Hauser v. Equifax, Inc.

Decision Date03 July 1979
Docket NumberNo. 78-1765,78-1765
Citation602 F.2d 811
PartiesWayne G. HAUSER, Appellant, v. EQUIFAX, INC., aka Retail Credit Company, Appellee, and Physicians Mutual Insurance Company.
CourtU.S. Court of Appeals — Eighth Circuit

Lawrence R. Brodkey, Omaha, Neb., for appellant.

David A. Svoboda of Kennedy, Holland, DeLacy & Svoboda, Omaha, Neb., for appellee.

Before HEANEY and McMILLIAN, Circuit Judges, and BENSON *, Chief District Judge.

BENSON, Chief District Judge.

Wayne G. Hauser brought this action for damages against Physicians Mutual Insurance Company, his disability insurer, and Equifax, Inc., a consumer reporting agency which, at Physicians' request, prepared an investigative consumer report on Hauser to be used by Physicians in connection with underwriting the disability insurance. Hauser alleged the defendants willfully and negligently failed to comply with the provisions of the Fair Credit Reporting Act, 15 U.S.C. § 1681 Et seq., and in addition raised several claims under state law. The matter was tried before a jury, and at the close of plaintiff's evidence, the district court 1 granted defendants' motions for directed verdict on all claims against Equifax and on all claims against Physicians except a state law claim for recovery of accrued but unpaid disability insurance benefits. The remaining claim against Physicians was submitted to the jury, and a verdict was returned for plaintiff in the amount of $4,000.00. This appeal was taken from the trial court's grant of the directed verdict on the Fair Credit Reporting Act claims against Equifax and subsequent denial of plaintiff's motion for a new trial as to those claims. We affirm.

Appellant Wayne Hauser, in partnership with his two sons, owned and operated Wayne's Auto Parts, an automobile parts salvage business in Council Bluffs, Iowa. On April 14, 1975, Hauser applied for a total disability insurance policy from Physicians Mutual Insurance Company. The agent who sold the policy asked Hauser the necessary questions and completed the application form for him. The agent had observed Hauser at work on several occasions and designated Hauser's occupation as Class B, which according to Physician's occupational classification guide indicated a mechanic-type position requiring some physical labor.

In the routine processing of the application, Physicians ordered an investigative report on Hauser from Equifax, Inc. The report from Equifax, entitled "Income Inspection Report," 2 was issued on April 23, 1975, and contained the following remarks:

A. Wayne G. Hauser is the owner of Wayne's Auto Parts. He has been so employed since 1967. This is an auto parts salvage yard, employing three persons. They sell used automobile parts.

B. He is a salesman and supervisor. He waits on the walk-in trade who come into this place of business. He also supervises the duties of the other two employees who are his sons. He is not responsible for any dismantling of auto bodies or engines. He takes care of the inventory and a small amount of the bookkeeping.

This information was accurate in all material respects, except for the statement that Hauser was not responsible for dismantling auto bodies or engines.

After receiving the Income Inspection Report, Physicians issued a policy to Hauser. In June 1975, Hauser developed severe back pain and was hospitalized from June 18 to July 11. He presented a claim for disability benefits under the policy in late August. The claim form provided by Physicians required statements from both the claimant and his attending physician. Hauser stated on the form that he was a self-employed auto mechanic and that he had been unable to resume his employment. He then forwarded the claim form to his attending physician, who certified that Hauser had been totally disabled while hospitalized, but was only partially disabled following his release from the hospital.

Physicians paid Hauser total disability benefits for the period of his hospitalization, but on September 10, 1975, denied the claim for continued disability payments for the reason that the physician had not certified Hauser to be totally disabled. Soon thereafter, Hauser called Physicians' Omaha office and spoke to Richard Gleason, a claims adjuster, about his claim for continued benefits. Gleason stated he would check with Hauser's physician to verify that Hauser's disability was only partial.

During or immediately after this telephone call, Gleason retrieved Hauser's application and claim files, and for the first time reviewed the Income Inspection Report prepared by Equifax. After reviewing the files, he ordered a Continuance of Disability Report from Equifax to check on Hauser's activities at that time. Specifically, he requested a determination as to whether heavy lifting was required in Hauser's business.

