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DEL AMORA v. METRO FORD SALES AND SERVICE INC.
United States District Court, Northern District of Illinois, Eastern Division
June 25, 2002
MIKE DEL AMORA, PLAINTIFF,
METRO FORD SALES AND SERVICE, INC., DEFENDANT.
The opinion of the court was delivered by: Matthew F. Kennelly, District Judge.
MEMORANDUM OPINION AND ORDER
In early 2001, Plaintiff Mike Del Amora was in the process of getting a
divorce. His estranged wife's brother, Jesus Roman, worked as a salesman
for Defendant Metro Ford Sales and Service, Inc. In that position, Roman
was authorized to obtain and review credit reports in connection with
making car sales. Roman knew that he was only allowed to obtain the
credit reports of customers who were interested in purchasing vehicles
from Metro Ford and who gave Roman permission to check their credit
On January 31 and March 27, 2001, Roman used his position at Metro Ford
to obtain credit reports on Del Amora. Del Amora was not interested in
buying a car from Metro Ford and did not give Roman permission to check
his credit. Roman was motivated solely by personal reasons related to
his sister's separation, and not by any desire to further Metro Ford's
business. The parties acknowledge that Roman obtained both credit
reports without Metro Ford's knowledge or consent. When Del Amora learned
that Roman had obtained his credit report, he filed this lawsuit alleging
that Metro Ford willfully violated the Fair Credit Reporting Act
("FCRA"), 15 U.S.C. § 1681b(f) & 1681(q).
Metro Ford now seeks summary judgment on the grounds that it cannot be
vicariously liable for Roman's willful misconduct, relying on Judge James
Moran's decision in Kodrick v. Ferguson, 54 F. Supp.2d 788 (N.D.Ill.
1999). Del Amora initially failed to respond to Metro Ford's motion,
thereby admitting all the facts as set forth by the company in its
summary judgment submission. Local Rule 56.1(b)(3)(B); Hudson v. West
Harvey/Dixmoor Sch. Dist. No. 147, 168 F. Supp.2d 851, 852 (N.D.Ill.
2001). At our instruction that Del Amora address Metro Ford's legal
arguments in light of a conflicting Circuit-level decision, Jones v.
Federated Fin. Reserve Corp., 144 F.3d 961 (6th Cir. 1998), he filed a
cross-motion for summary judgment seeking to hold Metro Ford liable for
Roman's actions pursuant to that case.
The FCRA prohibits any person from using or obtaining a consumer report
for other than permissible purposes. 15 U.S.C. § 1681b(f). Any
person who willfully or negligently fails to comply with any requirement
of the Act with respect to any consumer is liable to that consumer for
actual damages, attorneys' fees and costs. 15 U.S.C. § 1681no.
Willful violations may also result in punitive damages.
15 U.S.C. § 1681n. In addition, any person who knowingly obtains a
credit report under false pretenses shall be fined, imprisoned or both.
15 U.S.C. § 1681q.
In this case, the parties agree that Roman, a non-supervisory
employee, obtained Del Amora's credit reports for an improper purpose
under false pretenses in violation of these sections. The only question
is whether Metro Ford can be vicariously liable for Roman's willful
misconduct. Metro Ford argues that Del Amora should not be able to
proceed on this theory because he failed to allege it in his complaint.
The Court disagrees. The Federal Rules of Civil Procedure do not require
a plaintiff to plead a legal theory. Kirksey v. R.J. Reynolds Tobacco
Co., 168 F.3d 1039, 1041 (7th Cir. 1999). The complaint plainly
says that Metro Ford violated the FCRA. Fairly read, this allegation
encompasses the possibility of a theory of vicarious liability: corporations
necessarily act through their agents. Shager v. Upjohn Co., 913 F.2d 398,
404 (7th Cir. 1990). Metro Ford is in no way unfairly prejudiced or
surprised by Del Amora's argument; indeed, it affirmatively raised the
issue in its summary judgment motion. (Def. Memo, p. 4) (". . . Metro
Ford cannot be held liable for Jesus Roman's independent actions in this
case"). On these facts, it would be inappropriate to preclude Del Amora
from raising the argument. See Barbian v. Panagis, 694 F.2d 476, 487 n.
9 (7th Cir. 1982) (the court must construe a complaint liberally on a
motion for summary judgment).
