HOWLEY et al v. EXPERIAN INFORMATION SOLUTIONS, INC.
Filing
51
OPINION. Signed by Judge Noel L. Hillman on 9/27/2011. (TH, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
FRANCIS HOWLEY and
CANDICE HOWLEY,
Plaintiffs,
v.
EXPERIAN INFORMATION
SOLUTIONS, INC.
Defendant.
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Civil A. No. 09-241(NLH)(JS)
OPINION
APPEARANCES:
GREGORY JOSEPH GORSKI, ESQ.
JOHN SOUMILAS, ESQ.
FRANCIS & MAILMAN, P.C.
LAND TITLE BUILDING, 19TH FLOOR
100 SOUTH BROAD STREET
PHILADELPHIA, PA 19110
On behalf of plaintiffs
DOROTHY A. KOWAL
PRICE, MEESE, SHULMAN & D'ARMINIO, PC
MACK-CALI CORPORATE CENTER
50 TICE BOULEVARD
WOODCLIFF LAKE, NJ 07677
and
MICHAEL G. MORGAN, ESQ.
JONES DAY
555 SOUTH FLOWER STREET, 50TH FLOOR
LOS ANGELES, CA 90071
Admitted pro hac vice
and
GEORGE E. SPENCER, ESQ.
JONES DAY
222 E 41ST STREET
NEW YORK, NY 10017
Admitted pro hac vice
On behalf of defendant
HILLMAN, District Judge
Before the Court is defendant’s motion for summary judgment
on plaintiffs’ consumer protection claims for alleged violations
of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, et
seq.
Specifically, plaintiffs have alleged violations of
Sections 1681b(a), 1681e(a), 1681e(b), and 1681h(a) of the FCRA.1
In conjunction with their motion for summary judgment, defendant
has also filed a motion to exclude purported hearsay statements
by Francis Firlein, and to exclude a portion of plaintiffs’
expert opinion.
For the reasons expressed below, defendant’s
motion to exclude will be granted in part and denied in part
without prejudice, and its summary judgment motion will be
denied.
I.
BACKGROUND
In 2001, plaintiff Francis Howley’s personal identifying and
credit information became “mixed” with personal identifying and
credit information of an individual named Francis Firlein.
Apparently, the retail store Sears reported a credit card account
that belonged to Mr. Firlein under Mr. Howley’s social security
number.
Mr. Firlein and Mr. Howley have almost identical social
security numbers, except for the last number.
Since the credit
card was submitted under Mr. Howley’s social security number and
1
Plaintiffs have withdrawn their state law claims and their
claim for violation of section 1681g(a) of the FCRA.
2
Mr. Howley and Mr. Firlein share the same first name, i.e.,
Francis, their Experian credit files became “mixed.”
Experian
follows a rule that if the first name and social security number
match, then new credit information can be added.
Experian
follows this rule based on the reasoning that when women marry,
their first name and social security number typically do not
change, but their last name and address do change.
In May 2003, plaintiff2 obtained a copy of his Experian file,
noticed the discrepancy, and disputed the credit information
belonging to Mr. Firlein that appeared on his report.
Mr.
Firlein’s mailing address, credit accounts, and other personal
identifying information had also appeared on Mr. Howley’s
Experian credit report.
On May 13, 2003, Experian removed the
“trade lines” (reported information by credit grantors usually
containing the account number, payment status, balance
information, as well as account holder name, address, date of
birth and social security number) that belonged to Mr. Firlein
from Mr. Howley’s file, and added a “do not combine” mechanism to
block the addition of any trade lines pertaining to Mr. Firlein
onto plaintiff’s file.
Several years later, on or about January 23, 2007,
plaintiffs received a telephone call from Tom Subranni, Esq.,
2
When used singularly, “plaintiff” refers to Francis
Howley.
3
advising them that he had been contacted by Mr. Firlein.
Plaintiffs recognized Mr. Firlein’s name as the name on
plaintiff’s credit report generated by Experian.
Mr. Subranni
advised plaintiffs that Mr. Firlein believed that plaintiff
Francis Howley was Mr. Firlein’s long lost twin brother and was
interested in making contact with him.
Plaintiffs obtained Mr. Firlein’s telephone number from Mr.
Subranni and contacted Mr. Firlein to determine Mr. Firlein’s
intentions.
During their telephone conversation with Mr.
Firlein, plaintiffs state that they learned that plaintiff
Francis Howley’s personal and private information including
plaintiff’s personal contact information appeared on Francis
Firlein’s credit report.
Mr. Firlein later contacted plaintiffs and told them that he
and his fiancé had been outside plaintiffs’ home on two
occasions.3
On February 12, 2007, plaintiffs received another
call from Mr. Firlein who said he was in the vicinity and wanted
to visit.
Plaintiffs told Mr. Firlein not to visit and filed an
incident police report for harassment with the Galloway Township
Police Department.
