617 F.3d 688 (3rd Cir. 2010), 08-2465, Cortez v. Trans Union, LLC

Docket Nº:08-2465, 08-2466.
Citation:617 F.3d 688
Opinion Judge:McKEE, Chief Judge.
Party Name:Sandra CORTEZ, Appellant in 08-2465 v. TRANS UNION, LLC Sandra Cortez v. Trans Union, LLC, Appellant in 08-2466.
Attorney:James A. Francis, (Argued), John Soumilas, Francis & Mailman, P.C., Philadelphia, PA, for Appellant/Cross-Appellee. Mark E. Kogan, Bruce S. Luckman, (Argued), Timothy P. Creech, Kogan, Trichion & Wertheimer, P.C., Philadelphia, PA, for Appellee/Cross-Appellant.
Judge Panel:Before: McKEE, Chief Judge, HARDIMAN and VAN ANTWERPEN, Circuit Judges.
Case Date:August 13, 2010
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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617 F.3d 688 (3rd Cir. 2010)

Sandra CORTEZ, Appellant in 08-2465



Sandra Cortez


Trans Union, LLC, Appellant in 08-2466.

Nos. 08-2465, 08-2466.

United States Court of Appeals, Third Circuit.

August 13, 2010

Argued: June 11, 2009.

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James A. Francis, (Argued), John Soumilas, Francis & Mailman, P.C., Philadelphia, PA, for Appellant/Cross-Appellee.

Mark E. Kogan, Bruce S. Luckman, (Argued), Timothy P. Creech, Kogan, Trichion & Wertheimer, P.C., Philadelphia, PA, for Appellee/Cross-Appellant.

Before: McKEE, Chief Judge, HARDIMAN and VAN ANTWERPEN, Circuit Judges.


McKEE, Chief Judge.

Sandra Cortez appeals the district court's order remitting a jury's punitive damages award of $750,000 to $100,000 on claims she brought under the Fair Credit Reporting Act (" FCRA" ), codified at 15 U.S.C. §§ 1681-1681x.1 In its cross-appeal, Trans Union, LLC appeals the district court's order denying its motion for judgment as a matter of law and rejecting Trans Union's challenge to the jury's compensatory damages award of $50,000. For the reasons that follow, we will affirm the district court's orders.2

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A. Factual History

This dispute began when Cortez encountered problems with a credit report that Trans Union sent to a car dealership where she was trying to purchase a car. It stemmed from a Trans Union product called " OFAC Advisor" that confused Cortez's identity with the identity of someone with a similar name who was on a list compiled by the Treasury Department's Office of Foreign Assets Control (" OFAC" ).

We will discuss the OFAC List and Trans Union's related product in greater detail below. We note now that OFAC administers and enforces economic and trade sanctions based on U.S. foreign policy and national security goals against threats to the national security, foreign policy, or economy of the United States. Those sanctions are aimed at specific regimes, individuals thought to be terrorists, international narcotics traffickers, as well as persons involved in activities related to the proliferation of " weapons of mass destruction." http:// www. treas. gov/ offices/ enforcement/ ofac/ (visited on June 17, 2010).

OFAC maintains and publishes a list:

[a]s part of its enforcement efforts, OFAC publishes a list of individuals and companies owned or controlled by, or acting for or on behalf of, targeted countries. It also lists individuals, groups, and entities, such as terrorists and narcotics traffickers designated under programs that are not country-specific. Collectively, such individuals and companies are called " Specially Designated Nationals" or " SDNs." Their assets are blocked and U.S. persons are generally prohibited from dealing with them.

http:// www. treas. gov/ offices/ enforcement/ ofac/ faq/ answer. shtml# 17 (visited on June 17, 2010). The persons and organizations in OFAC's Specially Designated Nationals & Blocked Persons List (" SDN List" ) are so designated pursuant to a patchwork of federal laws, regulations, and executive orders. See, e.g., 31 C.F.R. §§ 536.101-36.901 (Narcotics Trafficking Sanctions

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Regulations) & 594.101-94.901 (Global Terrorism Sanctions); Exec. Order No. 13,399, 71 Fed.Reg. 25,059 (April 25, 2006) (Blocking Property of Additional Persons in Connection With the National Emergency With Respect to Syria).3 Individuals and businesses in the United States are generally prohibited from conducting any business with anyone named on OFAC's SDN List. See, e.g., 31 C.F.R. § 536.201 (" [N]o property or interests in property of a specially designated narcotics trafficker that are in the United States ... may be transferred, paid, exported, withdrawn or otherwise dealt in." ).4 Trans Union describes its product, the OFAC Advisor, which is also discussed in greater detail below, as a " screening solution that provides credit grantors with a simple, automatic method for use in complying with new federal regulations as set forth in the USA PATRIOT Act." J.A. 808.