A. Vicarious Liability Under the FCRA
The FCRA does not specifically provide for vicarious liability. Del
Amora argues that we should follow the lead of Jones and fill in this
statutory gap with common law agency principles. Metro Ford urges us
instead to follow Kodrick and leave such gap-filling to Congress.
Although neither case is binding on this Court, we find it useful to
review both here.
In Jones, the plaintiff's ex-husband pressured his friend Janice
Caylor, an employee of the defendant, to procure the plaintiff's credit
report for personal reasons related to his divorce. Caylor was
authorized to request credit reports from clerks who operated the
company's credit report request system, as long as she supplied a
customer name, address and social security number. There was no evidence
suggesting that any other employee knew of Caylor's improper request on
behalf of the plaintiff. 144 F.3d at 962-63.
On appeal from verdicts in favor of the defendant, the Sixth Circuit
considered only whether a principal may be vicariously liable for an
agent's tortious conduct under the FCRA based upon an apparent authority
theory. Id. at 965. After concluding that such a theory is compatible
with the Act's purposes of protecting consumers from improper use of
credit reports and deterring violations, the court found that the company
could be liable for Caylor's actions if it "created an appearance of
authority that caused the credit reporting agency reasonably and
prudently to believe that Caylor had made a proper request for a
permissible purpose, and there was reliance on Caylor's apparent
authority." Id. at 966. The court viewed this theory as a basis for
finding either a willful or negligent violation on the part of the
In Kodrick, defendant Cheryl Ferguson worked for co-defendant Accubanc
Mortgage as a senior loan officer. In that position, Ferguson was
authorized to obtain and review confidential credit histories of
Accubanc's customers. On two occasions, Ferguson used her authority to
obtain the plaintiff's credit report, ostensibly to process a real estate
loan. However, the plaintiff had not applied for a loan, nor did she
have any business relationship with Accubanc. Rather, Ferguson wanted
information on the plaintiff because the plaintiff was married to
Ferguson's ex-husband. Ferguson acted without supervisory approval and
did not have a high rank sufficient to deem her Accubanc's alter ego.
54 F. Supp.2d at 789.
The court rejected the theory of vicarious liability for subscribers
with rogue employees on the grounds that the FCRA is silent on the issue
and places the duty to prevent impermissible uses of credit reports not
on subscribers, but on consumer reporting agencies and individuals who
knowingly violate the law. Id. at 794. However, the court ultimately
holding to the particular scenario at issue in the case:
We hold only that a subscriber is not liable under
§ 1681n or § 1681o for its employee's
unauthorized willful violations of the Fair Credit
Reporting Act, where the employee of the subscriber
obtained the report under false pretenses and for
personal use without the express or implied approval
of her supervisors.
Id. at 797-98. The court expressly left open the possibility of direct
corporate liability where supervisors know their facilities are being
used to obtain reports for improper purposes, or where a company
recklessly gives access to its credit bureau facilities to employees who
do not need such access to perform their jobs. Id. See, e.g., Yohay v.
City of Alexandria Employees Credit Union, Inc., 827 F.2d 967, 973-74
(4th Cir. 1987) (credit union was liable for employee's violation of the
FCRA where anyone using the credit union's computers had access to credit
reports, and the credit union posted no guidelines for obtaining them).
We agree with the Jones court that imposing vicarious liability under
the FCRA is consistent with Congress's intent to protect consumers from
improper use of credit reports and to deter statutory violations. See
15 U.S.C. § 1681(a)(4) ("[t]here is a need to insure that consumer
reporting agencies exercise their grave responsibilities with fairness,
impartiality, and a respect for the consumer's right to privacy"); Pappas
v. City of Calumet City, 9 F. Supp.2d 943, 949 (N.D.Ill. 1998) (FCRA is
intended "to protect individual privacy interests"). Though the FCRA
originally imposed civil liability on "[a]ny consumer reporting agency or
user of information" that fails to comply with any requirement of the
Act, in 1996, Congress amended the Act's civil liability provisions to
cover "[a]ny person" who willfully or negligently fails to do so. The
term "person" is defined broadly to include corporations which, as we
have noted, necessarily act through their agents.
