Citation: 45 F.3d 1329
• Decision Date: 19 January 1995
• Docket Number: No. 93-15800,93-15800
• Parties: Renie GUIMOND, Plaintiff-Appellant, v. TRANS UNION CREDIT INFORMATION COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

Page 1329

45 F.3d 1329

Renie GUIMOND, Plaintiff-Appellant, v. TRANS UNION CREDIT INFORMATION COMPANY, Defendant-Appellee.

No. 93-15800.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Oct. 7, 1994.

Decided Jan. 19, 1995.

Timothy P. Rumberger, Berkeley, CA, for plaintiff-appellant.

Harry I. Jacobs, Encino, CA, for defendant-appellee.

Appeal from the United States District Court for the Northern District of California.

Before: PREGERSON, WIGGINS, Circuit Judges; and FONG, ^* District Judge.

FONG, District Judge:

INTRODUCTION

Renie Guimond ("Guimond") appeals the district court's grant of summary judgment in favor of Trans Union Credit Information Co. ("Trans Union") on her claims under the Federal Fair Credit Reporting Act ("FCRA"), 15 U.S.C. Sec. 1681, and the California Consumer Credit Reporting Agencies Act ("CCRAA"), California Civil Code Sec. 1785.1 et seq., alleging that Trans Union failed to correct inaccurate information in a consumer credit report and failed to disclose the source of the inaccurate information. Guimond also appeals the district court's award of attorneys' fees to Trans Union. Both parties seek fees on appeal. We AFFIRM in part, REVERSE in part and REMAND.

BACKGROUND

Trans Union is a consumer credit reporting agency which maintained a consumer credit report for Guimond. Trans Union does not dispute Guimond's recitation of the facts. ¹ Instead, Trans Union claims that liability cannot be predicated on those facts as a matter of law.

In October of 1989, Guimond became aware of and notified Trans Union of certain inaccuracies contained in her credit report. Specifically, the report incorrectly indicated On November 10, 1989, Trans Union responded to Guimond's letter, stating that the erroneous information disputed by her had been removed. However, on March 29, 1990, Trans Union again published the erroneous information which it purportedly had removed.

that she was married, listed a social security for this non-existent spouse, indicated that she was also known as "Ruth Guimond", and erroneously stated that she had a credit card from Saks Fifth Avenue.

Guimond then requested the source of the erroneous information from Trans Union. On April 28, 1990, Trans Union stated that it could not disclose the identity of the source of the disputed information because it did not know the source of the information. The disputed information was eventually removed from Guimond's file on October 25, 1990. No credit was denied to Guimond as a result of the inaccuracies in her credit file.

Guimond filed her complaint on January 10, 1992 alleging violations of the FCRA and the CCRAA. Specifically, Guimond claimed that Trans Union negligently and willfully 1) violated 15 U.S.C. Sec. 1681e(b); 2) violated 15 U.S.C. Sec. 1681g(a)(2); 3) violated 15 U.S.C. Sec. 1681i(c); and 4) violated California Civil Code Sec. 1785.1 et seq. Guimond claimed damages for: 1) fees collected by Trans Union for disclosure of source information, 2) lost opportunities, i.e. she had been deterred from applying for credit during the months pending resolution of this matter, ² and 3) emotional distress, manifested by sleeplessness, nervousness, frustration, and mental anguish resulting from the incorrect information in her credit report.

On March 26, 1993, the district court granted Trans Union's motion for summary judgment, denied plaintiff's motion for summary judgment, and awarded Trans Union attorneys' fees and costs in the amount of $7,700. The court held that no liability could be imposed on Trans Union absent a denial of credit. The court also held that liability could not be imposed because Guimond did not suffer any actual damages as there was no denial of credit.

STANDARD OF REVIEW

A grant of summary judgment by a district court is reviewed de novo on appeal. Jones v. Union Pacific R.R., 968 F.2d 937, 940 (9th Cir.1992).

DISCUSSION

I. Violation of 15 U.S.C. Sec. 1681e(b)

15 U.S.C. Sec. 1681e(b) states:

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.

The FCRA provides for compensation in the form of actual damages and attorneys' fees if a consumer reporting agency negligently fails to comply with any provision of FCRA. 15 U.S.C. Sec. 1681o. In addition, a consumer can recover punitive damages for willful non-compliance. 15 U.S.C. Sec. 1681n.

