Cousin v. Trans Union Corporation
| Decision Date | 21 March 2001 |
| Docket Number | No. 99-60429,99-60429 |
| Citation | 246 F.3d 359 |
| Parties | (5th Cir. 2001) TERRY COUSIN, Plaintiff-Appellee, v. TRANS UNION CORPORATION, Defendant-Appellant |
| Court | U.S. Court of Appeals — Fifth Circuit |
[Copyrighted Material Omitted]
[Copyrighted Material Omitted] Appeal from the United States District Court for the Northern District of Mississippi
Before GARWOOD, DeMOSS, and PARKER, Circuit Judges.
Defendant-Appellant Trans Union Corporation ("Trans Union") appeals, after a jury trial, a final judgment awarding Plaintiff-Appellee Terry Cousin ("Cousin") $50,000 in compensatory damages and $4,470,000 in punitive damages for violating the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. 1681-1681u,1 and for defaming Cousin with malice. Because no reasonable jury could have found that Trans Union acted willfully or with malice and because there was insufficient evidence of actual damages, we vacate the district court's judgment and render in favor of Trans Union.
Cousin lives in Clarksdale, Mississippi, with his wife and two teenage daughters and has worked at the Mississippi Department of Health for 19 years. He has apparently maintained a flawless credit history except for certain items resulting from the fraudulent acts of others posing as Cousin.
In 1984, Cousin's brother Richie misappropriated Cousin's personal identifying information, i.e., his name and social security number, to obtain automobile loans from two different lenders, NBC Bank of Mississippi ("NBC") and City Finance of Okolona ("City Finance"). When Richie failed to pay, the delinquencies were negatively noted on Cousin's file with Trans Union, a consumer reporting agency as defined by the FCRA.
In 1993, Richie again pretended to be Cousin and applied for credit to purchase an automobile in Aberdeen, Mississippi, a place where Cousin has never lived. To purchase the automobile, Richie gave a down payment check that later bounced. The dealer contacted Cousin, who explained that his brother was an impostor. Nevertheless, General Motors Acceptance Corporation ("GMAC"), the apparent lender on that automobile loan, forwarded negative information about Cousin to Trans Union.
On December 6, 1993, Trans Union sent a consumer report to Cousin containing the adverse information about the GMAC account or tradeline. The consumer report also contained negative information about the NBC account and another account with American General and listed a fraudulent Aberdeen address. Cousin immediately informed GMAC of the error, and on December 10, 1993, Cousin filled out Trans Union's Investigation Request Form ("IRF") and requested Trans Union to delete all the fraudulent information. On January 11, 1994, Trans Union responded by sending Cousin a partially corrected consumer report. The GMAC account and the Aberdeen address were deleted, but the consumer report still contained the NBC and American General accounts. Attached to the consumer report was a green postcard that said:
In response to your recent request, we have reinvestigated disputed information contained on your credit file. The enclosed file reflects the results of our investigation. Some information which was disputed may have been changed or deleted due to the creditor's failure to adequately respond to our verification requests. If the creditor satisfactorily verifies this information in the future, it may be reinstated to the credit file. In the event Trans Union reinstates information to your report as a result of credit grantor verification, you will be notified in writing and you will receive an updated copy of your Trans Union report reflecting the reinstatement.
In May 1994, however, Cousin sued Trans Union for its continued reporting of the NBC and American General accounts.2 That lawsuit was settled in January 1995, and Trans Union agreed to suppress all the adverse information about NBC and American General.
To suppress the improperly adverse information, Trans Union implemented a procedure called cloaking. Normally, when information reported to Trans Union is found to be inaccurate after reinvestigation pursuant to 1681i, it is deleted. But unless the credit grantor involved also deletes the information from its monthly computer tape submission,3 the information will be re-reported into the consumer's Trans Union file. To avert such errors, Trans Union designed a procedure called cloaking. The cloak is a flag in Trans Union's computer system associated with the subject account. The cloaking flag prevents the deleted information from reappearing in a consumer's file even if the credit grantor fails to remove the inaccurate information from its magnetic tapes and resubmits the information. The cloaking flag remains in effect until the credit grantor has deleted the inaccurate information from its tape submissions for twelve consecutive months. At that point, Trans Union believes that the credit grantor has deleted the information permanently, and the cloaking flag expires automatically.
