Miller v. Equifax Information Services LLC
Filing
124
AMENDED Opinion and Order. Signed on 05/20/2014 by Judge Anna J. Brown. (bb)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF OREGON
JULIE MILLER,
3:11-CV-01231-BR
Plaintiff,
AMENDED OPINION AND
ORDER
v.
EQUIFAX INFORMATION SERVICES,
LLC.,
Defendant.
MICHAEL C. BAXTER
JUSTIN M. BAXTER
KACHELLE A. BAXTER
Baxter & Baxter, LLP
8835 S.W. Canyon Lane
Suite 130
Portland, OR 97242
(503) 297-9031
MAUREEN LEONARD
P.O. Box 42210
Portland, OR 97242
(503) 224-0212
Attorneys for Plaintiffs
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IAN E. SMITH
LEWIS P. PERLING
PHYLLIS B. SUMNER
King & Spalding LLP
1180 Peachtree Street
Atlanta, GA 30309
(404) 572-4600
JEFFERY M. EDELSON
Markowitz Herbold Glade & Mehlhaf, PC
1211 S.W. Fifth Avenue
Suite 3000
Portland, OR 97204
(503) 295-3085
Attorneys for Defendant
BROWN, Judge.
This matter comes before the Court on Defendant Equifax
Information Services, LLC’s Motion (#91) for Reduction of
Punitive Damages.
For the reasons that follow, the Court GRANTS Equifax’s
Motion (#91) for Reduction of Punitive Damages as herein
specified and REDUCES the jury’s punitive-damages award from
$18,400,000 to $1,620,000, which produces a 9-to-1 ratio between
the amount of punitive damages the Court finds constitutionally
permissible on this record and the $180,000 of compensatory
damages the jury awarded.
BACKGROUND
Plaintiff Julie Miller brought this action for actual
damages and punitive damages pursuant to the Fair Credit
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Reporting Act (FCRA), 15 U.S.C. § 1681, et seq.
Miller alleged
Equifax negligently violated FCRA by (1) failing to follow
reasonable procedures to assure the maximum possible accuracy of
the information contained in her credit report; (2) failing to
conduct a reasonable reinvestigation of disputed information in
Miller’s credit file after she notified Equifax of the disputed
information; (3) failing to disclose to Miller the entire
contents of her credit file upon her request; and (4) furnishing
Miller’s consumer credit report to persons or businesses who did
not have a permissible purpose to receive her credit report.
In particular, Miller sought “actual damages” damages under
§ 1681n to compensate her for emotional distress, including
humiliation, mental anguish, loss of reputation, invasion of
privacy, and fear of lost credit opportunities that she alleged
she sustained as a result of Equifax’s FCRA violations.
Miller
also contended Equifax acted willfully in violating her rights
under FCRA, and, accordingly, Miller sought an award of punitive
damages under § 1681n.
During the three-day jury trial beginning July 24, 2013, it
was undisputed that Equifax merged Miller’s credit file with the
file of a different person who had the same name and a similar
Social Security number as Miller but who lived in a different
state and who had a negative credit record and a significantly
different credit record than Miller had.
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According to Margaret
Leslie, Vice President of Equifax’s Technology Area, this kind of
file-merger was a “reasonable combination” that occurs with
“regularity.”
Trial Transcript (Tr.) 583.
When Miller learned about the erroneous merger of her file,
she reported the problem to Equifax and began a two-year saga to
resolve it.
Despite Miller’s repeated notices to Equifax and
Equifax’s numerous reports to Miller that it had investigated her
complaints, Equifax did not correct the problem.
Tr. 152-53.
In
fact, Equifax did not take steps to correct the information in
Miller’s file until she filed this action after her two years of
efforts proved fruitless.
Nevertheless, Equifax argued to the
jury that taking corrective steps only after a civil action is
filed complied with its “policy.”
Tr. 530.
During the two years that Miller attempted to get Equifax to
fix her file, she was frustrated, overwhelmed, angry, depressed,
humiliated, fearful about misuse of her identity, and concerned
that her reputation would be damaged as a result of Equifax’s
conduct.
Tr. 152-54, 156-58.
Miller did not, however, seek
medical or mental-health services for these issues.