After reporting Mr. Firlein’s conduct to the Galloway
3
Plaintiff Candice Howley testified she recalled a man
knocking on her door in the middle of the night, but did not
permit him to enter the house. She testified she believed that
it was Mr. Firlein.
4
police, plaintiffs received a letter from Mr. Firlein who
continued to claim that Mr. Howley was his long lost twin
brother and reiterating his intent to reunite with him.
Plaintiffs subsequently contacted the local police in Thurman,
Ohio, where Mr. Firlein resided, to report Mr. Firlein’s conduct.
Plaintiffs state that Mr. Firlein had been convicted of running a
drug lab and for drunken violent behavior, and had “mental
impairments.”
In or around April 2008, plaintiffs became aware that Mr.
Firlein had been committing identity theft using plaintiff
Francis Howley’s identifying information which plaintiffs allege
was included on Francis Firlein’s credit report produced by
Experian to Mr. Firlein.
Plaintiffs allege that as a result of
the “mixing” of Mr. Howley’s and Mr. Firlien’s credit files,
plaintiffs have received calls and notices from creditors and
debt collectors alleging that Mr. Howley owes significant sums of
money to entities with whom plaintiffs have had no business, and
that they have been forced to expend substantial sums of money to
pay for a credit monitoring service in an attempt to resolve the
credit difficulties created by the mixing of the credit files.
II.
JURISDICTION
This Court has federal question jurisdiction over
plaintiffs’ FCRA claims pursuant to 28 U.S.C. § 1331.
5
III. DISCUSSION
A.
Summary Judgment Standard
Summary judgment is appropriate where the Court is satisfied
that “the pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.”
Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ.
P. 56(c).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
A fact is “material” if, under the governing
substantive law, a dispute about the fact might affect the
outcome of the suit.
Id.
In considering a motion for summary
judgment, a district court may not make credibility
determinations or engage in any weighing of the evidence;
instead, the non-moving party’s evidence “is to be believed and
all justifiable inferences are to be drawn in his favor.”
Marino
v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir.
2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of demonstrating
the absence of a genuine issue of material fact.
U.S. at 323.
Celotex, 477
Once the moving party has met this burden, the
6
nonmoving party must identify, by affidavits or otherwise,
specific facts showing that there is a genuine issue for trial.
Id.
Thus, to withstand a properly supported motion for summary
judgment, the nonmoving party must identify specific facts and
affirmative evidence that contradict those offered by the moving
party.
Anderson, 477 U.S. at 256-57.
A party opposing summary
judgment must do more than just rest upon mere allegations,
general denials, or vague statements.
Saldana v. Kmart Corp.,
260 F.3d 228, 232 (3d Cir. 2001).
B.
The Fair Credit Reporting Act
The stated purpose of the Fair Credit Reporting Act (FCRA)
is “... to require that consumer reporting agencies 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 subchapter.”
15 U.S.C.A. § 1681(b).
“The
... FCRA ... was crafted to protect consumers from the
transmission of inaccurate information about them, and to
establish credit reporting practices that utilize accurate,
relevant, and current information in a confidential and
responsible manner.”
Cortez v. Trans Union, LLC, 617 F.3d 688,
706 (3d Cir. 2010)(citing Guimond v. Trans Union Credit Info.
7
Co., 45 F.3d 1329, 1333 (9th Cir. 1995) (citations omitted)).
In passing the FCRA, Congress “... hoped to address a number
of related problems, including the inability at times of the
consumer to know he is being damaged by an adverse credit report,
the lack of access to the information in [his] file, the
difficulty in correcting inaccurate information, and getting
[his] version of a legitimate dispute recorded in ... [his]
credit file.”
Id. (citing S.Rep. No. 91-517, at 3
(1969)(internal citations omitted)).
The Third Circuit has
acknowledged that “‘[t]hese consumer oriented objectives support
a liberal construction of the FCRA,’ and any interpretation of
this remedial statute must reflect those objectives.” Id.
There is no dispute between the parties that plaintiffs are
“consumers” and defendant is a “consumer reporting agency” as
those terms are defined under the FCRA.
See 15 U.S.C.A. § 1681a.
There is also no dispute that the FCRA applies to plaintiff
Francis Howley’s credit file maintained by Experian which is the
subject of this litigation.
Plaintiffs have alleged violations of sections 1681b(a),
1681e(a), 1681e(b), and 1681h(a) of the FCRA.
Section 1681b(a)
sets forth the conditions under which specific individuals and
entities may receive a consumer report.
1681b(a).
See 15 U.S.C.A. §
Section 1681e(a) requires that a consumer reporting
agency maintain “reasonable procedures” designed to avoid
8
violations of the FCRA and that it “... shall make a reasonable
effort to verify the identity of a new prospective user and the
uses certified by such prospective user prior to furnishing such
user a consumer report” and that it may
not “...furnish a
consumer report to any person if it has reasonable grounds for
believing that the consumer report will not be used for a purpose
listed in section 1681b of this title.”
