Phillips v. Trans Union, LLC et al

Filing 36

MEMORANDUM OPINION. Signed by Judge Norman K. Moon on 9/6/17. (hnw)

9/6/2017
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
CHARLOTTESVILLE DIVISION
LISA PHILLIPS,

CASE NO. 3:16-CV-00088
Plaintiff,
MEMORANDUM OPINION

v.
TRANS UNION, LLC, ET AL.,

JUDGE NORMAN K. MOON

Defendants.

This case, brought by Plaintiff Lisa Phillips (“Phillips”), concerns information that
Defendant Specialized Loan Servicing, LLC (“SLS”) provided to credit reporting agencies, like
Defendant Trans Union, LLC (“Trans Union”), and that these agencies publish in credit reports.
Phillips now seeks summary judgment against SLS on Counts I and II of the Complaint. (Dkt.
30). Count I alleges a negligent violation of the Fair Credit Reporting Act (“FCRA”), and Count
II alleges a willful violation of the FCRA. The two counts allege that SLS provided inaccurate
or incomplete information about Phillips to Trans Union. SLS opposes summary judgment,
arguing that Phillips lacks Article III standing and ignores evidence that validates the
information it furnished. (Dkt. 35 at 4-5).
As explained below, Phillips has standing under Spokeo v. Robins, 136 S. Ct. 1540
(2016), both because her alleged injury is analogous to common law causes of action (like
defamation and libel) and because she allegedly has suffered the type of harm Congress sought
to prevent by enacting the FCRA. On the merits, this Court will deny Phillips’ motion as to the
negligent violation of the FCRA because there is a genuine dispute of material fact over whether
SLS’s investigation into any inaccuracies was reasonable. This Court will also deny Phillips’
motion as to the allegedly willful violation of the FCRA because a reasonable jury need not find
that any of the alleged violations were willful.

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I. LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) provides that a court should grant summary
judgment “if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). A fact is “material” if it “might affect the outcome of the suit under the
governing law will properly preclude the entry of summary judgment.” Id. In order to preclude
summary judgment, the dispute about that material fact must be “genuine.” Id. A dispute is
“genuine” if “the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Id.; see also JKC Holding Co. v. Washington Sports Ventures, Inc., 264 F.3d 459, 465
(4th Cir. 2001). If, however, the evidence of a genuine issue of material fact “is merely
colorable or is not significantly probative, summary judgment may be granted.” Anderson, 477
U.S. at 250. In considering a motion for summary judgment under Rule 56, a court must view
the record as a whole and draw all reasonable inferences in the light most favorable to the
nonmoving party. See, e.g., Celotex Corp. v. Catrett, 477 U.S. 317, 322–24 (1986); Shaw v.
Stroud, 13 F.3d 791, 798 (4th Cir. 1994).
II. FACTS
Lisa Phillips owned a home in Las Vegas, Nevada. (Dkt. 30-1 at 3). In November 2006,
Phillips obtained a second mortgage on that home for $77,764.80. (Dkt. 30-2 at 1). The original
servicer of this second mortgage transferred it to SLS for servicing on August 5, 2009. (Dkt. 303 at 2). Phillips then defaulted on this loan. (Dkt. 30-8). She made her last payment on August
26, 2009, the same month that the loan was transferred to SLS. (Dkts. 30-5, 30-6, 30-7).
Approximately three months later SLS “charged-off” the loan. (Dkt. 30-4 at 7).1 SLS sold the
home in a short sale in January 2011. (Dkt. 30-9). SLS and Phillips negotiated a settlement
1

