Birmingham v. Experian Info. Solutions Inc.

• Decision Date: 07 February 2011
• Docket Number: No. 09–4146.,09–4146.
• Citation: 633 F.3d 1006
• Parties: Ray BIRMINGHAM, Plaintiff–Appellant,v.EXPERIAN INFORMATION SOLUTIONS, INC.; Verizon Communications; Vodafone Group, PLC., a joint venture, d/b/a Verizon Wireless; Cellular Inc. Network; Utah RSA 6; Verizon Power Partners; Wasatch Utah RSA No. 2, d/b/a Verizon Wireless; Verizon Wireless Utah, operating under the name and style of Verizon Wireless; Verizon Wireless (VAW), Defendants–Appellees,TransUnion, Defendant.
• Court: U.S. Court of Appeals — Tenth Circuit

633 F.3d 1006

Ray BIRMINGHAM, Plaintiff–Appellant,

v.EXPERIAN INFORMATION SOLUTIONS, INC.; Verizon Communications; Vodafone Group, PLC., a joint venture, d/b/a Verizon Wireless; Cellular Inc. Network; Utah RSA 6; Verizon Power Partners; Wasatch Utah RSA No. 2, d/b/a Verizon Wireless; Verizon Wireless Utah, operating under the name and style of Verizon Wireless; Verizon Wireless (VAW), Defendants–Appellees,TransUnion, Defendant.

No. 09–4146.

United States Court of Appeals, Tenth Circuit.

Feb. 7, 2011.

Ronald W. Ady, Salt Lake City, UT, for Plaintiff–Appellant.Meir Feder, (Dawn Elizabeth McFadden, with him on the briefs), Jones Day, Cleveland, OH, for Defendant–Appellee, Experian Information Solutions, Inc.Steve K. Gordon, Durham, Jones & Pinegar, Salt Lake City, UT, for Defendants–Appellees Verizon Communications, Inc.; Vodafone Group, Plc; Cellular Inc. Network Corporation; Utah RSA 6, Limited Partnership; Verizon Power Partners, Inc., Wasatch Utah RSA No. 6, Limited Partnership; Verizon Wireless Utah, L.L.C.; and Verizon Wireless (VAW), L.L.C.Before LUCERO, HARTZ, and HOLMES, Circuit Judges.HARTZ, Circuit Judge.

Raymond Birmingham was the victim of identity theft. Verizon Wireless closed two fraudulent accounts opened in his name, but he disputed charges to his legitimate accounts and closed those as well. Verizon then reported his failure to pay the charges to the three major credit-reporting agencies—Experian Information Solutions, Inc. (Experian); Equifax; and TransUnion. Birmingham disputed these reports and was dissatisfied with the agencies' responses. Claiming violations of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, et seq., and Utah law, he filed suit in the United States District Court for the District of Utah against the three agencies and several entities (the Verizon Defendants) that he believed to be responsible for the allegedly incorrect reports to the agencies. On this appeal Birmingham challenges the district court's grant of summary judgment to Experian and the dismissal of his claims against the Verizon Defendants without granting him leave to add a defendant. We have jurisdiction under 28 U.S.C. § 1291.

With respect to Experian, the sole issue before us is whether Birmingham is entitled to liquidated and punitive damages under the FCRA because Experian intentionally or recklessly failed to investigate adequately his dispute with Verizon. We hold that the district court properly granted summary judgment on the issue because of the absence of evidence of intentional or reckless misconduct.

The issues concerning the Verizon Defendants are whether the entity that reported Birmingham's failure to pay his telephone charges was a defendant in this case and, if not, whether the district court properly denied his motion to amend his complaint to name that entity. As Birmingham learned several months into the litigation, the entity that informed the credit-reporting agencies of his failure to pay his phone bill was Cellco Partnership (Cellco). Cellco, however, does not appear in the caption of Birmingham's initial or amended complaints. Birmingham contends that Cellco was nevertheless a party or, in the alternative, that the district court should have added Cellco as a defendant because he moved to add Cellco the day before the final pretrial conference and because it was a necessary party under Federal Rule of Civil Procedure 19(a). We reject these contentions and hold that the district court properly dismissed the Verizon Defendants and properly denied Birmingham's motion to amend his complaint to add Cellco as a defendant.

Because there is very little overlap in the facts relevant to the dispositions of the claim against Experian and the claims against the Verizon Defendants, we will set forth the facts in the sections devoted to these distinct claims. We begin with the claim against Experian.

