Blumenfeld v. Regions Bank
Filing
44
MEMORANDUM OPINION AND ORDER The court GRANTS IN PART AND DENIES IN PART Regions Bank's motion for summary judgment. The court DENIES the motion for summary judgment on Count One. The court GRANTS the motion for summary judgment on Count Two, a nd ENTERS JUDGMENT in favor of Regions Bank and against Ms. Blumenfeld on that count. The court GRANTS the motion for summary judgment on Count Four, and ENTERS JUDGMENT in favor of Regions Bank and against Ms. Blumenfeld on that count. The court DENIES the motion for summary judgment on Count Six. Counts One and Six will proceed to trial. Signed by Judge Annemarie Carney Axon on 9/5/18. (SAC )
FILED
2018 Sep-05 AM 11:53
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
TERRY BLUMENFELD,
Plaintiff,
v.
REGIONS BANK,
Defendant.
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4:16-cv-01652-ACA
MEMORANDUM OPINION AND ORDER
This matter comes before the court on Defendant Regions Bank’s motion for
summary judgment. (Doc. 29).
Jo Ann Fryer is the sole mortgagee on a home she owns jointly with her
daughter, Plaintiff Terry Blumenfeld. Regions Bank is Ms. Fryer’s mortgagor.
While at the bank on other business, a Regions Bank employee asked Ms. Fryer—
who was there without her daughter—if she was interested in lowering the interest
rate on her mortgage, and Ms. Fryer said yes.
After speaking further with
Ms. Fryer, another Regions Bank employee learned that Ms. Blumenfeld actually
made each monthly payment on Ms. Fryer’s mortgage. That employee discussed
with Ms. Fryer the possibility of Regions Bank financing a new mortgage in
Ms. Blumenfeld’s name, and, without obtaining Ms. Blumenfeld’s consent, pulled
Ms. Blumenfeld’s consumer report.1 He printed out the consumer report, went
over it with Ms. Fryer, and gave her a copy to give to Ms. Blumenfeld.
Ms. Blumenfeld filed suit against Regions Bank, asserting six counts. (Doc.
12). The court has already dismissed Count Five and part of Count Six, and in her
briefing on Regions Bank’s motion for summary judgment, Ms. Blumenfeld
withdraws Count Three. (See Doc. 19; Doc. 37 at 5). The remaining counts are
(1) violation of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq.
(Count One); (2) invasion of privacy, in violation of Alabama law (Count Two);
(3) wanton hiring, training, and supervising of incompetent employees and/or
agents, in violation of Alabama law (Count Four); and (5) wanton and reckless
conduct, in violation of Alabama law (Count Six). (Doc. 12 at 13–21).
The court GRANTS IN PART and DENIES IN PART Regions Bank’s
motion for summary judgment.
The court DENIES the motion for summary
judgment on Count One because a jury could conclude that Regions Bank willfully
violated the FCRA by pulling Ms. Blumenfeld’s consumer report even though she
1
Both parties consistently refer to the report that Regions Bank pulled as a
“credit report,” but the Fair Credit Reporting Act uses the term “consumer reports”
to describe the reports that it regulates. See 15 U.S.C. § 1681a(d)(1) (defining a
consumer report as, among other things, “any written, oral, or other
communication of any information . . . bearing on a consumer’s credit worthiness,
credit standing, [or] credit capacity”). Although the parties do not address whether
the “credit report” that Regions Bank pulled meets the definition of a “consumer
report” under the FCRA, the court finds that it does meet that definition. The court
will, therefore, use the statutory terminology and refer to it as a “consumer report.”
2
had not initiated a transaction with the bank. The court GRANTS the motion for
summary judgment in favor of Regions Bank on Count Two because
Ms. Blumenfeld presented no evidence showing that Regions Bank’s action in
pulling her consumer report and sharing it with her mother would have caused an
ordinary person outrage or mental shame, suffering, or humiliation. The court
GRANTS the motion for summary judgment in favor of Regions Bank on Count
Four because Ms. Blumenfeld failed to present evidence showing that Regions
Bank was aware of any incompetence on the part of its employee. The court
DENIES the motion for summary judgment on Count Six because Ms. Blumenfeld
has introduced evidence from which a jury could find that Regions Bank violated
the FCRA.
I.
BACKGROUND
In deciding a motion for summary judgment, the court “draw[s] all
inferences and review[s] all evidence in the light most favorable to the non-moving
party.” Hamilton v. Southland Christian Sch., Inc., 680 F.3d 1316, 1318 (11th Cir.
2012) (quotation marks omitted).
The parties submitted four depositions in
support of and opposition to Regions Bank’s motion for summary judgment: one
by the plaintiff, Ms. Blumenfeld; one by her mother, Ms. Fryer; one by a mortgage
loan officer, Tracy Goodwin; and one by Mr. Goodwin’s supervisor, Kristy Smith.
