Beers v. Experian Information Solutions, Inc.

Background

Michelle Beers alleged that Experian Information Solutions, Inc., a credit reporting agency, inaccurately reported two accounts after her Chapter 7 bankruptcy discharge: a Toyota Motor Credit auto lease account and a LendingClub account. Her amended complaint asserted one claim under the Fair Credit Reporting Act (FCRA), alleging that Experian willfully or negligently failed to use reasonable procedures to ensure accurate credit reports.

Experian’s procedures automatically reviewed credit files after receiving notice of a bankruptcy discharge. Under procedures associated with a nationwide class-action settlement injunction, Experian generally treated derogatory pre-bankruptcy debts as discharged but excluded accounts that were current when bankruptcy was filed or had a zero balance with a status other than “Major Derogatory.” Experian contended that the LendingClub account was current with no late-payment history and that the Toyota account was reported as paid with a zero balance until April 2020. Toyota later updated the account twice but did not identify it as discharged in bankruptcy.

A report Beers obtained on April 29, 2020, listed the Toyota account as open with a $2,000 balance and the LendingClub account as open with a $12,792 balance, without indicating that either account had been discharged. Beers alleged that she was denied credit by Kohl’s and Best Buy and that the inaccurate information was provided to other third parties. Experian moved for summary judgment, which asks whether the evidence shows a real factual dispute requiring a trial.

White-Hernandez Injunction

Experian argued that Beers was bound by the injunction from the White-Hernandez class settlement, which Experian said prevented later challenges to the procedures and established that they complied with the FCRA. Beers disputed that she was a member of the settlement class and argued that the settlement did not bar her claim.

The court assumed without deciding that it was not bound by the injunction and analyzed Beers’s FCRA claim directly.

FCRA Negligence Claim and Actual Damages

For a negligent claim under Section 1681e(b) of the FCRA, Beers had to show that Experian failed to use reasonable accuracy procedures, reported inaccurate information, caused her harm, and caused her actual damages. The court held that she did not provide sufficient evidence of actual damages.

The court noted that Capital One and Wings Financial approved credit applications for which Experian provided reports. It also found that the record showed Experian did not provide Beers’s information to Kohl’s or Best Buy after her bankruptcy discharge. The court further observed that the Best Buy denial letter attributed the denial to Beers’s bankruptcy and identified Equifax, not Experian, as the credit reporting agency that supplied the information.

The court also rejected Beers’s emotional-distress damages evidence as insufficient. The record did not show treatment for emotional distress, physical injury, or observations by other people. The court found that Beers’s vague assertions alone did not establish a genuine injury sufficient to support actual damages.

The court therefore granted Experian’s motion for summary judgment as to Beers’s negligent-noncompliance claim under 15 U.S.C. §§ 1681e(b) and 1681o.

Willful FCRA Claim

A willful FCRA violation can support statutory damages without proof of actual injury. Willfulness includes knowing or reckless conduct. The court explained that conduct is reckless when it creates an unjustifiably high risk of harm that was known or should have been obvious, and that an unreasonable interpretation of the statute can be willful.

Experian argued that its reporting was not willful for several reasons: the bankruptcy discharge order did not identify which debts were discharged; its procedures excluded current accounts from automatic discharge coding; and Toyota updated the account without stating that it had been discharged. Beers argued that Experian knew its method could produce inaccurate reports and should have presumed that debts were discharged unless specifically exempted.

The court found that Beers identified no applicable authority establishing that Experian’s procedures willfully violated the FCRA. It also found no evidence that any inaccuracy from the procedures occurred more than occasionally. Assuming without deciding that Experian reported inaccurate information, the court concluded that the evidence was insufficient for a reasonable jury to find that Experian acted willfully.

Disposition

The court found that Beers failed to show a material factual dispute necessary to establish an FCRA claim. It granted Experian’s motion for summary judgment, and the order directed that judgment be entered accordingly.