Beaudry v. Telecheck Services, Inc.

• Decision Date: 28 August 2009
• Docket Number: No. 08-6428.,08-6428.
• Parties: Cheryl BEAUDRY, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. TELECHECK SERVICES, INC., Telecheck International, Inc. and First Data Corporation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

579 F.3d 702

Cheryl BEAUDRY, individually and on behalf of all others similarly situated, Plaintiff-Appellant, v. TELECHECK SERVICES, INC., Telecheck International, Inc. and First Data Corporation, Defendants-Appellees.

No. 08-6428.

United States Court of Appeals, Sixth Circuit.

Argued: August 6, 2009.

Decided and Filed: August 28, 2009.

ARGUED: Martin D. Holmes, Dickinson Wright PLLC, Nashville, Tennessee, for Appellant. David R. Esquivel, Bass Berry & Sims, PLC, Nashville, Tennessee, for Appellee. ON BRIEF: Martin D. Holmes, Dickinson Wright PLLC, Nashville, Tennessee, for Appellant. David R. Esquivel, Wallace W. Dietz, Stephen J. Jasper, Bass Berry & Sims, PLC, Nashville, Tennessee, for Appellee.

Before KEITH, SUTTON and WHITE, Circuit Judges.

OPINION

SUTTON, Circuit Judge.

Cheryl Beaudry appeals the district court's dismissal of her lawsuit under the Fair Credit Reporting Act (FCRA or the Act). Because FCRA's private right of action does not require proof of actual damages as a prerequisite to the recovery of statutory damages for a willful violation of the Act, we reverse.

I.

In 2007, Cheryl Beaudry sued the defendants, a group of foreign corporations who provide check-verification services. According to Beaudry, the defendants failed to account for a 2002 change in the numbering used by the Tennessee driver's license system, leading their systems to reflect incorrectly that many Tennessee consumers, including Beaudry, were first-time check-writers. Claiming that this error affected her and "hundreds of thousands if not millions," of other Tennesseans, Class Action Compl., R. 1, ¶ 65 (Aug. 17, 2007), she sought to represent a class of affected consumers, contending that the defendants' willful failure to provide accurate information entitled the class members to "declaratory relief, injunctive relief, statutory damages, punitive damages, attorneys' fees, costs and expenses." Id. ¶ 99.

The defendants filed a motion to dismiss on two grounds: that her complaint failed to allege that she had been injured by a FCRA violation and that the statute of limitations had run. Beaudry argued that neither ground for dismissal applied, and that in the alternative the statute permitted her to obtain forward-looking injunctive relief. The district court granted the motion on the ground that she had not alleged any injury and that the statute does not authorize courts to grant injunctive relief.

II.

We give fresh review to the district court's dismissal of a complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. Bowman v. United States, 564 F.3d 765, 769 (6th Cir.2008). In deciding whether a complaint has stated a claim on which relief can be granted, we "construe the complaint in favor of the plaintiff, accept the allegations of the complaint as true, and determine whether plaintiff's factual allegations present plausible claims." Id.

The Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq., places a number of restrictions on "consumer reporting agencies," meaning any individual or "other entity" who "regularly ... assembl[es] or evaluat[es] consumer credit information ... for the purpose of furnishing consumer reports to third parties." Id. § 1681 a(b), (f). One of the Act's (many) requirements is that consumer reporting agencies must "follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom" a credit report relates. Id. § 1681e(b).

To ensure compliance with its mandates, the FCRA contains several enforcement mechanisms: (1) The Federal Trade Commission may bring an administrative action against violators of the Act, see id. § 1681 s(a); (2) federal executive agencies that regulate certain types of consumer reporting agencies—such as the FDIC, which has jurisdiction over depository banks— may enforce the Act, see id. § 1681s(b); (3) state Attorneys General may bring enforcement actions to recover damages and to enjoin future violations, see id. § 1681s(c); and (4) private individuals may obtain relief against "willful[]" or "negligent" violators of the Act, see id. §§ 1681 n, 1681o. The last enforcement mechanism—the private right of action—concerns us here.