(Docs. 30-1 to 30-4).
3
Taken in the light most favorable to Ms. Blumenfeld, the evidence shows
that, when Ms. Blumenfeld divorced her husband, Ms. Fryer bought the
Blumenfelds’ marital home to ensure that her daughter could continue to live in it.
Thereafter, Ms. Fryer took out a mortgage on the house from Regions Bank. (Doc.
30-2 at 38; Doc. 30-1 at 75–76). Eventually, Ms. Fryer executed a warranty deed
conveying an equal interest in the property to her daughter. (Doc. 30-2 at 80).
In May 2016, Ms. Fryer visited a Regions Bank branch about a new debit
card. (Id. at 61). The employee helping her asked if she would be interested in
speaking to someone about getting a lower interest rate on her mortgage, to which
she said yes.
(Id. at 61–62).
The employee took her into the office of
Mr. Goodwin, a mortgage loan officer.
(Id. at 63).
Mr. Goodwin pulled
Ms. Fryer’s consumer report and, after reviewing it, noted that she had two
mortgages. (Id. at 64–65). Ms. Fryer told him that she had a mortgage on her
house as well as a mortgage on her daughter’s house. (Id. at 66). Ms. Fryer
explained that although the mortgage was in her name alone, Ms. Blumenfeld
made the payments on that mortgage. (Id.). Mr. Goodwin offered to see if they
could finance a new mortgage in Ms. Blumenfeld’s name. (Id. at 66–67).
Mr. Goodwin ran Ms. Blumenfeld’s consumer report and began printing it.
(Doc. 30-2 at 67, 69). At the same time, he told Ms. Fryer to call Ms. Blumenfeld
to ask permission for him to pull her consumer report. (Id. at 68). He testified that
4
before Ms. Fryer made the call, he either told her to put Ms. Blumenfeld on
speakerphone or asked to speak directly with Ms. Blumenfeld. (Doc. 30-3 at 71).
He did that because Regions Bank’s Mortgage Production Manual requires the
“borrower’s expressed consent” before a loan officer can pull a borrower’s
consumer report, and because he knew that pulling a consumer report without the
borrower’s permission was against the law. (Id. at 42, 59–60, 91–92). But the call
was not on speakerphone and he did not speak directly to Ms. Blumenfeld. (Id. at
71–72). Mr. Goodwin testified that he did not attempt to speak directly with
Ms. Blumenfeld because he “had no reason to believe [he] did not have consent.”
(Id. at 30–31).
Instead, Ms. Fryer called her daughter and explained that she was at Regions
Bank, trying to get a lower rate on the mortgage, and that Mr. Goodwin needed
Ms. Blumenfeld’s permission to run her consumer report. (Doc. 30-2 at 69; Doc.
30-1 at 98–99). Ms. Blumenfeld initially gave her permission, but immediately
changed her mind and said no. (Doc. 30-2 at 69; Doc. 30-1 at 99). Ms. Fryer told
her daughter, “Well, it’s too late. He has it.” (Doc. 30-2 at 69; Doc. 30-1 at 100).
According to Ms. Fryer, her conversation with Ms. Blumenfeld was “very, very
short.” (Doc. 30-2 at 73)
After Ms. Fryer and Ms. Blumenfeld finished their phone call, Ms. Fryer
returned to her conversation with Mr. Goodwin. (Doc. 30-2 at 69–70). She never
5
told him that Ms. Blumenfeld had not consented to him running her consumer
report. (Doc. 30-2 at 71). Mr. Goodwin went over Ms. Blumenfeld’s consumer
report with Ms. Fryer, pointing out several ways in which Ms. Blumenfeld could
improve her credit score. (Doc. 30-2 at 73–74). At the end of their meeting,
Mr. Goodwin gave Ms. Fryer a copy of Ms. Blumenfeld’s consumer report, which
she took home and shared with Ms. Blumenfeld. (Id. at 82, 84–85).
Ms. Blumenfeld testified that she has not experienced any issues with
identity theft as a result of Regions Bank accessing or sharing her consumer report,
and she is not aware of a decrease in her credit score. (Doc. 30-1 at 145–46). But
she testified that she was very angry, embarrassed, and stressed about the
disclosure of her consumer report to her mother. (Id. at 115).
II.
DISCUSSION
Regions Bank moves for summary judgment on all counts raised against it,
contending that (1) the FCRA claim fails because it had reason to believe it was
authorized to pull Ms. Blumenfeld’s consumer report; (2) the FCRA claim fails
because Ms. Blumenfeld has not presented any evidence of damages; (3) the
FCRA
preempts
all
of
Ms. Blumenfeld’s
state
law
claims;
and
(4) Ms. Blumenfeld’s state law claims fail as a matter of law. (Doc. 29).
