Velez-Colon v. Caribbean Produce Exchange, Inc.

Filing 63

OPINION AND ORDER. GRANTED 7 MOTION for Summary Judgment filed by Caribbean Produce Exchange, Inc. Signed by Judge Salvador E Casellas on 12/8/2009.(LB)

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I N THE UNITED STATES DISTRICT COURT F O R THE DISTRICT OF PUERTO RICO J O S E CARLOS VELEZ-COLON Plaintiff v. Civil No. 08-1607 (SEC) C A R IB B E A N PRODUCE EXCHANGE, IN C . D e f e n d a n ts

O P I N IO N and ORDER 11 P e n d in g before this Court are Caribbean Produce Exchange, Inc.'s ("CPE") Motion for 12 S u m m a ry Judgment (Docket # 7), and accompanying Statement of Uncontested Material Facts 13 (" S U M F " ) (Docket # 23), José Carlos Vélez-Colon's ("Vélez") opposition thereto (Dockets ## 14 15 16 17 18 19 20 21 22 23 24 25 26 8 , 13 & 31-2), and CPE's Reply (Dockets ## 9-2 & 58). Also pending is Vélez's Motion for S u m m a ry Judgment (Docket # 29), which CPE opposed (Docket # 57). After reviewing the f ilin g s , and the applicable law, CPE's motion is GRANTED, and Vélez's motion is DENIED. Factual and Procedural Background O n May 30, 2008, Vélez, President of Hidrocultivos, J.C., Corp. ("Hidrocultivos"), filed s u it against CPE under the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681. According to Vélez, CPE obtained his credit report, under false pretenses and without a permissible p u rp o s e under FCRA. On July 18, 2008, CPE filed a motion to dismiss. This Court subsequently g ra n te d CPE's request to convert the same to a motion for summary judgment. See Dockets ## 1 2 & 21. Therein, CPE argues that Vélez's credit report is not a "consumer report" as defined b y the FCRA, and as a result, this Court lacks subject-matter jurisdiction. In the alternative, CPE a lle g e s that even if said report were covered by the FCRA, it was furnished due to a "legitimate b u s in e s s need" under Section 1681b(a)(3)(F). Vélez opposed, arguing that his credit report is

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a "consumer report" under the FCRA, and argues that CPE did not have a permissible purpose to procure said information. He further contends that CPE obtained his consumer report under f a ls e pretenses, and in violation of FCRA. T h e re a f te r, the parties filed numerous motions regarding procedural issues. Vélez then m o v e d for summary judgment, arguing that CPE obtained his credit report under false pretenses. V é le z also contends that he did not initiate a business transaction under the FCRA "legitimate b u s in e s s need" exception, thus, CPE did not have a permissible purposes to request his c o n s u m e r report. Pursuant to Vélez's request, and CPE's motion to strike for non-compliance

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w ith FED. R. CIV. P. 56, Vélez's motion for summary judgment was stricken from the record. S e e Dockets ## 31 & 55. However, per this Court's order, Vélez re-filed his Statement of U n c o n te s te d Facts. Docket # 29. O n April 24, 2009, Vélez filed an amended complaint, setting forth claims against G u a d a lb e rto Rodriguez-Rodriguez, Luis Rodriguez-Rodriguez, and Carmen Ramos, CPE's e m p lo ye e s . Docket # 32. Then, on July 6, 2009, he filed a motion for default entry against all d e f e n d a n ts , due to their alleged failure to answer the amended complaint. Docket # 47. Shortly th e re a f te r, Guadalberto Rodriguez-Rodriguez, Luis Rodriguez-Rodriguez, and Carmen Ramos f ile d a motion to dismiss, arguing insufficient service of process under FED. R. CIV. P. 4. Docket # 45. On July 9, 2009, Vélez filed a notice of voluntary dismissal (Docket # 50), to which CPE o p p o s e d (Docket # 49). Pursuant to this Court's orders, on August 10, 2009, CPE filed its o p p o s itio n to Plaintiff's additional facts, and its opposition to Plaintiff's Statement of U n c o n te s te d Facts at Docket # 29. On even date, this Court denied Vélez's notice of voluntary

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d ism is s a l. Docket # 62. Standard of Review F ED. R. CIV. P. 56 T h e Court may grant a motion for summary judgment when "the pleadings, depositions, a n s w e rs to interrogatories, and admissions on file, together with the affidavits, if any, show that th e re is no genuine issue as to any material fact and that the moving party is entitled to judgment