15 U.S.C. § 1681a(b); Shager, 913 F.2d at 404. It follows that a
subscriber corporation can be liable for its agent's misconduct under the
B. Common Law Theories of Agency
Where, as here, an employee cannot be considered an employer's "alter
ego," we look to the common law of agency to determine the circumstances
in which the employer may be liable under the FCRA for its employee's
willful misconduct. See Shager, 913 F.2d at 404 (common law rule
regarding vicarious liability for intentional torts "usually is carried
over to statutory torts, because statutes creating torts rarely bother to
set forth all the ancillary doctrines . . . that are necessary to compose
a complete regime of tort liability"). To promote uniformity in the
application of agency principles to the FCRA, we rely on the general
common law of agency as opposed to the law of any particular state. See
Kodrick, 54 F. Supp.2d at 794 (legislative history of the 1996 amendments
to the FCRA "indicates that Congress did not intend that we establish
differing rules for subscribers based on the agency law in each forum").
We note, however, that federal courts have adopted the Restatement of
Agency in establishing federal common law, and that Illinois law
parallels the Restatement. See Opp v. Wheaton Van Lines, Inc.,
231 F.3d 1060, 1064 (7th Cir. 2000) ("Illinois law of agency, as well as
the federal common law of agency, accord with the Restatement").
Under general agency rules, an employer may be vicariously liable for
the acts of its employees under one of two theories. Under the
respondeat superior doctrine,
an employer is strictly liable for its
employee's acts committed within the scope of employment. Restatement
(Second) of Agency §§ 219(1). Intentional torts generally do not fall
within the scope of this doctrine "unless the employee or agent is acting
in furtherance (however misguidedly) of his principal's business." Rice
v. Nova Biomedical Corp., 38 F.3d 909, 913 (7th Cir. 1995); Restatement
(Second) Agency § 235 (employee's act is not within scope of
employment "if it is done with no intention to perform it as a part of or
incident to a service on account of which he is employed"); § 228.
But see West v. Waymire, 114 F.3d 646, 649 (7th Cir. 1997) (for public
policy reasons, respondeat superior doctrine should apply where police
officer extracted sexual favors from troubled teenaged girls).
An employer may also be subject to vicarious liability if an employee
had apparent authority to act on behalf of the employer or was aided in
accomplishing the wrongful act by the existence of the agency relation.
Restatement (Second) Agency § 219(2). The apparent authority
doctrine addresses the situation where an employee purports to exercise a
power which he or she does not have; the "aided in the agency relation"
doctrine applies where an employee threatens to misuse actual power.
Burlington Indus., Inc. v. Ellerth, 524 U.S. 742, 759-60 (1998). Most
workplace tortfeasors are aided in accomplishing their tortious objective
by the existence of the agency relation. Id. at 760. The commentary to
the Restatement suggests that this theory contemplates holding an
employer liable only if the tort was "accomplished by an
instrumentality, or through conduct associated with the agency status."
Restatement (Second) Agency § 219 cmt. e; Costos v. Coconut Island
Corp., 137 F.3d 46, 49 (1st Cir. 1998) (inn was vicariously liable for
manager's rape of customer where agency relation allowed manager to
obtain victim's room key). See also Ellerth, 524 U.S. at 760 (in Title
VII context, "aided in the agency relation standard requires the
existence of something more than the employment relation itself").
If an employer cannot be vicariously liable under one of these
theories, liability may attach only where the employer expressly or
implicitly authorized the conduct; the employer was negligent or reckless
in allowing the conduct to occur; or the conduct violated a non-delegable
duty of the employer. Restatement (Second) of Agency § 219(2).
C. Application to Metro Ford
1. Respondeat Superior Liability
Del Amora argues that Metro Ford is liable under a respondeat superior
analysis because Roman was authorized to pull credit reports as part of
his regular job duties. Pl. Mem., pp. 4-6. This argument is without
merit, given that Roman's intentional actions were in no way designed to
further Metro Ford's business, and Metro Ford did not even know about
Roman's intentional misconduct until this lawsuit was filed. See
Restatement (Second) of Agency §§ 235, 228; Rice, 38 F.3d at 913;
Dillard-Heard v. Payne, No. 97 C 107, 1998 WL 67618 (N.D.Ill. Feb. 9,
1998) ("conduct that accrues to the sole benefit of the employee is
generally regarded to fall beyond the scope of employment"). Roman
committed a willful violation for purely personal reasons, which takes
his conduct outside the scope of his employment at Metro Ford. Rice, 38
F.3d at 913 ("[i]ntentional torts do not fall within the scope of the
doctrine of respondeat superior unless the employee or agent is acting in
furtherance . . . of his principal's business"). Metro Ford cannot be
to respondeat superior liability on these facts.
