Mark v. Valley Ins. Co.
| Decision Date | 17 July 2003 |
| Docket Number | No. CV 01-1575-BR.,CV 01-1575-BR. |
| Citation | 275 F.Supp.2d 1307 |
| Parties | Elena MARK and Paul Gustafson, Plaintiffs, v. VALLEY INSURANCE COMPANY and Valley Property and Casualty, Defendants. |
| Court | U.S. District Court — District of Oregon |
N. Robert Stoll, Steve D. Larson, David F. Rees, Stoll Stoll Berne Lokting & Schlacter P.C., Portland, OR, Charles A. Ringo, Beaverton, OR, for Plaintiffs.
Douglas G. Houser, Loren D. Podwill, Bullivant Houser Bailey P.C., Portland, OR, for Defendants.
The following is a redacted version of the Court's Opinion and Order (# 135) issued under seal on July 10, 2003. The redacted form of the Opinion and Order omits factual material of a proprietary and confidential nature. The legal analysis has not been redacted.
This matter comes before the Court on Defendant Valley Insurance Company's Motion for Summary Judgment (# 59) as to the claims of Plaintiff Paul Gustafson and all others similarly situated.
On June 18, 2002, Plaintiffs Elena Mark and Paul Gustafson filed their Second Amended Complaint alleging Defendants Valley Insurance Company and Valley Property and Casualty violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, when they took adverse actions with respect to the underwriting of the automobile insurance policies of Plaintiffs and others similarly situated on the basis of information contained in their consumer credit reports and then failed to notify them of those adverse actions.
On January 10, 2003, Defendants filed their Motions for Summary Judgment. During oral argument heard on May 21, 2003, the Court denied Valley Property's Motion for Summary Judgment as to the claims of Mark and all others similarly situated to the extent Valley Property contended no reasonable juror could conclude Valley Property failed to institute reasonable procedures to ensure FCRA compliance or willfully violated FCRA. The Court also denied Defendants' Motions to the extent Defendants argued they were entitled to judgment as a matter of law because they complied with FCRA's notice requirements when they mailed notices to Plaintiffs several months after they allegedly took the adverse actions.
The Court took under advisement Valley Insurance's Motion for Summary Judgment as to the claim of Gustafson and all others similarly situated to the extent Valley Insurance argued it had no duty to provide notice to Gustafson or other insureds like him because it did not take an adverse action against them. The Court also took under advisement Valley Insurance's Motion for Summary Judgment as to the claims of Gustafson and all others similarly situated to the extent Valley Insurance contended no reasonable juror could conclude Valley Insurance willfully failed to comply with its obligations under FCRA.1
For the following reasons, the Court GRANTS Valley Insurance's Motion for Summary Judgment as to the FCRA claims of Gustafson and all others similarly situated and, therefore, DISMISSES with prejudice those claims against Valley Insurance.
The following facts are undisputed unless otherwise noted:
A. Valley Insurance's FCRA Procedures for New Business Customers
During 1999, some of Defendants' employees went to a conference presented by Fair, Isaac and Company, a company in the business of providing statistically-based decision support tools. The topic of the conference was the correlation between poor credit history and increased likelihood of claims. After Defendants reviewed Fair Isaac's information, they looked at their own books of business and found the same correlation.
In July 1999, Valley Insurance began using a Household Financial Stability factor to rate and to set the premiums it charged for automobile insurance policies. Because Valley Insurance was not in operation before this time, all of Valley Insurance's customers were "new business customers" whom Valley Insurance did not insure previously.
Pursuant to Valley Insurance's program, when a potential insured requested a quote on automobile insurance, one of Valley Insurance's agents first determined the customer's Household Financial Stability factor by contacting ChoicePoint Services, Inc., a company that compiles and maintains databases of information regarding consumers. ChoicePoint then provided Valley Insurance with a national credit file report. The national credit file report contained the Fair Isaac Casualty Loss Score, a numerical score that was calculated by applying an analytical model that predicts the likelihood of future claims based on certain information in a consumer's credit history. The Fair Isaac Casualty Loss Score model analyzed the comprehensive information available in the potential insured's credit report and then synthesized it into a single numerical score ranging from approximately 300 to 900. Individuals with higher scores were less likely to produce a loss or a claims file than individuals with lower scores.