In deciding a motion for summary judgment, the court must first determine
if the parties genuinely dispute any material facts, and if they do not, whether the
6
moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A
disputed fact is material if the fact “might affect the outcome of the suit under the
governing law,” and a dispute is genuine “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). By and large, the parties agree on the material
facts, although they disagree about a number of non-material facts. (See Doc. 31 at
5–15; Doc. 37 at 11–24; Doc. 40 at 2–5). Accordingly, the question before the
court is whether, based on the facts set out above, Regions Bank is entitled to
judgment as a matter of law.
1.
The Fair Credit Reporting Act (Count One)
Ms. Blumenfeld asserts that Regions Bank willfully violated the FCRA
twice: once by pulling her consumer report and once by sharing her consumer
report with her mother. (Doc. 12 at 13; Doc. 37 at 29–31). Regions Bank’s
arguments in support of its motion for summary judgment focus solely on whether
it violated the FCRA by pulling her consumer report; it does not address whether it
violated the FCRA by sharing Ms. Blumenfeld’s report with Ms. Fryer. (See Doc.
30 at 16–25). Accordingly, the court will address only whether summary judgment
is appropriate with respect to Ms. Blumenfeld’s claim that Regions Bank willfully
violated the FCRA by pulling her consumer report.
7
The FCRA regulates permissible uses of and access to consumer reports, and
creates a private right of action for willful violations of the Act. See 15 U.S.C.
§§ 1681b, 1681n, 1681o. A “willful” violation of the FCRA encompasses both
knowing and reckless violations. See Safeco Ins. Co of Am. v. Burr, 551 U.S. 47,
56–58 (2007); see also Levine v. World Fin. Network Nat’l Bank, 554 F.3d 1314,
1318 (11th Cir. 2009) (“To prove a willful violation [of the FCRA], a consumer
must prove that a consumer reporting agency either knowingly or recklessly
violated the requirements of the Act.”).
The FCRA uses a number of terms to refer to the parties involved in the
creation, use of, and access to consumer reports. A “consumer reporting agency”
is any party that, “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.” 15 U.S.C. § 1681a(f). Regions Bank
is not a consumer reporting agency; it is a “person” as defined by the FCRA. Id.
§ 1681a(b). The court will also use the term “user” to describe Regions Bank,
because the FCRA uses that term to describe a person requesting a consumer
report. See, e.g., id. § 1681b(f). And a “consumer” is an individual—in this case,
Ms. Blumenfeld. Id. § 1681a(c).
8
Section 1681b(f) of the FCRA sets forth the circumstances under which a
user may obtain a consumer report. It permits a user to obtain a consumer report
only for those purposes under which an agency is authorized to furnish the report.
15 U.S.C. § 1681b(f)(1). Regions Bank contends that subsection (f) incorporates
language from § 1681b(a) permitting an agency to furnish a report if it has “reason
to believe” the user intends to use that information in certain ways, so that if it can
prove that it had “reason to believe” it had a permissible purpose for pulling
Ms. Blumenfeld’s consumer report, it will prevail. (Doc. 31 at 16–18).
The court does not interpret subsection (f) to incorporate the “reason to
believe” language from subsection (a). A basic tenet of statutory interpretation is
that the court must “examin[e] the text of the statute to determine whether its
meaning is clear.” Harry v. Marchant, 291 F.3d 767, 770 (11th Cir. 2002) (en
banc). The court “must begin, and often should end as well, with the language of
the statute itself.” Id. (quotation marks omitted).
The plain text of subsection (a) permits consumer reporting agencies to
provide consumer reports if the agency “has reason to believe” that the person or
entity to whom the agency is providing the report intends to use the information in
certain ways: it states “any consumer reporting agency may furnish a consumer
report under the following circumstances and no other: . . . . To a person which it
has reason to believe [intends to use the information in specified ways].” 15
9
U.S.C. § 1681b(a)(3) (emphasis added). The “it” in that sentence unambiguously
refers to “any consumer reporting agency.”
Of course, subsection (f) provides that “[a] person shall not use or obtain a
consumer report for any purpose unless . . . the consumer report is obtained for a
purpose for which the consumer report is authorized to be furnished under this
section.” 15 U.S.C. § 1681b(f)(1). Under Regions Bank’s reading of the statute,
subsection (f) would allow a person to obtain a consumer report if that person “has
reason to believe . . . [the person] intends to use the information [in specified ways
or] otherwise has a legitimate business need for the information.” But that reading
would be nonsensical. A user always knows the purpose for which it intends to use
the information.
Even if the user forms its purpose based on erroneous
information—for example, in the case of an identity thief misrepresenting herself
as a consumer, thereby causing the user to request a report on the individual it
believes to be the consumer—the user knows the reason for its own request. See,
e.g., Bickley v. Dish Network, LLC, 751 F.3d 724, 731 (6th Cir. 2014) (holding
that, where an identity thief purporting to be a consumer requested a service from a
user, the user, in verifying the identity of the consumer, had a permissible purpose
to obtain the report).
