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Henderson v. Trans Union, LLC

United States District Court, E.D. Virginia, Richmond Division

May 2, 2017

TYRONE HENDERSON, JOSEPH L. BUCKLEY, and JONATHAN HARRIS, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
TRANS UNION, LLC, and TRANS UNION RENTAL SCREENING SOLUTIONS, INC., Defendants.

          OPINION

          JOHN A. GIBNEY, JR. UNITED STATES DISTRICT JUDGE.

         As part of its business, Trans Union LLC ("Trans Union") furnishes consumer reports for employment purposes. The Fair Credit Reporting Act (the "FCRA") requires consumer reporting agencies like Trans Union to follow certain procedures when it furnishes such reports if the reports contain public record information about the subject consumers, such as criminal convictions. 15 U.S.C. § 1681k. Trans Union satisfies this requirement by sending notices- nicknamed "PEER Letters"- to the affected consumers. In this case, Trans Union furnished consumer reports for employment purposes about the class members. The plaintiffs, on behalf of the class, challenge the process Trans Union follows for sending PEER Letters, saying that the process willfully violates § 1681k of the FCRA. Trans Union has moved for summary judgment. Because Trans Union's process for sending PEER Letters is not an objectively unreasonable interpretation of the statutory text, Trans Union did not willfully violate § 1681k. Accordingly, the Court will grant summary judgment to Trans Union on the plaintiffs' class claim.

         I. BACKGROUND

         Trans Union is a consumer reporting agency (a "CRA") subject to the FCRA. One of its available products is a consumer report for employment purposes, called an Employment Credit Report. When a customer requests an Employment Credit Report on a specific consumer, Trans Union searches its database and locates its file on that consumer. Trans Union then reports certain information from the file on the Employment Credit Report. If the Employment Credit Report will include public record information, then Trans Union will send a notice to the consumer. As a step in the process of preparing the Employment Credit Report, Trans Union flags the file to indicate that Trans Union needs to send the consumer a PEER Letter.[1]

         Every day, sometime after midnight, Trans Union extracts the information needed to generate a PEER Letter for each file flagged the prior day (the "PEER Letter Data"), and electronically sends the data to its vendor, SourceHOV. Every day, except for Sundays and federal holidays, SourceHOV uses the information to prepare, print, and mail PEER Letters to consumers using the template provided by Trans Union.[2] For PEER Letter Data received on Sundays and federal holidays, SourceHOV prepares, prints, and mails the PEER Letters the next business day. SourceHOV coordinates with the United States Postal Service to expedite the mailing process.

         Two plaintiffs-Joseph L. Buckley and Jonathan Harris-brought a class claim against Trans Union for violating § 1681k of the FCRA based on its process for sending PEER Letters.[3]For the relevant class period, this process has remained the same. On May 3, 2016, the Court certified a class. Trans Union has now moved for summary judgment on this class claim.

         II. DISCUSSION[4]

         The plaintiffs allege a class claim against Trans Union for willfully violating § 1681k of the FCRA. Trans Union moves for summary judgment, arguing that it did not violate § 1681k and that, even if it did, the violation was not willful. Because the plaintiffs only seek statutory and punitive damages, they must prove willfulness to ultimately succeed on their claim. See 15 U.S.C. § 1681n.

         Willful violations of the FCRA include not only knowing and intentional violations, but also reckless violations. Safeco Ins. Co. v. Burr, 551 U.S. 47, 52 (2007). A company recklessly violates the FCRA when its interpretation of the language is "objectively unreasonable, " raising an "unjustifiably high risk" of a statutory violation. Id. at 69-70. To determine whether the company acted reasonably, courts should consider the clarity of the statutory text itself, as well as any guidance from authoritative sources interpreting the statutory text, such as courts of appeals, the Federal Trade Commission (the "FTC"), or the Consumer Financial Protection Bureau (the "CFPB"). Dreher v. Expehan Info. Solutions, Inc., 71 F.Supp.3d 572, 579 (E.D. Va. 2014). Without the help of clear text or authoritative guidance, courts then evaluate whether the company's interpretation of the statutory text has a foundation in the text and a "sufficiently convincing justification." Id; see Burr, 551 U.S. at 69-70. If so, the company did not act objectively unreasonably, even if it interpreted the statute wrongly. Id

         The plaintiffs in this case allege a willful violation of § 1681k, a section that focuses on consumer reports in the employment context. Specifically, a CRA must take one of two possible precautionary measures if it furnishes a consumer report for employment purposes that contains potentially adverse public record information about the consumer, such as a criminal conviction or an outstanding tax lien. Relevant in this case, a CRA can satisfy its obligation by "notify[ing] the consumer of the fact that public record information is being reported by the consumer reporting agency" "at the time such public record information is reported to the user of such consumer report." 15U.S.C. § 1681k(a)(1).

         The parties narrow the issue in this case to the mechanics of a § 1681k(a)(1) notice, focusing specifically on when a CRA must send the notice to the consumer in relation to when it sends the report to the user, and on when the Court should consider the notice and the report actually sent. The statutory text does not provide clear guidance on these mechanics. Neither Case 3:14-cv-00679-JAG Document 124 Filed 05/02/17 Page 5 of 7 PageID# 1817 has any court of appeals reached this specific issue.[5] The FTC has provided the guidance that CRAs may use first class mail to provide the required notice, [6] but does not go into any further detail. Accordingly, the Court turns to whether Trans Union's interpretation of § 1681k(a)(1) has a foundation in the statutory text.

         The process that Trans Union set up to generate and send PEER Letters is an objectively reasonable interpretation of § 1681k(a)(1). The undisputed facts show, and the plaintiffs concede, that the content of the PEER Letter complies with the statutory requirements. The undisputed facts also show that once Trans Union receives a request for an Employment Credit Report, it searches its database for information on the specific consumer. If the information retrieved includes public record information, Trans Union captures the information needed to send a PEER Letter, beginning the process of notifying the consumer. In other words, Trans Union starts the process of notifying the consumer pursuant to § 1681k at the time it realizes that the Employment Credit Report will include public record information. This interpretation (i.e., starting the mailing process at the time it realizes that the FCRA may require notice) has a clear foundation in the statutory text. The interpretation also has a sufficiently convincing justification, especially in light of FTC guidance that permits mailing the required notice to consumers. Thus, Trans Union's interpretation of § 1681k is not objectively unreasonable. Consequently, even if Trans Union violated § 1681k, it did not recklessly violate the statute. Without a reckless violation, the plaintiffs' claim fails because they cannot prove willfulness.

         III. CONCLUSION

         For the reasons stated, Trans Union did not willfully violate § 1681k through its process of sending PEER Letters to the plaintiffs. Accordingly, the Court ...


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