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Christine Baker
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Post Number: 467
Registered: 08-2002
Posted on Wednesday, February 05, 2003 - 04:44 pm:   Edit Post Delete Post Print Post    Move Post (Moderator/Admin Only)

Amicus brief for the Federal Trade Commission supporting individual consumer's right to maintain a cause of action under the Fair Credit Reporting Act against an entity that furnishes information to a consumer reporting agency. [PDF 51KB]

The .pdf is at Toby Nelson v. Chase Manhattan Mortgage Corporation, et al.


IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
No. 00-15946
TOBY NELSON,
Plaintiff-Appellant,
v.
CHASE MANHATTAN MORTGAGE CORPORATION, et al.,
Defendant-Appellees.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEVADA
BRIEF OF THE FEDERAL TRADE COMMISSION AS AMICUS
CURIAE,
SUPPORTING APPELLANT AND URGING REVERSAL
DEBRA A. VALENTINE
General Counsel
JOHN F. DALY
Assistant General Counsel
Federal Trade Commission
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2244
-i-
TABLE OF CONTENTS
PAGE
TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
INTEREST OF THE FEDERAL TRADE COMMISSION . . . . . . . . . . . . . . . . 1
ISSUE PRESENTED FOR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
I. The Plain Language of the Statute Provides for a
Private Cause of Action to Enforce Section 623(b) . . . . . . . . . . . . . 6
II. Well-Reasoned Case Law Supports Availability of a
Consumer Cause of Action for Section 623(b) Violations . . . . . . . . 8
III. The Statutory Framework, Legislative History, and
Administrative Guidance All Confirm the Availability of a
Private Cause of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
CERTIFICATE OF SERVICE
ADDENDUM – CITED CASES NOT YET REPORTED
-ii-
TABLE OF AUTHORITIES
CASES PAGE
Botosan v. Paul McNally Realty,
__ F.3d __, 2000 WL 781015 (9th Cir. June 20, 2000) . . . . . . . . . . . . . . . 6
Burgert v. The Lokelani Bernice Pauahi Bishop Trust,
200 F.3d 661 (9th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Campbell v. Baldwin,
90 F. Supp. 2d 754 (E.D. Tex. 2000) . . . . . . . . . . . . . . . . . . . . . . 5, 9, 10
Carney v. Experian Information Solutions, Inc.,
57 F. Supp. 2d 496 (W.D. Tenn. 1999) . . . . . . . . . . . . . . . . . . 9, 10, 11, 12
Carter v. United States,
120 S. Ct. 2159 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Cort v. Ash,
422 U.S. 66 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11
DiMezza v. First USA Bank, Inc.,
__ F. Supp. 2d __, 2000 WL 708458
(D.N.M. May 1, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 8, 9, 13, 14
Dornhecker v. Ameritech Corp.,
99 F. Supp. 2d 918 (N.D. Ill. 2000) . . . . . . . . . . . . . . . . . . . . . . . 5, 10, 13
Gozlon-Peretz v. United States,
498 U.S. 395 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Hornbeak v. Gold Key Leasing, Inc., IP 98-0795 (S.D. Ind. Mar. 3, 2000),
appeal pending, No. 00-1728 (7th Cir., docketed Mar. 30, 2000) . . . 10, 11
King v. United States Department of Justice,
830 F.2d 210 (D.C. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
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McMillan v. Experian Information Servs., Inc.,
No. 3:99cv1481 (D. Conn. July 18, 2000) . . . . . . . . . . . . . . . . . . . . 5, 9, 15
Ollestad v. Kelley,
573 F.2d 1109 (9th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Pennsylvania Dep’t of Corrections v. Yeskey,
524 U.S. 206 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Thomas v. Pierce, Hamilton, and Stern, Inc.,
967 F. Supp. 507 (N.D. Ga. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
United States v. Alvarez-Sanchez, 511 U.S. 350 (1994) . . . . . . . . . . . . . . . . . . . 6
United States v. Equifax Credit Information Servs., Inc.,
No. 1:00-CV-0087 (N.D. Ga. Jan. 26, 2000) . . . . . . . . . . . . . . . . . . . . . . . 2
United States v. Experian Information Solutions, Inc.,
No. 3-00CV0056-L (N.D. Tex. Jan. 20, 2000) . . . . . . . . . . . . . . . . . . . . . 2
United States v. Trans Union LLC,
No. 00C 0235 (N.D. Ill. Jan. 24, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
-iv-
FEDERAL STATUTES
Federal Trade Commission Act, 15 U.S.C. §§ 45 et seq.