The jury had the benefit of two expert witnesses to assist
them in assessing Equifax’s alleged FCRA violations:
Evan
Hendricks, Miller’s expert, testified about other mixed-file
cases in which juries had found Equifax violated FCRA, and Anne
Fortney, Equifax’s expert, testified that “only” one-to-two
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percent of consumer files contain inaccurate information, which
means approximately two-to-four million Americans have inaccurate
information in their credit reports because of mixed files.
Tr. 306-07, 384.
The jury returned a verdict in favor of Miller and found
Equifax had negligently and willfully violated FCRA in one or
more of the ways Miller alleged.
The jury awarded Miller
$180,000 in compensatory damages and $18,400,000 in punitive
damages.
During oral argument on Equifax’s Motion for Reduction of
Punitive Damages on December 20, 2013, Equifax took issue with
the “extra-record” evidence that Miller submitted in support of
her Opposition (#93) to the Motion, which included copies of
judgments in a number of FCRA cases and a declaration from a
plaintiff’s attorneys in one of those cases.
To ensure both
parties had the same opportunity to complete the record on this
Motion, the Court granted Equifax leave to file a Supplemental
Brief limited to arguments the Court should consider as to the
appropriate punitive-damages ratio and the third Gore guidepost.
BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996).
Equifax
filed its Supplemental Brief (#103) on January 3, 2014, but
Miller filed a Motion (#104) to Strike that submission on January
9, 2014, on the grounds that it exceeded the scope of the Court’s
instructions and prejudiced Miller.
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In its Supplemental Brief, Equifax cites a number of FCRA
cases to support its argument that the Court should adopt a 1:1
ratio of punitive to compensatory damages.
In support of its
position that the available civil penalties do not support the
jury’s punitive-damages award, Equifax also submitted a December
2004 Federal Trade Commission (FTC) report regarding the FTC’s
approval of Equifax’s process for matching consumers to credit
reports.
The Court has considered Equifax’s supplemental arguments
and materials and concludes they do not exceed the scope of the
Court’s instructions.
In any event, the Court notes Miller has
not been prejudiced by Equifax’s supplemental filing in light of
the Court’s conclusion that a ratio significantly greater than
1:1 is warranted and that, as explained below, the Court
concludes the third Gore guidepost is not helpful in the context
of this case.
Accordingly, the Court DENIES Plaintiff’s Motion (#104) to
Strike.
STANDARDS
A punitive-damages award that is grossly excessive violates
“[e]lementary notions of fairness enshrined in our constitutional
jurisprudence.”
Gore, 517 U.S. at 574.
In Gore the Supreme
Court set forth three “guideposts” for determining excessiveness
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of a punitive-damages award:
(1) “the degree of reprehensibility
of the defendant's conduct”; (2) the “ratio to the actual harm
inflicted on the plaintiff”; and (3) the “civil or criminal
penalties that could be imposed for comparable misconduct.”
at 575-83.
Id.
Although these guideposts provide an analytical
framework, they must be viewed in the context of the case and
need not be “rigidly or exclusively applied.”
In re Exxon
Valdez, 472 F.3d 600, 613 (9th Cir. 2006).
DISCUSSION
In its Motion for Reduction of Punitive Damages, Equifax
moves the Court to reduce the jury’s punitive-damages award “to
within constitutional limits as a matter of law.”
Thus, the
Court turns first to the Gore Guideposts.
I.
The First Gore Guidepost:
Reprehensibility
It is well-established that the most important of the three
Gore guideposts is the reprehensibility of the defendant’s
conduct.
Gore, 517 U.S. at 575 (“Perhaps the most important
indicium of the reasonableness of a punitive damages award is the
degree of reprehensibility of the defendant's conduct.”).
When
determining the reprehensibility of a defendant’s conduct for
purposes of evaluating the constitutionality of a punitivedamages award, courts should consider whether
(1)
7
the harm caused was physical as opposed to
- AMENDED OPINION AND ORDER
(2)
(3)
(4)
(5)
economic;
the tortious conduct evinced an indifference to or
a reckless disregard of the health or safety of
others;
the target of the conduct had financial
vulnerability;
the conduct involved repeated actions or was an
isolated incident; and
the harm was the result of intentional malice,
trickery, or deceit, or mere accident.
State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 419
(2003).
A.
