United States District Court, N.D. Illinois
June 7, 2004.
CHERYL BAGBY, Plaintiff,
EXPERIAN INFORMATION SOLUTIONS, SEARS and DISCOVER FINANCIAL SERVICES, Defendants
The opinion of the court was delivered by: MATHEW KENNELLY, District Judge
MEMORANDUM OPINION AND ORDER
Cheryl Bagby has filed suit under the Fair Credit Reporting Act, 15
U.S.C § 1681 et seq., against Experian Information Solutions, Sears and
Discover Financial Services.*fn1 Bagby claims that Experian failed to
conduct a reasonable investigation to ensure the accuracy of the
information regarding Sears and Discover accounts that were reported on
her credit report both before and after she made Experian aware that she
disputed these accounts. Bagby also brings a defamation claim against
Experian. Experian has moved for summary judgment. For the reasons stated
below, the Court grants Experian's motion.
In 1996, Cheryl Bagby's mother, Kathy Goodrich, gave Bagby a Discover
charge card to use while in college, which Goodrich had obtained in
Bagby's name. Bagby used the card throughout college, and Goodrich was
the primary user thereafter. According to Bagby, Goodrich also opened
several other accounts in Bagby's name without her knowledge. When Bagby was in the process of buying a home in 2001, the Home Bank
Mortgage Corporation called her about various items on her credit report.
As a result, Bagby ordered copies of her credit report and saw several
accounts she did not recognize, including accounts with Sears and
Discover. Bagby immediately closed the Sears account, which at that point
had a balance of $0, and had no late payments reported on it. She also
began paying the balance on the Discover account, which similarly had no
late payments reported on it. She continued to make payments on the
Discover account even though, she claims, the charges had been incurred
by her mother.
Bagby eventually learned that she could dispute matters appearing on
her credit report. She wrote to Experian in November 2002, explaining
that several of the accounts on her credit report had been opened by her
mother without her knowledge. Experian sent verification requests to the
creditors, but both Discover and Sears replied that the accounts were in
fact Bagby's. Experian advised Bagby of the results of its inquiries,
stating that she should contact the creditors if she suspected fraud.
Bagby had no further contact with Experian.
In May 2003, Bagby filed this suit against Experian, Sears, and
Discover, alleging that Experian willfully and negligently violated the
FCRA by reporting inaccurate information with respect to these accounts.
Bagby also asserts a claim for defamation against Experian with respect
to the information Experian disclosed in her credit report regarding
Summary judgment is proper when "the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). The Court must look at the evidence
"as a jury might, construing the record in the light most favorable to
the nonmovant and avoiding the temptation to decide which party's version
of the facts is more likely true." Payne v. Pauley, 337 F.3d 767, 770
(7th Cir. 2003).
Whether Experian's Procedures Were Reasonable Under § 1681e (b)
Bagby claims that Experian violated the FCRA's requirement that
consumer reporting agencies "follow reasonable procedures to assure
maximum possible accuracy of the information concerning the individual
about whom [a consumer credit] report relates." 15 U.S.C. § 1681e (b).
"Judging the reasonableness of a [credit reporting] agency's procedures
involves weighing the potential harm from inaccuracy against the burden
of safeguarding against such inaccuracy." Philbin v. Tram Union Corp.,
101 F.3d 957, 962 (3d Cir. 1996). To prevail on this claim, Bagby must
show (1) that there was inaccurate information in her consumer credit
report, (2) that the inaccuracy was due to Experian's failure to follow
reasonable procedures to assure accuracy, (3) that she suffered actual
damages and (4) that those damages were caused by the inaccuracy. Id. at
962. If Bagby fails to show the existence of a genuine factual issue on
any one of these elements, Experian is entitled to summary judgment on
Bagby claims the information Experian disclosed in her credit report
regarding the Sears and Discover accounts was inaccurate because the
accounts were fraudulently opened in her name. The Court assumes for the
purposes of discussion that both the Discover and the Sears accounts were
A credit reporting agency is not automatically liable when it prepares
an inaccurate credit report. Henson v. CSC Credit Serv., 29 F.3d 280, 284
(7th Cir. 1994). The issue is whether Experian maintained "reasonable standards for assuring maximum accuracy."
