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Murray v. GMAC Mortgage Corp.

July 23, 2007


The opinion of the court was delivered by: Honorable David H. Coar


Plaintiff Nancy Murray ("Murray" or "Plaintiff") has brought suit on behalf of a now-certified class of consumers against GMAC Mortgage Corporation d/b/a Ditech ("GMACM" or "Defendant") for violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq ("FCRA"). Before this Court is Defendant's Motion for the Court to Consider New Supreme Court Authority in Support of Summary Judgment and Certification for Immediate Appeal (Doc. No. 112). For the reasons stated below, this motion is GRANTED in part and DISMISSED AS MOOT in part.


The facts of this case were outlined in this Court's summary judgment opinion dated April 10, 2007. It is therefore unnecessary to repeat that description in its entirety. For present purposes, it is sufficient to state the following. Defendant GMACM is a residential mortgage lender that uses direct mailings to attract new customers. Defendant sent a nationwide mailing to 10,071,186 people between October 15, 2004 and April 14, 2005, which Plaintiff maintains failed to meet the requirements of FCRA. Specifically, Plaintiff claimed that the terms were not laid out in a properly "clear and conspicuous" manner as required by section 1681m(d), nor did the mailing amount to a "firm offer" that would justify the use of recipients credit scores under the permissible use exception of section 1681b(c). Defendant has shown that it used external agencies to assemble the list of recipients and develop the mailer in question, and received advice from internal associate legal counsel Peter Hender, compliance manager Shanna Gilroy, and production marketing director Peggy Knauft as to FCRA compliance.

In a ruling dated April 10, 2007, this Court denied in part and granted in part Defendant's motion for summary judgment, and granted Plaintiff's motion for class certification. This Court subsequently denied Defendant's motion to reconsider the partial denial of summary judgment. Following that ruling, the Supreme Court issued its opinion in Safeco Ins. Co. of America, et al. v. Burr, et al., 551 U.S. 1, 127 S.Ct. 2201 (2007). In Safeco, the Supreme Court interpreted the same willfulness standard upon which FCRA liability is based in this case (15 U.S.C § 1681n), though the underlying FCRA requirement was a different one (15 U.S.C. § 1681m(a) rather than 15 U.S.C. § 1681b(c)(1)(B)). Defendant now argues that this Court should reconsider its denial of summary judgment based on Defendant's claim that willfulness cannot lie under the standard established in Safeco. In the alternative, Defendant argues that it should be allowed to immediately appeal this issue to the Seventh Circuit, in light of the importance of interpreting the new Supreme Court ruling and the likelihood of settlement should this action move forward.


The standards for evaluating a motion to reconsider are discrete and limited. Such a motion will only be granted: where the court has patently misunderstood a party, or has made a decision outside the adversarial issues presented to the Court by the parties, or has made an error not of reasoning but of apprehension. A further basis for a motion to reconsider would be a controlling or significant change in the law or facts since the submission of the issue to the Court. Such problems rarely arise and the motion to reconsider should be equally rare.

See Bank of Waunakee v. Rochester Cheese Sales, Inc., 906 F.2d 1185, 1191 (7th Cir. 1990) (citing Above the Belt, Inc. v. Mel Bohannan Roofing, Inc., 99 F.R.D. 99, 101 (E.D. Va. 1983)).


Defendant is correct that Safeco concerns the same basic standard of liability to be used in evaluating parties' interpretations of FCRA. See 15 U.S.C. § 1681n (establishing a common standard of private-action liability for all violations of the law). This Court must now consider whether summary judgment was appropriate in light of the Supreme Court's reframing of FCRA language regarding willfulness.

a. Summary of Safeco Holdings

In Safeco, the Court considered 15 U.S.C. § 1681a(k)(1)(B)(I), which requires that consumers be advised whenever there is "an increase in any charge for...any insurance" as a result of a credit report. Defendants had interpreted this language as applying only to ongoing customers, rather than new customers, assuming that it would be impossible to "increase" the rates or charges on those who had never before been charged. As a result, the Safeco Defendants did not provide the required FCRA notice to new customers who were given substandard terms as a result of their credit reports. The Court disagreed with Defendants' interpretation of section 1681a(k)(1)(B)(I) and, after a lengthy analysis of FCRA's history and purpose, found that FCRA did require that notice be given.

However, because the statutory language was "less-than-pellucid" on this point, and in light of "a dearth of guidance" on interpreting that language, the Supreme Court found that Defendants had not acted "willfully" in interpreting section 1681a(k)(1)(B)(I) incorrectly. In making this determination, the Court made several important points. With respect to the "willful" standard for liability under Section 1681n, the Supreme Court found that willfulness for FCRA purposes can be founded on either a knowingly wrong or a reckless basis. Safeco, 551 U.S. at 6-10. It then established a two stage process for determining whether or not a party's interpretation was reckless: first, the reading of the statute must have been objectively unreasonable; and second, in making that unreasonable determination the party must have run "a risk of violating the law substantially greater than the risk associated with a reading that was merely careless." Id. at 18-21.

The Supreme Court focused on several different factors in determining that the Safeco Defendant's interpretation "was ...

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