Physical v. Economic Harm
When the harm to the plaintiff arises from “a transaction in
the economic realm” and “not from some physical assault or
trauma” and “there are no physical injuries,” this subfactor
weighs against finding the defendant’s conduct was sufficiently
reprehensible to warrant significant punitive damages.
State
Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 426 (2003).
When the plaintiff suffers both economic, emotional, and
psychological harm, however, some courts have found this
subfactor weighs in favor of finding the defendant’s conduct was
reprehensible and, therefore, warrants an award of punitive
damages.
See Goldsmith v. Bagby Elevator Co., 513 F.3d 1261,
1283 (11th Cir. 2008)(The plaintiff, who brought an employmentdiscrimination case, sought counseling as a result of emotional
distress, and the court found “[o]ne factor that suggests that
the misconduct of [the defendant] was reprehensible is that [the
plaintiff] suffered both economic harm and emotional and
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psychological harm.”).
To support its argument that this reprehensibility subfactor
weighs in its favor, Equifax relies heavily on Bach v. First
Union National Bank, 149 F. App’x 354, 362 (6th Cir. 2005)(Bach
I).
In Bach I the plaintiff sued the defendant bank for FCRA
violations.
The trial evidence established the plaintiff lost
credit opportunities as a result of the defendant’s conduct in
the form of a second denial of a mortgage application and a
denial of a credit-card application, and she sustained injuries
in the form of pain, suffering, and humiliation.
When assessing
the reprehensibility of the defendant’s conduct, the court found
emotional distress resulting from the alleged harm was “not the
sort of physical injury the State Farm case contemplates, and
thus, the first [reprehensibility subfactor, was] not present.”
Id. at 364.
See also Zhang v. Am. Gem Seafoods, Inc., 339 F.3d
1020, 1043 (9th Cir. 2003)(“Although the plaintiffs in State Farm
alleged emotional distress, the reprehensibility of the
fraudulent business practices at issue . . . is different in kind
from the reprehensibility of intentional discrimination on the
basis of race or ethnicity.”).
Here Equifax emphasizes its conduct did not cause Miller to
suffer any physical harm and the emotional distress she described
to the jury arose from a purely economic transaction.
Thus,
Equifax asserts this case is like Bach I, and this Court should
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follow the Sixth Circuit’s analysis in Bach I and conclude the
reprehensibility factor does not apply because the jury’s verdict
for compensatory damages was for “emotional distress from an
economic harm.”
In response Miller relies on the Eleventh Circuit’s analysis
in Goldsmith in which the court found “emotional and
psychological harm” in an employment discrimination case weighed
in favor of the reprehensibility subfactor.
Miller asserts she
too suffered “personal injuries in the form of psychic harm,”
and, as already noted, the jury heard evidence that “for two
years she was frustrated, overwhelmed, angry, depressed,
humiliated, fearful about misuse of her identify [sic], and
concerned for her damaged reputation.”
Pl.’s Opp’n Mem. at 9.
Unlike the plaintiff in Goldsmith who sought medical attention
for her emotional distress, however, the Court notes there was
not any trial evidence in this case that Miller sought such
treatment for her emotional distress.
In White v Ford Motor Co. the Ninth Circuit reviewed the
“hallmarks of particularly reprehensible conduct” from Gore:
Nonviolent offenses are less blameworthy than those that
involve violence or the threat of violence. “Similarly,
'trickery and deceit' are more reprehensible than
negligence.” Conduct that causes economic harm alone is
less reprehensible than conduct that injures (or risks
injuring) the health and safety of others. Id. “[R]epeated
misconduct is more reprehensible than an individual instance
of malfeasance.”
312 F.3d 998, 1029 (9th Cir. 2002)(citing Gore, 517 U.S. at 57610 - AMENDED OPINION AND ORDER
77)(emphasis added)).
Because the Court has not found any Ninth
Circuit case in which the court concludes emotional injuries
arising in an “economic realm” are categorically insufficient as
a matter of law to preclude a finding of reprehensibility, the
Court declines Equifax’s invitation to apply the Sixth Circuit’s
reasoning in Bach I to this matter.
Instead the Court expects
the Ninth Circuit would recognize emotional injuries are on a
continuum of harm affecting at least the “health and safety of
others” and that conduct causing such injuries, even in the
absence of bodily harm, is, in fact, more reprehensible than
conduct that causes “economic harm alone.”