15 U.S.C.A. § 1681e(a).
Section 1681e(b) provides that “[w]henever a consumer
reporting agency prepares a consumer report4 it shall follow
reasonable procedures to assure maximum possible accuracy of the
information concerning the individual about whom the report
relates.”
15 U.S.C.A. § 1681e(b).
Finally, section 1681h(a)
requires that a “consumer reporting agency shall require, as a
condition of making the disclosures required under section 1681g
of this title, that the consumer furnish proper identification.”
15 U.S.C.A. § 1681h(a).
4
The FCRA defines a “consumer report,” in relevant part,
as:
any written, oral, or other communication of any
information by a consumer reporting agency bearing on a
consumer’s credit worthiness, credit standing, credit
capacity, character, general reputation, personal
characteristics, or mode of living which is used or
expected to be used or collected in whole or in part
for the purpose of serving as a factor in establishing
the consumer’s eligibility for-(A) credit or insurance
to be used primarily for personal, family, or household
purposes;
15 U.S.C.A. § 1681a(d)(1).
9
1.
Statute of Limitations
The FCRA contains a statute of limitations for bringing
claims which states:
An action to enforce any liability created
under this subchapter may be brought in any
appropriate United States district court,
without regard to the amount in controversy,
or in any other court of competent
jurisdiction, not later than the earlier of
(1) 2 years after the date of discovery
by the plaintiff of the violation that
is the basis for such liability; or
(2) 5 years after the date on which the
violation that is the basis for such
liability occurs.
15 U.S.C.A. § 1681p.
Defendant states that plaintiffs’ claims are based on an
alleged FCRA violation that occurred in May 13, 2003 when
plaintiff Francis Howley’s personal credit information became
“mixed” with Francis Firlein’s personal credit information.
Defendants argue that plaintiffs’ FCRA claim is barred by the
statute of limitations because they did not file their action
within five years of the alleged violation.
Defendants state
that plaintiffs were required to file their FCRA action no later
than May 13, 2008, and that the filing of their complaint on
January 16, 2009, was beyond the five year statute of
limitations.
Plaintiffs respond that Experian violated the FCRA in 2007,
2008 and 2009 when it provided plaintiff’s personal information
10
to Mr. Firlein and sold plaintiff’s information to creditors as
part of Mr. Firlein’s credit report.
Specifically, plaintiffs
attach a September 20, 2008 credit report they claim Experian
sent to Mr. Firlein which contains plaintiff’s social security
number.
They also attach a May 5, 2009 “Administrative Report”
prepared for Mr. Firlein that includes plaintiff’s social
security number, name, and New Jersey home address which they
allege was sold to nine different creditors from 2007 to 2009.
Plaintiffs argue that although Experian may have placed a “do not
combine” flag on plaintiff’s file, thus stopping Mr. Firlein’s
information from appearing on plaintiff’s file, Experian did not
place a “do not combine” flag on Mr. Firlein’s file.
Plaintiffs
argue that it was not until July 16, 2010, when Experian used a
“soft delete” process to disassociate plaintiff’s social security
number from Mr. Firlein’s credit records that the “mixed file”
problem was finally resolved.
According to plaintiffs, Experian
has committed ongoing violations of the FCRA, and the statute of
limitations bars a claim two years after the last violation so
that the statute of limitations does not run until July 16, 2012,
two years after the defendant finally fixed the mixed file
problem.
In response to plaintiffs, defendant argues that after May
13, 2003, plaintiff’s information was never mixed into Mr.
Firlein’s file by Experian.
The supplemental affidavit of
11
Kathleen Centanni, Compliance Manager for Experian, states that
in July 2007 creditors began to report trade lines with Francis
Firlein’s name attached to plaintiff’s address and social
security number as a result of Mr. Firlein’s fraudulent credit
activity and not due to any mixing of the files by Experian.
Experian admits that they sent two documents to Mr. Firlein, a
January 22, 2007 file disclosure which they state contained no
information relating to plaintiff, and a September 20, 2008
disclosure which apparently did contain plaintiff’s identifying
information.
Defendant argues, however, Mr. Firlein had
fraudulently obtained that information elsewhere and had
committed identity theft.
There is a genuine dispute of material fact concerning
whether Mr. Firlein obtained plaintiff’s identifying information
from Experian or from other sources, and when he obtained the
information.
Plaintiffs have provided sufficient evidence that
an Experian credit report prepared for Mr. Firlein contained
plaintiff’s credit information and the report was provided to
creditors and available to Mr. Firlein within the two years prior
to filing their complaint.
See Lawrence v. Trans Union LLC, 296
F.Supp.2d 582, 587 (E.D.Pa. 2003) (“Liability arises under §
1681e(b) when the consumer reporting agency issues an inaccurate
consumer report” ... and “Each transmission of the same credit
report is a separate and distinct tort to which a separate
12
statute of limitations applies.” )(citing Jaramillo v. Experian
Info. Solutions. Inc., 155 F.Supp.2d 356, 359-60 (E.D.Pa. 2001)).