Regions Bank bases its “reason to believe” argument not on the text of the
FCRA, but on a number of district court decisions that have read § 1681b(f) to
10
incorporate the “reason to believe” standard from § 1681b(a). See Korotki v. Att’y
Servs. Corp. Inc., 931 F. Supp. 1269, 1276 (D. Md. 1996) (“[S]o long as a user has
reason to believe that a permissible purpose exists, that user may obtain a
consumer report without violating the FCRA.”); see also Foote v. Cont’l Serv.
Grp., 2018 WL 3008880, at *2 (M.D. Fla. June 16, 2018) (citing Korotki); Davis v.
ConsumerInfo, 2014 WL 12589134, at *2 (S.D. Fla. Sept. 10, 2014) (citing
Korotki); Shepherd-Salgado v. Tyndall Fed. Credit Union, 2011 WL 5401993, at
*7 (S.D. Ala. Nov. 7, 2011) (citing Korotki); Carter v. MBNA Am. Bank, 2006 WL
8432582, at *2 (N.D. Ga. July 28, 2006) (citing Korotki).
This court does not find the Korotki decision persuasive. First, the Korotki
court issued that decision in 1996, under a previous version of the FTCA. The
version of § 1681b in effect at the time of the Korotki decision did not provide any
guidance for when a “person” could obtain a consumer report and addressed only
when a consumer reporting agency could furnish a report. See id. (1982); Korotki,
931 F. Supp. at 1275 (“Section 1681b appears to impose requirements only on
consumer reporting agencies.”). Unlike this court, the Korotki court could not
resort to the statutory language in subsection (f) because subsection (f) did not yet
exist.
The second reason this court finds Korotki inapposite is that it does not
actually hold that a user is shielded from liability as long as that user had “reason
11
to believe” it was authorized to obtain a consumer report. After determining that a
user could willfully violate the FCRA by obtaining a consumer report without a
permissible purpose, the Korotki court held that the users at issue in that case did
have a permissible purpose. Korotki, 931 F. Supp. at 1276 (“The only purpose
which the record reflects that defendants had was to obtain an alternate address at
which to serve [the plaintiff]. In this Court’s view, that purpose is permissible
under 15 U.S.C. § 1681b(3)(E) [having a legitimate business need for the
information]; accordingly, defendants did not violate the FCRA.”).
After reaching its holding that the defendants had not violated the FCRA
because they had a permissible purpose in obtaining the plaintiff’s report, the court
went on to discuss “the standard that a court should use to determine whether a
user has shown that he or she has a permissible purpose under § 1681b.” Id.
Relying on two other district court opinions, the Korotki court stated that “so long
as a user has reason to believe that a permissible purpose exists, that user may
obtain a consumer report without violating the FCRA.” Id. But the Korotki
court’s statement about that standard is dicta. See Edwards v. Prime, Inc., 602
F.3d 1276, 1298 (11th Cir. 2010) (“All statements that go beyond the facts of the
case . . . are dicta. And dicta is not binding on anyone for any purpose.”) (citations
omitted). The court did not need to find whether the users had “reason to believe”
they had a permissible purpose in obtaining the consumer report because the court
12
had already found that they actually had a permissible purpose for obtaining the
report.
The court concludes that § 1681b(f) does not incorporate the “reason to
believe” language from § 1681b(a). Accordingly, the court will deny Regions
Bank’s motion for summary judgment because it has not established that, based on
the facts taken in the light most favorable to Ms. Blumenfeld, it must prevail as a
matter of law. Section § 1681b(a) provides a lengthy list of authorized purposes,
but Regions Bank relies on only two as authorization for its action:
§ 1681b(a)(3)(A) and § 1681b(a)(3)(F). (See Doc. 31 at 16–17).
The first authorized purpose on which Regions Bank relies is contained in
§ 1681b(a)(3)(A), which permits a user to use or obtain a consumer report if it
“intends to use the information 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.”
That subsection is limited by § 1681b(c), which provides in relevant part that “a
consumer reporting agency may furnish a consumer report . . . in connection with
any credit or insurance transaction that is not initiated by the consumer only if . . .
the consumer authorizes the agency to provide such report to such person.”
15 U.S.C. § 1681b(c)(1)(A) (emphasis added). Because § 1681b(c)(1) provides
authorization for users to use or obtain consumer reports in connection with credit
13
transactions not initiated by the consumer, by implication, § 1681b(a)(3)(A) covers
situations in which the user may use or obtain a consumer report in connection
with a credit transaction that the consumer did initiate.