Section 5(a), 15 U.S.C. § 45(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 5(b), 15 U.S.C. § 45(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. . . . . . . . . . . . . . . . . . passim
Section 602, 15 U.S.C. § 1681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 602(a), 15 U.S.C. § 1681(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 602(b), 15 U.S.C. § 1681(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 616, 15 U.S.C. § 1681n . . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Section 617, 15 U.S.C. § 1681o . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Section 621, 15 U.S.C. § 1681s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7
Section 621(a)(1), 15 U.S.C. § 1681s(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 2
Section 623, 15 U.S.C. § 1681s-2 . . . . . . . . . . . . . . . . . . . . . . . . . . passim
Section 623(a), 15 U.S.C. § 1681s-2(a) . . . . . . . . . . . . . . 7, 8, 9, 11, 14, 17
Section 623(b), 15 U.S.C. § 1681s-2(b) . . . . . . . . . . . . . . . . . . . . . . passim
Section 623(c), 15 U.S.C. § 1681s-2(c) . . . . . . . . . . . 7, 8, 9, 10, 11, 14, 16
Section 623(d), 15 U.S.C. § 1681s-2(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 7
15 U.S.C. § 1681n (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
15 U.S.C. § 1681o (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Pub. L. No. 90-321, § 502, 82 Stat. 167 (1968), reported as note
following 15 U.S.C. § 1601 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Pub. L. No. 104-208, 110 Stat. 3009 (1996)
Div. A, § 2412, 110 Stat. 3009-446 . . . . . . . . . . . . . . . . . . . . . . . . . 11, 15
Div. A, § 2413, 110 Stat. 3009-447-48 . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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REGULATIONS
16 C.F.R. Part 600 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
16 C.F.R. Part 601, App. A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
62 Fed. Reg. 35586 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
RULES
Fed. R. App. P. 29(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fed. R. App. P. 29(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Fed. R. App. P. 32(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
LEGISLATIVE MATERIALS
S. Rep. No. 104-185, 104th Cong., 1st Sess. (1995) . . . . . . . . . . . . . . . . . . . . 16
H.R. Rep. No. 103-486, 103d Cong., 2d Sess. (1994) . . . . . . . . . . . . . . . . . . . 16
INTEREST OF THE FEDERAL TRADE COMMISSION
The Fair Credit Reporting Act (“FCRA” or “the Act”), 15 U.S.C. §§ 1681 et
seq., seeks to ensure the “[a]ccuracy and fairness of credit reporting.” 15
U.S.C. § 1681(a). In recognition of the importance of such accuracy and
fairness to the interests of individual consumers and to the efficient functioning
of the banking system, Congress imposed obligations both on consumer
reporting agencies (CRAs) such as credit bureaus that compile consumer
reports, and on creditors and others who provide information to those agencies.
See, e.g., 15 U.S.C. § 1681(b) (requiring CRAs to “adopt reasonable
procedures” for credit reporting, “in a manner which is fair and equitable to the
consumer, with regard to the confidentiality, accuracy, relevancy, and proper
utilization of such information”); 15 U.S.C. § 1681s-2 (requiring furnishers of
information to provide accurate information and to investigate and report the
results of all disputes regarding such accuracy).