Drawing all justifiable inferences in favor of plaintiffs,
defendant has not met its burden of showing an absence of a
genuine dispute of material fact regarding the timing of the
alleged FCRA violations and, therefore, defendant’s motion for
summary judgment based on the statute of limitations is denied.
The Court notes, however, that plaintiffs’ claims of FCRA
violations that were discovered prior to January 16, 2007, two
years before plaintiffs filed their complaint, are time-barred.
See Philbin v. Trans Union Corp., 101 F.3d 957, 968 n.7 (3d Cir.
1996).
However, although certain claims may be time-barred,
plaintiffs may use evidence concerning the time-barred claims to
satisfy their burden of proof on their timely claims.
2.
Id.
Causation
Plaintiffs allege that defendant negligently and willfully
violated the FCRA.
Defendants argue that plaintiffs have no
evidence that Experian caused their alleged damages and,
therefore, cannot prove a negligent violation of the FCRA.
The Third Circuit has ruled that a “FCRA plaintiff [must]
produce evidence from which a reasonable trier of fact could
infer that the inaccurate entry was a substantial factor that
brought about the [injury].”
Philbin, 101 F.3d at 969 (citing
Restatement (Second) of Torts § 431(a)).
13
Plaintiffs list their
evidence of causation as: the mixed credit reports of Mr. Howley
and Mr. Firlein which permitted each person to have the other’s
identifying information; Experian’s failure to use its “do not
combine” and “soft delete” procedures to block Firlein’s report
from being able to post or display information about Mr. Howley
until 2010; Mr. Firlein’s possession of Mr. Howley’s full social
security number; the Experian report containing Mr. Howley’s full
social security number as a “variation” on Mr. Firlein’s credit
report; and the 2009 “Admin Reports” for Mr. Howley and Mr.
Firlein in which each showed identifying information of the other
and sales of the reports by Experian to third parties.
Plaintiffs also rely on the Galloway Township Police Department
report which contains plaintiffs’ harassment complaint concerning
Mr. Firlein after Mr. Firlein obtained Mr. Howley’s identifying
information.
Defendants argue that plaintiffs cannot prove that it was
Experian who provided Mr. Howley’s credit information to Mr.
Firlein prior to January 2007.
Defendants state that not only is
Mr. Firlein’s statement that he had seen Mr. Howley’s information
on his “credit report” insufficient to identify that it was an
Experian credit report, but that Mr. Firlein’s statements should
be excluded as inadmissible hearsay.
Defendant also seeks to
exclude the opinion of plaintiff’s expert, Mr. Hendricks, who
opined that Mr. Firlein obtained Mr. Howley’s identifying
14
information from Experian.
Although defendant filed a separate
motion to exclude the statements of Mr. Firlein and Mr.
Hendricks, since the admissibility of the statements pertain
directly to evidence relied upon for summary judgment, the Court
will address them in conjunction with the summary judgment
motion.
a.
Hearsay Statements of Mr. Firlein
1.
Availability of Declarant at Trial
Plaintiffs state that in January 2007 Mr. Firlein told them
that he obtained Mr. Howley’s credit information from a “credit
report.”
They also submit a copy of a letter presumably written
by Mr. Firlein to plaintiffs which indicates that Mr. Firlein
knew plaintiff’s address, social security number, and birth
date.5
This telephone conversation and letter are unverified
out-of-court statements and, therefore, hearsay.
Fed.R.Civ.P. 802.
See
Inadmissible hearsay may not be considered for
purposes of summary judgment.
Smith v. City of Allentown, 589
F.3d 684, 693 (3d Cir. 2009).
If, however, plaintiffs can
produce Mr. Firlein at trial to testify about the credit report
he received, then the statement can be considered on summary
judgment.
Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware
Co., Inc., 998 F.2d 1224, 1235 n. 9 (3d Cir. 1993) (finding that
5
Although Mr. Firlein states that he and Mr. Howley have
the same birth date, other records indicate a different birth
date for Mr. Howley.
15
even though statement was hearsay, “... in this circuit it can be
considered on a motion for summary judgment because it is capable
of being admissible at trial.”); J.F. Feeser, Inc. v.
Serv-A-Portion, Inc., 909 F.2d 1524, (3d Cir. 1990) (concluding
that “... hearsay evidence produced in an affidavit opposing
summary judgment may be considered if the out-of-court declarant
could later present the evidence through direct testimony, i.e.,
in a form that ‘would be admissible at trial.’”)(citing Williams
v. Borough of West Chester, 891 F.2d 458, 465-66 n. 12 (3d Cir.
1989)).
Plaintiffs maintain that Mr. Firlein can be called as a
witness at trial and asked how he obtained plaintiff’s social
security number and birth date, and whether or not he was able to
obtain credit using that information.
Defendant states that
plaintiffs did not list Mr. Firlein as a potential witness in
their Rule 26 disclosures, that defendant was unable to contact
him during discovery, and that it is possible that he is beyond
the subpoena power of the Court.
Since the plaintiffs wish to rely on the hearsay statements,
it is their burden to show that Mr. Firlein would be available
for trial.