Sandra Cortez was born in 1944 in Chicago. She was living in Colorado when, in March of 2005, she decided to buy a new car. Before visiting a car dealer, she decided to check her credit report to learn her credit score. Her score was approximately 760, which is a very good credit rating. J.A. 80; see also J.A. 526-27 (listing Cortez's score as 761 in the credit report obtained by the dealership); 5 http:// www. myfico. com/ myfico/ Credit Central/ Loan Rates. aspx (visited on June 17, 2010). The credit report that Cortez downloaded before going to the car dealership was compiled and furnished by Trans Union, one of the three major companies providing credit reports in the United States. That report contained no information about OFAC's SDN List and did not suggest that Cortez was a " Specially Designated National" or SDN, nor did it contain any information that would suggest that she was suspected of being associated with anyone who was an SDN.6

Cortez planned to finance her car purchase through the dealership. Armed with knowledge of her strong credit score and a copy of her credit report, Cortez went to John Elway Subaru a car dealership in Colorado, to purchase a car. She arrived at the dealership at approximately 1:00 pm and was ready to proceed with a purchase about thirty minutes later. She began completing the required paper work and furnishing the information required to obtain a car loan through the dealership. The dealership's finance manager, Tyler Sullivan, used the information Cortez provided to obtain Cortez's credit report. J.A. 468. It was a Trans Union credit report because the dealership subscribed

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to Trans Union's credit reporting services, including the OFAC Advisor. Unlike the credit report Cortez had downloaded before going to the dealership, the Trans Union credit report that the dealership obtained contained what Sullivan later referred to as an " advisor alert," which was an alert from the OFAC Advisor. J.A. 471.

This was the first time that Sullivan had ever seen such an alert. Id. He called the regional finance director to determine how he should respond. J.A. 472-73. He then went to OFAC's SDN List on the Treasury Department's website " to check [Cortez's] name against the actual list." J.A. 473. In searching the list, he first " look[ed] for a matching name" and if there was a match, he planned to check birth dates. J.A. 474.7

Sullivan then returned to Cortez and started asking her questions including whether she had " always lived in the United States, if [she] had ever lived outside of the country" and other " really strange questions." J.A. 83. He then showed Cortez the credit report Trans Union had provided to the dealership. When she looked at it, she saw that " it had all of these OFAC Alerts, talk alerts." Id. Cortez was very confused, she explained to Sullivan that she had " never been out of the country and that [she] was born in Chicago." Id. Sullivan responded by telling Cortez that " he was going to have to check with the FBI ... [t]o see if [she] was this person" in the OFAC alert on her credit report. J.A. 84. As this was occurring, Cortez was waiting in the salesperson's office, and the dealership had her car keys. Id. Finally, at about 5:00 pm, Cortez said she had to leave, but someone asked her to wait.8 J.A. 84-85. When she asked what the person was going to do, again she was told that the FBI would be called. At this point, hours had passed and the dealership was holding Cortez's down payment on the car. Id.

A short time later, Cortez finally left the dealership. She called the dealership that same evening and was told that they had determined that she " probably" was not the person in the OFAC alert, and that she could pick up the car. J.A. 85. That evening, she did go back to the dealership and she eventually got the car.9 Before leaving the dealership with her new car, she asked for a copy of the credit report that the dealership had received from Trans Union. The dealership provided a copy, and pointed out the OFAC and HAWK alerts on the report.10

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That credit report was a two-page document entitled: " TRANS UNION CREDIT REPORT." J.A. 526-27. It contained identifying information about Cortez including her name, Social Security number, birth date, current and former addresses, telephone number, and employer. A number of sections appeared directly below that information in the same font and style. The first such section was labeled: " SPECIAL MESSAGES." That " SPECIAL MESSAGES" section contained the OFAC and HAWK alerts. It was followed by: " MODEL PROFILE," which contained several numbers including Cortez's FICO credit score. The report then contained the following four sections: " CREDIT SUMMARY", " TRADES", " INQUIRIES", and " END OF CREDIT REPORT-SERVICED BY." Id.

The " SPECIAL MESSAGES" section on the first page stated: " HAWK ALERT: INPUT ISSUED: 1959-60; STATE: CA; (EST. AGE OBTAINED 00+ TO) ... HAWK ALERT: FILE ISSUED: 1959-60; STATE CA; (EST. AGE OBTAINED +14 TO +16)." This was followed by eight entries titled: " OFAC ADVISOR ALERT-INPUT NAME MATCHES NAME ON THE OFAC DATABASE." The information in those eight entries was similar to the information in OFAC's SDN List, including the name: " Cortes Quintero, Sandra." J.A. 526-27.

That report is not visually the same as the report Trans Union provides to consumers. It also does not have the same exact content. The report that was sent to the dealership contained no additional information about the significance of the OFAC alerts and no information about how to follow up or contact anyone regarding any OFAC...

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