Pintos v. Pacific Creditors Ass'n

• Decision Date: 21 September 2007
• Docket Number: No. 04-17558.,No. 04-17485.,04-17485.,04-17558.
• Citation: 504 F.3d 792
• Parties: Maria E. PINTOS, Plaintiff-Appellant, v. PACIFIC CREDITORS ASSOCIATION; Experian Information Solutions, Inc., Defendants-Appellees. Maria E. Pintos, Plaintiff-Appellee, v. Pacific Creditors Association, Defendant, and Experian Information Solutions, Inc., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

504 F.3d 792

Maria E. PINTOS, Plaintiff-Appellant, v. PACIFIC CREDITORS ASSOCIATION; Experian Information Solutions, Inc., Defendants-Appellees.

Maria E. Pintos, Plaintiff-Appellee, v. Pacific Creditors Association, Defendant, and Experian Information Solutions, Inc., Defendant-Appellant.

No. 04-17485.

No. 04-17558.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted January 9, 2007.

Filed September 21, 2007.

Andrew J. Ogilvie (argued), Kemnitzer, Anderson, Barron & Ogilvie, LLP, San Francisco, CA, for appellant/cross-appellee Maria E. Pintos.

Daniel J. McLoon (argued), Jones Day, Los Angeles, CA, Adam R. Sand and Marc S. Carlson, Jones Day, San Francisco, CA, for appellee/cross-appellant Experian Information Solutions, Inc.

Andrew M. Steinheimer (argued) and Mark E. Ellis, Ellis Coleman Poirier LaVoie & Steinheimer, LLP, Sacramento, CA, for appellee Pacific Creditors Association.

Appeal from the United States District Court for the Northern District of California; Claudia Wilken, District Judge, Presiding. D.C. No. CV-03-05471-CW.

Before: MARY M. SCHROEDER, Chief Circuit Judge, RICHARD R. CLIFTON, Circuit Judge, and GEORGE P. SCHIAVELLI,^* District Judge.

CLIFTON, Circuit Judge:

Maria E. Pintos appeals the district court's summary adjudication of her claims under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. Pintos contends that Pacific Creditors Association violated the FCRA by obtaining, without any FCRA-sanctioned purpose, a credit report on her from Experian Information Solutions, Inc., a credit reporting agency. Pintos also argues that Experian violated the FCRA by furnishing the report to PCA.

The district court granted summary judgment in favor of the defendants. Relying on our decision in Hasbun v. County of Los Angeles, 323 F.3d 801 (9th Cir. 2003), the court held that PCA was authorized to obtain Pintos's credit report under 15 U.S.C. § 1681b(a)(3)(A) because it was attempting to collect a debt from Pintos. Hasbun held that debt collection was a permissible purpose for obtaining a credit report, but we decided that case prior to the enactment of the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), Pub.L. No. 108-159, 117 Stat. 1952. FACTA makes clear that debt collection is a permissible purpose for obtaining a credit report under § 1681b(a)(3)(A) only in connection with a "credit transaction" in which a consumer has participated directly and voluntarily. Because PCA obtained a credit report on Pintos unrelated to any such transaction, we reverse the district court with respect to Pintos's claims against PCA and remand for further proceedings with respect to damages and to Experian's liability.

I. Background

Police officers found a sport utility vehicle belonging to Maria Pintos parked on the street in San Bruno, California on May 29, 2002. The vehicle's registration was expired. At police direction, the vehicle was towed, and the towing company, P & S Towing, obtained a lien on the vehicle for the cost of towing and impound. P & S later sold the vehicle when Pintos failed to reclaim it or pay the outstanding charges. Since the vehicle's sale price did not cover the amount owed, P & S asserted a deficiency claim against Pintos and later transferred the claim to PCA, a collection agency.¹

PCA sought and obtained a credit report on Pintos from Experian on December 5, 2002, in connection with its effort to collect on the debt assigned by P & S. Pintos subsequently filed a complaint against PCA and Experian under the FCRA. She alleged that PCA violated the FCRA by obtaining her credit report without any FCRA-sanctioned purpose and that Experian was liable for providing the report to PCA.

PCA and Experian filed separate motions for summary judgment. Both argued that, under 15 U.S.C. § 1681b(a)(3)(A), PCA had a permissible purpose for obtaining Pintos's credit report because it was seeking to collect a debt, the towing deficiency claim. Experian further argued that it was not liable for a violation because it had fulfilled its obligations under 15 U.S.C. § 1681e, which immunizes a reporting agency against FCRA violations by the agency's subscribers so long as the agency takes certain steps.