Davis v. Mountaire Farms, Inc., 598 F.Supp.2d 582,
591 (D.Del. 2009) (“the party seeking admission of evidence ...
has the burden to establish its admissibility”); accord David by
Berkeley v. Pueblo Supermarket of St. Thomas, 740 F.2d 230, 235
16
(3d Cir. 1984) (“the burden of establishing the facts which
qualify a statement as an excited utterance rests with the
proponent of the evidence.”).
Plaintiffs simply state that “if
Mr. Firlein is found,” then he would be able to testify.
Plaintiffs have offered no evidence, however, that Mr. Firlein is
available to testify at trial, or even stated that they intend to
call him as a witness at trial.
It is also noteworthy that
plaintiffs also seek to introduce Mr. Firlein’s hearsay
statements under Fed.R.Evid. 804, which rule presumes that the
declarant is unavailable.
Although the law permits hearsay
statements to be considered if the witness could later testify,
it would seem that the law requires more than just a remote
possibility, and plaintiffs would need to show that some
likelihood exists that he will appear at trial and testify, or at
least indicate that they intend to call him as a witness,
particularly, here, where defendant has provided facts indicating
that Mr. Firlein is not available to testify.
Thus, Mr.
Firlein’s statements are hearsay and plaintiffs have not provided
any proof that he is capable of testifying at trial.
2.
Exceptions to Hearsay
Plaintiffs argue that if Mr. Firlein is not available that
Mrs. Howley’s notes memorializing her telephone conversation with
Mr. Firlein, as well as Mr. Firlein’s letter to the plaintiffs
come under an exception to the hearsay rule.
17
a).
Fed.R.Evid. 804(b)(3)
Rule 804(b)(3) states:
(b) Hearsay exceptions. The following are not excluded
by the hearsay rule if the declarant is unavailable as
a witness:
(3) Statement against interest.--A statement that:
(A) a reasonable person in the declarant’s
position would have made only if the person
believed it to be true because, when made, it was
so contrary to the declarant’s proprietary or
pecuniary interest or had so great a tendency to
invalidate the declarant’s claim against someone
else or to expose the declarant to civil or
criminal liability; and
(B) is supported by corroborating circumstances
that clearly indicate its trustworthiness, if it
is offered in a criminal case as one that tends to
expose the declarant to criminal liability.
An “essential predicate” for a statement against interest is
that it “be objectively contrary to the declarant’s interest.”
United States v. Ashfield, 735 F.2d 101, 110 (3d Cir. 1984).
Courts have generally found that the statement must be clearly
against his interest and not made for any self-serving reason.
See PECO Energy Co. v. Boden, 64 F.3d 852, (3d Cir. 1995)
(finding that hearsay statement was admissible under Rule
804(b)(3) where declarant said he was told to steal by his
employer since it subjected him to possible criminal and civil
liability); Hayes v. City of Philadelphia, No. 04-554, 2005 WL
3054550, at *3 (E.D.Pa. Nov. 15, 2005) (noting that statement by
declarant that she had accused plaintiff of a crime and testified
plaintiff committed the crime, even though she knew plaintiff was
18
innocent was arguably admissible under Rule 804(b)(3)); Cf.
Ebenhoech v. Koppers Industries, Inc., 239 F.Supp.2d 455, 464
(D.N.J. 2002) (finding that statements during an investigation
could “have been serving as a conduit for defenses” and noting
that a statement made after investigation had begun is likely not
against interest, but strategically made).
Plaintiffs argue that when Mr. Firlein made the statements
to Mrs. Howley in January 2007, he had already committed identity
theft, although that fact was not yet known to the plaintiffs.
Plaintiffs refer to an August 21, 2008 Experian Transaction Log
showing that an account opened on October 1, 2002, should be
“DELETED [due to] FRAUD.”
Plaintiffs also refer to an April 3,
2008 Trans Union report listing fraudulent accounts marked as
“not Howleys” that were opened before January 2007.
Plaintiffs
argue that by admitting that he had Mr. Howley’s identifying
information he was exposing himself to criminal and civil
penalties for identity theft.
Plaintiffs also argue that Mr.
Firlein’s statements were harassing and, therefore, also against
his interest as they could expose him to criminal or civil
liability.
Defendants respond that the August 21, 2008 Transaction Log
sent to Experian by Trans Union and the April 3, 2008 Trans Union
report are not evidence of identity theft, but rather, evidence
that Trans Union’s file was fully mixed in 2008 as a result of
19
Mr. Firlein’s identify theft in 2007.
Based on the record before the Court, we can not conclude
that Mr. Firlein’s statements were so clearly contrary to his
interests as to justify application of the hearsay exception.
Putting aside the uncertainty as to when exactly Mr. Firlein
began using Mr. Howley’s identifying information, it is not
objectively clear that the statements are against his interests.
While it is true that it could be considered a link in
establishing Mr. Firlein’s access to Mr. Howley’s information, it
is far from a confession of liability.