The second authorized purpose on which Regions Bank relies is contained in
§ 1681b(a)(3)(F), which permits a user to use or obtain a consumer report if it
“otherwise has a legitimate business need for the information . . . in connection
with a business transaction that is initiated by the consumer.”
Id.
§ 1681b(a)(3)(F)(i).
Both of the subsections that Regions Bank relies on involve transactions
initiated by the consumer. Regions Bank does not contend that Ms. Blumenfeld
actually initiated any transaction; instead, it contends that it had reason to believe
that she initiated a transaction. (Doc. 31 at 18). In support of that contention,
Regions Bank points to evidence showing that Ms. Blumenfeld and Ms. Fryer
jointly owned the home; Ms. Blumenfeld and Ms. Fryer shared a joint savings and
checking account at Regions Bank; Ms. Fryer requested assistance in lowering the
interest rate on the mortgage; Ms. Blumenfeld made all the monthly payments on
Ms. Fryer’s mortgage; Ms. Fryer called Ms. Blumenfeld to speak with her about
pulling her credit; and Ms. Fryer never told Mr. Goodwin that Ms. Blumenfeld had
not consented to Regions Bank pulling her consumer report. (Id. at 20–21; Doc. 40
at 7).
14
The court has already explained that it does not interpret § 1681b(f) to
incorporate the “reason to believe” language from § 1681b(a). And taking the
facts in the light most favorable to the Ms. Blumenfeld, a jury could find that
Mr. Goodwin knew that Ms. Blumenfeld had not initiated a transaction, yet he ran
her report anyway. Mr. Goodwin met with Ms. Fryer outside of Ms. Blumenfeld’s
presence. (See Doc. 30-2 at 61–70). He reviewed Ms. Fryer’s consumer report
and knew that she held the mortgage on Ms. Blumenfeld’s house. (See id. at 65–
66). He offered to see if the bank would finance the property in Ms. Blumenfeld’s
name.
(Id. at 67).
And although Ms. Fryer never told Mr. Goodwin that
Ms. Blumenfeld had not consented to the bank pulling her consumer report, she
also never told him that Ms. Blumenfeld had consented. (See id. at 69–71). From
those facts, a jury could find that Mr. Goodwin—and by extension, Regions
Bank—knew that Ms. Blumenfeld had not initiated a transaction providing a
permissive purpose for the bank to use or obtain her report.
To bolster its argument that it had reason to believe it was authorized to pull
Ms. Blumenfeld’s consumer report, Regions Bank points to two cases involving
identity thieves impersonating a consumer and causing a user to pull that
consumer’s report. See Bickley v. Dish Network, LLC, 751 F.3d 724 (6th Cir.
2014); Kruckow v. Merchants Bank, 2017 WL 3084391 (D. Minn. July 19, 2017)
15
(Kruckow I), vacated in part on reconsideration by 2017 WL 5990125 (D. Minn.
Dec. 1, 2017) (Kruckow II). Neither case is persuasive.
The Sixth Circuit’s Bickley case is inapposite because in that case, the user
believed that the consumer had initiated the transaction, when in fact an identity
thief presenting herself as the consumer had initiated the transaction. Bickley, 751
F.3d at 726, 732–33. The user pulled the consumer’s report to verify a consumer’s
identity. Id. at 726. The Sixth Circuit held that a user does not violate the FCRA
by accessing a consumer report to verify the consumer’s identity, even when the
person actually initiating the transaction is an identity thief. Id. at 732–33. The
Sixth Circuit pointed out that “[t]he requirement that a consumer ‘initiate’ a
business transaction is designed to protect a consumer’s privacy and credit-related
data by preventing companies from running credit checks that are unrequested by
the consumer.” Id. at 732. Running a consumer report to verify a consumer’s
identity is consonant with that purpose and does not violate the FCRA. Id.
By contrast, in this case, a jury could find that Regions Bank knew that the
consumer had not initiated a transaction.
Regions Bank did not pull
Ms. Blumenfeld’s consumer report to verify her identity; it knew that Ms. Fryer,
not Ms. Blumenfeld, had inquired about transferring the mortgage into
Ms. Blumenfeld’s name. Unlike the user in Bickley, Regions Bank’s conduct is
not “exactly the sort of thing the Fair Credit Act seeks to promote.” Id. at 733
16
(quotation marks omitted). Indeed, assuming a jury found the facts as set out
above, its conduct is the sort of thing the FCRA seeks to prevent.
Regions Bank also relies on the district court’s opinion in Kruckow. In that
case, the plaintiff’s husband told a bank’s loan officer that the plaintiff intended to
be jointly liable for two loans, and the bank pulled her consumer report. Kruckow
II, 2017 WL 5990125, at *1; Kruckow I, 2017 WL 3084391, at *1. The plaintiff
filed suit, asserting, among other claims, that the bank had violated the FCRA.
