Porter v. Talbot Perkins Children's Services, 72 Civ. 4964.

• Decision Date: 27 February 1973
• Docket Number: No. 72 Civ. 4964.,72 Civ. 4964.
• Citation: 355 F. Supp. 174
• Parties: Than PORTER, Plaintiff, v. TALBOT PERKINS CHILDREN'S SERVICES et al., Defendants.
• Court: U.S. District Court — Southern District of New York

355 F. Supp. 174

Than PORTER, Plaintiff, v. TALBOT PERKINS CHILDREN'S SERVICES et al., Defendants.

No. 72 Civ. 4964.

United States District Court, S. D. New York.

February 27, 1973.

Bernard Dworkin, New York City, for plaintiff.

Terry Milburn, New York City, for defendant Talbot Perkins.

Cullen & Dykman, Brooklyn, N. Y., for defendant Brookwood by Warren H. Gunther, Brooklyn, N. Y.

Hale, Grant, Meyerson, O'Brien & McCormick, New York City, for defendant Sheltering Arms by Harold I. Meyerson, and Vincent J. Maroney, New York City.

London, Buttenwieser & Chalif, New York City, for defendant Windham by Helen L. Buttenwieser, New York City.

OPINION

POLLACK, District Judge.

The defendants, child adoption agencies, have separately moved for dismissal of the complaint herein on the ground that plaintiff has failed to state a claim upon which relief may be granted, Fed. R.Civ.P. 12(b) (6), or, alternatively, for summary judgment in their favor, pursuant to Fed.R.Civ.P. 56 and General Rule 9(g) of this Court. At issue is the question of first impression whether the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681t, which became effective April 26, 1971, ("the Act" hereafter) applies to the activities and to the confidential information and reports of an adoption agency.

The background facts of this suit are not contested. Porter and his wife have three children and have attempted on several occasions to adopt a fourth child. Among the adoption agencies to which they applied were the four named defendants. The applications for adoption were filed with defendant Talbot in December 1969; defendant Sheltering Arms in August-November of 1970; defendant Windham in August 1970; and defendant Brookwood in August 1971. In each instance, the application was denied, as was the subsequent request addressed to each defendant for all information collected or used by the agency with respect to plaintiff and his wife. Plaintiff wrote to each of these agencies in November of 1971 for copies of any and all reports relating to his application.

Plaintiff seeks both actual and punitive damages claiming to be entitled thereto on the ground that the defendants willfully and wrongfully refused to make the requested disclosures to him in violation of the Act.

I.

The purpose of the Fair Credit Reporting Act is to protect an individual from inaccurate or arbitrary information about himself in a consumer report that is being used as a factor in determining the individual's eligibility for credit, insurance or employment. 116 Cong.Rec. 36572 (1970). Congress ascertained a "need to insure that consumer reporting agencies exercise their grave responsibilities with fairness, impartiality, and a respect for the consumer's right to privacy." 15 U.S.C. § 1681(a)(4). The Act was designed to require consumer reporting agencies to

adopt reasonable procedures for meeting the needs of commerce for consumer credit, personnel, insurance, and other information in a manner which is fair and equitable to the consumer, with regard to the confidentiality, accuracy, relevancy, and proper utilization of such information in accordance with the requirements of this Act. § 1681(b). (Emphasis supplied).

For the most part, the consumer reporting industry is comprised of credit bureaus, investigative reporting companies and other organizations whose business is the gathering and reporting of information about consumers for use by others in making a decision concerning whether to grant credit, underwrite insurance or employ the subject of such reports. F.T.C., Compliance with the Fair Credit Reporting Act, 4 CCH Consumer Credit Guide ¶ 11,302 (1971).