Thus, for purposes of this reprehensibility subfactor, the
Court concludes Miller’s emotional injuries are sufficient to
trigger a reprehensibility finding, and, therefore, the Court
concludes this reprehensibility subfactor weighs in Miller’s
favor when considering the record as a whole.
B.
Indifference to or a Reckless Disregard of the Health
or Safety of Others
Equifax argues this reprehensibility subfactor weighs
against Miller because Equifax did not act in reckless disregard
for anyone’s health or safety because its conduct occurred in the
“economic realm.”
According to Equifax, any potential harm to be
expected from the violations that Miller asserted would have been
purely economic, and, as a result, its conduct should not be
viewed as reckless.
See State Farm, 538 U.S. at 426.
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See also
Bach I, 149 F. App’x at 364.
Although the Court agrees FCRA
violations are most likely to cause primarily economic harm, the
Court has already found Miller’s emotional-distress injuries are
on the continuum of harm affecting the “health and safety of
others,” and, therefore, the fact that she sustained “only”
emotional and non-economic harm does not rule out a conclusion
that Equifax acted in reckless disregard of the “health and
safety of others.”
When evaluating this subfactor, Miller first asserts the
Court should consider “the possible harm to other victims that
might have resulted if similar future behavior were not
deterred.”
See TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S.
443, 460-61 (1993)(In a slander-of-title case, the Court found
the defendant’s “pattern of behavior ‘could potentially cause
millions of dollars in damages to other victims.’”).
See also
Philip Morris USA v. Williams, 549 U.S. 346, 357 (2007)
(“[C]onduct that risks harm to many is likely more reprehensible
than conduct that risks harm to only a few.
And a jury
consequently may take this fact into account in determining
reprehensibility.”).
Miller also argues Equifax’s recklessness was proven by
trial evidence that showed Equifax’s mixed-file errors were not
rare or isolated problems, and, in fact, Equifax’s industry
“matching” criteria produced errors in two-to-four million
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consumer files.
As noted, Miller’s expert testified about cases
in which juries returned verdicts against Equifax based on
allegations of mixed files, and Equifax’s own representative
testified it is Equifax’s policy to investigate and to correct
files only after a lawsuit is filed.
Miller contends the jury
could have regarded Miller as an “‘exemplar’ of the harm that
Equifax is prepared to inflict on many other consumers.”
Pl.’s
Opp’n Mem. at 10.
As noted, the jury found Equifax acted willfully when it
violated Miller’s FCRA rights.
The Court agrees with Miller that
the jury’s Verdict supports a conclusion that Equifax’s conduct
was more than merely indifferent to Miller’s rights and, in fact,
resembled reckless disregard of those rights in light of the fact
that Miller’s repeated efforts over two years to get Equifax to
correct its errors went completely unheeded.
Accordingly, the Court concludes this subfactor weighs in
favor of Miller.
C.
Financial Vulnerability
Equifax argues Miller was not financially vulnerable because
she is not elderly, poor, or enfeebled:
“[S]he is a middle-aged
woman who is employed, earned a college degree, owns her own
home, . . . is active in her community,” and “was knowledgeable
about her rights, represented by counsel, and exercised those
rights - both by complaining to Equifax and also by filing suit
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against other consumer credit reporting agencies.”
at 8.
Def.’s Mem.
Equifax also contends this subfactor does not weigh
against it because it did not intentionally target Miller.
When a plaintiff is of “limited means” and is “subject to
the recklessness or malice of a large corporate bureaucracy,”
this subfactor is satisfied.
882, 887 (9th Cir. 2013).
Arizona v. ASARCO, LLC,
733 F.3d
Contrary to Equifax’s contention,
however, this subfactor does not require the defendant to have
targeted the plaintiff.
See Bach I, 149 F. App’x at 365 (“[This]
factor . . . does not require that the defendant target the
victim specifically because of her vulnerability, but rather
requires only that the target be financially vulnerable.”).
See
also Dixon-Rollins v. Experian Info. Solutions, Inc., 753 F.
Supp. 2d 452, 465 (E.D. Pa. 2010).
According to Miller, this
subfactor has been satisfied because Miller “had limited
resources compared to Equifax, and Equifax’s errors and
intransigence destroyed her access to credit and rendered her
financially vulnerable.”
Pl.’s Mem. at 9.