Congress has entrusted the Federal Trade Commission (“FTC” or “the
Commission”) with primary responsibility for governmental enforcement of the
FCRA as it applies to CRAs and those who furnish information to them. 15
U.S.C. § 1681s. The Act states that any violation of the FCRA “shall constitute
an unfair or deceptive act or practice in commerce in violation of section 5(a)
of the Federal Trade Commission Act [15 U.S.C. § 45(a)] and shall be subject
1 Recently, for example, the Commission initiated three actions against the
major consumer reporting agencies, to correct failures to provide adequate consumer
access for inquiries about credit report errors. See United States v. Equifax Credit
Information Servs., Inc., No. 1:00-CV-0087 (N.D. Ga. Jan. 26, 2000); United States
v. Experian Information Solutions, Inc., No. 3-00CV0056-L (N.D. Tex. Jan. 20,
2000); United States v. Trans Union LLC, No. 00C 0235 (N.D. Ill. Jan. 24, 2000).
Those actions resulted in consent judgments including injunctive relief and the payment
of $2.5 million in civil penalties. Id.; see Press Release, Nation's Big Three Consumer
Reporting Agencies Agree To Pay $2.5 Million To Settle FTC Charges of Violating
F a i r C r e d i t R e p o r t i n g A c t , a v a i l a b l e a t :
http://www.ftc.gov/opa/2000/01/busysignal.htm.
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to enforcement by the Federal Trade Commission under section 5(b) thereof
[15 U.S.C. § 45(b)] * * * .” 15 U.S.C. § 1681s(a)(1). The Commission
regularly brings enforcement actions pursuant to that authority.1 It has issued
interpretive guidance regarding various aspects of the Act’s requirements. 16
C.F.R. Part 600. In light of the Commission’s key role administering the
FCRA, this Court has found it appropriate to defer to the Commission’s
analysis of the Act’s provisions. See Ollestad v. Kelley, 573 F.2d 1109, 1111
(9th Cir. 1978).
The Commission also recognizes, however, the importance of private enforcement
actions as a vital additional means of securing compliance with the
FCRA’s requirements. Congress has provided broad authority for consumers
to seek damages for the violation of the FCRA by “any person.” 15 U.S.C.
-3-
§§ 1681n, 1681o. In the present case, a district court has improperly precluded
consumers from invoking such remedies with respect to any and all FCRA
violations committed by entities that furnish credit information to CRAs,
including failures to correct errors brought to their attention. This holding flies
in the face of clear statutory language, and will, if upheld, seriously weaken the
enforcement of the Act. Especially since the district courts have reached
conflicting decisions on this point, and this Court’s ruling will likely be the first
appellate precedent, the outcome of this case is of great importance to the
Commission.
ISSUE PRESENTED FOR REVIEW
Whether a private right of action, created by Sections 616 and 617 of the
FCRA, 15 U.S.C. §§ 1681n, 1681o, may be based on a violation of the
requirements of Section 623(b) of the Act, 15 U.S.C. § 1681s-2(b).
STATEMENT OF THE CASE
Plaintiff Toby Nelson brought this action against defendant Chase Manhattan
Mortgage Corporation (“Chase”), alleging that Chase violated Section 623(b)
of the Act, 15 U.S.C. § 1681s-2(b), by failing to take appropriate steps to
address Mr. Nelson’s dispute regarding information Chase had furnished to the
major CRAs. See Third Supplemental Complaint (“3d Compl.”), ¶ 24, ER 22-
2 “ER” refers to the Excerpts of Record filed by plaintiff-appellant.