“The term[ ] . . . ‘charge-off’ describe[s] a debt that is deemed uncollectible and written
off.” Saunders v. Branch Banking And Tr. Co. Va., 526 F.3d 142, 146 n.2 (4th Cir. 2008).
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agreement for the outstanding balance of the loan in May 2011, and Phillips paid $4,000 to settle
her outstanding debt on June 27, 2011. (Dkts. 35-1, 35-2). At this point, SLS confirmed that
Phillips no longer owed it any money. (Dkts. 30-4 at 23, 30-3 at 1).
In the following years, Phillips disagreed with how credit reporting agencies were
displaying this now-settled debt on her credit report. She sent Trans Union three letters in 2016
expressing her concerns. (Dkts. 30-10, 30-14, 30-16). Phillips disputed when she had first fallen
behind on the loan—specifically she contended that her first delinquency was in September
2009, but that the credit reports wrongly reported that it was in June 2011. (Id.). Trans Union, in
turn, contacted SLS to verify the information that Phillips disputed using Automated Consumer
Dispute Verification (“ACDV”) forms. (Dkts. 30-5, 30-6, 30-7, 30-11 at 68). These forms are
part of the industry standard format for credit reporting developed by the Consumer Data
Industry Association (“CDIA”). (Dkt. 30-11 at 15). There is “an industry-wide automated
consumer dispute resolution system,” called e-OSCAR, that allows furnishers and credit
reporting agencies the ability to verify consumer disputes using these ACDV forms. (Id. at 17).
SLS responded, also using these forms, that it was reporting the disputed information
correctly, contrary to Phillips’ protestations.

(Dkts. 30-5, 30-6, 30-7).

communicated at least two of SLS’s responses back to Phillips.

Trans Union

(Dkts. 30-15, 30-16).

Unsatisfied, Phillips filed this lawsuit. (Dkt. 1).
III. DISCUSSION
A.

Phillips has Article III standing.

