Forslund v. Experian Information Solutions, Inc.

Background

Marcus and Melissa Forslund leased a Dodge Ram pickup truck through an agreement with Santander Consumer USA/Chrysler Capital. They filed for Chapter 7 bankruptcy on June 28, 2020, and received a discharge order on September 28, 2020. Although they stated in their bankruptcy filings that they intended to reaffirm the lease, they did not execute or file a reaffirmation agreement. They nevertheless continued making payments and driving the vehicle, and Chrysler Capital accepted the payments without demanding that they surrender it.

Experian received notice of the Forslunds’ bankruptcy and discharge, but the notices did not identify specific debts. Chrysler Capital stopped reporting the lease to Experian after June 2020 and did not tell Experian that the lease had been discharged. In January 2021, Experian reports listed the Chrysler Capital account as open, never late, and carrying a balance of $10,776 as of June 2020. The reports described the account as in good standing.

Claims and Arguments

The Forslunds sued under Section 1681e(b) of the Fair Credit Reporting Act, which requires consumer-reporting agencies to use reasonable procedures to ensure the maximum possible accuracy of reported information. They alleged both negligent and willful noncompliance. They argued that the lease should have been reported as discharged and that Experian’s bankruptcy “scrub” procedure was unreasonable because it did not update accounts that were current or less than 91 days delinquent. They also argued that Experian should have addressed stale reporting by Chrysler Capital.

Experian sought summary judgment, arguing that its report accurately reflected the information Chrysler Capital last supplied, that its procedures complied with industry standards and a prior settlement order, and that the Forslunds could not prove that the reporting caused their alleged credit denials or emotional distress. The Forslunds opposed the motion and argued that evidence created factual disputes for trial.

Court’s Analysis

Summary judgment is appropriate when the evidence shows no genuine dispute about a fact that could affect the outcome and the moving party is entitled to judgment under the law. The court viewed the evidence in the light most favorable to the Forslunds but required them to identify specific evidence supporting each required element.

Negligent noncompliance. The court did not decide whether Experian’s report was inaccurate or whether its procedures were reasonable because the damages element was dispositive. A negligent Fair Credit Reporting Act claim requires proof of actual damages caused by the failure to use reasonable procedures.

The court rejected the argument that the inaccurate report itself, or a reduced credit score alone, established actual damages. The Forslunds testified that unnamed car salespeople told them they were denied financing because they still had a Chrysler Capital balance, but the court found that testimony depended on out-of-court statements and was insufficient to avoid summary judgment. Two credit-denial letters did not identify Experian’s reporting as the reason for denial, while four other letters cited the bankruptcy or prior payment delinquencies.

The court also rejected the emotional-distress damages theory. The Forslunds had not sought medical treatment, had no physical injury, and relied only on their own testimony. Their testimony described confusion, anxiety, frustration, stress, sleep difficulties, and related concerns, but the court found insufficient specific detail or corroborating evidence of severe emotional distress. The court further noted that some testimony connected their distress to the bankruptcy, the financing denials, or the litigation rather than to Experian’s report.

Because the Forslunds did not present sufficient evidence of actual damages caused by Experian’s reporting, the court granted summary judgment to Experian on the negligent-noncompliance claim.

Willful noncompliance. A willful Fair Credit Reporting Act violation does not require proof of actual damages, but it requires at least reckless disregard of the law. The court explained that this requires an objectively unreasonable interpretation of the statute and evidence that the defendant knowingly and intentionally acted in conscious disregard of others’ rights.

The court assumed without deciding that the prior settlement order governing Experian’s bankruptcy-scrub procedures did not bind this court. Even so, it held on the merits that Experian’s procedures were not objectively unreasonable. The court relied in part on an Eighth Circuit decision involving similar reporting after a bankruptcy discharge, which stated that a general bankruptcy notice alone does not necessarily identify which debts were discharged and does not automatically require a credit-reporting agency to investigate every account.

The court found that the Forslunds’ evidence concerning Chrysler Capital’s stale reporting did not establish a systemic reporting problem or show that Experian acted recklessly. Experian had received no updates about the Chrysler Capital account after June 2020, and the Forslunds had not disputed the account directly with Experian before filing suit. The court concluded that the evidence did not create a genuine dispute about reckless or conscious disregard of the Forslunds’ rights.

Disposition

The court granted Experian’s Motion for Summary Judgment as to all claims and ordered judgment to be entered accordingly. Judge Susan Richard Nelson did not add a with-prejudice or without-prejudice qualifier to the motion’s disposition.