On the contrary, the
statement could have been made to offer the defense that he
possessed the information innocently, not by theft but through
the negligent conduct of the defendant.
It could have been a
fishing expedition to determine whether plaintiffs were aware of
the mixed files.
Or it could have been an attempt to establish
the defense that he believed, rightly or wrongly, that plaintiff
was his long lost brother.
Given Plaintiffs’ own mistrust of Mr.
Firlein, it seems more likely that Mr. Firlein was attempting to
lull the Howleys rather than confess to them.
Statements made to
establish a defense do not qualify for the exception.
This ambiguity concerning Mr. Firlein’s intentions also
undermines the claim that the letter falls within the exception.
If Mr. Firlein was in fact earnest in his interest in
reconnecting with what he believed to be his long lost twin
20
brother, a fact we can not determine either way, it would not
appear that his statements were objectively harassing.
In any
event, the purpose of the rule is to allow statements that are
inherently reliable because of the content of the statement and
the circumstances under which it was made.
The exception does
not apply simply because the statements themselves (as opposed to
their content) may be criminal conduct.
just as harassing as a true statement.
A false statement may be
Thus, neither the
statements made by Mr. Firlein to Mrs. Howley or the written
correspondence are admissible under Rule 804(b)(3) as an
exception to the rule against hearsay.
b).
Fed.R.Evid. 803(1) and 803(5)
Although plaintiffs state that Mrs. Howley’s notes regarding
her conversation with Mr. Firlein, and Mr. Firlein’s letter are
admissible under Fed.R.Evid. 803(1) and 803(5), plaintiff does
not explain how either the notes or letter fit under either
exception.
Federal Rule of Evidence 803(1) (present sense impression)
provides that hearsay will not be excluded if “... the statement
describing or explaining an event or condition [is] made while
the declarant was perceiving the event or condition, or
immediately thereafter.”
See Fed.R.Evid. 803(1).
Mrs. Howley’s
notes taken during or immediately after her conversation with Mr.
Firlein could potentially come under Rule 803(1), except for the
21
statements made by Mr. Firlein which are hearsay.
Mr. Firlein’s
statements written by Mrs. Howley are hearsay within hearsay, and
Rule 803(1) does not cover hearsay statements contained within
Mrs. Howley’s notes.
Federal Rule of Evidence 803(5) (recorded recollection)
permits “[a] memorandum or record concerning a matter about which
a witness once had knowledge but now has insufficient
recollection to enable the witness to testify fully and
accurately, [if it is] shown to have been made or adopted by the
witness when the matter was fresh in the witness’ memory and to
reflect that knowledge correctly.
If admitted, the memorandum or
record may be read into evidence but may not itself be received
as an exhibit unless offered by an adverse party.”
803(5).
Fed.R.Evid.
Mrs. Howley’s notes and the letter written by Mr.
Firlein can be used to refresh Mrs. Howley’s recollection and
permit Mrs. Howley to testify about events during that time.
It
does not, however, permit Mr. Firlein’s hearsay statement to be
admitted as evidence.
Mr. Firlein’s statements are hearsay and
Rule 803(5) does not permit his statements to be read into
evidence for the truth of the matter.
Plaintiffs also state that the notes and letter may be
offered not for their truth, but for other relevant, non-hearsay
purposes.
If offered for a non-hearsay purpose such as Mrs.
Howley’s state of mind, then they can be used for such purpose.
22
Again, however, the out-of-court statement and letter by Mr.
Firlein are hearsay and cannot be used for the truth of the
matter stated therein (i.e., “I [Mr. Firlein] received your
information from a credit report”).
Thus, Mr. Firlein’s
statements made in the telephone call with plaintiffs and his
written correspondence are hearsay, and as such will be excluded
as evidence at the summary judgment stage.
b.
Plaintiffs’ Expert Report
Defendant also seeks to bar Mr. Hendricks’ testimony arguing
that it does not meet the requirements of Federal Rule of
Evidence 7026 or the standard under Daubert v. Merrell Dow
Pharma., 509 U.S. 579 (1993)7.
Although presented as a motion to
6
Rule 702 provides,
If scientific, technical, or other specialized
knowledge will assist the trier of fact to understand
the evidence or to determine a fact in issue, a witness
qualified as an expert by knowledge, skill, experience,
training, or education, may testify thereto in the form
of an opinion or otherwise, if (1) the testimony is
based upon sufficient facts or data, (2) the testimony
is the product of reliable principles and methods, and
(3) the witness has applied the principles and methods
reliably to the facts of the case.
7
In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S.
579, 572 (1993), the Supreme Court analyzed Rule 702, and
instructed that a two-step analysis is to be used to assess the
admissibility of the proffered expert testimony on scientific
issues under Rule 702. The expert testimony must be reliable, so
that it must be “scientific,” meaning grounded in the methods and
procedures of science, and it must constitute “knowledge,”
meaning something more than subjective belief or unsupported
speculation. Daubert, 509 U.S. at 590. Guideposts that the
court may consider in assessing the reliability of the proffered
expert testimony include, but are not limited to: (1) whether the
23
exclude at the summary judgment stage, defendant has essentially
presented a motion in limine to restrict plaintiffs’ evidence at
trial.