SLS suggests that Phillips lacks Article III standing. (Dkt. 35 at 6). In particular, SLS
notes that Phillips has not put forward evidence specifying what monetary or emotional distress
damages she has incurred. (Id. at 7). SLS has not formally brought a motion to dismiss or a
cross-motion for summary judgment based on a lack of standing, but if jurisdiction “ceases to
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exist, the only function remaining to the court is that of announcing the fact and dismissing the
cause.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998) (quoting Ex parte
McCardle, 74 U.S. (7 Wall.) 506, 514 (1868)). Accordingly, a discussion of standing and the
Court’s jurisdiction follows.
“Standing ‘is a threshold jurisdictional question’ that ensures a suit is ‘appropriate for the
exercise of the [federal] courts’ judicial powers.’” Dreher v. Experian Info. Sols., Inc., 856 F.3d
337, 343 (4th Cir. 2017) (quoting Pye v. United States, 269 F.3d 459, 466 (4th Cir. 2001))
(alteration in Dreher). To have standing a “plaintiff must have (1) suffered an injury in fact, (2)
that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be
redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547
(2016), as revised (May 24, 2016) (citing Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992)).
An injury in fact must be both “concrete” and “particularized.” Id. “A ‘concrete’ injury must be
‘de facto’; that is, it must actually exist.” Id. (citing Black’s Law Dictionary 479 (9th ed. 2009)).
And “[f]or an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal and
individual way.’” Id. (quoting Lujan, 504 U.S. at 560).
Concerns about the concreteness of injuries arising from statutory violations are
heightened in the FCRA context. Last year, in Spokeo, the Supreme Court observed that “[a]
violation of one of the FCRA’s procedural requirements may result in no harm” and so a mere
procedural violation of the FCRA that produces no “concrete and particular” injury will not be
justiciable. Id. at 1548, 1550. However, the Supreme Court reiterated that “intangible injuries
can nevertheless be concrete,” id. at 1549 (citing injuries to free speech and free exercise rights),
and has provided two tests to guide the concreteness analysis. Id.; In re Horizon Healthcare
Servs. Inc. Data Breach Litig., 846 F.3d 625, 637 (3d Cir. 2017) (“There are thus two tests for
whether an intangible injury can (despite the obvious linguistic contradiction) be ‘concrete.’”).
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First, “it is instructive to consider whether an alleged intangible harm has a close
relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in
English or American courts.” Spokeo, 136 S. Ct. at 1549. If the “alleged intangible harm” does
have a close relationship to a traditionally recognized harm, “it is likely to be sufficient to satisfy
the injury-in-fact element of standing.” In re Horizon, 846 F.3d at 637. This analogy to the past
makes sense “[b]ecause the doctrine of standing derives from the case-or-controversy
requirement, and because that requirement in turn is grounded in historical practice.” Spokeo,
136 S. Ct. at 1549.
If the “alleged intangible harm” does not have a close relationship to a traditionally
recognized harm, we move to the second test. This inquiry asks whether, even in the absence of
a traditional harm, Congress has sought to “identify[] and elevat[e] [this] intangible harm[]” and
make it redressable. Spokeo, 136 S. Ct. at 1549 (“[B]ecause Congress is well positioned to
identify intangible harms that meet minimum Article III requirements, its judgment is also
instructive and important.”). Of course, Congress cannot outflank Article III’s requirements.
See Summers v. Earth Island Inst., 555 U.S. 488, 496 (2009) (“[D]eprivation of a procedural
right without some concrete interest that is affected by the deprivation—a procedural right in
vacuo—is insufficient to create Article III standing.”); Dreher v. Experian Info. Sols., Inc., 856
F.3d 337, 344 (4th Cir. 2017) (“[A] plaintiff cannot automatically satisfy the injury in fact
requirement just because ‘a statute grants a person a statutory right and purports to authorize that
person to sue to vindicate that right.’”). But Congress may, and frequently does, “accord[] a
procedural right to protect [a plaintiff’s] concrete interests.” Lujan v. Defs. of Wildlife, 504 U.S.
555, 572 n.7 (1992). The recipient of such a procedural right can “assert that right without
meeting all the normal standards for redressability and immediacy.” Id.; see also Strubel v.
Comenity Bank, 842 F.3d 181, 189 (2d Cir. 2016) (“[W]here Congress confers a procedural right
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in order to protect a concrete interest, a violation of the procedure may demonstrate a sufficient
‘risk of real harm’ to the underlying interest to establish concrete injury without ‘need [to] allege
any additional harm beyond the one Congress has identified.’” (quoting Spokeo, 136 S.Ct. at
1549)).
Earlier this year, the Fourth Circuit engaged in Spokeo’s two-part analysis. Dreher, 856
F.3d at 337. In Dreher, the defendant “list[ed] a defunct credit card company, rather than the
name of its servicer, as a ‘source[ ] of . . . information’ on an individual’s credit report.” Id. at
340 (second alteration in original). “Dreher claim[ed] he suffered a cognizable ‘informational
injury’ because he was denied ‘specific information to which [he] w[as] entitled under the
FCRA’”—namely the contact information for the servicer he was interacting with. Id. at 345.
But the court could “find no traditional right of action that is comparable.” Id. It quickly moved
on to the second leg of the inquiry: whether the procedural right protected “the type of harm
Congress sought to prevent.” Id. at 347 (citation omitted). “In enacting the FCRA, Congress
sought ‘to ensure fair and accurate credit reporting, promote efficiency in the banking system,
and protect consumer privacy.’” Id. (quoting Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 52
(2007)). But “Dreher . . . failed to show how the knowledge that he was corresponding with [the
servicer’s] employee, rather than [the defunct credit card’s] employee, would have made any
difference at all in the ‘fair[ness] or accura[cy]’ of his credit report, or that it would have made
the credit resolution process more efficient.” Id. at 346 (third and fourth alterations in the
original). The alleged procedural violation did not correspond to a traditional right of action or
the concrete interests that Congress sought to protect, so Dreher did not have standing. Id. at
340.
As for Phillips, her injury consists of SLS’s allegedly inaccurate reporting of her credit
information to the credit reporting agencies. (Dkts. 30-5, 30-6, 30-7). More specifically, SLS
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allegedly reported the wrong date of Phillips’ first delinquency. (Id.). This date matters both
because it informs potential creditors how long ago this delinquency occurred and because credit
reporting agencies use it to determine how long her delinquent loan should remain on credit
reports. See 15 U.S.C. § 1681c(c)(1). Importantly, this allegedly inaccurate information was
about Phillips herself, and not, as in Dreher, about a third party. If SLS did furnish inaccurate
information, it would be contributing to a material false disclosure about Phillips’ credit history.
This injury “has a close relationship to a harm that has traditionally been regarded as
providing a basis for a lawsuit in English or American courts.” Spokeo, 136 S. Ct. at 1549.
Compare it to Spokeo. There, the plaintiff alleged that the defendant “falsely reported that he is
married with children, that he is in his 50s, that he is employed in a professional or technical
field, that he has a graduate degree, and that his wealth level is higher than it is.” Robins v.
Spokeo, Inc., No. 11-56843, 2017 WL 3480695, at *7 (9th Cir. Aug. 15, 2017)). On remand, the
Ninth Circuit analogized the injuries in that case to common law protections against defamation
and libel, even though none of the inaccurate information was obviously negative. Id. at *5.2 At
common law, “libel was ‘actionable per se . . .’ because the ‘publication is itself an injury.’” Id.
(quoting the Restatement (First) of Torts § 570 (1938)).
The injury here also deals with falsely reported information about the plaintiff, namely
the date of Phillips’ first delinquency on the loan. Like the injury in Spokeo, this publication of
false information is analogous to libel. Because “[c]ourts have long entertained causes of action
to vindicate intangible harms caused by certain untruthful disclosures about individuals,” Robins,
2017 WL 3480695 at *7, this injury “is likely to be sufficient to satisfy the injury-in-fact element
of standing.” In re Horizon, 846 F.3d at 637.
Even if Phillips’ injury did not have a sufficiently “close relationship to a harm that has
2

