Morris v. Equifax Information Services, LLC

• Decision Date: 24 July 2006
• Docket Number: No. 05-20578.,05-20578.
• Citation: 457 F.3d 460
• Parties: Kenneth M. MORRIS, Plaintiff-Appellant, v. EQUIFAX INFORMATION SERVICES, LLC, et al., Defendants, Equifax Information Services, LLC, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

457 F.3d 460

Kenneth M. MORRIS, Plaintiff-Appellant, v. EQUIFAX INFORMATION SERVICES, LLC, et al., Defendants Equifax Information Services, LLC, Defendant-Appellee.

No. 05-20578.

United States Court of Appeals, Fifth Circuit.

July 24, 2006.

As Modified on Rehearing August 17, 2006.

Kenneth M. Morris (argued), Morris & Campbell, Houston, TX, pro se.

Mara McRae (argued), Jennifer Rossi Auwarter, Kilpatrick Stockton, Atlanta, GA, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Texas.

Before GARWOOD, HIGGINBOTHAM and CLEMENT, Circuit Judges.

GARWOOD, Circuit Judge:

Plaintiff-appellant Kenneth M. Morris (Morris) appeals the district court's summary judgment in favor of defendant-appellee Equifax Information Services, LLC (Equifax). On Morris's claim under the Fair Credit Reporting Act (FCRA), we reverse and remand. On Morris's state law claim for libel, we affirm.

Facts and Proceedings Below

On July 3, 2003, Morris obtained a "3-in-1 Credit Report" through TrueCredit's internet website.¹ The 3-in-1 report purported to show Morris's account history information as provided by the three major credit reporting bureaus: Experian, TransUnion, and Equifax.² The 3-in-1 report from July 3 contained several pieces of information about Morris that he wanted either changed or deleted. Morris wrote a letter to Equifax³ on July 16, 2003, identifying these items and stating, "False information in the credit report that you disseminate about me is causing me harm." One of the items identified by Morris for correction was a charge account with RNB-Target (Target). The 3-in-1 report showed that Experian, TransUnion, and Equifax all reported that Morris had joint responsibility for this account, that the account's condition was "Derogatory" and its pay status was "Collection/Chargeoff" of the past due amount of $253. In his letter to Equifax, Morris stated, "I owe Target nothing," and explained that the account in question had been opened by Rebecca Morris while she was married to Morris, that the account was never a joint account, that Morris divorced Rebecca in April 2001, and that the charge in question had been effected by Rebecca in late 2001 after the divorce. In the letter to Equifax, Morris stated that he had informed Target of his position on this account, and he also stated that "Target's bureaucratic bungling is solely responsible for this false information that Target has furnished to you." Morris demanded that Equifax correct the information about the Target account and also that Equifax show the information as "disputed" in the meantime. Morris's letter also requested that Equifax give its immediate attention to the disputed items and stated that Morris was in the process of refinancing his home mortgage and that he would hold Equifax responsible for substantial damages in the event he could not obtain the lowest interest rate available because of an incorrect credit report.

Equifax received Morris's letter on July 19, 2003. Equifax took none of the action demanded by Morris, but instead responded by sending Morris a letter dated July 24, 2003, stating that "Equifax does not maintain or service the information contained in your credit file." Equifax's letter also informed Morris that his letter of July 16 had been forwarded to CSC Credit Services (CSC), which, according to Equifax, is "the credit reporting agency which researches the credit file concerns of consumers living in [Morris's] area." The July 24 letter from Equifax also provided Morris with contact information for CSC and directed Morris to contact CSC if he had any further concerns or needed additional help.

It is not clear from the record when Equifax actually mailed Morris's July 16, 2003 letter to CSC, but it is clear that CSC received the forwarded letter on July 29, 2003. In response to Morris's letter, CSC sent an Automated Consumer Dispute Verification (ACDV) to Target on August 1, 2003. In its August 13, 2003 response to CSC, Target did not tell CSC to stop reporting the account in question as a joint account with Morris. Equifax admittedly, and CSC allegedly, did not report the results of this reinvestigation to Morris in August 2003. In September 2003, CSC sent another ACDV to Target. In its September 19, 2003 response to CSC, Target again did not tell CSC to stop reporting the account as a joint account. While Equifax again did not report the results of this reinvestigation to Morris, CSC did report the results to Morris by letter dated October 3, 2003, seventy-six days after Equifax received Morris's dispute letter (and sixty-six days after CSC received Morris's letter forwarded from Equifax).

