Equifax Services, Inc. v. Cohen

• Decision Date: 09 September 1980
• Citation: 420 A.2d 189
• Parties: EQUIFAX SERVICES, INC., Frank W. Robinson and Paul D. Weeks v. Richard S. COHEN, Attorney General.
• Court: Maine Supreme Court

Page 189

420 A.2d 189

12 A.L.R.4th 251

EQUIFAX SERVICES, INC., Frank W. Robinson and Paul D. Weeks v. Richard S. COHEN, Attorney General.

Supreme Judicial Court of Maine.

Argued Sept. 20, 1979.

Decided Sept. 9, 1980.

Bernstein, Shur, Sawyer & Nelson by Gordon F. Grimes (orally), Peter J. Rubin, Barnett I. Shur, Portland, for plaintiffs.

Peter B. Bickerman, Asst. Atty. Gen. (orally), Stanley Greenberg, Asst. Atty. Gen., Augusta, for defendant.

Before McKUSICK, C. J., and POMEROY, ^* WERNICK, ARCHIBALD, ^** GODFREY and NICHOLS, JJ.

WERNICK, Justice.

The defendant Richard S. Cohen, in his capacity as the present Attorney General of the State of Maine (substituted as party defendant in this action in place of his predecessor in office Joseph E. Brennan who was originally named as defendant), has appealed from a judgment of the Superior Court (Kennebec County) which: (1) adjudicated invalid particular provisions of the Maine Fair Credit Reporting Act (hereinafter the Maine Act), on the grounds that all of said provisions were unwarranted restraints upon constitutionally protected commercial speech and that some of them, because of their vagueness, also contravened constitutional due process of law; and (2) permanently enjoined the defendant Attorney General from enforcing the statutory provisions thus invalidated.

By a cross appeal plaintiffs Equifax Services, Inc. (Equifax), Frank Robinson and Paul Weeks contend that the judgment wrongly decided some, and erroneously failed to decide some others, of the additional attacks they made against various provisions of the Maine Act.

We deny the appeal and the cross appeal.

As we interpret the scope of the Superior Court judgment, we affirm its injunction against the enforcement of Sections 1314 and 1321 of the Act, in their original and amended versions, as adjudicating unconstitutional restraints upon commercial speech. We affirm, too, the adjudication rejecting plaintiffs' constitutional attack, asserted in Count 5 of their amended complaint, based on the "supremacy" clause of article VI of the Constitution of the United States.

We modify the Superior Court's judgment, however, in two respects.

First, we add a clause to include an adjudication that Section 1323(2) is an unconstitutional abridgement of commercial speech insofar as it authorizes an award of additional damages for each "irrelevant" item included in a consumer report.

Second, we strike from the judgment, as determinations of constitutional issues that were made unnecessarily in that they related to the same provisions of the Maine Act the presiding Justice had otherwise invalidated, correctly we decide, as unconstitutional abridgements of commercial speech: (1) that part holding various provisions "void for vagueness" and (2) that part deciding in favor of defendant on Counts 3, 4 and 6 of plaintiffs' amended complaint which, together, alleged violations of the "commerce" clause, as well as the "due process of law" (in substantive, as distinguished from procedural, terms) and the "equal protection of the laws" clauses of the Fourteenth Amendment to the Constitution of the United States.

I. FACTUAL AND PROCEDURAL BACKGROUND.

I-A. Nature of the Business Involved.

The plaintiff Equifax is a Georgia Corporation authorized to do business in Maine. The plaintiff Frank Robinson was Vice-President of a region of Equifax which included Maine, and the plaintiff Paul Weeks was the manager of an Equifax office maintained in Falmouth, Maine. Equifax engages in the business of being a "consumer reporting agency", as defined in Section 1312(4) of the Maine Act ¹ and in the Federal Fair Credit Reporting Act, 15 U.S.C. § 1681a(f) ² (the Federal Act). Equifax has offices all over the United States, several of which are located in Maine.

As a consumer reporting agency, Equifax gathers and sells information about individuals who have applied for credit, insurance or employment (or the like). Among the purchasers of these informational reports ("consumer reports") are insurance companies, banks and diverse kinds of employers. We refer to the purchasers of consumer reports as "users." The users need information from various sources to enable them properly to evaluate a consumer's qualifications and capacity to undertake the particular transactions involved in applications of consumers for credit, insurance coverage, employment and so forth. Approximately 80 to 85 percent of the Maine users to which Equifax has furnished consumer reports have been engaged in the business of insurance. In 1976, Equifax furnished more than 60,000 consumer reports to users in the State of Maine, and in 1977 and 1978 the volume of such reports was approximately the same.