The plaintiff alleged that obviously false information, even if not obviously negative,
would undermine his credibility. Id.
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traditionally been regarded as providing a basis for a lawsuit in English or American courts,”
Spokeo, 136 S. Ct. at 1549, the harm is still concrete under Spokeo because it is “the type of
harm [that] Congress sought to prevent by requiring disclosure.” Dreher, 856 F.3d at 347.
Phillips’ injury falls squarely within the interests that Congress sought to protect by enacting the
FCRA; it deals directly with the accuracy of the credit information reported about her. It is more
like the injury in Spokeo than the injury in Dreher. In Spokeo the plaintiff alleged that the
defendant falsely reported various biographical details about him. 2017 WL 3480695 at *7.
This violation of the FCRA’s accuracy requirement led to a concrete injury because “[e]nsuring
the accuracy of this sort of information thus seems directly and substantially related to [the]
FCRA’s goals.” Id. at *5. Likewise, Phillips’ injury is sufficiently concrete because “ensuring
the accuracy of [the information inaccurately reported by SLS] seems directly and substantially
related to [the] FCRA’s goals.” The inaccuracy in Dreher, on the other hand, dealt with a fact
about the creditor, and accordingly did not implicate Congress’s attempt to protect consumers.
Dreher, 856 F.3d at 340.
Finally, as in Spokeo itself, the particularization of Phillips’ injury is not disputed here.
“For an injury to be ‘particularized,’ it ‘must affect the plaintiff in a personal and individual
way.’” Spokeo, 136 S. Ct. at 1548 (quoting Lujan, 504 U.S. at 560). Here, Phillips’ injury is
specific to her personal credit report. (Dkts. 30-5, 30-6, 30-7). This is not an “undifferentiated”
general harm that would raise questions about particularity. United States v. Richardson, 418
U.S. 166, 177 (1974). Phillips’ injury is sufficiently particularized to support standing.
In summary, Phillips has sufficiently established that she has standing to bring this suit,
and the Court is convinced of its jurisdiction.
B.

