Jones v. Federated Financial Reserve Corp.

• Decision Date: 22 May 1998
• Docket Number: No. 96-1593,96-1593
• Citation: 144 F.3d 961
• Parties: Karen JONES, Plaintiff-Appellant, v. FEDERATED FINANCIAL RESERVE CORPORATION; Randy Lind; TRW, Inc.; Janice Caylor, Defendants-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 961

144 F.3d 961

Karen JONES, Plaintiff-Appellant, v. FEDERATED FINANCIAL RESERVE CORPORATION; Randy Lind; TRW Inc.; Janice Caylor, Defendants-Appellees.

No. 96-1593.

United States Court of Appeals Sixth Circuit.

Argued Oct. 21, 1997.

Decided May 22, 1998.

Martin J. Smith (argued and briefed), Ann Arbor, MI, for Plaintiff-Appellant.

Allen J. Philbrick (argued and briefed), Conlin, McKenney & Philbrick, Ann Arbor, MI, for Defendants-Appellees.

Before: KEITH, BOGGS, and COLE, Circuit Judges.

OPINION

COLE, Circuit Judge.

This appeal requires us to determine if civil liability under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq., may be imposed on an employer for its employee's actions under a theory of apparent authority. Plaintiff-Appellant Karen Jones brought suit against defendants Federated Financial Reserve Corporation ("Federated"), TRW, Inc., Randy Lind and Janice Caylor, claiming that the defendants willfully and negligently violated the FCRA in connection with the acquisition of a report concerning Jones's credit status. Jones appeals the district court's entry of a directed verdict in favor of Federated on Jones's willful noncompliance claim under 15 U.S.C. § 1681n; the district court's instruction to the jury on Jones's negligent noncompliance claim under 15 U.S.C. § 1681o; the district court's denial of Jones's motion for a new trial; and the district court's exclusion of Jones's expert witness. Because we disagree with the standard of liability relied on by the district court, we reverse the district court's entry of a directed verdict on Jones's willful noncompliance claim as well as the jury's verdict on the negligence claim, and remand for further proceedings.

I.

A. Background

Karen Jones married Randy Lind in May 1993, after a brief and largely long-distance relationship. Jones described her relationship with Lind as "weird, erratic, [and] strange" from the outset, and later claimed that Lind was demanding, controlling, and abusive. Upon their marriage, Jones moved to Oregon to live with Lind until October 1993, when she returned to Michigan without him. At Jones's request, her marriage to Lind was annulled on April 26, 1994. Notwithstanding the annulment, Lind and Jones stayed in contact, and sometimes discussed the possibility of a reconciliation. Eventually, however, Jones moved to a new apartment and took precautions to conceal her new address and phone number from Lind.

On June 17, 1994, Lind called Jones at work, offering to deliver a check representing a portion of their property division. After rejecting Lind's proposal that they meet for lunch or dinner, Jones suggested that they meet at a bar and have a drink. Following an evening together, Lind and Jones quarreled in the morning over his desire to reconcile and her refusal to do so.

Several days later, on June 22, 1994, Jones called Lind and apparently voiced her concern that Lind intended to harass her. Lind denied Jones's assertion, stating "If I wanted to harass you, I'd harass you, because I've known since April 25th where you live." J.A. at 239. After several unsuccessful efforts to learn how Lind obtained her address, Jones had a friend, whose employer had access to credit reporting agencies, check to see if anyone had requested a credit report on her. Further inquiries by Jones led her to discover that Janice Caylor, a Federated employee, whom she knew to be a friend of Lind, had likely procured a report on her credit status on Lind's behalf. Jones later ascertained that Federated, at Caylor's request, had obtained her credit report from TRW, a consumer reporting agency.

Federated is a lessor of a broad range of consumer and business equipment, such as computers, cellular phones, facsimile machines, and machine tools. To facilitate its credit approval and debt collection practices, Federated obtains approximately 25,000 credit reports annually concerning its customers through its on-line credit report request system. TRW supplies the credit reports to Federated, but requires Federated to certify that it will use those reports only for certain permissible business-related purposes.

Caylor, Lind's roommate, was hired as a full-time collector by Federated on June 14, 1994, after having worked for Federated for three months as a collector on a "temporary" basis. During Caylor's temporary and full-time employment at Federated, she was authorized to request customer credit reports from clerks who operated Federated's credit report request system. To obtain a credit report, Federated merely required Caylor to present a request form containing the customer's name, address, and social security number. Federated neither required Caylor to get her supervisor's approval to obtain a credit report, nor oversaw whether credit reports were actually placed in customer files.