The purpose of Rule 702 and Daubert is to ensure that the
expert is sufficiently qualified, his opinion is based on
sufficient facts, and his testimony is based on reliable methods.
Id.
The parties do not disagree that plaintiffs’ expert, Evan
Hendricks, is a qualified expert on credit reporting and privacy.
Rather, defendants argue that Mr. Henricks’ opinion on causation
is inadmissible because his opinion is not based on a reliable
method, because it is not based on sufficient data or reliable
application of his methodology, and because it will not be
helpful to a jury.
Defendants argue that Mr. Hendricks’ opinion
that Mr. Firlein obtained plaintiff’s credit information from an
Experian mixed credit report is flawed because Mr. Hendricks only
reviewed documents from Experian, and failed to consider
documents from Equifax, another consumer reporting agency.
Defendants further argue that Mr. Hendricks’ deposition testimony
expert’s methodology has been tested or is capable of being
tested; (2) whether the technique has been subjected to peer
review and publication; (3) the known and potential error rate of
the methodology; and (4) whether the technique has been generally
accepted in the proper scientific community. Id. at 593-94; In
re TMI Litig., 193 F.3d 613, 663-64 (3d Cir. 1999). Ultimately,
a court is required to act as a gatekeeper “to make certain that
an expert, whether basing testimony upon professional studies or
personal experience, employs in the courtroom the practice of an
expert in the relevant field.” Kumho Tire Co. v. Carmichael, 526
U.S. 137, 152 (1999).
24
shows that he admitted that the Equifax files were mixed in 2003
-2006, thus undermining his causation theory that the only way
Mr. Firlein could have gotten Mr. Howley’s credit information is
from an Experian credit report containing the mixed information.
Plaintiffs respond that Mr. Hendricks reviewed the “2006
Kroll Report”8 but only admitted that it showed the data as it
appeared on that report in 2006, and did not admit that it proved
Mr. Howley’s Equifax file was mixed with Mr. Firlein’s file.
Plaintiffs also argue that Equifax does not list social security
variations (the full social security number of another person) on
its files, even mixed files.
Although defendant’s motion does raise some concerns about
the methodology used by Mr. Hendricks, the Court is not convinced
on the present record, and at this stage of the proceedings, that
his opinion concerning causation should be stricken.
Although
defendants criticize Mr. Hendricks for failing to review 2003 2006 Equifax documents, it is unclear what documents these may be
and whether such documents exist.
Defendant’s criticism that Mr.
Hendricks should have requested archived records from Equifax is
more properly explored on cross-examination.
Also, no Equifax
files were presented that show the files were mixed prior to
2006, and plaintiffs have presented evidence that only Experian
8
The “2006 Kroll Report” is apparently a report generated
in connection with a 2006 mortgage refinance transaction via
Kroll, a reseller of credit located in Mount Laurel, NJ.
25
files contain the full social security number variations.
In any
event, even if we were to exclude the testimony of Mr. Hendricks
at this time, plaintiffs have presented other evidence of
causation to survive summary judgment.
As explain earlier in
this Court’s opinion,9 plaintiffs have presented enough evidence
for a jury to decide whether Experian caused plaintiffs’ damages
by disclosing Mr. Howleys’ identifying information to Mr.
Firlein.
Consequently, defendant’s request to exclude plaintiffs’
expert’s testimony on causation is denied.10
3.
Punitive Damages
Defendant argues that plaintiffs’ claim for punitive damages
fails because they cannot show that defendant willfully violated
the FCRA.
Punitive damages are available under the FCRA in cases
of willful noncompliance with the statute.
1681n.
See 15 U.S.C. §
The Supreme Court has held that willful violations of the
FCRA are assessed for “reckless disregard.”
Safeco Insurance Co.
of America v. Burr, 551 U.S. 47, 60, 69, 127 S.Ct. 2201, 167
L.Ed.2d 1045 (2007); see Gelman v. State Farm Mut. Auto. Ins.
Co., 583 F.3d 187, 192 n. 8 (3d Cir. 2009).
“[A] company subject
to FCRA does not act in reckless disregard of it unless the
9
See Opinion section III.B.2.
10
The Court’s ruling on the motion to exclude is without
prejudice, and the parties may file properly supported motions in
limine in advance of trial.
26
action is not only a violation under a reasonable reading of the
statute’s terms, but shows that the company ran a risk of
violating the law substantially greater than the risk associated
with a reading that was merely careless.”
Cortez, 617 F.3d at
721 (citing Safeco, 551 U.S. at 69).
Plaintiffs have offered evidence that Experian was put on
notice of the mixed file by plaintiff in 2003; that Experian did
not use the “do not combine” and “soft delete” procedures on Mr.
