Heagerty v. Equifax Info. Servs. LLC

• Decision Date: 19 March 2020
• Docket Number: Civil Action No. 1:18-CV-01233-CAP
• Citation: 447 F.Supp.3d 1328
• Parties: Glenn HEAGERTY, Plaintiff, v. EQUIFAX INFORMATION SERVICES LLC and National Consumer Telecom & Utilities Exchange, Inc., Defendants.
• Court: U.S. District Court — Northern District of Georgia

447 F.Supp.3d 1328

Glenn HEAGERTY, Plaintiff,

v.EQUIFAX INFORMATION SERVICES LLC and National Consumer Telecom & Utilities Exchange, Inc., Defendants.

Civil Action No. 1:18-CV-01233-CAP

United States District Court, N.D. Georgia, Atlanta Division.

Signed March 19, 2020

Charles Jackson Cole, Craig Edward Bertschi, McRae Bertschi & Cole, LLC, Dunwoody, GA, for Plaintiff.

John Anthony Love, King & Spalding LLP, Norman Charles Campbell, II, Equifax, Inc., Atlanta, GA, Kendall W. Carter, Accrescent Marketing LLC, Suwanee, GA, for Defendants.

ORDER

CHARLES A. PANNELL, JR., United States District Judge

On March 23, 2018, the plaintiff initiated this action against Equifax Information Services LLC ("Equifax") and National Consumer Telecom & Utilities Exchange, Inc. ("NCTUE"), asserting violations of the Fair Credit Reporting Act ("FCRA" or the "Act"), 15 U.S.C. §§ 1681b and 1681e. In Count One of his complaint, the plaintiff alleges that both the defendants violated § 1681b(a), which sets out the permissible purposes for which a credit reporting agency ("CRA") may furnish a consumer report to "a person." In Count Two, the plaintiff alleges that NCTUE violated § 1681e(a), which requires CRAs to maintain reasonable procedures designed to ensure that consumer reports are furnished only for the limited permissible purposes set out in § 1681b. In Count Three, the plaintiff alleges that Equifax violated § 1681b(f), which prohibits "a person" from using or obtaining a consumer report for any purpose other than those specifically authorized under the statute. The plaintiff alleges each statutory violation, in the alternative, as being either negligently or willfully done.

Upon the completion of discovery, the parties filed cross motions for summary judgment. The plaintiff then moved to strike a declaration that the defendants filed contemporaneously with their reply brief in support of their summary judgment motion. The magistrate judge then issued a report and recommendation ("R & R") [Doc. No. 76] recommending that both summary judgment motions be denied, and, further, ordered that the plaintiff's motion to strike be denied. The defendants timely filed objections to the R & R [Doc. No. 80], to which the plaintiff responded [Doc. No. 81]. The plaintiff filed no objections regarding the denial of his motion.

I. Background¹

A. Factual background

In the spring of 2016, the plaintiff decided to check his Equifax credit report for accuracy, so he contacted Equifax and asked for a copy of his credit file.² After the plaintiff received his Equifax file disclosure, he noticed that a company called "Eqxncatt" had obtained his Equifax credit report on several occasions in 2014 and 2015. According to the plaintiff, he became concerned because he had never heard of "Eqxncatt," and he had never authorized a company by that name to obtain his Equifax consumer report. To investigate the situation, he called the telephone number for Eqxncatt listed on his Equifax file disclosure. The plaintiff was told that Eqxncatt was "The Exchange Service Center," which is affiliated with defendant NCTUE.

After doing some research the plaintiff learned that NCTUE, like Equifax, is also a CRA; and he did not understand why one CRA would be providing a copy of his credit report to another CRA. To investigate, the plaintiff asked NCTUE to provide him with a copy of his NCTUE credit file. After receiving his NCTUE file disclosure report, the plaintiff saw that companies described as "EISCOMPANY" and "EIS/EQUIFAX" had accessed his NCTUE credit file or data report on at least 73 occasions, beginning in June 2014. These are pseudonyms for Equifax.

On July 8, 2016, the plaintiff emailed attorney Meryl W. Roper of King & Spalding (who had represented Equifax in prior unrelated litigation with the plaintiff), claiming that Equifax had obtained 73 consumer reports from NCTUE without a permissible purpose and under false pretenses, in violation of the FCRA. He also raised the possibility that King & Spalding had been involved in obtaining his NCTUE credit report, and that it was "terrifying to think people were monitoring me during the case, violating my privacy, what information was obtained, what was done with it, who all got it, where is it now, how many other individuals has this happened to?"