Shortly after Lind's marriage to Jones was annulled, Lind began pressuring Caylor to procure Jones's credit report for him. Bowing to Lind's pressure, Caylor obtained a copy of Jones's credit report by completing a request form using information supplied by Lind, and attaching the form to an unrelated business file. Testimony did not suggest that any other Federated employee knew of Caylor's improper request, and Jones's credit report was never placed in the unrelated file that had been used to obtain the report.

B. Procedural History

On July 11, 1994, Jones filed suit in federal court, alleging negligent and willful violations of the FCRA, 15 U.S.C. § 1681 et seq., and also asserting various state-law tort theories of relief. Jones named Federated, Lind, Caylor, and TRW as defendants. Following discovery, Lind and TRW moved for summary judgment, which the district court denied as to Lind, but granted as to TRW. In addition, all of Jones's state-law tort claims were dismissed with prejudice.

At the inception of the trial, Jones voluntarily dismissed all claims against Lind and Caylor, neither of whom had appeared for the trial. Jones's FCRA claims against the remaining defendant, Federated, were tried to a jury beginning on August 17, 1995.

At the close of evidence, Federated moved for a directed verdict as to Jones's claim against it for willful violation of the FCRA, 15 U.S.C. § 1681n, and for negligent violation of the FCRA, 15 U.S.C. § 1681o. The district court granted Federated's motion as to the claim of willful violation. On the remaining negligent non-compliance claim, the district court submitted the question to the jury with an instruction, to which Jones objected, that it could find Federated vicariously liable for Caylor's actions only if Caylor was acting within the scope of her employment or if Federated was negligent in allowing Caylor to obtain the credit report. Based on this instruction, the jury returned a verdict for Federated on August 22, 1995. On September 5, 1995, Jones moved for a new trial, arguing that the jury's verdict was not supported by the evidence and that the district court erred by giving an erroneous jury instruction, by excluding the testimony of an expert witness, and by failing to allow Jones a fair trial in general. The district court denied Jones's motion for a new trial on April 1, 1996. Jones timely appealed the judgment and the denial of her motion for a new trial.

There are five issues before us on appeal: (1) whether Jones is entitled to a new trial based upon the district court's allegedly erroneous jury instruction regarding Federated's liability for negligent violation of the FCRA; (2) whether the district court erred in granting a directed verdict in Federated's favor on Jones's claim of willful violation of the FCRA; (3) whether the jury's verdict was supported by the evidence; (4) whether Jones received a fair trial; and (5) whether the district court erred in excluding the testimony of Jones's expert witness.

II.

The first two issues before us--the jury instruction challenge and the appeal of the directed verdict--are closely related, in that they both depend on our determination of the following threshold legal question: whether the FCRA authorizes the imposition of liability on an employer for the actions of an employee under the common law doctrine of apparent authority. The FCRA does not address the existence or the scope of vicarious liability. The statutory language focuses on the conduct of consumer reporting agencies and users of credit information in furnishing and using credit reports. See 15 U.S.C. § 1681(b) (listing permissible purposes for use and provision of consumer reports).

The FCRA's express language imposes civil liability on "any consumer reporting agency or user," which is either negligent, 15 U.S.C. § 1681o, ¹ or willful, 15 U.S.C. § 1681n, ² in failing to comply with any requirement imposed under the FCRA. The FCRA requirement which Federated allegedly violated is § 1681b, which provides an extensive list of the limited circumstances under which a consumer reporting agency or a user of credit reports may furnish or utilize a consumer report. Federated was required by the statute to comply with § 1681b's permissible uses and purposes when providing and using consumer credit reports.

Because the FCRA does not directly address vicarious liability, we look to the statute's purposes for guidance in determining whether to interpret the FCRA's words to include liability based on the apparent authority of an employee. See Wells v. United States Steel, 76 F.3d 731, 737 (6th Cir.1996); EEOC v. Kimberly-Clark Corp., 511 F.2d 1352, 1357 (6th Cir.1975); 2A Singer, Sutherland Statutes and Statutory Construction § 45.09 at p. 40 (4th ed.1984). We are additionally guided by the fact that the FCRA is to be liberally construed in favor of the consumer, see Guimond v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir.1995), as well as the rule of statutory construction which requires us to read a statutory provision in a manner consistent with the statute...