Id. at 286. Reasonable procedures are "those that a reasonably prudent
person would undertake under the circumstances." Lee v. Experian
Information Solutions, No. 02 C 8424, 2003 WL 22287351, at *3 (N.D. Ill.
Oct. 2, 2003). Bagby contends that the reasonableness of the credit
reporting agency's procedures is always a question for a jury. The issue
is, generally speaking, a question of fact. Crabill v. Trans Union,
L.L.C., 259 F.3d 662, 664 (7th Cir. 2001). But if the reasonableness of
the procedures used by the consumer reporting agency is beyond question,
a court can determine that the procedures were reasonable as a matter of
law. Id. For example, Henson held as a matter of law that consumer
reporting agencies are not liable for reporting information from a
judgment docket unless the agency has prior notice from the consumer that
the information might be inaccurate. Henson, 29 F.3d at 285.
It is undisputed that the Sears and Discover accounts were in Bagby's
name and that the creditors reported them to Experian as her accounts.
Bagby has presented no evidence that Sears or Discover are unreliable
sources of information or that Experian had any reason to doubt the
accuracy of the information they reported. Before Bagby sent Experian her
dispute letter in November 2002, Experian was not aware, nor should it
have reasonably been aware, that these accounts belonged to any one other
than Bagby. Under the circumstances, the Court agrees with Experian that
Bagby cannot sustain a § 1681e (b) claim for the period before November
2002. See Quinn v. Experian Solutions, No. 02 C 5908, 2004 609357, at *3
(N.D. Ill. Mar. 24, 2004). Moreover, as will be discussed in greater
detail below, Experian's procedures following its receipt of Bagby's
dispute letter were also reasonable as a matter of law. The duty of
reinvestigation imposed by § 168H (a) following a dispute by a consumer
is more stringent than the credit reporting agency's initial obligation under § 1681e (b).
Cushman v. Tram Union Corp., 115 F.3d 220, 225 (3d Cir. 1997). Thus, if
Experian has satisfied its § 1681 i (a) obligation as the Court has
found, it has a fortiori met the requirements of § 168 1e (b). See Lee,
2003 WL 22287351 at *3.
Once Bagby placed Experian on notice that there was a claimed
inaccuracy in her credit report, "the window of potential liability
opened," id., and Experian was responsible for using reasonable procedures
to assure accuracy. After receiving the dispute letter from Bagby,
Experian sent a Consumer Dispute Verification form to Sears and Discover
as well as several other creditors whose accounts Bagby disputed. The CDV
stated that Bagby disputed that the accounts belonged to her and claimed
that they were fraudulently opened in her name. Based on this
investigation, several of the items were deleted from Bagby's credit
report, but both Sears and Discover reported to Experian that Bagby's
accounts were correctly reported. Bagby offers no evidence supporting the
proposition that Experian had any reason to doubt whether Sears or
Discover performed a full reinvestigation concerning Bagby's accounts. No
reasonable jury could find that Experian's procedures for policing the
accuracy of its credit reports were unreasonable.
Even if Experian's procedures following receipt of Bagby's letter could
be found unreasonable, Bagby's claim would still fail because she has not
shown that there is a genuine issue of material fact as to whether she
suffered any actual damages. In her complaint, Bagby claims that she was
damaged by having to incur expenses associated with disputing the
information, she suffered emotional distress associated with having
incorrect derogatory personal information about her reported to others,
and she was given a decreased credit score which may prevent her from getting credit. However, Bagby has failed to
offer any evidence as to how the information regarding the Sears and
Discover accounts (which were not reported as past due or late) had any
negative effect on her credit rating. And Bagby has offered no evidence
of emotional distress resulting from Experian's reporting of the
accounts, as distinguished from her mother's allegedly unauthorized
opening of accounts in Bagby's name. See Def's Rule 56.1 Statement ¶¶
41-43; Pl's Resp. to Def's Rule 56.1 Statement ¶¶ 41-43.