Phillips’ FCRA Claims

“The FCRA seeks to ensure ‘fair and accurate credit reporting.’” Spokeo, 136 S. Ct. at
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1545 (quoting 15 U.S.C. § 1681(a)(1)). It does this by regulating “the creation and the use of
‘consumer report[s]’ by ‘consumer reporting agenc[ies]’ for certain specified purposes, including
credit transactions, insurance, licensing, consumer-initiated business transactions, and
employment.” Id. (footnotes omitted). The FCRA does not only burden consumer reporting
agencies; it also creates duties for the creditors that furnish information to consumer reporting
agencies, known as “furnishers.” See 15 U.S.C. § 1681s-2; Johnson v. MBNA Am. Bank, NA,
357 F.3d 426, 429 (4th Cir. 2004). This is necessary to ensure the accuracy of the reports
eventually published by the consumer reporting agencies. Some of the duties imposed on
furnishers may be enforced only by certain agencies and officials. See id. at § 1681s-2(c), (d).
Other duties, like those at issue here, may be enforced directly by harmed consumers. See id. at
§ 1681s-2(b), (c). Generally, the FCRA provides civil liability for both negligent and willful
noncompliance with the Act’s obligations. See id. at §§ 1681n, o. Phillips has alleged both
negligent and willful violations of SLS’s furnisher obligations.
i.

Count 1: Negligent Violation of the FCRA by SLS

Section 1681o provides that “[a]ny person who is negligent in failing to comply with” the
FCRA is liable to consumers for damages, costs, and reasonable attorney’s fees. The FCRA
provides that when a furnisher of information receives notice of a dispute from a consumer
reporting agency it shall:
(A) conduct an investigation with respect to the disputed information;
(B) review all relevant information provided by the [agency] . . .;
(C) report the results of the investigation to the [agency];
(D) if the investigation finds that the information is incomplete or inaccurate,
report those results to all other [agencies] . . .; and
(E) if an item of information disputed by a consumer is found to be inaccurate or
incomplete or cannot be verified after any reinvestigation . . . (i) modify that item
of information; (ii) delete that item of information; or (iii) permanently block the
reporting of that item of information.
15 U.S.C. § 1681s-2(b)(1). SLS is then liable to Phillips under Section 1681o if it negligently

9

violated these duties.
The Fourth Circuit elaborated on what duties a furnisher owes a consumer. In particular,
it has held that the “investigation” requirement on a furnisher demands only a “reasonable”
investigation.

See Johnson, 357 F.3d at 431.

This cuts for and against furnishers.

The

inaccuracy of furnished information, without evidence that the furnisher’s investigation was
unreasonable, does not create liability by itself. Id.; Blick v. Wells Fargo Bank, N.A., No. 3:11CV-00081, 2012 WL 1030137, at *9 (W.D. Va. Mar. 27, 2012), aff’d, 474 F. App’x 932 (4th
Cir. 2012).

However, instigating an unreasonable investigation that does not reveal the

inaccuracy will not insulate a furnisher from liability. Johnson, 357 F.3d at 431.
Unsurprisingly, a reasonableness determination should look to many different factors.
The analysis involves the weighing of “the cost of verifying the accuracy of the information”
against “the possible harm of reporting inaccurate information.” See Johnson, 357 F.3d at 432.
Relatedly, it should also be “based on an evaluation of information within the furnisher’s
possession, such as correspondence between the consumer and the furnisher, the data identified
by the reporting agency as disputed, and the furnisher’s other records relating to the disputed
account.”

David M. Daugherty v. Ocwen Loan Servicing, LLC, No. 16-2243, 2017 WL

3172422, at *4 (4th Cir. July 26, 2017) (unpublished); Boggio v. USAA Fed. Sav. Bank, 696 F.3d
611, 617 (6th Cir. 2012) (“[H]ow thorough an investigation must be to be ‘reasonable’ turns on
what relevant information was provided to a furnisher by the CRA giving notice of a dispute.”).
Reasonableness determinations are normally left to the jury, and the Fourth Circuit has
reiterated this rule in the FCRA context. Dalton v. Capital Associated Indus., Inc., 257 F.3d 409,
416 (4th Cir. 2001) (“The issue of whether the agency failed to follow ‘reasonable procedures’
will be a ‘jury question[ ] in the overwhelming majority of cases.’” (citation omitted)). Still, this
does not necessarily preclude summary judgment. “It is appropriate ‘when only one conclusion
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about the conduct’s reasonableness is possible.’” Gorman v. Wolpoff & Abramson, LLP, 584
F.3d 1147, 1157 (9th Cir. 2009) (citation omitted).
Here, however, summary judgment is inappropriate. To repeat, even if SLS furnished
inaccurate information, it would not incur liability unless its investigation into the disputed
information was “unreasonable.” See Johnson, 357 F.3d at 431. Phillips has not met the high
burden of proving that, after making all reasonable inferences in SLS’s favor, “no genuine
dispute as to” SLS’s reasonableness remains. Anderson, 477 U.S. at 248. First, SLS describes
its investigation as follows: “In response to each [dispute form], SLS’s [dispute] operator
reviewed the form, checked SLS’s records regarding the disputed information, and responded
accordingly.” Id. And again: “operators review the substance of the dispute, check SLS’s
internal records regarding the alleged reporting error, and respond accordingly.” Id. This
description of the investigation is admittedly short, but it describes a process that jury could find
reasonable. Boggio, 696 F.3d at 617 (“[F]irst and foremost a furnisher must review all relevant
information provided to it by a CRA regarding a dispute in order to comply with § 1681s–
2(b)(1)(B).”). Furthermore, Phillips has introduced no evidence describing SLS’s investigation
or demonstrating what about it was particularly unreasonable.