Gleason then wrote to Hauser's attending physician, asking for verification that Hauser was only partially disabled from performing the duties of his employment, rather than totally disabled. He added, "For your reference, it is our understanding that Mr. Hauser works on a self-employed basis as a salesman and bookkeeper for an auto parts store." Gleason testified he got this understanding from the Income Inspection Report.

The physician responded on September 23, 1975, stating Hauser's complaints were not "adequate to justify a disability at this time in view of the type of work which he does."

Equifax issued the requested Continuance of Disability Report on September 26, 1975. The information in the report was obtained from a personal interview with Hauser at his place of business and upon personal interviews with several of his neighbors. The report accurately stated that Hauser's work required strenuous activity including heavy lifting, that Hauser's back condition prevented him from engaging in such physical activity, and that daily medication made him "dopey" and prevented him from doing even the office work.

Gleason did not request another opinion from Hauser's physician, based on this new information, but merely informed Hauser that his physician had verified the disability was only partial and that Physicians would not pay any further disability benefits. 3

Hauser subsequently learned from a Physicians employee that Equifax had prepared an investigative report on him prior to the issuance of the disability policy. He telephoned Equifax's Omaha office in July 1976 to inquire about the report. Conrad Larsen, the claims manager, took the call and after establishing that the caller was in fact Wayne Hauser, he disclosed the information contained in the Income Inspection Report. However, Larsen did not reveal the existence of the Continuance of Disability Report, which was prepared in September 1975, and which accurately described Hauser's duties. Larsen explained at trial that the two reports were kept in separate files; the Income Inspection Report was in an underwriting file, and the subsequent Continuance of Disability Report was in a claim file.

Hauser alleged in his complaint that Equifax willfully and negligently violated the provisions of the Fair Credit Reporting Act through (1) failure to adopt reasonable procedures to assure maximum possible accuracy, 15 U.S.C. § 1681e(b); (2) failure to disclose the existence of the Continuance of Disability Report, 15 U.S.C. § 1681g; and (3) failure to conduct a reinvestigation. 15 U.S.C. § 1681i. The district court granted Equifax's motion for directed verdict on these claims because it found Hauser had failed to prove either willfulness or negligence on the part of Equifax.

The propriety of granting a motion for directed verdict is to be determined by the same standard both in the trial court and on appeal. The motion should be granted only when the nonmoving party has presented insufficient evidence to support a jury verdict in his favor. Schneider v. Chrysler Motors Corp., 401 F.2d 549, 555 (8th Cir. 1968). In deciding this question, the evidence must be viewed in the light most favorable to the nonmoving party, without assessing credibility. Parker v. Seaboard Coastline R. R., 573 F.2d 1004, 1007 (8th Cir. 1978); Lisa-Jet, Inc. v. Duncan Aviation, Inc., 569 F.2d 1044, 1046 (8th Cir.), Cert. denied, 439 U.S. 828, 99 S.Ct. 100, 58 L.Ed.2d 121 (1978). In addition, the nonmoving party is entitled to the benefit of all reasonable inferences, that is, inferences which may be drawn from the evidence without resort to speculation. Admiral Theatre Corp. v. Douglas Theatre Co., 585 F.2d 877, 883 (8th Cir. 1978). However, "(w)hen the evidence is so one-sided as to leave no room for any reasonable difference of opinion as to how the case should be decided, it should be decided by the court as a matter of law rather than submitted to a jury for its determination." Id. See Kennedy v. U. S. Construction Co.,545 F.2d 81, 82 (8th Cir. 1976); Gillette Dairy, Inc. v. Hydrotex, Inds., Inc., 440 F.2d 969, 971 (8th Cir. 1971).

The Fair Credit Reporting Act does not provide for comprehensive regulation of the consumer reporting industry. Rather it establishes the broad minimum standard of "reasonable procedures" and requires consumer reporting agencies to adopt procedures which meet that minimum standard. See 15 U.S.C. § 1681(b). The Act provides for recovery by a consumer upon a showing of willful or negligent failure to follow reasonable procedures. Upon a showing of negligent noncompliance, a consumer may recover actual damages, costs and attorney's fees. 15 U.S.C. § 1681O. The same recovery, and in addition punitive damages, may be awarded upon a showing of willful noncompliance. 15 U.S.C. § 1681n.

1. Accuracy.

Hauser's primary claim is that Equifax willfully and negligently failed to comply with 15 U.S.C. § 1681e(b), which provides:

Whenever a consumer reporting agency prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information...

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