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a s a matter of law." FED.R.CIV.P. 56(c); See also Anderson v. Liberty Lobby, Inc., 477 U.S. 2 4 2 , 248(1986); Ramírez Rodríguez v. Boehringer Ingelheim, 425 F.3d 67, 77 (1 st Cir. 2005). In reaching such a determination, the Court may not weigh the evidence. Casas Office Machs., In c . v. Mita Copystar Am., Inc., 42 F.3d 668 (1st Cir. 1994). At this stage, the court examines th e record in the "light most favorable to the nonmovant," and indulges all "reasonable in f e re n c e s in that party's favor." Maldonado-Denis v. Castillo-Rodríguez, 23 F.3d 576, 581 (1 st

7 C ir. 1994). 8 9 10 11 12 13 14 15 16 17 18 19 a genuine issue of material fact. Cadle Co. v. Hayes, 116 F.3d 957, 960 (1 st Cir. 1997). Once 20 th e party moving for summary judgment has established an absence of material facts in dispute, 21 22 23 24 25 26 a n d that he or she is entitled to judgment as a matter of law, the "party opposing summary j u d g m e n t must present definite, competent evidence to rebut the motion." Méndez-Laboy v. A b b o t Lab., 424 F.3d 35, 37 (1st Cir. 2005) (quoting from Maldonado-Denis v. Castillo R o d ríg u e z , 23 F.3d 576, 581 (1st Cir. 1994). "The non-movant must `produce specific facts, in s u ita b le evidentiary form' sufficient to limn a trial-worthy issue. . . .Failure to do so allows the s u m m a ry judgment engine to operate at full throttle." Id.; see also Kelly v. United States, 924 O n c e the movant has averred that there is an absence of evidence to support the n o n m o v in g party's case, the burden shifts to the nonmovant to establish the existence of at least o n e fact in issue that is both genuine and material. Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990) (citations omitted). "A factual issue is `genuine' if `it may reasonably be re s o l v e d in favor of either party and, therefore, requires the finder of fact to make `a choice b e tw e e n the parties' differing versions of the truth at trial.'" DePoutout v. Raffaelly, 424 F.3d 1 1 2 , 116 (1st Cir. 2005)(quoting Garside, 895 F.2d at 48 (1st Cir. 1990)); see also SEC v. Ficken, 5 4 6 F.3d 45, 51 (1st Cir. 2008). In order to defeat summary judgment, the opposing party may not rest on conclusory a lle g a tio n s , improbable inferences, and unsupported speculation. See Hadfield v. McDonough, 4 0 7 F.3d 11, 15 (1st Cir. 2005) (citing Medina-Muńoz v. R.J. Reynolds Tobacco Co., 896 F.2d 5 , 8 (1st Cir. 1990). Nor will "effusive rhetoric" and "optimistic surmise" suffice to establish

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F .2 d 355, 358 (1st Cir. 1991) (warning that "the decision to sit idly by and allow the summary ju d g m e n t proponent to configure the record is likely to prove fraught with consequence"); M e d in a -M u ń o z , 896 F.2d at 8 (quoting Mack v. Great Atl. & Pac. Tea Co., 871 F.2d 179, 181 (1st Cir. 1989)) (holding that "[t]he evidence illustrating the factual controversy cannot be c o n je c tu ra l or problematic; it must have substance in the sense that it limns differing versions o f the truth which a factfinder must resolve."). When filing a motion for summary judgment,

7 b o th parties must comply with the requirements of Local Rule 56, and file a statement of facts, 8 9 10 11 12 13 14 15 16 17 18 19 a p p ro p ria te , be entered against that party." When "a party opposing summary judgment fails to 20 a c t in accordance with the rigors that such a rule imposes, a district court is free, in the exercise 21 22 23 24 25 26 o f its sound discretion, to accept the moving party's facts as stated." Cabán-Hernández v. Philip M o rris USA, Inc., 486 F.3d 1, 7 (1st Cir. 2007). These rules "are meant to ease the district c o u rt's operose task and to prevent parties from unfairly shifting the burdens of litigation to the c o u rt." Id. at 8. The First Circuit has held that when the parties ignore the Local Rule, they do s o at their own peril. See Ruiz-Rivera v. Riley, 209 F. 3d 24, 28 (1 st Cir. 2000). A p p lic a b le Law and Analysis s e t forth in numbered paragraphs, and supported by record citations. See Local Rule 56(b). In tu rn , when confronted with a motion for summary judgment, the opposing party must: [ s ]u b m it with its opposition a separate, short, and concise statement of material f a c ts . The opposition shall admit, deny or qualify the facts by reference to each n u m b e re d paragraph of the moving party's statement of material facts and unless a fact is admitted, shall support each denial or qualification by a record citation a s required by this rule. The opposing statement may contain in a separate section a d d itio n a l facts, set forth in separate numbered paragraphs and supported by a re c o rd citation...Local Rule 56(c). L o c a l Rule 56(e) further provides that "[a]n assertion of fact set forth in a statement of material f a c ts shall be followed by a citation to the specific page or paragraph of identified record m a te ria l supporting the assertion." Moreover, a "court may disregard any statement of material f a c t not supported by a specific record citation to record material properly considered on s u m m a ry judgment." Local Rule 56(e). Local Rule 56(e)(2) further states that, if the opposing p a rty does not respond to a motion for summary judgment, "summary judgment should, if