To advance this design, the Act provides a mechanism with which a consumer can determine what information has been gathered about him for submission to those engaged in commerce and can have the opportunity to correct any inaccuracies in that information. §§ 1681g-1681i; 116 Cong.Rec. 35941. The term "consumer" is broadly defined in the Act as an individual. § 1681a(c). Limitations are imposed on the uses to which the accumulated information may be put. § 1681f. The Act sets a time after which details must be deleted from the files. § 1681c. Willful failure to comply with the provisions of the Act, including those which specifically allow the consumer to examine and correct his file, exposes the credit reporting agency or user of information to civil liability, including actual and punitive damages. § 1681n. Negligent failure to comply may result in actual damages and the imposition of Court costs. § 1681o.

The consumer reporting agency, to which the Act is directed, is defined as follows:

The term "consumer reporting agency" means any person which, for monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties, and which uses any means or facility of interstate commerce for the purpose of preparing or furnishing consumer reports. § 1681a(f). (Emphasis added).

A finding that a prospective defendant fits within these definitional boundaries is requisite to the imposition of procedural requirements and possible liabilities contained in the Act.

Essentially, this definition contains four links. (1) The consumer reporting agency must act for monetary fees, dues, or on a cooperative non-profit basis; (2) it must regularly engage in whole or in part in gathering or evaluating information on consumers; (3) the purpose of such activity must be the distribution of information to third parties engaged in commerce; and (4) the agency must use a facility of interstate commerce to prepare or distribute the reports.

The Federal Trade Commission, which is vested with enforcement powers under the Act, § 1681s, has provided some preliminary interpretations of the Act, 4 CCH Consumer Credit Guide ¶ 11,301 et seq., to which the Court may refer for guidance. Fernandez v. Retail Credit Co., 349 F.Supp. 652 (E.D.La. 1972).

The Federal Trade Commission guidelines have interpreted the coverage of the phrase "consumer credit agencies";

Obviously, this covers all credit bureaus and others whose business is to create and disseminate such consumer reports. However, there are many others who may from time to time function as consumer reporting agencies and, to the extent they issue consumer reports, they will be covered by the Act. For example, some banks and finance companies have engaged in the practice of giving out credit information other than that which they have developed from their own ledgers. To the extent they give out information and experience gained from other creditors, such banks and finance companies would be functioning as consumer reporting agencies and would be required to comply with the terms of the Act. As indicated earlier, giving out a firm's own ledger experience does not make it a consumer reporting agency or the information a consumer report. In order to be a consumer reporting agency, the firm must engage "in whole or in part" in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties. When a firm gives its own credit experience on a consumer to a credit bureau, that information does not constitute a consumer report. . . . ¶ 11,305.

The balance of the Federal Trade Commission's interpretation confirms that the Agency considers that the Act is dealing with commercial purposes. The persons mentioned by the Federal Trade Commission in its full interpretation are banks and finance companies, detective agencies and others preparing employment reports, and collection agencies, all of which perform services which aid and support institutions making economic decisions, such as whether to give employment or whether to loan money. It was to insure accuracy in reports from such organizations, affecting an individual's eligibility for credit, insurance or employment, that the Act was passed; its aim was to impose a legislative filter on the input of the burgeoning consumer credit reporting industry to the flow of commerce. § 1681(a)(2)(4); Fernandez v. Retail Credit Co., 349 F.Supp. 652 (E.D.La.1972). Certainly where an agency regularly sells consumer reports which affect commercial eligibility, that agency would properly fall within the ambit of the Act. See ¶ 11,354 of the F.T.C. guidelines, where the following interpretation is advanced:

It is quite common for certain businesses such as insurance companies to request reports on a prospective (or current) insured from various State Departments of Motor Vehicles. These reports are sold to such companies and generally reveal a consumer's entire driving record, including arrests for speeding, drunk driving, involuntary manslaughter, etc.

It is the Commission's view that, under the circumstances in which such a State motor vehicle report contains information which bears on the "personal characteristics" of the consumer (i. e., when the report refers to an arrest for drunk driving), such reports sold by a Department of Motor Vehicles are "consumer reports" and the agency is a "consumer reporting

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