SLS’s description of its

investigation is sufficient to create a “genuine” dispute about a material fact. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986) (a dispute is genuine “if the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”).
Second, many of the inaccuracies alleged by Phillips are centered on how to properly
interpret the CDIA Guide.3 Phillips contends that SLS wrongly reported that “the Loan was 90119 days past due in May of 2011,” that the Account History was incomplete because it

3

As discussed above, the Consumer Data Industry Association (“CDIA”) has created the
form that credit reporting agencies and creditors use to communicate. The CDIA also publishes
a guide explaining how to use the form and what the various fields indicate. (Dkt. 30-11).
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indicates that SLS did not have payment information for months when its service log indicated
that it did, and that SLS reported an inaccurate date of first delinquency. (Dkt. 30 at 10-14).
With respect to at least the first two of these alleged mistakes, any mistake likely inured to
Phillips’ benefit. SLS introduced evidence that Phillips and SLS settled the outstanding loan in
June 2011 for $4,000, (dkts. 35-1, 35-2), and further argues that this settlement payment justified
the information that it reported to Trans Union. (Dkt. 35 at 5). Until she settled her loan at the
end of June 2011, Phillips still was past due on her obligations to SLS—just by more than the 90
to 119 days reported by SLS. And if SLS had reported the allegedly incomplete information, it
would have only shown that she was behind—not the neutral lack of information reported.
With respect to the third alleged mistake, SLS introduced evidence that “[t]he CDIA
Guide . . . is silent on how dates of first delinquency are to be reported for cases in which the
account is paid in full for less [than] the full balance.” (Dkt. 35 at 5 (citing Dkt. 30-11 at 188)).
The Court is not necessarily convinced by this characterization of the CDIA Guide, (cf. dkt. 3011 at 68 (describing how the date of first delinquency should generally be reported)), but Phillips
did not respond to SLS’s characterization and conversely relies on a statutory definition that
appears to provide guidance to credit reporting agencies but not necessarily furnishers. (See
Dkt. 30 at 10 (citing 15 U.S.C. § 1681c(c)(1))). At the very least, “the evidence is susceptible of
different interpretations or inferences by the trier of fact.” Hunt v. Cromartie, 526 U.S. 541, 553
(U.S. 1999).4
Third, as described the above, a reasonableness determination must consider multiple
factors, including the documents in the furnisher’s possession, the communications between the