-4-
23.2 As alleged in the complaint, this claim arises out of the following facts. In
1998, plaintiff took out a mortgage with a cosigner who later filed for
bankruptcy. Plaintiff was the primary obligor on the mortgage and made all
payments in full and in a timely manner, even after his cosigner declared
bankruptcy. After having some trouble being approved for credit, plaintiff
obtained a copy of his credit report from Experian, one of the three major
CRAs in the U.S., and discovered that Chase had reported to Experian that his
account was “included in or discharged through bankruptcy chapter 7, 11 or
12.” 3d Compl., Exh. 1, ER 26. After Mr. Nelson disputed the accuracy of
Chase’s reported information by sending a letter to both Chase and Experian,
Chase informed him that its internal operating procedures required this notation
in order “to prevent contact with the party(ies) involved in violation of the
bankruptcy laws.” 3d Compl., ¶ 10 & Exh. 2, ER 20, 27. Chase then slightly
changed the information it reported to Experian, so that the relevant notation
reflected that only one of the parties to the mortgage had filed for bankruptcy.
Plaintiff contends, however, that Chase’s actions did not deal with the problem
adequately, and that he has continued to experience difficulty in obtaining credit.
-5-
3d Compl., ¶¶ 11-14, ER 20-21. Plaintiff further claims that Chase failed to
send corrective notices to another consumer reporting agency. 3d Compl.,
¶¶ 15-17, ER 21. Plaintiff contends that all of these alleged failures constituted
violations of Section 623(b) of the FCRA, 15 U.S.C. § 1681s-2(b). 3d Compl.,
¶ 24, ER 22-23.
Chase moved to dismiss. Chase argued, inter alia, that Section 623 of the Act
creates a duty “only * * * to the consumer reporting agency,” and that a
consumer therefore cannot assert a cause of action to enforce the requirements
of the section. Chase Motion to Dismiss, Apr. 5, 1999, Dkt. No. 4, at 7.
The district court granted the motion to dismiss, stating that:
[n]either party has cited, and the Court has not been able to locate, any
case which confers a private right of action for alleged violations of
§ 1681s-2(b) by a furnisher of information to a credit reporting agency.
Order, Apr. 14, 2000, at 3, ER 41. Plaintiff moved for reconsideration, citing two
recent district court cases that have recognized the availability of a private right
of action for violations of Section 623(b). See DiMezza v. First USA Bank,
Inc., __ F. Supp. 2d __, 2000 WL 708458 (D.N.M. May 1, 2000); Campbell
v. Baldwin, 90 F. Supp. 2d 754 (E.D. Tex. 2000); see also McMillan v.
3 For the Court’s convenience, we include as an addendum a copy of this case,
as well as another cited case that is not yet reported or available on electronic services.
-6-
Experian Information Servs., Inc., No. 3:99cv1481 (D. Conn. July 18, 2000)3
(not cited below, but reaching same result); Dornhecker v. Ameritech Corp., 99
F. Supp. 2d 918 (N.D. Ill. 2000) (same). Despite these holdings, the court
below denied plaintiff’s motion for reconsideration, stating that “[t]he court
decision in the district of New Mexico does not constitute controlling
authority.” Order, May 16, 2000, ER 43-44.
-7-
ARGUMENT
I. The Plain Language of the Statute Provides for a
Private Cause of Action to Enforce Section 623(b).
The district court’s rationale for rejecting plaintiff’s claim — the lack of
“controlling [judicial] authority” that “confers a private right of action” for
violations of Section 623(b) — not only ignores a number of district court
decisions that have recognized such a right, but neglects the primacy of
statutory language. It is Congress, not the courts, that “confers” a federal
statutory cause of action. As in any matter of statutory interpretation, the
inquiry begins (and often ends) “with the plain meaning of the statute’s
language.” See Botosan v. Paul McNally Realty, __ F.3d __, 2000 WL
781015 at *3 (9th Cir. June 20, 2000) (citing United States v. Alvarez-Sanchez,
511 U.S. 350, 356 (1994)). Where, as here, Congress has clearly and expressly
provided for a private right of action, no prior case law is necessary.
In the present case, the language creating the private cause of action could
hardly be more clear. Sections 616 and 617 of the Act, 15 U.S.C. §§ 1681n,
1681o, expressly create private damage actions for, respectively, willful and
negligent violations of the FCRA. In the parallel language of those sections,
“[a]ny person” who fails “to comply with any requirement imposed under [the
-8-
FCRA] with respect to any consumer is liable to that consumer * * * .”