In addition, Miller
established at trial that she delayed the refinancing of her home
while interest rates were low and did not apply for a loan to
help her disabled brother due to the errors in her credit file.
Tr. 155-56.
Miller compares her situation to that of the plaintiff in
Saunders v. Branch Banking & Tr. Co. of VA, 526 F.3d 142 (4th
14 - AMENDED OPINION AND ORDER
Cir. 2008).
In Saunders the plaintiff prevailed on her claims
against the defendant bank for willfully breaching its FCRA
obligations.
The Fourth Circuit found the plaintiff was
financially vulnerable compared to the bank:
“[The plaintiff]
has a modest income and limited resources compared to [the
defendant].
Furthermore, [the defendant’s] conduct rendered [the
plaintiff] significantly more financially vulnerable.”
153.
Id. at
The court in Dixon-Rollins reached a similar conclusion:
“[B]ecause Trans Union was well aware of [the plaintiff’s]
specific disputes and repeatedly failed to conduct proper
reinvestigations with respect to them . . . .
We shall take into
account [the plaintiff's] financial vulnerability in our
reprehensibility analysis.”
753 F. Supp. 2d at 465.
In light of the significant disparity between the parties’
financial resources in this case and the fact that Miller was
subjected to two years of Equifax’s repetitive, wrongful conduct
that violated FCRA and affected Miller’s credit and her financial
condition, the Court concludes this subfactor weighs in favor of
Miller.
D.
Repeated Actions or an Isolated Incident
In Gore the Court noted:
“[P]ersist[ing] in a course of
conduct after it had been adjudged unlawful,” acting in bad
faith, and making deliberate false statements all increase the
reprehensibility of defendant’s conduct.
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517 U.S. at 579.
Equifax argues even if Miller encountered the same conduct
repeatedly and even if juries may have returned verdicts against
Equifax in other cases involving mixed files as Miller’s expert
testified, Equifax’s conduct in this instance is not considered
“repetitive” within the meaning of State Farm and Gore because it
involved only “isolated” violations of FCRA as to Miller
personally, and, in any event, there was not any specific
evidence offered as to similar conduct by Equifax in relation to
other parties.
As noted by the Ninth Circuit in its recent decision in
ASARCO, however, this subfactor is satisfied when the defendant’s
wrongful conduct is repetitive and directed solely at the
plaintiff, and, therefore, such evidence as to similar conduct in
relation to others is not necessary.
ASARCO, 733 F.3d at 887.
Specifically, in ASARCO the court found this subfactor was
satisfied, and “there was nothing ‘isolated’ about the
[defendant’s] conduct” when it “involved repeated harassment” and
“cruel treatment [of the plaintiff] . . . over a lengthy period”
and the plaintiff’s many complaints “went repeatedly
unaddressed.”
Id.
Here, as in ASARCO, Equifax’s conduct was repetitive and
Miller’s repeated complaints went unaddressed for two years until
she filed this lawsuit.
Accordingly, the Court concludes this
subfactor weighs in favor of Miller.
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E.
Intentional Malice, Trickery, or Deceit or Mere
Accident
Equifax also argues its conduct was not the product of
“intentional malice, trickery, or deceit.”
In particular,
Equifax relies on the Court’s decision at trial not to instruct
the jury on malice because Miller had not introduced evidence of
“actual ill will directed to the plaintiff, or spite, or
something that was directed to her to purposefully injure her.”
Tr. 217.
Although Miller does not dispute this jury-instruction
analysis, she, nevertheless, argues this subfactor is satisfied
because Equifax consistently gave Miller false information in
response to her complaints and repeatedly gave her incorrect
information about the extent to which Equifax had investigated
and resolved her complaints.
In light of the Court’s trial rulings that Miller did not
establish there was a jury question as to whether Equifax acted
with actual ill will towards her, the Court concludes this
subfactor weighs in favor of Equifax.
F.
Summary of Analysis under the First Gore Guidepost
As noted, only one of the first Gore guidepost subfactors
weighs in favor of Equifax (i.e., the lack of intentional malice,
trickery or deceit), and all of the other subfactors weigh in
Miller’s favor.
In particular, the Court finds Miller’s
emotional injuries are sufficient to trigger a reprehensibility
finding; Equifax’s conduct was not isolated in that Equifax
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repeatedly ignored Miller’s complaints over a period of two
years; Equifax acted with more than mere indifference to the harm
caused by its conduct; and Miller was a financially vulnerable
victim.