On February 6, 1995, three weeks after settling the first lawsuit, Trans Union sent a consumer report to Cousin, which still contained the fraudulent NBC and American General accounts and the Aberdeen address. Furthermore, that consumer report for the first time listed a fraudulent BellSouth Mobility ("BellSouth") account. Richie had apparently opened an account in Cousin's name with BellSouth for cellular phone service in mid-1994.
On February 17, 1995, Cousin completed another IRF, again contesting the NBC and American General accounts and the Aberdeen address. In addition, he challenged for the first time the BellSouth account. On February 28, 1995, Trans Union forwarded another consumer report to Cousin, but it still retained all of the false information. After further communication between Cousin's lawyers and Trans Union, a clean consumer report was furnished to Cousin on March 9, 1995. Moreover, the BellSouth account was cloaked as of that date.4
On November 15, 1996, Cousin went to Heafner Motors ("Heafner") to buy a vehicle. After reaching agreement on price and other details, Cousin sought credit to purchase the vehicle. The salesman filled out the paperwork and submitted it to the credit manager Bill Harmon.
At trial, Harmon testified that Heafner does not lend any credit.5 Instead, he stated that Heafner obtains consumer reports on customers to select the best financing match among a group of lenders. Heafner obtained a consumer report on Cousin from Trans Union, which again included the old BellSouth account. The consumer report listed the account as a "P and L write off" and showed it to have a "N09" rating, the worst rating a consumer can receive and which means "bad debt" or "charged off account." Heafner selected GMAC to provide financing for Cousin's purchase and sent his application, but not Trans Union's consumer report, to it.
Like Heafner, GMAC sought a consumer report and obtained one from Equifax. The Equifax report also contained the BellSouth account. GMAC denied in writing Cousin's application for credit to purchase the car from Heafner. GMAC based its denial on two items: 1) the Equifax report containing the BellSouth account and 2) GMAC's own internal record of the loss on the prior GMAC account which neither the Equifax or Trans Union reports listed.
Cousin called Heafner later in the afternoon of November 15, 1996, and was told that his application had not been approved. On December 11, 1996, Cousin requested disclosure of his file from Equifax. Before releasing the file to Cousin, Equifax deleted the BellSouth account from the file, thus making Cousin unaware of the BellSouth problem.
On January 13, 1997, Cousin requested a consumer report from Trans Union. Upon receipt, he noticed that the report included the false Aberdeen address and the BellSouth account.6 As a result, Cousin sent to Trans Union another IRF on January 24, 1997, notifying it that the entries were false.
In response to Cousin's notice, Trans Union sent to Cousin another consumer report, dated February 27, 1997. That report deleted any reference to the BellSouth account, but it restated the GMAC account that had previously been deleted in January 1994. Apparently, GMAC had decided to re-report the old GMAC account after it noted that the Equifax report did not list the GMAC account. Moreover, GMAC had re-reported the old GMAC account, using a different prefix number to designate the account. On March 4, 1997, Cousin notified Trans Union about the GMAC account.7
On March 28, 1997, Cousin sued Trans Union, alleging various claims, including 1) negligent violation of the FCRA, 2) willful violation of the FCRA, 3) defamation with malice, and 4) breach of contract.8 Notwithstanding this lawsuit challenging its handling of the GMAC account, Trans Union sent to BellSouth a consumer report displaying the GMAC account on April 9, 1997. Thereafter, Trans Union attempted to recloak the GMAC account on April 21, 1997. It proved to be short-lived. The following day, Trans Union pulled Cousin's file off the automated system and manually examined the file, penning certain comments on the file. Moreover, it uncloaked the file. Later on May 12, 1997, Trans Union sent a consumer report to GMAC with the GMAC tradeline still on the report.
The jury trial commenced on May 11, 1998. Before submitting the case to the jury, Trans Union moved for judgment as a matter of law under Federal Rule of Civil Procedure 50. The district court granted the motion with respect to the breach of contract claim, but denied the rest of the motion. The jury returned a verdict of $50,000 in compensatory damages and $4,470,0009 in punitive damages.
On June 4, 1998, Trans Union again moved for judgment as a matter of law under Rule 50 and moved for a new trial under Rule 59. In the alternative, Trans Union also moved for a remittitur of the compensatory and punitive damages awards or for a...
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