(Emphasis added.)
Section 623 of the Act, 15 U.S.C. § 1681s-2, imposes two distinct sets of obligations
on persons who (like Chase) furnish information to CRAs. Section
623(a) imposes broad duties on such furnishers to refrain from knowingly
reporting erroneous information, to correct and update furnished information,
and to provide various types of notice. Section 623(b) imposes further
obligations, which are triggered only upon a dispute regarding the completeness
or accuracy of particular information that a person has furnished to a CRA. In
such instances, the furnisher is required to conduct an investigation, review all
relevant information, and report the results of the investigation to CRAs. In the
present case, plaintiff has alleged that Chase failed to fulfill its obligations under
Section 623(b). See 3d Compl., ¶ 24, ER 22-23.
Section 623 does not itself contain language creating private remedies, but
recognizes the facial applicability of Sections 616 and 617 by selectively
limiting their effect. Specifically, Section 623(c), 15 U.S.C. § 1681s-2(c),
provides that Sections 616 and 617 “do not apply to any failure to comply with
subsection (a),” apart from certain state enforcement proceedings not pertinent
here. (Emphasis added.) Section 623(d), 15 U.S.C. § 1681s-2(d), further
-9-
confirms the limitation on enforcement of the provisions of subsection (a), by
stating that it “shall be enforced exclusively under [15 U.S.C. § 1681s] by the
Federal agencies and officials and the State officials identified in that section.”
Neither Section 623(c) nor Section 623(d) contains any words that limit the
availability of Section 616 and 617 private remedies with respect to violations
of subsection (b) of Section 623.
Application of these provisions clearly shows that the district court erred in
failing to recognize the availability of a private right of action based on violations
of Section 623(b). As an acknowledged furnisher of information to CRAs,
Chase plainly qualifies as “any person” under Sections 616 and 617, and just
as plainly has statutory duties under Section 623. In the present case, Mr.
Nelson is a “consumer” who alleges that Chase has willfully or negligently failed
to comply with its Section 623(b) obligations, “with respect to” his complaint.
If these allegations are sustained, Sections 616 and 617 expressly make Chase
liable in damages “to that consumer,” unless some other provision of the Act
limits their application. And while Section 623(c) carves out the general duties
of Section 623(a) from private damage liability, it does nothing to foreclose the
application of Sections 616 and 617, according to their express terms, to
violations of the specific dictates of Section 623(b).
-10-
II. Well-Reasoned Case Law Supports Availability of a
Consumer Cause of Action for Section 623(b) Violations.
The better-reasoned district court decisions have adopted the foregoing
analysis. For example, in DiMezza v. First USA Bank, Inc., supra, a victim of
identity theft brought an action against a furnisher of information that had
allegedly failed to fulfill its obligations, under Section 623(b), to investigate and
correct disputed items. The court, analyzing the pertinent statutory language,
stated:
[a]bsent any explicit limitation, the plain language of [Sections 616, 617,
623(b) and (c)] provide a private right of action for a consumer against
furnishers of information who have willfully or negligently failed to
perform their duties upon notice of a dispute. * * * Accordingly, the
plain language of the Fair Credit Reporting Act compels the conclusion
that there is a private right of action for consumers to enforce the
investigation and reporting duties imposed on furnishers of information.