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In the present case, Vélez was granted several opportunities to correct procedural m is t a k e s . Specifically, this Court allowed him to re-file his opposition to CPE's motion for s u m m a ry judgment, as well as his statement of material facts in support of his request for s u m m a ry judgment. See Docket # 55. Notwithstanding, Vélez's Statement of Disputed Facts ( D o c k e t # 31-2) does not comply with Local Rule 56, which requires that a party opposing a m o tio n for summary judgment admit, deny or qualify the facts by reference to each numbered

7 p a ra g ra p h of the moving party's statement of material facts. In his opposition, Vélez partially 8 9 10 11 12 13 14 15 16 17 18 19 e v id e n c e ...[ h ]e a rs a y evidence, inadmissible at trial, cannot be considered on a motion for 20 21 22 23 24 25 26 s u m m a ry judgment." SEC v. Ficken, 546 F.3d 45, 53 (1s t Cir. 2008) (citing Garside v. Osco D ru g , Inc., 895 F.2d 46, 50 (1st Cir. 1990)). Moreover, Vélez fails to point out hearsay e x c e p tio n s and exclusions, and accompanying argumentation, that would lead to a different c o n c lu s io n . Bennett v. Saint-Gobain Corp., 507 F.3d 23, 28 (1st Cir. 2007). As a result, this C o u rt will ignore those statements that are based upon hearsay. A ls o , ¶¶ 5, 6, 9, 11, and portions of ¶ 8 and 13 are conclusory allegations, and u n s u p p o rte d speculation, since Vélez solely focuses on third-party motivations without a d m itte d SUMF ¶ 1, which will be discussed shortly. Vélez, however, did not admit, deny or q u a lif y the rest of CPE's SUMF by reference to each numbered paragraph. Instead, Vélez stated th a t "the rest of the statements are accepted in part, denied in part on the same grounds." Docket # 31-2, p. 3. Furthermore, Vélez's Statement of Additional Facts is fraught with conclusory a lle g a tio n s , hearsay, and highly speculative assertions of fact. Thus, although as will be d isc u s s e d below, CPE partially failed to provide specific page and paragraph numbers in its re p ly to Vélez's additional statements of facts, said facts cannot be considered by this Court. S p e c if ic a lly, in ¶3 and a portion of ¶13, which are exclusively supported by Vélez's sworn s ta te m e n t, and the complaint's allegations, Vélez sets forth what a CPE's "agent" allegedly told h im via telephone on two separate occasions. Since Rule 56 (e)(1) states that, in opposing s u m m a ry judgment, an "affidavit must . . . set out facts that would be admissible in

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re f e re n c e s to evidence on the record. Although courts must evaluate the record in the light most f a v o ra b le to the non-movant, summary judgment cannot be defeated by relying on conclusory a lle g a tio n s . Rios-Jimenez v. Sec'y of Veterans Affairs, 520 F.3d 31 (1 st Cir. 2008) (citing In g ra m v. Brink's, Inc., 414 F.3d 222, 228-29 (1st Cir. 2005)). Moreover, at ¶ 4, Vélez avers that he never requested an extension of credit to CPE, and a t ¶ 10, Vélez reiterates that he "is not seeking damages for failure to give notice of credit