The statute describes the willfulness private right of action in this way:

Any person who willfully fails to comply with any requirement imposed under [the FCRA] with respect to any consumer is liable to that consumer in an amount equal to the sum of—

(1)(A) any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

(3) in the case of a successful action to enforce any liability under this section,

the costs of the action together with reasonable attorney's fees as determined by the court.

Id. § 1681n(a). The negligence action is worded similarly: It provides that "[a]ny person who is negligent in failing to comply with any requirement imposed under [the FCRA] with respect to any consumer is liable to that consumer." Id. § 1681o. Unlike a willfulness claimant, however, the statute permits a negligence claimant to recover only actual damages, costs and attorney's fees. Id.

The district court, Beaudry claims, erred in dismissing her lawsuit on the ground that the complaint failed to allege that the FCRA violation injured her. We agree.

Beaudry, to start, alleged that the defendants violated § 1681e(b) "with respect to" her, just as the statute requires. Id. § 1681n(a). "Whenever a consumer reporting agency prepares a consumer report," the provision says, "it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." Id. § 1681e(b). According to Beaudry's complaint, she has "presented checks to businesses utilizing Defendants' [check] verification services," Compl. ¶ 13, and "each time a transaction is processed by Defendants, a new consumer report is generated," id. ¶ 58. Since Tennessee changed the numbering system for its driver's licenses in 2002, those reports systematically have been based on inaccurate information because the new license numbers make consumers, including Beaudry, "appear as a first-time check writer" within the defendants' systems. Id. ¶ 60. All that the defendants need to do to correct the problem, she claims, is to "associate the old driver['s] license number with the new driver['s] license number." Id. Beaudry thus claims to have suffered the precise "injury" that the statute proscribes: The defendants "prepare[d] a consumer report" about her but failed to "follow reasonable procedures to assure maximum possible accuracy of the information" it contained. 15 U.S.C. § 1681e(b).

The defendants, however, insist that the statute requires something more—that Beaudry allege a different form of "injury": consequential damages. "Plaintiff," they note, "has not ... had a check rejected or any other transaction terminated as a result of a TeleCheck recommendation"; nor has she "suffered any harm with respect to the availability of credit." Br. at 5. But the Act imposes no such hurdle on willfulness claimants. The Act does not require a consumer to wait for unreasonable credit reporting procedures to result in the denial of credit or other consequential harm before enforcing her statutory rights. It requires regulated companies to use "reasonable procedures" when "prepar[ing] a consumer report" "with respect to" a given consumer, and creates a cause of action in favor of the consumer when they do not. 15 U.S.C. §§ 1681e(b), 1681n(a).

Section 1681n, which creates the cause of action for willful violations, also does not impose the consequential-damages requirement that defendants wish to add to the statute. "Any consumer," it says, may sue to recover "any actual damages ... or damages of not less than $100 and not more than $1000" from "[a]ny person who willfully fails to comply with any requirement imposed under [the FCRA] with respect to [that] consumer." 15 U.S.C. § 1681n(a)(1)(A) (emphasis added). Because "actual damages" represent an alternative form of relief and because the statute permits a recovery when there are no identifiable or measurable actual damages, this subsection implies that a claimant need not suffer (or allege) consequential damages to file a claim. A comparison with § 1681o buttresses the point: Congress excluded the statutory-damages option in negligence cases. "Where Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (internal quotation marks omitted).

Case law in this and related areas backs up this interpretation. In Murray v. GMAC Mortg. Corp., 434 F.3d 948 (7th Cir.2006), the Seventh Circuit addressed the Act's prohibition on accessing a consumer's credit score without her consent and the narrow exception created for lenders who are making a "firm offer of credit" to the consumer. See 15 U.S.C. § 1681b(c)(1)(B)(i). The court explained that individual-damages issues did not preclude class certification because the class representative could seek statutory damages "without proof of injury" in lieu of actual damages. Murray, 434 F.3d at 952-53. Other courts have reached the same conclusion when considering § 1681n statutory damages suits premised on violations of other provisions of the Act. See Ashby v. Farmers Ins. Co. of Or., No. CV 01-1446-BR, 2004 WL 2359968, at *5 (D.Or. Oct. 18., 2004) (holding...