Berscheid v. Experian Information Solutions, Inc.

Background

Becky Berscheid brought claims against Experian under the Fair Credit Reporting Act (FCRA). She alleged that Experian failed to use reasonable procedures to ensure the maximum possible accuracy of her credit report, in violation of 15 U.S.C. § 1681e(b), and failed to conduct reasonable reinvestigations after she disputed information, in violation of 15 U.S.C. § 1681i.

The disputed information concerned an account that Midland Credit Management, Inc. sought to collect from Berscheid. A state conciliation court dismissed Midland’s collection action with prejudice after finding that Midland had not shown that it owned the account. Experian nevertheless continued reporting the account after Midland continued furnishing information that Berscheid still owed the money.

Berscheid sent Experian four disputes. After the first dispute, Experian contacted Midland, which verified the account. After the second dispute, Midland did not respond within 30 days, and Experian deleted the account from Berscheid’s credit report. Experian later told Berscheid that the account was no longer appearing. Berscheid claimed that Experian’s reporting caused emotional distress and physical symptoms. She did not present evidence of medical treatment, expert testimony about emotional harm, or credit denials and similar financial harm.

Legal Standards

The court considered cross-motions for summary judgment. Summary judgment is appropriate when there is no genuine dispute about a material fact and the moving party is entitled to judgment as a matter of law. A genuine factual dispute exists when the evidence could allow a reasonable jury to decide for the nonmoving party.

For a § 1681e(b) claim, Berscheid had to show that Experian failed to follow reasonable procedures intended to ensure accurate reports, reported inaccurate information, caused her harm, and caused that harm through its failure to use reasonable procedures. For a § 1681i claim, she had to show that Experian reported inaccurate information that she disputed, failed to reasonably reinvestigate or confirm, correct, or delete it, and caused her harm.

Rulings

The court granted Experian summary judgment on the § 1681e(b) claim. The court found that Experian believed Midland was a reputable source and that Berscheid had not provided sufficient evidence that Experian had notice of systemic problems with Midland’s reliability. The court therefore held that Berscheid could not meet her initial evidentiary burden on that claim, even assuming she could establish its other elements.

The court denied both parties’ motions for summary judgment on the negligent § 1681i claim. The court found factual disputes about whether reporting the account, despite the state court’s dismissal, created a materially misleading impression that Berscheid still owed a collectible debt. It also found factual disputes about whether Experian reasonably questioned the authenticity or meaning of the state court judgment and reasonably sent automated verification forms to Midland. The court concluded that these questions should be resolved by a jury.

The court also found that Berscheid’s evidence of emotional distress was sufficient to create a factual dispute about actual damages. Although she had no medical expert testimony or evidence of medical treatment, her testimony and the testimony of her partner and coworker could allow a reasonable jury to find genuine emotional injury. The court did not find evidence of pecuniary harm, such as lost credit opportunities or higher interest rates, but such evidence was not required to preserve the emotional-distress damages question at summary judgment.

The court granted Experian summary judgment on Berscheid’s claim that Experian willfully violated § 1681i. The court held that sending verification forms to Midland and failing to use additional research tools could, at most, support negligence. Berscheid had not presented enough evidence that Experian knowingly and intentionally violated the FCRA or acted with the reckless disregard required for willfulness.

Order

The court granted in part and denied in part Experian’s motion for summary judgment: it granted the motion as to Experian’s liability for alleged negligent and willful violations of § 1681e(b), granted it as to alleged willful violations of § 1681i, and denied it as to alleged negligent violations of § 1681i. The court denied Berscheid’s motion for summary judgment. The remaining case may proceed on whether Experian negligently violated § 1681i.