In an unpublished decision in the case of Shaun J. Younger v. Experian Information Solutions, Inc., the Eleventh Circuit Court of Appeals vacated the jury’s finding that Experian willfully violated the FRCA by failing to reinvestigate the Plaintiff’s dispute.  Since punitive damages are only available for willful violations, the jury’s award of punitive damages was eliminated.

Plaintiff filed suit against Experian alleging that it negligently and willfully violated 15 U.S.C. § 1681i(a)(1)(A) when it failed to reinvestigate an item on his credit report.  The item at issue was a debt associated with a small claims case which was resolved by a dismissal with prejudice.  Plaintiff, through the assistance of counsel, obtained a copy of his credit report and discovered that the debt was still being reported by Experian.  After making this discovery, Plaintiff and his lawyer drafted a letter to Experian attaching a copy of the dismissal.  They requested that Experian reinvestigate the debt listing and remove it.  The 11th Circuit addressed the contents of the letter in great detail its opinion.  The letter identified the Plaintiff, the debt at issue, and enclosed a copy of the dismissal with prejudice.  The letter was sent from the lawyer’s office but had Plaintiff’s return address.  An identical letter was apparently sent to multiple credit reporting agencies.

Experian admittedly received the letter.  Instead of investigating the dispute, an Experian mail room employee determined that the letter qualified as “suspicious” and diverted the letter based on Experian’s “suspicious mail policy.”  Experian sent Plaintiff correspondence informing him that it received a suspicious mailing and it had determined the letter in question was not sent by him.  Further, Experian stated it would not initiate a dispute.  The standard letter invited Plaintiff to call Experian to further discuss.  Instead of calling Experian, Plaintiff filed suit.  Plaintiff’s Experian Credit Report was corrected shortly after filing the lawsuit.

Prior to trial, the magistrate court granted Plaintiff’s motion for summary judgment in part.  The magistrate concluded that the letter triggered Experian’s duty to conduct a reinvestigation which it admittedly failed to do.  In other words, the magistrate concluded that Experian was negligent when it determined that the letter was suspicious and took no action.

Plaintiff’s theory at trial was that the suspicious mail policy was overbroad and Experian created the policy to force consumers to call Experian for the purposes of marketing and sale of other products.

Much of the trial testimony was geared towards the suspicious mail policy.  Plaintiff elicited testimony from Experian’s corporate representative that his letter was misclassified and his letter contained no characteristics raising suspicion.  Experian’s corporate representative agreed that the suspicions mail policy had caused other letters to be misclassified but neither party presented any evidence on the error rate.  Conversely, Experian’s corporate representative testified that the suspicious mail policy was “really important to . . . protect the consumer’s privacy” because of the danger that a copy of a full credit report, which must be provided after a reinvestigation, could fall in to a fraudster’s hands.  Importantly, Experian’s corporate representative testified that the suspicious mail policy was created to both protect the consumer’s privacy and to ensure that Experian did not run afoul of the FCRA by furnishing a credit report for an impermissible purpose.  

In addition to the suspicious mail policy, Plaintiff was able to elicit testimony about a prior state attorney general settlement with Experian, which called in to question potential marketing of products to consumer’s during debt dispute calls.  The magistrate previously granted Experian’s motion in limine to prohibit the mentioning of any settlement agreements that Experian may have executed in other actions.  Despite this in limine order, Plaintiff was allowed to offer this evidence due to Experian’s trial counsel’s failure to object.

After the two-day trial, the jury returned a verdict finding that Experian’s negligent failure to reinvestigate caused $5,000 in actual damages.  Further, the jury concluded that Experian’s violation of FCRA was willful and awarded $3 million in punitive damages.  Not surprisingly, Experian filed several post-trial motions.  The magistrate judge denied the post-trial motions but did reduce the punitive damages award to $490,000.00.

On appeal, Experian argued that the evidence did not support the jury’s finding of willfulness; therefore, it was entitled to a judgment as a matter of law on the willfulness claim.

The Eleventh Circuit first turned to the issue of willfulness.  The court distilled the applicable willfulness standard based on the holdings of Safeco Ins. Co. v. Burr, 551 U.S. 47 (2007) and Collins v. Experian Info. Sols., Inc., 775 F.3d 1330 (11th Cir. 2015).  A company’s action is a willful violation if it “shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless. That is, a company acts recklessly when its “‘conduct ... entail[s] an unjustifiably high risk of harm that is either known or so obvious that it should be known.’”

Based on this standard, and the record on appeal, the Eleventh Circuit concluded that, “The verdict of willfulness cannot stand . . . . .”  The Eleventh Circuit held that Plaintiff failed to establish by clear and convincing evidence that “Experian ran an unjustifiably high risk of violating its duties under the FCRA, especially in the light of another duty imposed by the FCRA.”  While the Eleventh Circuit admitted that the suspicious mail policy was negligent as applied to the Plaintiff, it concluded that Experian’s suspicious mail policy “had a foundation in the statutory text” because of its dual purpose of ensuring that disputes were initiated directly by the consumer and thereby avoiding furnishing a consumer report for an impermissible purpose.