I. CLAIM AGAINST EXPERIAN

Birmingham alleges that Experian violated § 1681e(b) and § 1681i(a)(1) of the FCRA. Section 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.” 15 U.S.C. § 1681e(b). Under § 1681i(a)(1), if a consumer notifies a consumer reporting agency of a dispute concerning the completeness or accuracy of information in the consumer's file,

the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information, or delete the item from the file ... before the end of the 30–day period beginning on the date on which the agency receives the notice of the dispute from the consumer or reseller.

Id. § 1681i(a). Section 1681o(a) provides that a consumer is entitled to actual damages for a negligent violation of the FCRA. See id. at § 1681o(a). Under § 1681n(a), however, the consumer need not prove actual damages if the violation is willful, but may recover punitive damages and statutory damages ranging from $100 to $1,000. See id. at 1681n(a). A “willful” violation is either an intentional violation or a violation committed by an agency in reckless disregard of its duties under the FCRA. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57–58, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). Recklessness is measured by “an objective standard: action entailing an unjustifiably high risk of harm that is either known or so obvious that it should be known.” Id. at 68, 127 S.Ct. 2201 (internal quotation marks omitted). “[A] company subject to FCRA does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Id. at 69, 127 S.Ct. 2201.

Birmingham's opening brief on appeal challenges the district court's ruling that he had not established actual damages. But he abandoned that challenge at oral argument. His counsel surprised the court by stating: “We didn't raise the issue of actual damages with Experian.” And when asked: “And your damages claim, then, is essentially you had proof of willfulness, and therefore you're entitled to statutory damages regardless of whether you put on evidence of actual damages?” he responded, “Correct.” Accordingly, the sole issue before us is whether Experian was entitled to summary judgment on the claim that it willfully violated the FCRA.

“We review de novo the district court's grant of summary judgment.” Fredericks v. Jonsson, 609 F.3d 1096, 1098 (10th Cir.2010). Summary judgment “should be rendered if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c)(2) (2009); cf. Fed.R.Civ.P. 56(a) (effective Dec. 1, 2010) (“The court shall grant summary judgment ...”). “[W]e must view the facts in the light most favorable to the nonmoving party.” Fredericks, 609 F.3d at 1097.

Birmingham has presented little evidence regarding what Experian knew and when it knew it. The record shows the following:

In December 2003, Birmingham discovered that fraudulent charges had been made to one of his credit cards. He filed a statement of identity theft with the police department in Reno, Nevada (where he lived at the time), and sent a letter to the Las Vegas, Nevada, police department. He also reported the fraud to Experian by telephone and requested that it add a security alert to his file. Experian sent him a letter (incorrectly addressed to the name “Raymond Burnham” but listing the proper Reno address) dated December 1, 2003, stating that a fraud security alert had been added to his personal credit report, suggesting that he consider adding a fraud-victim statement that would remain on his credit file for seven years, and detailing the information needed to add such a statement to his file. Birmingham does not recall providing that information to Experian, and Experian has no record of receiving such information from him.

On January 12, 2004, Birmingham reported to Verizon Wireless, with whom he maintained two mobile telephone accounts, that two fraudulent telephone accounts had been opened in his name and that fraudulent charges had appeared on one of his legitimate accounts, apparently as the consequence of the same identity theft. Although Verizon Wireless terminated the fraudulent accounts the next day, Birmingham alleges that it failed to credit him for the fraudulent charges incurred on the legitimate account. After Birmingham failed to make any payments on his legitimate accounts for several months, Verizon closed those two accounts and reported the unpaid charges to Experian, Equifax, and TransUnion.

Birmingham complained to Equifax and TransUnion; and both investigated his disagreement with Verizon and received verification of the information from Verizon. But there is a dispute of fact regarding when and how Birmingham complained to Experian, which conducted no investigation. In a sworn declaration Birmingham asserted that he had first “disputed [with Experian] the Verizon Wireless charges in writing on January 21, 2005....” Aplt.App., Vol. III at 1065. In deposition testimony, however, he said that he had no recollection of sending anything in writing to Experian in January 2005. Instead, he stated that he “disputed online,” id., Vol. I at 438, with all three credit agencies, and that he did so approximately every six months; yet he had no records of doing so (he said that these online communications could not be printed out) and could not provide the date, week, or even month of any communication to Experian. The only document from Experian for the relevant time period was a...