Kruckow I, 2017 WL 3084391, at *1. In the opinion on which Regions Bank
relies, the district court dismissed the FCRA claim because (1) the bank pulled the
consumer report during the life of another loan with the bank; and (2) the husband
misrepresented that the plaintiff was willing to be jointly liable on the new loans.
Id. at *1, 5–6; Kruckow II, 2017 WL 5990125, at *1. Based on those facts, the
court concluded that the bank believed it had a permissible purpose for pulling her
consumer report, insulating it from liability. Kruckow I, 2017 WL 3084391, at *6.
Regions Bank’s reliance on Kruckow I is misplaced, however, because after
Regions Bank filed its brief in support of summary judgment, the Kruckow district
court granted reconsideration and vacated the part of its decision dismissing the
FCRA claim. See Kruckow II, 2017 WL 5990125, at *2–3. The court explained
that, because the plaintiff and her husband did not already have a loan with that
bank and the bank “undertook no effort to confirm that Plaintiff intended to be
17
jointly liable for the loans,” the plaintiff had adequately pleaded that the bank
lacked a reasonable belief that it had a permissible purpose for pulling the
consumer report. Id. at *2–3. If anything, the Kruckow II decision supports
Ms. Blumenfeld’s opposition to summary judgment, because, taking the facts in
the light most favorable to her, a jury could find that Regions Bank knew that she
had not initiated a transaction when it pulled her consumer report.
Finally, Regions Bank contends that it is entitled to summary judgment on
Ms. Blumenfeld’s FCRA claim because she has not demonstrated that she suffered
any damages from either purported FCRA violation. (Doc. 31 at 24–25). This
argument fails because, although a plaintiff may recover only actual damages for a
negligent violation of the FCRA, a plaintiff may recover statutory and punitive
damages for a willful violation of the FCRA. See 15 U.S.C. § 1681n(a)(1)(A).
Because
the
court
will
deny
Regions
Bank
summary
judgment
on
Ms. Blumenfeld’s claim of a willful violation of the FCRA, Ms. Blumenfeld need
not present any evidence of actual damages for her claim to survive summary
judgment.
The court concludes that a jury could find that Regions Bank willfully
violated the FCRA. As a result, the court DENIES Regions Bank’s motion for
summary judgment as to Ms. Blumenfeld’s FCRA claim.
18
2.
The State Law Claims
In addition to her FCRA claim, Ms. Blumenfeld raises three state law claims
against Regions Bank arising from the same conduct. (Doc. 12 at 14–18, 20–21).
In Count Two, Ms. Blumenfeld raises a claim of invasion of privacy; in Count
Four, she raises a claim of wanton hiring, training, and supervision; and in Count
Six, she raises a claim of wanton and reckless conduct. (Id.).
Regions Bank contends that summary judgment is warranted as to all of
Ms. Blumenfeld’s state-law claims for several reasons. (Doc. 30 at 25–31). First,
it argues that under 15 U.S.C. § 1681h(e), the FCRA preempts Ms. Blumenfeld’s
state law claims. (Doc. 31 at 25–26). Next, it argues that even if her state law
claims are not preempted, they fail as a matter of law. (Id. at 26–31). The court
will address each argument in turn.
i.
Preemption
Section 1681h(e) of the FCRA provides:
Except as provided in sections 1681n [willful noncompliance] and
1681o [negligent noncompliance] of this title, no consumer may bring
any action or proceeding in the nature of defamation, invasion of
privacy, or negligence with respect to the reporting of information
against . . . any user of information . . . based on information disclosed
pursuant to section 1681g, 1681h, or 1681m of this title, or based on
information disclosed by a user of a consumer report to or for a
consumer against whom the user has taken adverse action, based in
whole or in part on the report except as to false information furnished
with malice or willful intent to injure such consumer.
15 U.S.C. § 1681h(e) (footnote omitted).
19
In other words, § 1681h(e) provides that the FRCA preempts certain state
law claims in three specific situations: when the state law claim is (1) “based on
information disclosed pursuant to section 1681g, 1681h, or 1681m”; (2) “based on
information disclosed by a user of a consumer report to . . . a consumer against
whom the user has taken adverse action”; or (3) “based on information disclosed
by a user of a consumer report . . . for a consumer against whom the user has taken
adverse action.”
Id.
The court concludes that the FCRA does not preempt
Ms. Blumenfeld’s state law claims in this case because this case does not implicate
any of those three situations.
First, none of the claims are based on information disclosed pursuant to 15
U.S.C. §§ 1681g, 1681h, or 1681m. Sections 1681g and 1681h govern disclosures
by consumer reporting agencies to consumers; in this case, a consumer reporting
agency disclosed information to a user, and then the user disclosed information to
a third party. Section 1681m governs the requirements for users of consumer
reports taking an “adverse action” against a consumer based on information
contained in the consumer report. Regions Bank does not contend that it took any
adverse action against Ms. Blumenfeld—nor could it.