Accordingly, the Court concludes Equifax’s conduct was
sufficiently reprehensible to support a substantial award of
punitive damages.
II.
Second Gore Guidepost:
Ratio to Actual Harm
As noted by the Ninth Circuit in ASARCO:
The Supreme Court has noted that “[punitive]
damages must bear a reasonable relationship
to compensatory damages.” Gore, 517 U.S. at
580 (internal citations and quotation marks
omitted). Further, the Court has stated that
“few awards exceeding a single-digit ratio
between punitive and compensatory damages
. . . will satisfy due process.” State Farm,
538 U.S. at 425, 123 S. Ct. 1513. Nonetheless, the Court has steadfastly refused to
create a bright-line ratio and has emphasized
that a higher ratio is justified when “a
particularly egregious act has resulted in
only a small amount of economic damages.”
733 F.3d at 888.
“Although single digit multipliers are more
likely to be constitutional, a greater ratio may be appropriate
where an egregious act results in only a small amount of economic
damages.”
Dixon-Rollins, 753 F. Supp. 2d at 466 (citing State
Farm, 538 U.S. at 425).
“Ultimately, the appropriate ratio must
be based on the particular facts and circumstances of the
defendant's conduct and the plaintiff's injury.”
Id.
In cases involving FCRA violations, courts have determined
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ratios exceeding 1:1 are constitutional.
For example, in
Dixon-Rollins the court characterized as “modest” the jury’s
$30,000 compensatory damages award for non physical, emotionaldistress injuries arising from willful FCRA violations, but, in
reducing the punitive-damages award from a 16:1 ratio, the court
chose a 9:1 ratio, primarily because of “recidivist” conduct on
the part of the defendant.
2010).
753 F. Supp. 2d 452, 467 (E.D. Pa.
See also Cortez v. Trans Union, LLC, 617 F.3d 688, 723-24
(3d Cir. 2010)(“An award that is twice the compensatory damages
award falls well within the Supreme Court's standard for ordinary
cases of a single-digit ratio”); Mullins v. Equifax Info. Servs.,
LLC, No. 3:05-cv-888, 2007 WL 2471080, at *7 (E.D. Va. 2007)(“[A]
five-to-one punitive damages ratio is well within the
constitutionally permissible ratios.”).
Equifax emphasizes there is not a bright-line rule for the
permissible ratio and insists the 102:1 ratio of punitive damages
to compensatory damages in this case is “indefensible.”
Equifax
relies on Bach v. First Union Nat. Bank (Bach II) in which the
court found "alarming" the punitive-damages award of $2,268,600,
which was 6.6 times the compensatory-damages award of $400,000.
486 F.3d 150, 156 (6th Cir. 2007).
Equifax also relies on Paul
v. Asbury Automotive Group, LLC, a workplace harassment case
based on race in which the court reduced the compensatory damages
for each plaintiff to $150,000 and the multi-million dollar
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punitive-damages award to $150,000 (a 1:1 ratio) on the basis
that “$150,000 in compensatory damages [is] substantial,
particularly in light of the fact that plaintiffs suffered no
long-term effects and the damages are based on emotional harm,
something not easily quantified.”
No. 3:06-cv-01603-KI, 2009 WL
188592, at *11 (D. Or. Jan. 23, 2009)(case settled at trial
level).
Equifax argues a 1:1 ratio is appropriate here because
Miller, like the plaintiff in Paul, did not suffer long-term
effects from her experiences with Equifax and was awarded
compensatory damages based entirely on emotional distress and not
on out-of-pocket losses.
Miller, on the other hand, argues there are a number of
considerations in this case that justify a ratio higher than 1:1,
including the fact that Equifax has numerous opportunities as a
credit-reporting agency to jeopardize a consumer’s credit status.
Accordingly, Miller argues the penalty in this case should be a
reflection of “the public wrong rather than the private injury.”
See St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 66
(1919).
See also Exxon Shipping Co. v. Baker, 554 U.S. 471, 494
(2008)(“Regardless of culpability, however, heavier punitive
awards have been thought to be justifiable when wrongdoing is
hard to detect.”)(citing Gore, 517 U.S. at 582); Sloane v.
