former employer to check whether he was absent from work for the years in which the criminal was imprisoned, even though Stevenson provided the defendants with a verification of employment from his past employer, id. PP 24, 42-43; failed to reconcile how Stevenson could have been working at Northwestern while the criminal was serving another imprisonment sentence, id. PP 31-33; failed to report to Northwestern that the criminal's birth date differed from Stevenson's, id. PP 27-29, and continued to assert that the birth dates matched even after a "reinvestigation," id. P 47; and continued to maintain, after a reinvestigation revealed that Stevenson was wrongly identified as to one felony, that Stevenson committed the other two felonies even though the State's records identified the same person as the defendant in all three cases, id. PP 53-57. Whether EMA and Schlack committed these acts and omissions with a negligent or willful state of mind (or at all) is a proper subject for discovery. For now, it is enough to conclude that these allegations may entitle the plaintiff to relief under § 1681 n.
Similarly, the defendants argued in their opening brief that the state common law libel claim, designated as Count 3, did not sufficiently allege malice or willful conduct so as to escape preemption under § 1681 h (e). On the contrary, both the original complaint and the amended complaint allege malice. Compl. P 88; First Am. Compl. P 88; Whelan v. Trans Union Credit Reporting Agency, 862 F. Supp. 824, 833 (E.D.N.Y. 1994) (borrowing definition of malice from New York Times Co. v. Sullivan, 376 U.S. 254, 279-80, 11 L. Ed. 2d 686, 84 S. Ct. 710 (1964) and citing Thornton v. Equifax, Inc., 619 F.2d 700, 705 (8th Cir. 1980) (citing New York Times malice standard as an example of type of malice required under the FCRA)); Wiggins v. Equifax Servs., 848 F. Supp. 213, 223 (D.D.C. 1993).
The defendants' final argument in their opening brief contended that Schlack could not be sued as an individual because he was acting in a "corporate capacity." Defs.' Br. at 2-3. Schlack provided no citation to legal authority or any other explanation why he cannot be sued in his individual capacity under the FCRA or state common law, see id., and we can discern no basis for such immunity, 15 U.S.C. §§ 1681 n, 1681 o (providing for suits against "any consumer reporting agency"); § 1681 a (f) (defining "consumer reporting agency" as "person" who meets certain standards). Accordingly, the motion to dismiss is denied.
We turn now to sanctions. By signing the opening and reply briefs, the defendants' attorney certified that "the claims, defenses, and other legal contentions therein are warranted by existing law or by a nonfrivolous argument for the extension, modification, or reversal of existing law or the establishment of new law." Fed. R. Civ. P. 11(b)(2). As we explained above, the defendants' preemption argument challenging Stevenson's § 1681 o statutory negligence claim was based on § 1681 h (e), and the first clause of § 1681 h (e) expressly exempts § 1681 o from its purview. In addition to the absence of any legal basis for the preemption argument, the defendants' attorney appears to have intentionally omitted the first clause of § 1681 h (e), even though the complaints expressly grounded the negligence claim on § 1681 o, and even after the plaintiff pointed to the statute yet again in his response brief, Pl.'s Resp. at 1. In light of these circumstances, we order the signatory of the defendants' briefs, Attorney Michael Hennessy, to show cause why he should not be sanctioned for either (1) failing to make a reasonable inquiry as to the legal basis of the argument to dismiss Count 1, or (2) intentionally omitting the first clause of § 1681 h (e) in an attempt to mislead the court.
Mr. Hennessy shall file a response to the order to show cause on or before April 7, 1997. We emphasize that, because we are acting pursuant to our own initiative, Fed. R. Civ. P. 11(c)(1)(B), there is no 21-day "safe harbor" provision
and the parties shall proceed expeditiously with the litigation on the merits.
For the reasons discussed above, we deny the motion to dismiss and order Attorney Michael Hennessy to show cause why he should not be sanctioned. It is so ordered.
MARVIN E. ASPEN
United States District Judge