7 a d v e rse action precisely because no credit extension was ever requested..." Docket # 31-2, p. 8 9 10 11 12 13 14 15 16 17 18 19 re f e rre d to Luis Rodriguez as the caller, including in the accompanying sworn statement. In 20 lig h t of the foregoing, this Court finds that Vélez's statements on this front are contradictory, 21 22 23 24 25 26 Although Vélez contests that his social security number was never included in the application, he does not dispute the rest of its contents, and admits that he signed the application.
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5 . However, the record shows that Vélez signed a form titled "Caribbean Produce Application f o r Commercial Credit,"authorizing "the investigation and the exchange of credit information in regard to [said] application." The application further provides that Vélez, in his personal c a p a c ity, would be jointly and severally liable to CPE by reason of products served by credit. A s such, Vélez's statements of fact ¶¶ 4 and 10 contradict the evidence on the record, as well a s his admission regarding the veracity of the application.1 See Docket # 31-2, page 1. T h e re f o re , ¶ 4 will be disregarded by this Court. At ¶ 12, Vélez states that he received at least two phone calls from CPE's "agent," who id e n tif ie d himself as Luis Rodriguez. Notwithstanding, on August 14, 2009, Vélez filed a m o tio n informing this Court that he had mistakenly stated that Luis Rodriguez had called him, a n d later, after reviewing his note-pad, realized that it had been Guadalberto RodriguezR o d rig u e z . Docket # 59. This Court notes that prior to filing said motion, Vélez at all times

a n d shall be disregarded upon ruling on the instant motion. Lastly, in its reply to Velez's additional facts (Docket # 31), CPE provides the sworn s ta te m e n ts of Maria Candelas, CPE's comptroller, and Carmen Ramos, CPE's sales manager.

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S in c e Candelas' sworn statement is three pages long, and CPE failed to provide the page n u m b e rs in support of each reply statement of fact, this Court cannot consider those facts s u p p o rte d by Candelas' affidavit, in ruling upon this motion. Nevertheless, considering that R a m o s ' sworn statement consists of a single page, those reply statements of fact supported by h e r declaration, and which are not properly rebutted by Vélez, are deemed admitted. B a s e d on the foregoing, the uncontested facts are as follows: Plaintiff is an individual.

7 D o c k e t # 29, ¶ 2. Trans Union is a consumer reporting agency. Docket # 29, ¶ 3. On May 24, 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 2 0 0 7 , Vélez signed a form, in the Spanish language, titled "Caribbean Produce Application for C o m m e rc ia l Credit." SUMF at ¶ 1; Docket # 29, ¶ 1. In a section labeled "Name of Business o r Applicant", Vélez wrote "Hidrocultivos J.C. Corp." Id. at ¶ 2. Moreover, under a heading title d "Persons authorized to negotiate merchandise with charges to us", Vélez printed his name. Id . at ¶ 3. Below Vélez's name, and above his signature, the following text appears: I affirm that the previous answers are true and correct. I authorize the in v e s tig a tio n and the exchange of credit information in regard to this application. I agree that this application is and will remain as your property, the credit re q u e s t e d , be or not approved. If the credit applied for is approved, this a p p lic a tio n will constitute a continuing and irrevocable guaranty contract. The u n d e r s i g n e d will agree in his/her/their personal capacity to pay jointly and s e v e ra lly what is owed to Caribbean Produce Exchange, Inc. by reason of p ro d u c ts served by credit under the terms of this contract. We understand that any p r o d u c t served by credit to the applicant by Caribbean Produce Exchange, Inc. w ill be protected by the dispositions of the Perishable Agricultural Commodities A c t (PACA) and that it must paid no later than the terms established herein. In c a s e of a legal claim the undersigned will submit to the jurisdiction and control o f the Courts in San Juan and we agree to cover the costs, expenses and d is b u rs e m e n ts caused by the claim, and also attorney fees in an amount not lower th a n twenty (20) percent of the original principal of this claim with the mere f i l in g of the complaint. In case of selling the business, you must notify said tra n s a c tio n at least twelve (12) days before in writing returned receipt requested, o th e rw is e you will continue being responsible for the credit granted herein (Law 6 0 ). Id. at ¶ 4. The Form is signed and dated by Vélez on May 24, 2007. Id. at ¶ 5. His signature a p p e a rs on the section labeled "Signature of Applicant." Id. at ¶ 6. In order to speed up the c o m m e rc ia l credit application, which required the applicant's information and social security n u m b e r, Vélez provided his social security number to Ramos via telephone, who in turn gave

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Civil No. 08-1607 (SEC) it to Candelas, CPE's comptroller. Docket # 58, ¶¶ 4-6.2

