• Cancer Treatment of Consumer May Equitably Toll FCRA Limitations Period
  • April 15, 2009
  • Law Firm: Strasburger & Price, LLP - Dallas Office
  • Drew v. Equifax Information Services, LLC, 2009 U.S. Dist. LEXIS 18965 (N.D. Cal.March 5, 2009) 

    Facts: In 2003, Plaintiff’s identity was stolen by an employee of a hospital where he was being treated for cancer. The identity thief opened several credit cards in Plaintiff’s name before ultimately being arrested and convicted. Due to Plaintiff’s medical condition, it was a few months after the identity theft before Plaintiff made disputes with the credit card companies and with the credit reporting agencies. According to Plaintiff, the credit card companies continued to report adverse information to the credit reporting agencies, which, in turn, continued to report inaccurate information. Plaintiff filed suit on December 18, 2006, well outside the two-year limitations period, alleging violations of the FCRA, California’s Consumer Credit Reporting Agencies Act, and California’s Song-Beverly Credit Card Act, as well as negligence and fraud. Defendants filed Motions for Summary Judgment. For some of the Defendants, the Court granted the Motions for Summary Judgment in their entirety while for the remainder, the Court granted the Motions only in part.

    FCRA Claims May Be Equitably Tolled In Instances of Mental Incompetency, Which Includes Cancer Treatment

    • Statute of Limitations. Under § 1681p, FCRA claims must be brought no more than 2 years after the date of discovery by Plaintiff of the violation that is the basis for such liability.
    • Statute of Limitations.  The doctrine of equitable tolling applies in situations where, despite all due diligence, the party invoking equitable tolling is unable to obtain vital information bearing on the existence of the claim, or where the party invoking the doctrine has been induced or tricked by his adversary's misconduct into allowing the filing deadline to pass. The doctrine is not available to avoid the consequence of one's own negligence, when a late filing is due to claimant's failure to exercise due diligence in preserving his legal rights.
    • Statute of Limitations. In the Ninth Circuit, equitable tolling may apply if Plaintiff is mentally incompetent. In this case, a trier of fact could conclude that Plaintiff was rendered mentally incompetent for at least some of 2004 by the cancer treatment following his bone marrow transplant. The question of whether Plaintiff was mentally incompetent during 2004, and if so, for how long, was a question for the jury.

    A CRA has no Duty to Conduct a Reasonable Reinvestigation Until a Dispute is Made by a Consumer

    • Reinvestigation. § 1681i provides that if the completeness or accuracy of any item of information contained in a consumer's file at a consumer reporting agency (“CRA”) is disputed by the consumer and the consumer notifies the agency directly, or indirectly through a reseller, of such dispute, the agency shall, free of charge, conduct a reasonable reinvestigation to determine whether the disputed information is inaccurate and record the current status of the disputed information.
    • Reinvestigation. A request made by a consumer to a CRA that a fraud alert be added to the consumer’s file is not a dispute as to the completeness or accuracy of information contained in the consumer’s file for purposes of the CRAs’ reinvestigation duties.
    • Reinvestigation. Without evidence that a dispute letter sent to a third party was also received by the CRA, a consumer cannot establish a claim under § 1681i for the failure of the CRA to conduct a reasonable reinvestigation.
    • Reinvestigation. A rational fact-finder could conclude that a CRA’s reinvestigation was unreasonable when it resulted in an account being reported as both closed and paid, but overdue after the date it was closed.

    An Inaccuracy on the Consumer’s Credit Report is Essential to a §  1681e(b) Claim

    • Reasonable Procedures. Section1681e(b) provides that whenever a CRA prepares a consumer report it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates. 
    • Reasonable Procedures. Without any report of identity theft to a CRA, it is not unreasonable as a matter of law for the CRA to provide a credit report with an address that had been reported to the CRA by two separate furnishers.
    • Reasonable Procedures. Without evidence of an inaccuracy, a consumer cannot state a claim against a CRA for failure to maintain reasonable procedures, and summary judgment is appropriate. 