Equifax Info. Servs., 510 F.3d 495, 506 (4th Cir. 2007)(FCRA
violations, “while unquestionably harmful, are difficult to
20 - AMENDED OPINION AND ORDER
translate into monetary terms.”).
Miller also contends the Court should take into account the
potential harm that Miller would have faced if she had not been
able to find an attorney to represent her and had not filed this
lawsuit after two years of attempting to have Equifax correct the
errors in her credit file.
Because this point raises speculative
issues, however, the Court does not find it helpful.
Finally, for purposes of the ratio analysis of her “actual
damages,” Miller asks the Court to include the attorneys’ fees
and litigation costs she incurred, which total approximately
$250,000, but the Court notes there is not any clear authority on
this point.
Compare Willow Inn, Inc. v. Public Serv. Mut. Ins.
Co., 399 F.3d 224, 237 (3d Cir. 2005)(“an award of attorney fees
and costs . . . is an apt term in the Gore/Campbell ratio
analysis”) with Sun Pacific Farming Co-op., Inc. v. Sun World
Intern., Inc., No. 1:01-cv-61022009, 2009 WL 900751, at *7 (E.D.
Cal. 2009)(“No consideration may be given to the amount of costs
recovered, attorneys fees, which were not recovered, or any sum
other than the compensatory damages actually awarded to calculate
the State Farm ratio.”).
Here the Court concludes the
appropriate denominator on which to determine a constitutionallypermissible punitive-damages ratio is the amount of actual
damages the jury awarded Miller to compensate her for the harm
she suffered.
Accordingly, the Court declines to include the
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attorneys’ fees and costs incurred by Miller in the ratio
analysis.
In any event, there is not any question that the 102:1 ratio
of punitive damages to compensatory damages awarded by the jury
in this case is constitutionally excessive and inconsistent with
due process.
Accordingly, the Court must reduce the award of
punitive damages to bring it within constitutional limits.
III. Third Gore Guidepost:
Penalties that Could Be Imposed
In a FCRA case the third Gore guidepost is not particularly
helpful to the due-process analysis of a punitive-damages award.
“The maximum civil penalty the FTC can pursue for knowing
violations of the FCRA is $2,500 per violation.
§ 1681s(a)(2)(A).
15 U.S.C.
However, because this limit does not apply to
actions brought by private citizens, the third guidepost is not
particularly helpful in assessing the constitutionality of
punitive damages awards under the FCRA.”
Dixon-Rollins, 753 F.
Supp. 2d at 466 (citing Cortez, 617 F.3d at 724).
See also Bach
I, 149 F. App’x at 367.
Accordingly, the Court concludes this guidepost does not
provide any assistance in the Court’s analysis of the
constitutionality of the punitive-damages award in this case.
IV.
Deterrence
When determining the appropriateness of a punitive-damages
award in a FCRA case, the Court must consider not only the three
22 - AMENDED OPINION AND ORDER
Gore guideposts, but also the effect the punitive-damages award
will have on deterring future misconduct.
A.
Considerations
“The threat of punitive damages under § 1681n of the FCRA is
the primary factor deterring erroneous reporting by the credit
reporting industry.”
Brim v. Midland Cred. Mgmt., 795 F. Supp.
2d 1255, 1265 (N.D. Ala. 2011)(citing Yohay v. City of Alexandria
Employees Cred. Union, 827 F.2d 967, 972 (4th Cir. 1987)).
In
Brim the court upheld a punitive-damages award of $623,180.00
even though the plaintiff had been awarded only $100,000 in
compensatory damages.
The Brim court reasoned:
“Any reduction
. . . of an award that was decided by a jury who were fully
instructed regarding all relevant aspects and the economic
ability (substantial net worth) of the offending defendant to
withstand such an award while forcing it to acknowledge the
award's legitimate punitive and deterrent purpose, would be
purely arbitrary.”
Id.
In Bains LLC v. ARCO Products Company the Ninth Circuit
explained the extent to which a defendant’s wealth can be
considered when determining the amount of punitive damages that
will deter future conduct:
A punitive damages award is supposed to sting
so as to deter a defendant’s reprehensible
conduct, and juries have traditionally been
permitted to consider a defendant's assets in
determining an award that will carry the
right degree of sting. But there are limits.