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O n or around May 25, 2007, Trans Union furnished some information to CPE regarding V é le z . Docket # 29, ¶ 4. On even date, CPE certified to Trans Union that the request for Vélez's in f o rm a tio n was a "customer initiated transaction." Docket # 29, ¶ 6. CPE did not certify to T ra n s Union that it would use Vélez's consumer report for purposes of credit, employment, or in su ra n c e purposes. Docket # 29, ¶ 7. Later on, Vélez voluntarily discontinued the credit

7 a p p lic a tio n process. Docket # 58, ¶¶ 8 & 10. 8 9 10 11 12 13 14 15 16 17 18 19 In the alternative, CPE alleges that even if said report were covered by the FCRA, it was 20 o b ta in e d due to a "legitimate business need," under Section 1981b(a)(3)(F). Specifically, CPE 21 22 23 24 25 26 Since Vélez did not file an opposition to CPE's reply statements, after reviewing the same, this Court finds that these facts are uncontested.
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In its motion for summary judgment, CPE argues that Vélez's credit report is not a " c o n s u m e r report" as defined by the FCRA. In support thereof, CPE points out that a "consumer re p o rt" is defined as certain information furnished by a consumer reporting agency bearing on a consumer's credit worthiness, "which is used for the sole purpose of serving as a factor in e s ta b lis h in g the consumer's eligibility for...credit or insurance purposes, employment purposes, o r any other purpose authorized under section 1681b of this title." 15 U.S.C. § 1681a (emphasis p ro v id e d ). According to CPE, reports utilized for business, commercial, or professional p u rp o s e s are not covered by FCRA, and Vélez's credit report was obtained solely to establish h is business' credit eligibility. As such, CPE argues that insofar as Vélez's report was not o b ta in e d for personal, family, or household purposes, nor one of the permissible purposes under S e c tio n 1681b, it is not a "consumer report" under the FCRA, and as a result, said statute is in a p p lic a b le to the case at bar.

n o te s that Section 1681b(a)(3)(F)(i) provides that a consumer reporting agency may furnish a c o n s u m e r report to a person which it has reason to believe has a legitimate business need for th e information, in connection with a business transaction that is initiated by the consumer. CPE

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c o n te n d s that Vélez's report was obtained for legitimate business reasons, and in connection w ith a business transaction that was initiated by the consumer. As such, CPE argues that it had a permissible purpose to obtain Vélez's credit report. In opposition, Vélez avers that the credit application was made on behalf of H id ro c u ltiv o s, not in his individual capacity. He further argues that CPE had no permissible p u rp o s e under FRCA to obtain his credit report. Specifically, Vélez posits that CPE obtained

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h is credit report pursuant to Section 1681b(a)(3)(F)'s business needs exception, without in f o rm in g the customer reporting agency the true use or purpose of said information. According to Vélez, "the information collected by the credit reporting agency was collected in whole or in part for the purpose of serving as a factor in establishing Plaintiff's eligibility for credit, but n o t for business purposes." Docket # 8, p. 3. According to Vélez, the information collected by C P E is a "consumer report" under the FRCA, which was obtained under false pretenses. Vélez f u rth e r contends that he never provided his social security number to CPE or its employees, thus a n y inquiry into his credit report was unauthorized. A f te r reviewing the record, this Court first notes that Vélez's social security number does n o t appear in the Spanish language copy of the commercial credit application. Notwithstanding, in its reply statements, CPE argued that Vélez failed to provide the same, and as a result, R a m o s , CPE's General Manager, called Vélez to request said information in order to speed up th e application process, and Vélez voluntarily provided his social security number. See Docket # 58, ¶¶ 4-6; Docket # 58-3, Ramos' Sworn Statement. Since Vélez did not provide any

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s ta te m e n t or evidence to rebut Ramos' declaration, the proposed reply statements are deemed u n c o n te s te d for purposes of this motion. As a result, this Court finds that Vélez voluntarily p ro v id e d his social security to CPE in order to speed up, and complete the commercial credit a p p lic a tio n , despite the fact that he later discontinued the application process. Thus, this Court must now determine whether Vélez's credit report is a "consumer re p o rt" pursuant to the FCRA. " C o n s u m e r Report"

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C o n g re s s enacted the FCRA in 1970 as part of the Consumer Credit Protection Act "to e n s u re fair and accurate credit reporting, promote efficiency in the banking system, and protect c o n s u m e r privacy." Sullivan v. Greenwood Credit Union, 520 F.3d 70, 73 (1 st Cir. 2008) (citing Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52 (2007)). In so doing, "FCRA regulates access to individuals' "consumer reports" Dixon v. Shamrock Fin. Corp., 522 F.3d 76, 77 (1 st Cir. 2 0 0 8 ). Pursuant to FRCA, "[a]n entity may gain access to an individual's consumer report only