4

This is not to say that a furnisher is required to consult and adhere to every nuance of the
CDIA Resource Guide. Cf. Jones v. Experian Info. Sols., Inc., No. 1:11-CV-826, 2012 WL
2905089, at *5 (E.D. Va. July 16, 2012) (“The simple failure to consult an external source in the
investigation of post-plan confirmation credit reporting simply cannot constitute an unreasonable
investigation per se within the meaning of § 1681s2–(b)(1)(A).”).
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credit reporting agency and the furnisher, and the cost of discovering the inaccuracy. Johnson,
357 F.3d at 432; Daugherty, 2017 WL 3172422 at *4. The information in SLS’s possession does
not lead obviously to one conclusion. Phillips notes that the “Defendant’s own Note History”
shows that “the Loan was charged to profit and Loss by SLS on January 26, 2010.” (Dkt. 30 at
11). But the confirmations sent from SLS to Trans Union also indicate that the loan had been
charged-off. (Dkts. 30-5, 30-6, 30-7, 30-11 at 112 (indicating account status code “13” indicates
a paid or closed account)). And while Phillips appears to have sent Trans Union evidence
validating her position, there is no evidence that Trans Union sent this on to SLS. The inquiries
that Trans Union sent to SLS allude to some of this evidence, but are not very specific or
consistent. (Compare dkt. 30-5 (“Disputes Date of Last Payment/Date Opened/Date of First
Delinquency/Date Closed. Verify all dates.”) with dkt. 30-7 (“Claims company will change.
Verify all account information.”)). And finally, Phillips offers no evidence about how difficult it
would have been for SLS to consult the relevant records. In short, there is evidence going both
ways, and while the evidence may on the balance favor Phillips, the multifactored nature of the
reasonableness analysis demonstrates why these questions should go to the jury.
Accordingly, the Court will deny summary judgment on Count 1.
ii.

Count 2: Willful Violation of the FCRA by SLS

Section 1681n provides liability for willful violations of the FCRA. A furnisher who
willfully violates the furnisher obligations spelled out above is liable for (1) actual damages
between $100 and $1,000, (2) punitive damages, and (3) costs and reasonable attorney’s fees. 15
U.S.C. § 1681n. “A showing of malice or evil motive is not required to prove willfulness under
the Act.”

Dalton, 257 F.3d at 418.

Instead, acting with “reckless disregard” of FCRA

obligations can be sufficient to prove willfulness. See Safeco, 551 U.S. at 57. This is a “high
standard.” Berry v. Schulman, 807 F.3d 600, 605 (4th Cir. 2015). To succeed, the plaintiff must
13

“show that the defendant ‘knowingly and intentionally committed an act in conscious disregard
for the rights’ of the consumer.” Dalton, 257 F.3d at 418. “A defendant may demonstrate
reckless disregard of its statutory obligations by repeatedly ignoring warning signs that it is
violating the law and by failing to take corrective action to prevent future violations.”
Daugherty, 2017 WL 3172422 at *5.
However, “[w]here states of mind are decisive as elements of a claim or defense,
summary judgment ordinarily will not lie.” Overstreet v. Kentucky Cent. Life Ins. Co., 950 F.2d
931, 937 (4th Cir. 1991). This remains true in the FCRA context: “summary judgment is
‘seldom appropriate’ on whether a party possessed a particular state of mind.” Dalton, 257 F.3d
at 418.
Phillips’ motion for summary judgment on the willful violation fails. While there may be
sufficient evidence for a jury to infer “reckless disregard” on SLS’s part, there is insufficient
evidence to hold as a matter of law that every reasonable jury must make that inference. Id. at
418. The primary evidence put forward to establish willfulness is the repeated nature of SLS’s
alleged refusal to adequately investigate Phillips’ complaint. But as discussed above, Phillips
has failed to clear even the lesser hurdle of demonstrating that there is no genuine dispute about
the reasonableness of SLS’s investigation. And even if it had, reasonable juries could disagree
on whether three violations, without other evidence of intention, establish willfulness. Anderson,
477 U.S. at 248.
Accordingly, this Court will deny Phillips’ motion for summary judgment on Count II.
IV. CONCLUSION
Based on the foregoing, the Court will deny Phillips’ motion as to the negligent violation
of the FCRA because there still is a genuine issue of material fact about whether SLS’s
investigation into the dispute was reasonable. The Court will also deny Phillips’ motion as to the
14

alleged willful violation of the FCRA because Phillips’ evidence is insufficient to establish as a
matter of law that there is no genuine issue of material fact about SLS’s willfulness.
An appropriate Order will issue, and the Clerk of the Court is hereby directed to send a
certified copy of this Memorandum Opinion to Plaintiff, Defendants, and all counsel of record.
6th
Entered this _____ day of September, 2017.

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