2. Aided in the Agency Relation Liability
Neither party addresses the "aided in the agency relation" standard;
instead, both debate whether Roman had apparent authority as set forth in
Jones. However, the apparent agency theory does not encompass the
situation presented here, which involves an employee's misuse of actual
authority, as opposed to the exercise of authority the employee did not
rightly have. See Ellerth, 524 U.S. at 759-60. The aided in the agency
relation doctrine requires a showing that the violation was "accomplished
by an instrumentality, or through conduct associated with the agency
status." Restatement (Second) Agency § 219 cmt. e. In this case, it
is undisputed that Roman was able to obtain Del Amora's credit report
solely by virtue of his position with Metro Ford and his resultant access
to Metro Ford's consumer reporting facilities. Metro Ford is in the best
position to prevent future FCRA violations through employee training and
screening programs, and it is therefore liable for Roman's actions.
See, e.g., Jones, 144 F.3d at 965-66 (apparent authority theory "is in
keeping with the FCRA's underlying deterrent purpose because employers
are in a better position to protect consumers by use of internal
3. Direct Liability
Having determined that Metro Ford is subject to vicarious liability
under the aided in the agency relation standard, we next consider whether
there is any basis for holding the company directly liable under the
Act. To hold Metro Ford directly liable for Roman's willful violation of
the FCRA, Del Amora must demonstrate that (1) Metro Ford implicitly or
expressly authorized his misconduct; (2) Metro Ford was negligent or
reckless in allowing the misconduct to occur; or (3) the misconduct
involved a non-delegable duty belonging to Metro Ford. Del Amora cannot
establish any of these requirements. Del Amora admits that Roman did not
have any express or implied authorization from Metro Ford to obtain the
credit reports. Nor do we find support for the argument that Roman
violated a non-delegable duty belonging to Metro Ford. It is clear that
"all persons," including Roman, have a duty to refrain from using or
obtaining credit reports for improper purposes. 15 U.S.C. § 1681b(f).
Del Amora does not assert a negligence claim in his complaint, but he
now suggests that questions of fact exist as to whether Metro Ford was
negligent or reckless in allowing Roman to violate the statute. The
Seventh Circuit has made it clear that "it is too late in the day to be
adding new claims" in response to a summary judgment motion. Auston v.
Schubnell, 116 F.3d 251, 255 (7th Cir. 1997). Nevertheless, to the extent
that this new theory does not change the outcome of the case and there is
no prejudice to Metro Ford, we will allow Del Amora effectively to amend
the pleadings pursuant to Fed.R.Civ.P. 15(a), and will consider the
argument on its merits. See Bethany Pharmacal Co. v. QVC, Inc.,
241 F.3d 854, 860-61 (7th Cir. 2001) ("leave to amend a complaint should
be freely granted when justice so requires").
Del Amora asserts that "Defendant has not put forth any evidence that
it had any policies in place to ensure compliance with the Fair Credit
Reporting Act." Pl. Mem., p. 6. It is worth repeating here that Del
Amora never responded to Metro Ford's Local Rule 56.1 statement of facts
or supplied his own statement of material facts. He has offered no
evidence regarding the alleged deficiency of Metro Ford's policies.
Having failed to comply with the applicable Local Rules, Del Amora cannot
now avoid summary judgment with bald speculation that Metro Ford's
policies may have been deficient. Patterson v. Chicago Ass'n for Retarded
Citizens, 150 F.3d 719, 724 (7th Cir. 1998) ("a plaintiff's speculation
is not a sufficient defense to a summary judgment motion"). Without any
evidence that Metro Ford's policies were in fact inadequate to ensure
compliance with the FCRA, Del Amora cannot proceed on a negligence
In sum, because Del Amora has produced no evidence sufficient to permit
a finding of Metro Ford's direct liability for Roman's willful violation
of the FCRA, the Court grants summary judgment for Metro Ford on the
claim of direct liability.
For the reasons stated above, Metro Ford's motion for summary judgment
[docket item 3-1] is granted on the claim of direct liability but is
otherwise denied. Del Amora's cross-motion for summary judgment is
granted on the claim of vicarious liability. The case is set for a
status hearing on July 3, 2002 at 9:30 a.m.
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