    A Consumer Reporting Agency Need Only Believe that a Consumer Report is Being Used for a Permissible Purpose Before Supplying it to a Creditor

    • Permissible Purpose.  Section 1681b(a). limits the circumstances under which CRAs may furnish credit reports, stating, in part, that a CRA may provide credit reports to a bank when the CRA has reason to believe that the bank intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished. 
    • Permissible Purpose. A claim under §  1681b(a) fails as a matter of law and summary judgment is appropriate when there is no evidence that the CRA did not have reason to believe that the bank intended to use the credit report in connection with a transaction with Plaintiff.
    • Permissible Purpose.  Section 1681g provides that CRAs must disclose a credit report to the consumer upon request.
    • Permissible Purpose. A claim under §  1681g fails as a matter of law and summary judgment is proper when Plaintiff provides no evidence that the CRA failed to provide a requested report. 
    • Summary Judgment. Self-serving interrogatory responses that conflict with Plaintiff’s deposition testimony do not create a factual dispute sufficient to preclude summary judgment. 

    The Limitations Period for a Claim Against a Furnisher for the Failure to Investigation Begins to Run when the Furnisher Fails to Investigate

    • Permissible Purpose.  Section 1681s-2(b) requires a furnisher upon notice from a CRA of a dispute as to information provided by the furnisher, to take certain steps to investigate the disputed information, and correct the information if necessary. Violation of this provision gives rise to a private cause of action by the consumer against the furnisher.
    • Statute of Limitations. For purposes of the statute of limitation, a consumer’s cause of action accrues when the furnisher fails to conduct a reasonable investigation under § 1681s-2(b). 

    A Furnisher May Be Liable for the Failure to Reasonably Investigate When The Furnisher is Notified by the Consumer Reporting Agency that an Account Was Removed by the CRA as Presumed Fraud

    • Furnisher Investigation. Notice by a CRA to a furnisher that the CRA has removed an account from a consumer’s credit report as presumed fraud triggers the furnisher’s investigation duties.
    • Furnisher Investigation. The furnisher’s investigation must be reasonable. Summary judgment is generally an inappropriate way to decide questions of reasonableness because the jury's unique competence in applying the reasonable man standard is thought ordinarily to preclude summary judgment.
    • Furnisher Investigation. Evidence that a furnisher continued to report and make inquiries about a fraudulent account after receiving notice from a credit reporting agency that the account was removed from the consumer’s credit report as presumed fraud was sufficient to preclude summary judgment on the issue of the reasonableness of the furnisher’s investigation under §  1681s-2(b). 
    • Furnisher Investigation. Evidence that a furnisher continued to report a fraudulent account after receiving notice from Plaintiff of his identity theft and medical condition was sufficient to preclude summary judgment on the reasonableness of the furnisher’s investigation under §  1681s-2(b).

    Available Damages Under the FCRA.

    • Punitive Damages. Punitive damages are only available under § 1681n for willful violations, which includes violations committed with reckless disregard for FCRA duties.
    • Emotional Distress. Emotional distress claims under the FCRA can be supported by surrounding circumstances or other evidence of genuine injury.

    California Common Law Claims

    • Equitable Tolling of Limitations. While the statute of limitations may be tolled when Plaintiff is disabled by virtue of being insane, in California, such mental disability must exist at the time the cause of action accrues.
    • Negligence. A negligence claim may be barred by California’s mutual interest privilege, which applies to a publication or broadcast made without malice. “Malice” is a state of mind arising from hatred or ill will, evidencing a willingness to vex, annoy or injure another person.
    • Fraud. To survive summary judgment on a fraud claim, Plaintiff must present proof of fraudulent intent. Non-performance of an oral promise is insufficient to preclude summary judgment.  

    California Statutory Protections and Available Remedies

    • CCRAA. California’s Consumer Credit Reporting Agencies Act ("CCRAA") regulates credit reporting agencies in a manner similar to the FCRA, and a credit reporting agency cannot be held liable under the FCRA and the CCRAA for the same actions. CCRAA claims that are duplicative of FCRA claims are barred.
    • Limitations. Section 1785.33 of the CCRAA provides for tolling the statute of limitations only where a defendant has materially and willfully misrepresented any information required by the CCRAA to be disclosed to a consumer.
    • Injunctive Relief. Injunctive relief is appropriate only when there is a threat of continuing misconduct with evidence ongoing illegal conduct by the defendant.