Valley Insurance's computer system automatically converted the Fair Isaac Casualty Loss Score into one of four insurance scores: Significantly Above Average (750 +), Above Average (675-749), Average (575-674), and Below Average (Below 575).2 Valley Insurance then used the new insured's insurance score in conjunction with the insured driver's age and driving activity to determine the insured's premium tier rating and insurance premium. Valley Insurance's automobile insurance program consisted of four premium tiers or levels: Ultra, Preferred, Standard, and Non-Standard. Each of the four insurance scores corresponded to one of the premium rates:
Significantly above average = Ultra Rate
Above average = Preferred Rate
Average = Standard Rate
Below Average = Non-Standard Rate
To qualify for Valley Insurance's optimal rate, the Ultra Rate, an insured had to meet the following requirements: 1) be over age 21, 2) have an incident-free driving record during the three prior years, and 3) have a Significantly Above Average insurance score. Thus, an insured with a Significantly Above Average insurance score did not necessarily qualify for Valley Insurance's best rate available, the Ultra Rate. An insured, however, could not qualify for Valley Insurance's best rate available unless the insured had a Significantly Above Average insurance score.
Valley Insurance considered the Standard Rate to be its baseline rate. The Non-Standard Rate was [REDACTED] higher than the Standard rate [REDACTED]. The Preferred Rate was [REDACTED] less than the Standard Rate. The Ultra Rate was [REDACTED] less than the Standard Rate [REDACTED]. In other words, an insured whose credit, age, and activity scores resulted in his placement in the Non-Standard tier paid nearly twice as much for his car insurance as an Ultra customer. Moreover, an insured with a Below Average insurance score paid almost twice as much for insurance as a similarly-situated insured with a Significantly Above Average insurance score.
B. Gustafson's Policy
On July 24, 2001, Valley Insurance issued an automobile insurance policy to Gustafson. Valley Insurance rated Gustafson's insurance score as Average. As a result, Valley Insurance charged Gustafson its Standard Rate, which was a higher insurance premium than it would have charged him if his insurance score had been rated Above Average or Significantly Above Average. In fact, if Gustafson's insurance score had been Significantly Above Average, his annual premium would have been [REDACTED] less than Valley Insurance charged him.
Valley Insurance did not provide Gustafson with a FCRA adverse action notice when it issued his policy. Valley Insurance, however, sent Gustafson a FCRA notice in January 2001, which was approximately six months after his insurance policy became effective and three months after Mark originally filed this action against Valley Property.
Fed.R.Civ.P. 56(c) authorizes summary judgment if no genuine issue exists regarding any material fact and the moving party is entitled to judgment as a matter of law. The moving party must show the absence of an issue of material fact. Leisek v. Brightwood Corp., 278 F.3d 895, 898 (9th Cir.2002). In response to a properly-supported motion for summary judgment, the nonmoving party must go beyond the pleadings and show there is a genuine issue of material fact for trial. Id.
An issue of fact is genuine "`if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.'" Villiarimo v. Aloha Island Air, Inc., 281 F.3d 1054, 1061 (9th Cir.2002) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)). The Court must draw all reasonable inferences in favor of the nonmoving party. Id. A mere disagreement about a material issue of fact, however, does not preclude summary judgment. Jackson v. Bank of Haw., 902 F.2d 1385, 1389 (9th Cir.1990). When the nonmoving party's claims are factually implausible, that party must come forward with more persuasive evidence than otherwise would be required. Blue Ridge Ins. Co. v. Stanewich, 142 F.3d 1145, 1147 (9th Cir.1998) (citation omitted).
The substantive law governing a claim or a defense determines whether a fact is material. Addisu v. Fred Meyer, Inc., 198 F.3d 1130, 1134 (9th Cir.2000). If the resolution of a factual dispute would not affect the outcome of the claim, the court may grant summary judgment. Arpin v. Santa Clara Valley Transp. Agency, 261 F.3d 912, 919 (9th Cir.2001).
When a district court interprets a federal statute, it must apply a two-part analysis. "The first and most important step in construing a statute is the statutory language itself." Royal Foods Co. v. RJR Holdings, Inc., 252 F.3d 1102, 1106 (9th Cir.2001) (citing Chevron, U.S.A. v. Natural Res. Def. Council, 467 U.S. 837, 842-44, 104 S.Ct. 2778, 81 L.Ed.2d 694 (198...
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