On October 31, 2003, Morris obtained a "3 Bureau Online Credit Report" from consumerinfo.com.⁴ This 3 Bureau report, like the 3-in-1 report from July 3, 2003, purported to show Morris's account history information as provided by the three major credit reporting bureaus: Experian, TransUnion, and Equifax. On the 3 Bureau report from October 31, 2003, the past due amount of $253 from the disputed Target account was still displayed under all three of the major bureaus, although Equifax no longer reported it as a "RNB-Target" account as did Experian and TransUnion, but instead reported it under the account heading of "Retailers National B." The remarks in the Equifax column for "Retailers National B" stated, "Consumer says acct. is responsibility of separated or divorced spouse." In addition, the payment status for this account was shown in the Equifax column as "Bad debt & placed for collection & skip." On January 8, 2004, Morris filed suit in Texas state court against both Equifax and CSC asserting claims for violations of the reinvestigation requirements of the Fair Credit Reporting Act, 15 U.S.C. § 1681i, and also a state law libel claim. In this original petition, Morris alleged damages from receiving higher insurance quotes and from being unable to refinance his mortgage at a more favorable rate. Equifax, with CSC's consent, timely removed the case to the United States District Court for the Southern District of Texas.

In mid-January 2004, Morris received a letter from Capital One disapproving Morris's request for a Capital One credit card. In its letter, known as an "adverse action" letter from the requirements of 15 U.S.C. § 1681m, Capital One provided the following reasons, inter alia, for not approving Morris's request: the "presence of a collection record" and "too many 30-day delinquencies on Installment Trades." The Capital One letter also stated that its decision "was based in whole or in part on information contained in consumer credit report [sic] obtained from the credit bureau(s) listed below." The letter then listed Equifax, Experian, and TransUnion. About the same time, Morris received a letter from Citibank disapproving Morris's application for a Citi Platinum Select MasterCard account. Citibank identified the following reason for its disapproval: "A delinquent credit obligation(s), either paid or unpaid, was recorded in your credit bureau report." Much like the Capital One letter, the Citibank letter stated that the "decision was based in whole or in part on information obtained in a report from the consumer reporting agency listed below." Unlike Capital One, however, the Citibank letter listed only one consumer reporting agency — Equifax. Neither the Capital One letter nor the Citibank letter made any mention of CSC.⁵

On January 24, 2005, Morris filed his first amended complaint, which incorporated the January 2004 denials of credit by Capital One and Citibank. At some point Morris sued Target in a separate action and following that suit Target sent (to precisely whom is unclear) a universal automated data form resulting in the challenged information being removed from consumer credit reports on file respecting Morris. Morris and CSC settled and on March 4, 2005, Morris filed an unopposed motion to dismiss without prejudice his claims against CSC, which was granted on March 8, 2005, dismissing CSC from the present case.

On March 22, 2005, Morris filed a motion for partial summary judgment based on Equifax's admission that it did not comply with the FCRA's reinvestigation provisions, 15 U.S.C. § 1681i. Also on March 22, Equifax filed a motion for summary judgment on both of Morris's claims, arguing that its receipt of Morris's dispute letter did not trigger any obligation on its part to comply with section 1681i, and on the ground that Morris's libel claim was barred under section 1681h(e)⁶ and conditional privilege under Texas state law. The case was referred to a magistrate judge who, on June 10, 2005, recommended that the district court deny Morris's motion for partial summary judgment and grant Equifax's motion for summary judgment. The magistrate judge recommended summary judgment for Equifax on Morris's FCRA claim because CSC, not Equifax, owned Morris's file and only CSC had the authority to modify the information in Morris's file. The magistrate judge also recommended summary judgment for Equifax on the libel claim because "the court finds that Plaintiff failed to raise a fact issue on malice or willful intent." In addition, the magistrate judge noted that, although "[t]he record demonstrates that Equifax published Plaintiff's credit information[,] [n]othing in the record suggests that Equifax knew or should have known at that time that the information was false."

Morris filed objections to the magistrate judge's memorandum and recommendation, arguing that the language of the FCRA does not allow a consumer reporting agency to avoid the reinvestigation obligations of 15 U.S.C. § 1681i simply because it does not "own" the file. In his objections, Morris also argued that he had raised a fact issue concerning Equifax's "malice" in that his evidence shows "Equifax knew of the falsity because Morris told them of the falsity, and Equifax did nothing but continue to...