The FCRA provides several definitions for an “adverse action,” see 15
U.S.C. § 1681a(k), two of which are relevant here. One of those definitions is “a
denial or revocation of credit, a change in the terms of an existing credit
20
arrangement, or a refusal to grant credit in substantially the amount or on
substantially
the
terms
requested.”
Id.
§ 1681a(k)(1),
cross-referencing
§ 1691a(d)(6). Ms. Blumenfeld did not have or apply for credit with Regions
Bank, so the bank could not have denied or revoked her credit, changed the terms
of a credit arrangement, or refused to grant her credit on the terms requested.
The second definition of an “adverse action” is “an action taken or
determination that is . . . made in connection with an application that was made by,
or a transaction that was initiated by, any consumer, or in connection with a review
of an account under section 1681b(a)(3)(F)(ii) [governing disclosure to review an
existing account] of this title; and . . . adverse to the interests of the consumer.” 15
U.S.C. §§ 1681a(k)(1), 1691(d)(6). As discussed above, the evidence taken in the
light most favorable to Ms. Blumenfeld shows that she did not make any
application or initiate any transaction, nor did she have an account for Regions
Bank to review. Accordingly, Regions Bank could not have taken any adverse
action, as the term is defined by the FCRA, against her.
The FCRA also preempts certain state law claims are when those claims are
based on information disclosed by a user “to or for a consumer against whom the
user has taken adverse action.”
15 U.S.C. § 1681h(e).
As discussed above,
Regions Bank has not shown that it took any adverse action against
Ms. Blumenfeld, and as a result, the FCRA does not preempt her state law claims.
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ii.
Invasion of Privacy (Count Two)
In Count Two, Ms. Blumenfeld alleges that Regions Bank invaded her
privacy by pulling her consumer report and sharing it with her mother. (Doc. 12 at
14–16). Although Alabama law sets out several types of invasion of privacy
claims, Ms. Blumenfeld contends that Regions Bank committed only one type:
wrongful-intrusion invasion of privacy. (Doc. 37 at 32–33).
In a wrongful-intrusion invasion of privacy claim, the plaintiff must
demonstrate that the defendant intruded into the plaintiff’s “private activities in
such manner so as to outrage or to cause mental suffering, shame or humiliation to
a person of ordinary sensibilities.” Hogin v. Cottingham, 533 So. 2d 525, 530
(Ala. 1988) (quotation marks omitted). The Alabama Supreme Court has stated in
dicta that “[i]It is clear that a wrongful intrusion may be by some investigation into
the plaintiff’s private concerns, such as examining a private bank account.”
Johnson v. Stewart, 854 So. 2d 544, 550 (Ala. 2002) (quotation marks and
alterations omitted).
Regions Bank argues that summary judgment is warranted on this claim
because pulling a consumer report is not egregious enough to cause outrage or
mental suffering, shame, or humiliation. (Doc. 31 at 27–29). Ms. Blumenfeld
responds that sharing any private financial information constitutes an invasion of
privacy. (Doc. 37 at 31–33).
22
The court will grant summary judgment in favor of Regions Bank as to
Ms. Blumenfeld’s invasion of privacy claim. Although pulling the report and
sharing it with her mother may amount to an “intrusion” under the wrongfulintrusion type of invasion of privacy claim, Ms. Blumenfeld has presented no
evidence to create a genuine dispute of material fact about whether that intrusion
would cause an ordinary person to feel outrage or mental suffering, shame, or
humiliation. See Hogin, 533 So. 2d at 530; Johnson, 854 So. 2d at 550.
Ms. Blumenfeld contends that “any unauthorized disclosure” of her
consumer report constitutes an invasion of privacy under Horne v. Patton, 291 Ala.
701 (Ala. 1973). (Doc. 37 at 32–33). In Horne, the Alabama Supreme Court held
that a plaintiff may state an invasion of privacy claim based on a doctor’s
unauthorized disclosure of confidential medical information to the plaintiff’s
employer. Id. at 704–05, 709–10. The court, however, finds the Horne case
distinguishable. The disclosure of private medical information to an employer may
cause an ordinary person to experience outrage or mental suffering that the same
ordinary person would not experience based on the disclosure of private financial
information to a parent. The court GRANTS Regions Bank’s motion for summary
judgment in its favor on Count Two.
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iii. Wanton Hiring, Training, and Supervision of Incompetent
Employees and/or Agents (Count Four)
In Count Four, Ms. Blumenfeld alleges that Regions Bank allows,
encourages, and even trains its employees to violate the FCRA. (Doc. 12 at 17–
18). Regions Bank contends that it is entitled to summary judgment on Count Four
because Ms. Blumenfeld failed to present evidence that its employee,
Mr. Goodwin, committed a state law tort or that Regions Bank was aware of his
purported incompetence. (Doc. 31 at 29–30). Ms. Blumenfeld responds that the
jury must decide whether Regions Bank acted wantonly because Regions Bank
committed a “gross violation of the law” by pulling her consumer report and
sharing it with her mother. (Doc. 37 at 33).