Pintos filed a cross-motion for partial summary judgment on the issues of permissible purpose and Experian's negligence. She attached to that motion several Experian documents detailing the company's internal procedures for complying with its FCRA obligations. Claiming these documents were confidential and proprietary, Experian filed a motion to seal them.

The district court granted the defendants' motions for summary judgment on November 9, 2004. Relying on Hasbun v. County of Los Angeles, 323 F.3d 801 (9th Cir.2003), the court agreed that debt collection was a permissible purpose under § 1681b(a)(3)(A) for PCA to obtain Pintos's credit report. The court denied Experian's motion to seal documents, without explanation.

Pintos filed a timely notice of appeal on December 8, 2004. Experian cross-appealed the district court's denial of its motion to seal on December 9, 2004. It also sought reconsideration by the district court of the denial of that motion. On April 29, 2005, the district court held that it lacked jurisdiction over the matter since Experian already appealed the order to this court. Nevertheless, the court stated that, if it had jurisdiction, it would grant Experian's motion under Phillips v. General Motors Corp., 307 F.3d 1206 (9th Cir. 2002), and it stayed its prior order on the subject pending the appeal.

II. Discussion

We review grants of summary judgment de novo. ACLU v. City of Las Vegas, 466 F.3d 784, 790 (9th Cir.2006). Cross-motions for summary judgment are evaluated separately under this same standard. Id. at 790-91; Hoopa Valley Indian Tribe v. Ryan, 415 F.3d 986, 989-90 (9th Cir.2005).

A. 15 U.S.C. § 1681b(a)(3)(A)

"Congress enacted the FCRA in 1970 to promote efficiency in the Nation's banking system and to protect consumer privacy." TRW Inc. v. Andrews, 534 U.S. 19, 23, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001). Those two goals potentially lie in tension, and the FCRA strikes a balance between them. The Act authorizes credit reporting agencies to "furnish . . . consumer report[s]" because "[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), 1681b(a). At the same time, the FCRA "requir[es] credit reporting agencies to maintain reasonable procedures designed to assure maximum possible accuracy of the information contained in credit reports," limits access to credit reports except for "certain statutorily enumerated purposes," and creates "a private right of action allowing injured consumers to recover any actual damages caused by negligent violations and both actual and punitive damages for willful noncompliance." Andrews, 534 U.S. at 23, 122 S.Ct. 441 (citations and internal quotation marks omitted).

Statutory limitations on the furnishing of credit reports are particularly relevant here. Section 1681b(a) authorizes the furnishing of credit reports only for a limited number of purposes, including, under § 1681b(a)(3)(A), the furnishing of reports "in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer." Concluding that debt collection is the "collection of an account" described in this subsection, the district court held that the statute authorized PCA to obtain Pintos's credit report.

Section 1681b(a)(3)(A) does not provide that all "account collection" is a permissible purpose for obtaining credit reports, however. Debt collections are authorized to obtain credit reports on debtors only for account collection "in connection with a credit transaction involving the consumer." 15 U.S.C. § 1681b(a)(3)(A) (authorizing the release of credit reports "in connection with a credit transaction involving the consumer . . . and involving the . . . review or collection of an account") (emphasis added).

The FCRA does not define the term "credit transaction" and initially did not define the term "credit." This changed with the adoption of the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"). In FACTA, Congress amended the FCRA by, inter alia, defining credit for purposes of the statute as amounting to a particular kind of debt: "the right granted by a creditor to a debtor to defer payment of debt or to incur debts and defer its payment or to purchase property or services and defer payment therefor."² See Pub.L. No. 108-159, § 111, 1955 (codified as amended at 15 U.S.C. § 1691a(d)). By defining credit as a "right . . . to defer payment," FACTA indicates that a § 1681b(a)(3)(A) "credit transaction" is a transaction in which the consumer directly participates and voluntarily seeks credit. Accord Stergiopoulos v. First Midwest Bancorp, Inc., 427 F.3d 1043, 1047 (7th Cir.2005) (holding that § 1681b(a)(3)(A) applies "only if the consumer initiates [a credit] transaction"). Not all "debt" involves a "credit transaction."

Interpreting "credit transaction" to require voluntary consumer participation comports with the FCRA's underlying goal of protecting consumer privacy. See Andrews, 534 U.S. at 23, 122 S.Ct. 441 (noting that Congress enacted the FCRA "to protect consumer privacy," among other goals, and identifying § 1681b specifically as embodying this purpose). A consumer who chooses to initiate a credit transaction implicitly consents to the release of his credit report for related purposes. By requiring this consent, § 1681b(a)(3)(A) forges a "direct link" between a consumer's search for credit and the furnishing of his credit report. See Stergiopoulos, 427 F.3d at 1047. This link is critical for providing the consumer with some degree of privacy protection in accordance with...