In response, Ms. Roper replied that, after speaking with someone at NCTUE, she learned the NCTUE system and the dispute resolution system at Equifax Information Services are linked, and that is what caused the inquiries to show up on the NCTUE report. She stated, "In order to address your concerns and allegations in the prior lawsuit, it was necessary for attorneys at my firm to speak with Equifax and pull up your Equifax credit file to determine how accounts ... were reporting and whether changes needed to be made. Each time we needed to address your file, it created the inquiry on the NCTUE report and multiple updates would cause multiple entries on the same day." Ms. Roper indicated that these inquiries were the direct result of the prior lawsuit, and there no basis to say there was an impermissible purpose to access the plaintiff's file. She claimed, "I can assure you that nobody was monitoring you or trying to violate your privacy. There was no consumer report provided from NCTUE to Equifax Information Services .... no third party obtained the information and this had no impact on a credit score or ability to receive credit."

The plaintiff spent the next eighteen months trying to get an explanation for why Equifax had obtained his NCTUE credit report 73 times without authorization. Because the explanations were confusing and ultimately unsatisfactory to him, the plaintiff filed this lawsuit.

B. The defendants' business models

Although both the defendants are CRAs, they operate in different ways. Equifax gathers information about consumers from sources such as banks, collection agencies, and court records; it then creates credit files that it uses to prepare consumer reports for use in evaluating the potential credit risk of consumers, among other permissible purposes. NCTUE is also a CRA but it gathers consumers' account history, unpaid closed accounts, and customer service applications from companies in the telecommunications, pay TV, and utilities industries (such as AT & T, DirecTV, and Georgia Power). This information is sold to companies deciding whether to extend services to consumers.

Equifax and NCTUE are separate companies, and each maintains its own separate database of consumer credit files and account information. There is no common ownership between Equifax and NCTUE, but NCTUE—which has no employees—uses Equifax to host and maintain NCTUE's database of consumer data and to provide certain operational services for NCTUE.³ Equifax does not include NCTUE's consumer data in its own consumer reports, and NCTUE does not include Equifax's consumer data in its own consumer reports. However, Equifax has created a credit risk score called the "Insight Score" that utilizes data contained in NCTUE's database as well as Equifax's credit files.⁴

Equifax, as a CRA, is obligated to conduct "reinvestigations" when consumers dispute the accuracy or completeness of information contained in their Equifax credit file. To reinvestigate and track consumer disputes, Equifax uses a software platform called "ACIS," which is an acronym for "Automated Consumer Interview System." When an Equifax ACIS operator accesses a consumer's Equifax credit file to conduct a dispute reinvestigation, the ACIS system automatically, and without prompting, provides the ACIS operator with the consumer's Insight Score that is viewable on the operator's computer screen. The operator is also able to view the Insight Score when accessing an Equifax consumer's file to do other things such as process a request for a consumer disclosure, add a fraud alert to the consumer's file, answer a question a consumer has about his or her file, and during other consumer-initiated contacts with Equifax. The Equifax operators, however, can see only the Insight Score and are not able to see or otherwise access the full NCTUE data file or any of the data used to calculate the Insight Score. Every time Equifax obtains this information from a consumer's NCTUE credit file to generate an Insight Score, that event is recorded as an "soft inquiry" on the consumer's NCTUE data report.⁵ The generation of an Insight Score is unnecessary to the reinvestigation of consumer disputes.

Since 2014, the plaintiff has disputed the accuracy and completeness of information contained in his Equifax credit file on numerous occasions. Following its general procedures for reinvestigating consumer disputes, Equifax reinvestigated the plaintiff's disputes using its ACIS software platform. As noted above, each time an ACIS operator accessed the plaintiff's Equifax credit file, an Insight Score was generated using information from the plaintiff's NCTUE and Equifax credit files, the score was displayed to the ACIS operator, and the event was recorded as an "inquiry" on the plaintiff's NCTUE file. The companies that are listed as having inquired or requested the plaintiff's NCTUE data report are "EISCOMPANY," "EIS/EQUIFAX," "ACIS," and "GESC," which are all pseudonyms for Equifax and its ACIS system. When NCTUE learned (as a result of this lawsuit) that Equifax, through its ACIS system, was generating Insight Scores on consumers using NCTUE's data, which was causing a hit on the consumers' NCTUE file, NCTUE instructed Equifax to cease this practice.

II. The Magistrate Judge's R & R

In their motion for summary judgment, the defendants argued that they were entitled to summary judgment because they did not invade the plaintiff's privacy, so the plaintiff has no injury in fact and lacks Article III standing to sue and because the Insight Scores at issue in this lawsuit were not consumer reports. The R & R, however, found that the plaintiff had alleged and...