Firlien’s file until July 2010; and that Experian sent
plaintiff’s identifying information to Mr. Firlein, including
plaintiff’s full social security number.
This is sufficient
evidence to go to a jury on the issue of whether Experian
willfully violated the FCRA.
See Cortez, at 709 (“the
reasonableness of a credit reporting agency’s procedures is
‘normally a question for trial unless the reasonableness or
unreasonableness of the procedures is beyond question.’”);
Campbell v. Experian Information Solutions, Inc., No. 08-4217,
2009 WL 3834125, at * 9 (W.D.Mo. Nov. 13, 2009)(finding that
Experian had notice of problems in plaintiff’s file consistent
with a mixed file and yet took no action to determine whether
plaintiff’s information was mixed with another person’s
information so that Experian could be found by a reasonable juror
to have been reckless).
Therefore, defendant’s motion for
summary judgment on plaintiff’s punitive damages claim is denied.
27
4. FCRA Section 1681e(b)
Defendant summarily argues that plaintiffs’ claim under
section 1681e(b) of the FCRA should be dismissed because Experian
did not issue a consumer report for Mr. Howley that was
inaccurate since 2003, and therefore, the claim is beyond the
FCRA’s five year statute of limitations.
Plaintiffs, however,
have alleged that Experian incorrectly mixed his credit
information with Mr. Firlein thus creating an inaccurate consumer
report for Mr. Firlein which contained Mr. Howley’s credit
information, within the limitations period.
The view that defendant suggests is too narrow and not in
keeping with the statute’s remedial purpose.
Cortez, 617 F.3d at
706 (applying a liberal construction of the FCRA and
acknowledging it as a remedial statute).
Although Experian
technically may not have issued an inaccurate report for Mr.
Howley since 2003, plaintiffs allege that Experian issued an
inaccurate report for Mr. Firlein due to their mixing Mr.
Howley’s credit information and making it available to Mr.
Firlein.
Also, Experian has not shown that the FCRA limits a
cause of action solely to the person who is the subject of the
alleged inaccurate consumer report.11
11
See 15 U.S.C.A. §§ 1681n,
The case that defendant relies on, Wantz v. Experian Info.
Solutions, 386 F.3d 829, 833 (7th Cir. 2004), is inapposite since
the Wantz case held that the plaintiff failed to prove damages as
a result of an alleged failure to conduct an adequate
reinvestigation into a claim of an unpaid judgment.
28
1681o, 1681e(b).
It would seem, given the remedial nature of the
FCRA, that a consumer should be able to bring a claim if he has
been harmed as a result of his personal information appearing on
another person’s consumer report.
Thus, plaintiffs have alleged sufficient facts to go to a
jury on their claim of violation of section 1681e(b) of the FCRA.
5.
FCRA Section 1681h(a)
Section 1681h(a) requires that a “consumer reporting agency
shall require, as a condition of making the disclosures required
under section 1681g of this title, that the consumer furnish
proper identification.”
Defendants briefly state, without much
argument, that plaintiffs’ Section 1681h(a) claim must fail
because unlike most cases where this section of the FCRA is
relied upon, this is not a case where the consumer reporting
agency improperly refused to give a consumer his or her own
credit report, but a case in which a consumer’s information was
given to another consumer.
As stated above, the FCRA is a remedial statute, Cortez, 617
F.3d at 706, and there is nothing in the statue or case law to
support defendant’s very narrow reading.
As such, plaintiffs
have presented enough evidence to go to a jury on the issue of
whether Experian’s disclosure of plaintiff’s personal credit
information to Mr. Firlein was without proper identification in
violation of Section 1681h(a).
29
6.
FCRA Section 1681b(a) and 1681e(a)
Section 1681b(a) sets forth the conditions under which
specific individuals and entities may receive a consumer report.
See 15 U.S.C.A. § 1681b(a).
Section 1681e(a) requires that a
consumer reporting agency maintain “reasonable procedures”
designed to avoid violations of the FCRA and that it “... shall
make a reasonable effort to verify the identity of a new
prospective user and the uses certified by such prospective user
prior to furnishing such user a consumer report” and that it may
not “...furnish a consumer report to any person if it has
reasonable grounds for believing that the consumer report will
not be used for a purpose listed in section 1681b of this title.”
See 15 U.S.C.A. § 1681e(a).
Defendant states that plaintiffs’ Section 1681b(a) and
1681e(a) claims fail because they are beyond the statute of
limitations and because plaintiff cannot show causation or
damages.
Defendant raises these defenses in conjunction with the
arguments discussed earlier in this opinion regarding summary
judgment.
For the reasons previously discussed, we deny summary
judgment on these grounds.
IV.
See Opinion, Section III.B.1 and 2.
CONCLUSION
For the reasons expressed above, defendant’s motion to
exclude is granted in part and denied in part without prejudice,
and its motion for summary judgment is denied.
30
An appropriate
Order will be entered.
Date: September 27, 2011
S/Noel L. Hillman
At Camden, New Jersey
NOEL L. HILLMAN, U.S.D.J.
31
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