The Alabama Supreme Court has explained that, in the context of a wanton
training and/or supervision claim, wantonness is “the conscious doing of some act
or the omission of some duty, while knowing of the existing conditions and being
conscious that, from doing or omitting to do an act, injury will likely or probably
result.” Pritchett v. ICN Med. Alliance, Inc., 938 So. 2d 933, 941 (Ala. 2006)
(quotation marks omitted). For example, to prove a claim of wanton supervision,
the plaintiff may establish that the employer “wantonly disregarded its agent’s
incompetence.” Armstrong Bus. Servs., Inc. v. AmSouth Bank, 817 So. 2d 665, 682
(Ala. 2001). A plaintiff may demonstrate such wanton disregard by establishing
that the employer knew of the employee’s incompetence or that the employer
24
would have learned of the employee’s incompetence if it had “exercised due and
proper diligence.” Id. (quotation marks omitted). The Alabama Supreme Court
has stated: “[I]t is proper, when repeated acts of carelessness and incompetency of
a certain character are shown on the part of the [employee,] to leave it to the jury
whether [those acts] would have come to [the employer’s] knowledge, had [it]
exercised ordinary care.” Id. (quotation marks omitted).
The court will grant Regions Bank’s motion for summary judgment on this
claim.
Even assuming that Mr. Goodwin acted incompetently or in “gross
violation of the law” by pulling Ms. Blumenfeld’s consumer report and giving it to
her mother, Ms. Blumenfeld has not pointed to any evidence creating a genuine
dispute of fact about whether Regions Bank was aware of that incompetence and
wantonly disregarded it. To make that showing, she needed to present evidence
that she “informed [Regions Bank] about specific misdeeds of the employee, or
that the employee’s misdeeds were of such nature, character, and frequency that
[Regions Bank], in the exercise of due care, must have had them brought to [its]
notice.”
Armgstrong Bus. Servs., Inc., 817 So. 2d at 683 (quotation marks
omitted).
She has presented no evidence of any “misdeeds” aside from the
purported violations of the FTCA related to her own consumer report. As a result,
the court GRANTS Regions Bank’s motion for summary judgment in its favor on
Count Four.
25
iv.
Wanton and Reckless Conduct (Count Six)
In Count Six, Ms. Blumenfeld alleges that Regions Bank engaged in wanton
and reckless conduct by pulling her consumer report and giving it to her mother.
(Doc. 12 at 20). Regions Bank contends that it is entitled to summary judgment on
Count Six because Ms. Blumenfeld failed to present evidence showing that
Regions Bank owed her a duty or, alternatively, because Regions Bank did not
violate the FCRA. (Doc. 31 at 31).
The Alabama Supreme Court has held that a defendant acted wantonly if
“with reckless indifference to the consequences the party consciously and
intentionally did some wrongful act or omitted some known duty, and . . . this act
or omission produced the injury.” Brown v. Turner, 497 So. 2d 1119, 1120 (Ala.
1986). Regions Bank contends that because Ms. Blumenfeld has not presented
evidence showing that it owed her a duty, her wantonness claim fails as a matter of
law. But under Brown, the plaintiff must prove that the defendant “did some
wrongful act or omitted some known duty.” Id. On the alternative prong of
committing “some wrongful act,” Regions Bank rests entirely on its argument that
it did not violate the FCRA because it had reason to believe “the credit report was
to be used in connection with a mortgage refinance transaction,” without
addressing whether, standing alone, a willful violation of the FCRA could rise to
the level of a wantonness claim under Alabama law. (Doc. 31 at 31). The court
26
has already determined that Ms. Blumenfeld created a jury question as to whether
Regions Bank committed willful violations of the FCRA, and will not raise, on its
own motion, whether a willful violation of the FCRA alone is sufficient to support
a wantonness claim. Accordingly, the court DENIES Regions Bank’s motion for
summary judgment on Count Six.
III.
CONCLUSION
The court GRANTS IN PART AND DENIES IN PART Regions Bank’s
motion for summary judgment.
The court DENIES the motion for summary
judgment on Count One. The court GRANTS the motion for summary judgment
on Count Two, and ENTERS JUDGMENT in favor of Regions Bank and against
Ms. Blumenfeld on that count. The court GRANTS the motion for summary
judgment on Count Four, and ENTERS JUDGMENT in favor of Regions Bank
and against Ms. Blumenfeld on that count. The court DENIES the motion for
summary judgment on Count Six.
Counts One and Six will proceed to trial.
DONE and ORDERED this September 5, 2018.
_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE
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