The reports themselves vary in nature and scope, depending on the purposes for which they may be drawn. Thus, for example, the reports to life insurance companies will be in a form and have a content to assist in the underwriting of life, health and disability insurance; as furnished to fire and casualty insurers, the reports will be geared to help the underwriting of fire and casualty policies on home or automobile; as provided to employers, the reports will be formulated to be of benefit in the making of hiring decisions as to various kinds of work; and as sent to banks, reports will be formulated to be of benefit in the evaluation of applicants for loans. Equifax uses numerous printed forms containing a series of questions about consumers, the questions being devised to relate to particular transactions involved. The scope of the information may include data on a consumer's past or present employment, home environment, hobbies, health, use of alcohol or drugs, criminal record, credit record, military record, sources of income, financial stability, reputation, and so forth. In consequence of consultations between Equifax and users, the information supplied in the reports conforms very generally to areas designated by users, and various questionnaire forms are prepared and utilized to obtain the kinds of information users wish to have furnished. The process of gathering information also varies according to the purpose and nature of the consumer report. Typically, field investigators employed by Equifax compile information through personal interviews with the consumers who are the subjects of reports, through interviews with their friends, neighbors and associates and also through investigations of public records.

Although the uses to which consumer reports may be put vary according to the needs of particular users, the record before us suggests that at least in the insurance context, which encompasses the large majority of the reports furnished in Maine, the reports are used mainly to achieve a final verification of information received from other sources-such as, for example, the information acquired from insurance application forms and from the observations, or reports, or both, of insurance agents. The consumer reports serve to verify and supplement data received through these other sources. Should an inconsistency appear concerning an important aspect of an application, a further investigation may be ordered either by the user or the consumer reporting agency in an effort to clarify the inconsistency. Thus, consumer reports generally serve as one, albeit an important, source of information through which users seek to obtain information to assist them in making decisions incident to the conduct of their businesses.

I-B. The Federal Regulatory Scheme.

It will assist us fully to understand the Maine regulatory scheme if we first examine various provisions of the Federal Act, which also regulates large parts of the consumer reporting industry as conducted in Maine.

In October, 1970, the Congress of the United States enacted the Federal Act, 15 U.S.C. §§ 1681-1681t (1974). While expressly recognizing the primacy of the value of maintaining a free flow of fair, accurate information, as well as that

"(c)onsumer reporting agencies have assumed a vital role in assembling and evaluating consumer credit and other information on consumers," 15 U.S.C. § 1681(a)(3) (1974),

Congress sought to protect consumers from arbitrary, secretive reporting procedures, and inaccurate and intrusive reporting. See 15 U.S.C. § 1681(a) (1), (4) (1974). The regulatory scheme established by Congress includes the following provisions. It limits the purposes for which a "consumer report" ³ may be furnished, requiring that the reporting agency must reasonably believe that the user of the report has a "legitimate" business need for the information, as clarified by certain enumerated uses. See 15 U.S.C. § 1681b(3). For any other purpose, a reporting agency must obtain either prior consent of the subject-consumer or a court order. 15 U.S.C. § 1681b(1), (2). The Federal Act flatly prohibits the making of a consumer report containing certain dated public record information, such as a bankruptcy record over fourteen years old, or tax liens, arrest records, and any "other adverse item of information" over seven years old. 15 U.S.C. § 1681c(a)(6). Section 1681d requires that when a user requests an "investigative consumer report", ⁴-a consumer report containing information relating to, among others, a consumer's character general reputation or mode of living, see 15 U.S.C. § 1681a(e),-unless the report is to be used for the purpose specified in Section 1681d(a)(2), a consumer must be given clear, written notice that (1) such a report was requested and (2) the consumer is entitled to disclosure from the user of the "nature and scope" of the investigation. Furthermore, reporting agencies are required to establish procedures designed to keep information current, accurate, and confidential, and to disclose upon request of the consumer the substance of the information on file, (15 U.S.C. §§ 1681e, 1681g, 1681h), and to establish an investigation procedure to be followed when a consumer disputes the...