Finally, the only out of pocket expenses Bagby claims are the fees she
paid to obtain copies of her credit report to check for inaccuracies and
the cost of having to pay the balance on the Discover account in order to
keep it current. However, Bagby's requests for copies of her credit
report were made even before she initially alerted Experian that she
disputed the Sears and Discover accounts. As previously discussed, as a
matter of law, Experian cannot be held liable prior to having been
informed of Bagby's dispute. And Bagby's voluntary decision to pay the
balance on the account cannot reasonably be said to have been caused by
Experian's reporting of the account. See Ruffin-Thompkins v. Experian
Info. Sys., No. 03 C 0683, 2003 U.S. Dist. Lexis 23647, at *16 (N.D.
Ill. Dec. 31, 2003).
Whether Experian's Reinvestigation Procedures Were Reasonable Under 1681i
Bagby's second FCRA claim is that Experian violated 15 U.S.C. § 1681i
(a) because it had a duty to conduct its own independent investigation in
light of the fact that she claimed that she was the victim of identity
theft. The potential for § 1681(a)(1)(A) liability arose when Experian
received notification from Bagby about a potential inaccuracy in her
credit report. Casella v. Equifax Credit Info. Servs., 56 F.3d 469, 474
(2d Cir. 1995). The Court must examine two factors to determine whether
Experian had a duty to go beyond the information it received from Sears and Discover in the CDV forms: (1) whether Bagby had alerted
Experian that Sears or Discover may be unreliable or Experian otherwise
knew or should have known that they were unreliable, and (2) the cost of
verifying the accuracy of the information versus the possible harm that
inaccurate information could have caused Bagby. Henson, 29 F.3d at 287.
Experian was not obligated under the circumstances to conduct an
independent investigation. When Experian received Bagby's dispute letter
it sent a CDV form to Sears and Discover. Both companies advised Experian
that the account was accurate, and as a result
Experian made no changes to these accounts on Bagby's credit report.
Experian informed Bagby of the investigation results, and instructed her
to contact Sears and Discover directly if she suspected her identity had
been stolen. As indicated earlier, Bagby has offered no evidence
suggesting that either Discover or Sears was an unreliable source of
information. Although Experian conducted no further investigation, it was
under no obligation to do so, as its standard reinvestigation procedure
was sufficient under the law to satisfy its obligations in the
circumstances present here. See Lee, 2003 WL 22287351, at *6 ("[T]he CDV
procedure alone is accepted by courts as an adequate method both for
assuring accuracy and for reinvestigation.").
The cost to Experian of verifying on its own the information regarding
the Sears and Discover accounts would have been significant and far
outweighs the possible harm to Bagby resulting from the reporting of the
accounts on her credit report. As indicated earlier, no negative
information about these accounts was reported. And with regard to the
Discover card, Bagby was aware of the account, having used the Discover
card herself. The Sears account had a balance of $0 and was being
reported as "Paid/Never late." Under the circumstances, any possible harm
to Bagby was minimal. The Court finds as a matter of law that Experian
was not required to independently verify the information it received from
the creditors based on the CDV's.
Whether Bagby Can Sustain A Defamation Claim
Finally, Experian argues that it is entitled to summary judgment on
Bagby's defamation claim because Bagby cannot prove that Experian acted
with "malice or willful intent to injure." 15 U.S.C. § 1681h(e). This
Court has already determined that Experian did not violate the FCRA.
Compliance with the FCRA precludes a finding of malicious intent. See
Moline v. Experian Info. Solutions, Inc., 289 F. Supp.2d 956, 959
(N.D. Ill. 2003). Thus, Experian is entitled to summary judgment on
Bagby's defamation claim.
For the reasons stated above, the Court grants Experian's motion for
summary judgment [Docket #21]. The Clerk is directed to enter judgment in
favor of Experian.