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w ith the written consent of the individual, unless the consumer report is to be used for certain `p e rm is sib le purposes,' in which case written consent is not required." Id.; see 15 U.S.C. § § 1 6 8 1 b (a )(2 ) and (3). FCRA defines a "consumer report" as "any written, oral, or other communication of any in f o rm a tio n by a consumer reporting agency bearing on a consumer's credit worthiness, credit s ta n d in g , credit capacity, character, general reputation, personal characteristics, or mode of liv in g which is used for the sole purpose of serving as a factor in establishing the consumer's e li g i b ility for...credit or insurance purposes, employment purposes, or any other purpose a u th o r iz e d under section 1681b of this title." 15 U.S.C. § 1681a (emphasis provided). A c c o rd in g ly, courts have held that "[i]f the information was used or expected to be used to a s s e s s an individual's eligibility for personal credit, insurance, or employment, then the in f o rm a tio n constitutes a `consumer report,' and is governed by FCRA." Zeller v. Samia, 758 F . Supp. 775, 780 (D. Mass 1991) (citing Ippolito, 864 F.2d at 449. Section 1681b, commonly referred to as a "catch-all provision", sets forth the only

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p e rm is s ib le purposes under which a consumer reporting agency may furnish a consumer report. It provides, in pertinent part, that: a n y consumer reporting agency may furnish a consumer report under the f o llo w in g circumstances and no other: . .. . (2 ) In accordance with the written instructions of the consumer to whom it relates. (3 ) To a person which it has reason to believe. .. (F ) otherwise has a legitimate business need for the information(i) in connection with a business transaction that is initiated

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Civil No. 08-1607 (SEC) b y the consumer; or (ii) to review an account to determine whether the consumer c o n tin u e s to meet the terms of the account.

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P rio r to 1996, Section 1681b(3)(E) read "a consumer reporting agency may furnish a c o n s u m e r report under the following circumstances and no other: ... " (3) [t]o a person which it has reason to believe ... (E) otherwise has a legitimate business need for the information in c o n n e c tio n with a business transaction involving the consumer." (Emphasis provided). Section

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1 6 8 1 b was amended in 1996, and the "business need" exception was renumbered as S e c tio n 1 6 8 1 b (a )(3 )(F ). As previously mentioned, said subsection now provides that a party may o b ta in a report if it "otherwise has a legitimate business need for the information-- (i) in c o n n e c tio n with a business transaction that is initiated by the consumer..." See Bakker v. M c K in n o n , 152 F.3d 1007, 1011 (8th Cir. 1998). Courts have held that "[t]he terms `legitimate b u s in e s s need' and `in connection with' refer to the needs and objectives of the individual to w h o m the report is furnished, not the needs of the person about whom the report is furnished." Z e l l e r, 758 F. Supp. at 782 (citing Fernandez v. Retail Credit Co., 349 F. Supp. 652, 654-55 (E .D .L a . 1972)).3 C o u rts have differed regarding the factors to be considered in determining whether credit in f o rm a tio n constitutes a "consumer report" under FCRA. In Bakker, 152 F.3d at 1012, the c o u rt held that determining "whether a credit report is a consumer report does not depend solely u p o n the ultimate use to which the information contained therein is put, but instead, it is g o v e rn e d by the purpose for which the information was originally collected in whole or in part

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b y the consumer reporting agency." Thus the Eighth Circuit concluded that regardless of the in te n d e d use of the credit reports, they will be considered consumer reports within the meaning o f the FCRA if the information contained therein was collected for a consumer purpose, i.e., c re d it or insurance purposes, employment purposes, or any other purpose authorized under

Vélez argues that cases decided prior to the 1996 amendments are null. However, the cases herein cited have been reiterated by courts after said amendments, and remain prevalent case law.