23 - AMENDED OPINION AND ORDER
“The wealth of a defendant cannot justify an
otherwise unconstitutional punitive damages
award,” and “cannot make up for the failure
of other factors, such as 'reprehensibility,'
to constrain significantly an award that
purports to punish a defendant's conduct.”
405 F.3d 764, 777 (9th Cir. 2005)(quoting State Farm, 538 U.S. at
427-28).
B.
Analysis
Here Equifax’s worth is substantial:
revenue of close to one billion dollars.
It has a net operating
A punitive-damages
award that is sufficient to “sting” economically would,
therefore, exceed constitutional limits in this FCRA case.
Nevertheless, the Court must determine a punitive-damages amount
that is high enough to serve as the deterrence intended in FCRA’s
punitive-damages provision while, at the same time, ensuring the
award comports with due-process requirements, which, in essence,
means it must fall within a single-digit ratio.
As noted, the Court has concluded under the first Gore
guidepost that Equifax’s conduct was sufficiently reprehensible
to justify a substantial award of punitive damages.
Certainly
the jury’s 102:1 ratio, while constitutionally excessive,
nevertheless, conveys that message.
Moreover, although the Court
agrees with Equifax that the jury’s $180,000 compensatory-damages
award is “substantial” in light of the fact that Miller did not
sustain any out-of-pocket losses or “physical injury,” there is
not any reason to think that award is not supported by the
24 - AMENDED OPINION AND ORDER
evidence or is inconsistent with the jury instruction to
compensate Miller “reasonably” for the real, but noneconomic,
harm she sustained as a result of Equifax’s wrongful conduct.
The difficulty with Equifax’s arguments in favor of a 1:1
ratio is that those arguments do not focus on Equifax’s wrongful
behavior or the need to deter Equifax from future misconduct.
Instead, because the jury chose to award compensatory damages in
a “substantial” sum (consistent with the evidence and the law),
Equifax focuses on that amount and the fact this case arises in
an “economic realm” to argue that a 1:1 ratio is enough.
The
Court is not aware of any legal standard, however, that directs
it to reduce the awarded punitive damages to the lowest possible
amount that survives constitutional scrutiny.
On the other hand, the Court has not found any explicit
authority for the proposition that the Court should reduce an
excessive award to the highest amount within constitutional
limits.
Nevertheless, the Court agrees with the trial judge in
Brim that it would be arbitrary not to adopt a jury’s punitivedamages award to the extent that it is constitutional.
For purposes of this constitutional analysis and based on
the record as a whole, the Court concludes Equifax engaged in
reprehensible conduct that caused real harm to Miller; Equifax
should be punished financially for that wrongful conduct; and the
amount of the punitive-damages award, although within
25 - AMENDED OPINION AND ORDER
constitutional limits, nevertheless, should be enough to deter
Equifax and others similarly situated from repeating this type of
conduct in the future.
For all of these reasons, the Court concludes it should
reduce the jury’s punitive-damages award to the highest singledigit ratio ordinarily accepted as within constitutional limits;
that is, a 9:1 ratio of punitive damages to the compensatory
damages that the jury awarded in this case.
Accordingly, the Court reduces the jury’s punitive-damages
award from $18,420,000 to $1,620,000 in order to reach a 9-to-1
ratio between the amount of punitive damages that the Court finds
constitutionally permissible on this record and the $180,000 of
compensatory damages the jury awarded.
CONCLUSION
For these reasons, the Court GRANTS Equifax’s Motion (#91)
for Reduction of Punitive Damages as specified herein, DENIES
Miller’s Motion (#104) to Strike, and REDUCES the jury’s
punitive-damages award from $18,400,000 to $1,620,000, which
reflects a 9-to-1 ratio between the amount of punitive damages
the Court finds constitutionally permissible on this record and
the $180,000 of compensatory damages the jury awarded.
The Court directs counsel to confer on an appropriate form
of Judgment and to submit no later than February 7, 2014, a
26 - AMENDED OPINION AND ORDER
stipulated form of Judgment for the Court’s consideration.
If the parties are unable to agree on the form of Judgment,
each party shall separately submit by the same deadline a
proposed form of Judgment together with a concise explanation
supporting that proposal.
IT IS SO ORDERED.
DATED this 20th day of May, 2014.
/s/ Anna J. Brown
ANNA J. BROWN
United States District Judge
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