In granting Trans Union's motion for summary judgment, the district court noted that the parties disputed the scope of the term "actual damages" and disputed whether such damages were a prerequisite to finding Trans Union liable under Sec. 1681e(b). The district court held that "while mental anguish may be an independent basis upon which to find liability, plaintiff in this case has not identified evidence sufficient to meet her burden to show that any damage due to emotional harm was caused by inaccuracies in defendant's credit report." The district court found that since there was no denial of credit, the emotional distress plaintiff claimed could not have resulted from Trans Union's activities, even if it came within the definition The term "actual damages" has been interpreted to include recovery for emotional distress and humiliation. See Johnson v. Department of Treasury, I.R.S., 700 F.2d 971, 984 (5th Cir.1983) (mental anguish included as an element of recovery in FCRA claims); Thompson v. San Antonio Retail Merchants Ass'n, 682 F.2d 509, 514 (5th Cir.1982); Millstone v. O'Hanlon Reports, Inc., 528 F.2d 829, 834-35 (8th Cir.1976); Bryant v. TRW, Inc., 487 F.Supp. 1234, 1240 (E.D.Mich.1980), aff'd, 689 F.2d 72 (6th Cir.1982); Jones v. Credit Bureau of Huntington, Inc., 184 W.Va. 112, 117, 399 S.E.2d 694 (1990). Moreover, no case has held that a denial of credit is a prerequisite to recovery under the FCRA.

of actual damages. As a result, Guimond's claims were rejected due to lack of causation between Guimond's alleged harm and Trans Union's activities.

Accordingly, as a procedural matter, the district court erred in granting summary judgment on the issue of causation because there was uncontroverted evidence to support Guimond's theory of liability. Trans Union did not contest Guimond's claims of damages, nor that those damages were a result of the inaccuracies in her credit report. On this record, summary judgment is inappropriate. The district court found that Guimond's claimed damages could not have resulted from Trans Union's activity because there was no denial of credit. Yet, absent some authority stating that a denial of credit, and not mere credit inaccuracies, are necessary for recovery under FCRA, the issue of causation should have been left for a fact finder to determine.

In addition, we find that a failure to comply with Sec. 1681e(b) is actionable even absent a denial of credit. Accordingly, the district court erred in finding that any liability under Sec. 1681e(b) was predicated, as a matter of law, on the occurrence of some event--denial of credit or transmission of the report to third parties--resulting from the compilation and retention of erroneous information.

The FCRA was the product of congressional concern over abuses in the credit reporting industry. St. Paul Guardian Insurance Co. v. Johnson, 884 F.2d 881, 883 (5th Cir.1989). The legislative history of the FCRA reveals that it was crafted to protect consumers from the transmission of inaccurate information about them, Kates v. Croker National Bank, 776 F.2d 1396, 1397 (9th Cir.1985); see also St. Paul, 884 F.2d at 883 (citing Pinner v. Schmidt, 805 F.2d 1258, 1261 (5th Cir.1986), cert. denied, 483 U.S. 1022, 107 S.Ct. 3267, 97 L.Ed.2d 766 (1987), and to establish credit reporting practices that utilize accurate, relevant, and current information in a confidential and responsible manner. St. Paul, 884 F.2d at 883 (citing Hovater v. Equifax. Inc., 823 F.2d 413, 417 (11th Cir.), cert. denied, 484 U.S. 977, 108 S.Ct. 490, 98 L.Ed.2d 488 (1987)). These consumer oriented objectives support a liberal construction of the FCRA. Kates, 776 F.2d at 1397.

Liability under Sec. 1681e(b) is predicated on the reasonableness of the credit reporting agency's procedures in obtaining credit information. Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir.1991); Bryant v. TRW, Inc., 689 F.2d 72, 77 (6th Cir.1982); Thompson v. San Antonio Retail Merchants Ass'n, 682 F.2d 509, 513 (5th Cir.1982); Ladner v. Equifax Credit Information Services, 828 F.Supp. 427, 430 (S.D.Miss.1993); Boothe v. TRW Credit Data, 768 F.Supp. 434, 437 (S.D.N.Y.1991). In order to make out a prima facie violation under Sec. 1681e(b), a consumer must present evidence tending to show that a credit reporting agency prepared a report containing inaccurate information. Cahlin, 936 F.2d at 1156. ³ The FCRA does not impose strict liability, however--an agency can escape liability if it establishes that an inaccurate report was generated despite the agency's following reasonable procedures. The reasonableness of the procedures and whether the agency followed them will be jury questions in the overwhelming majority of cases. Id.

An inquiry into the reasonableness of the procedures utilized by the agency in acquiring information belies a claim that liability under Sec. 1681e(b) must be predicated on the effect of that information once disseminated. In the instant case, the focus should not have been on Guimond's damage claims. Rather the inquiry should have centered on whether Trans Union's procedures for preparing Guimond's file contained reasonable procedures to prevent inaccuracies. Guimond has made out a prima facie case under Sec. 1681e(b) by showing that there were inaccuracies in her credit report. The district court was then required to consider whether Trans Union was liable under Sec. 1681e(b) before it determined that...