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s e c tio n 1681b. Id. As a result, "even if a report is used or expected to be used for a n o n -c o n s u m e r purpose, it may still fall within the definition of a consumer report if it contains in f o rm a tio n that was originally collected by a consumer reporting agency with the expectation th a t it would be used for a consumer purpose." Id. (citing Ippolito, 864 F.2d at 453). Zeller, 758 F . Supp. at 780, adopted this view, holding that "if the user of a report led the reporting agency to believe that the report would be used for a permissible purpose under the Act, then the report

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i s a `consumer report,' and the ultimate use to which the report is actually put is irrelevant to th e question of whether the FCRA governs the report's use and the user's conduct." Thus "if th e information was collected for one of the purposes under the Act, it is a `consumer report' re g a rd le s s of the purpose which the report is subsequently used." Id. However, Ippolito, 864 F.2d at 449-50 n.10, also warns that "because of the circular d e f in itio n of `consumer report,' [section] 1681b's limitations on the dissemination of consumer re p o rts are essentially rendered meaningless if the sole determination of whether a report is a c o n s u m e r report is made solely by looking at the reason for which the report is requested." See a ls o Yang v. Government Emples. Ins. Co., 146 F.3d 1320, 1325 (11 th Cir. 1998). The court f u rth e r noted that albeit the plain language of the statute, "`used or expected to be used or c o lle c te d in whole or in part' requires an inquiry into the reasons why the report was requested a n d why the information contained in the report was collected or expected to be used by the c o n s u m e r reporting agency," an inquiry regarding the use of the report is also needed. Ippolito, 8 6 4 F.2d at 449-50 n.10. Otherwise, consumer reporting agencies will provide consumer reports

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w h e n a person requests the same for a purpose set forth in Section 1681b, as well as when a re p o rt is not under one of the permissible purposes because it is not covered by the FCRA. Moreover, although courts have held that information used or expected to be used to a s se s s an individual's eligibility for personal credit, insurance, or employment, is a consumer re p o rt under FCRA, Zeller, 758 F. Supp. at 780 (citing Ippolito, 864 F.2d at 449), it is also well e s ta b lis h e d that "[r]eports issued for commercial, business or professional purposes are outside th e scope of the Act." Id. (citing Ippolito, 864 F.2d at 452). Ippolito recognized that "Congress

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s o u g h t to regulate the dissemination of information used for consumer purposes, not business p u rp o s e s ." Since FCRA is designed to protect consumers only in their individual capacities, w h e re a corporate plaintiff applies for credit for a commercial purpose, the plaintiff is not a m e m b e r of the class the Act was intended to benefit. Id. Similarly, courts have found that credit re p o rts obtained in connection with applications for commercial credit are not "consumer re p o rts " under FCRA. Matthews v. Worthen, 741 F.2d 217, 218 (8 th Cir. 1984); Ley v. Boron O i l , 419 F. Supp. 1240, 1243 (noting that FCRA regulates the reporting of credit matters i n v o l v i n g individuals as consumers, and was not meant to cover business credit reports p e rta in in g to the business activities of the person reported on); Sizemore v. Bambi Leasing C o rp ., 360 F. Supp. 252, 254 (N.D.Ga.1973) (holding that the use of a credit report in c o n n e c tio n with a lease application for business purposes, i.e., an application for commercial c re d it, falls outside the protection afforded by FCRA). Civil Liability under FRCA F C R A provides a private right of action against businesses that use consumer reports but f a il to comply with its provisions. Safeco, 551 U.S. at 53. Accordingly, "[i]f a violation is n e g lig e n t, the affected consumer is entitled to actual damages... [i]f willful [or reckless], h o w e v e r, the consumer may have actual damages, or statutory damages ranging from $100 to $ 1 ,0 0 0 , and even punitive damages." Id. Section 1681n(a) provides that "[a]ny person who w illf u lly fails to comply with any requirement imposed under this subchapter with respect to a n y consumer..." may be held liable to that consumer for actual damages or damages of not less

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th a n $100 and not more than $1,000. Under the FCRA, to constitute willful noncompliance u n d e r Section 1681n, a party must have "knowingly and intentionally committed an act in c o n s c io u s disregard for the rights of others." Stevenson v. TRW, Inc., 987 F.2d 288, 293 (5th C ir. 1993); Richardson v. Fleet Bank, 190 F. Supp.2d 81, 89 (D. Mass. 2001). N e v e rth e le s s , if the offender is liable "for obtaining a consumer report under false p r e te n s e s or knowingly without a permissible purpose," actual damages or $1,000 may be im p o se d . Safeco, 551 U.S. 47 at 59. Section 1681q of FCRA provides "[a]ny person who

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k n o w in g ly and willfully obtains information on a consumer from a consumer reporting agency u n d e r false pretenses shall be fined not more than $5,000 or imprisoned not more than one year, o r both."4 To determine whether a request for a consumer report has been made under "false p re te n s e s " , courts must look at the permissible purposes for which consumer reports may be o b ta in e d under 15 U.S.C. § 1681b of the FCRA. Veno v. AT&T Corp., 297 F. Supp. 2d 379, 3 8 5 (D. Mass. 2003) (citing Graziano v. TRW, Inc., 877 F. Supp. 53, 57 (D. Mass. 1995). Thus

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" [ i]f a user requests information from a consumer reporting agency for a purpose not permitted b y section 1681b, while representing to the agency that the report will be used for a permissible p u rp o s e , the user may be liable for obtaining information under false pretenses under section 1 6 8 1 q ." Zeller, 758 F. Supp. at 781. In the present case, per Vélez's own admission, CPE did not certify that his report would b e used for credit, insurance, or employment purposes. Docket # 29, ¶ 7. As such, the report in q u e s tio n can only be deemed a "consumer report" if it was obtained under one of Section 1 6 8 1 b 's permissible purposes. Pursuant to the uncontested facts, Vélez filled out an application f o r commercial credit, on behalf on Hidrocultivos. The application form, signed by Vélez, e x p re ss ly provided that he "authorize[d] the investigation and the exchange of credit in f o rm a tio n in regard[s] to [the] application..." Moreover, the application states that if credit w e re approved, Vélez would be jointly and severally liable for any amounts owed to CPE by re a s o n of products served by credit under the terms of the contract. Insofar as Vélez authorized th e credit investigation via the signed commercial credit application form, for the sole purpose

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o f obtaining credit for Hidrocultivos, and access to CPE's services, the report obtained by CPE is outside the scope of FCRA. As previously stated, "[r]eports issued for commercial, business o r professional purposes are outside the scope of the Act." Zeller, 758 F. Supp. at 780 (citing Ip p o lito , 864 F.2d at 452). Accordingly, credit reports obtained in connection with applications f o r commercial credit are not "consumer reports" under FCRA. Ley v. Boron Oil, 419 F. Supp.

4

Section 1681q does not include negligent violations. Graziano, 877 F. Supp at 56.

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a t 1243. Here, Vélez sought credit for a commercial purpose. Therefore, he is not a member of th e class FCRA was intended to benefit. Zeller, 758 F. Supp. at 780 (citing Ippolito, 864 F.2d a t 452). This follows Congress' purpose to regulate the dissemination of information used for c o n s u m e r purposes, not business purposes. Vélez argues that the wording "customer initiated transaction" shows that CPE a d m itte d ly requested a consumer report under Section 1681b(a)(3)(F), but later used said

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in f o rm a tio n for other purposes, in violation of FCRA. Based on the foregoing, Vélez argues that h is credit report was obtained under false pretenses. Even assuming that the credit report was a "consumer report" covered by FCRA, Vélez's allegations on this front fail. First, Vélez a u th o riz e d the inquiry in writing, as such, Section 1681b(a)(2)'s permissible purpose is met.5 F u rth e rm o re , a consumer reporting agency may furnish a credit report to a person it has reason to believe has a "legitimate business need" for the information in connection with a business tra n s a c tio n initiated by the consumer. 15 U.S.C. § 1681b(a)(3(F)(i). Clearly, Vélez's written re q u e st for commercial credit on behalf of Hidrocultivos shows CPE's legitimate business need f o r the information sought. Thus even assuming that the information sought is a consumer re p o rt under the FCRA, it was obtained by CPE for a permissible purpose, i.e., in connection w i t h a business transaction initiated by the consumer. As discussed earlier, a "legitimate b u s in e s s need," refers to the needs and objectives of the individual to whom the report is f u rn is h e d , in this case CPE, not the needs of the person about whom the report is furnished. Z e lle r, 758 F. Supp. at 782.

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Supplemental State Law Claims H a v in g dismissed Vélez's federal law claims against CPE, his state law claims against C P E are also dismissed. See Newman v. Burgin, 930 F.2d 955, 963 (1st Cir. 1991) (holding that " [ t]h e power of a federal court to hear and to determine sate-law claims in non-diversity cases

A consumer report may be furnished "in accordance with the written instructions of the consumer to whom it relates."

5

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Civil No. 08-1607 (SEC) d e p e n d s upon the presence of at least one `substantial' federal claim in the lawsuit.") Conclusion

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B a s e d on the foregoing, CPE's motion for summary judgment is GRANTED, and V é le z 's motion for summary judgment is DENIED. The instant case is DISMISSED with p r e ju d ic e . I T IS SO ORDERED.

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S a n Juan, Puerto Rico, this 8th day of December, 2009. S /S a lv a d o r E. Casellas S a lv a d o r E. Casellas U .S . District Judge