DiMezza, 2000 WL 708458 at *3. The court expressly recognized that the limiting
language of Section 623(c), on its face, “only applied to subsection (a),” and
observed that another court’s “extension of the limitation to subsection (b) is
baffling.” Id. at *4 (citing Carney v. Experian Information Solutions, Inc., 57
F. Supp. 2d 496 (W.D. Tenn. 1999)). Similarly, the district court in Campbell
v. Baldwin, supra, recognized that, although Sections 616 and 617 “do not
apply ‘to any failure to comply with subsection (a) of’ [§ 623,] * * * individuals
4 Another case that reached the same result — albeit on the basis of reasoning
we do not entirely endorse — is Dornhecker, supra. The Dornhecker court began
by acknowledging the textual analysis of Campbell, but then addressed the issue as
“whether an implied right of action exists,” under the standards of Cort v. Ash, 422
U.S. 66 (1975). See 99 F. Supp. 2d at 926. To be sure, we agree with the
Dornhecker court’s assessment of the Cort factors, since Congress plainly intended
to protect consumer interests and the recognition of this cause of action comports
with the statutory scheme. However, resort to the Cort framework is unnecessary
where, as here, the plain language of the statute affords an express private right of
action. See, e.g., Burgert v. The Lokelani Bernice Pauahi Bishop Trust, 200 F.3d
661, 663-64 (9th Cir. 2000) (turning to a Cort analysis “[b]ecause neither [relevant
statute] contains an express private right of action”).
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who violate subsection (b) of [§ 623] are not exempted from civil liability.” 90
F. Supp. 2d at 756.
Most recently — indeed, subsequent to the filing of appellant’s opening brief
in this appeal — another district court has recognized that the plain language of
the FCRA provides a private right of action for violations of Section 623(b).
See McMillan v. Experian Information Servs., Inc., supra, slip op. 7-8. That
court relied both on the precision of the limiting language in Section 623(c), and
on the fact that, at the same time Congress enacted Section 623, it also
broadened the language of Sections 616 and 617 to cover FCRA violations by
“any person.” Id.4
By contrast, two other district courts that have found that there can be no
private right based on violations of Section 623(b) have simply ignored the plain
-12-
language of the statute. See Carney v. Experian Information Solutions, Inc.,
57 F. Supp. 2d 496 (W.D. Tenn. 1999); Hornbeak v. Gold Key Leasing, Inc.,
IP 98-0795 (S.D. Ind. Mar. 3, 2000), appeal pending, No. 00-1728 (7th Cir.,
docketed Mar. 30, 2000). The Carney court committed a number of errors in
its analysis. To begin with, that court incorrectly stated that Sections 616 and
617 of the FCRA, 15 U.S.C. §§ 1681n, 1681o, create liability only for
“consumer reporting agencies and users of consumer reports,” and observed
that creditors who furnish information to CRAs do not fall within either of those
two categories. 57 F. Supp. 2d at 500-01. That observation is beside the point,
however, since Congress amended Sections 616 and 617 in 1996 to expand
their reach from “consumer reporting agencies and users of consumer reports”
to the present “any person.” See Pub. L. No. 104-208, Div. A, § 2412, 110
Stat. 3009, 3009-446 (1996). The Carney court also asserted that “the
provisions for civil liability set forth in [Sections 616 and 617] do not apply to
any violation of [Section 623].” 57 F. Supp. 2d at 502. The court cited Section
623(c) for this proposition, ignoring the fact that it refers solely to claims based
on Section 623(a), not those based on Section 623(b).
Apart from thus misreading of the statutory language, the Carney court opined
that the obligations imposed by Section 623(b) “appear to exist solely for the
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benefit of consumer reporting agencies which face liability under the remainder
of the FCRA to the consumer for erroneous and inaccurate reporting.” 57 F.
Supp. 2d at 502; see also Hornbeak, slip op. 2 (following Carney on this point
without further analysis). This reasoning is doubly flawed. First, any notion of
the intended statutory “beneficiary” is irrelevant to the interpretive issue at hand.
Whether a particular plaintiff is “one of the class for whose especial benefit the
statute was enacted” is pertinent in determining whether a private cause of action
may be implied, in the absence of express statutory authority. Cort v. Ash, 422
U.S. at 78. Such considerations are irrelevant where, as here, Congress has
provided an express cause of action. See note 4, supra. Sections 616 and 617
do not limit the causes of action they create based on a standard of whom
Congress intended to benefit. On the contrary, they expressly make “any
person” who fails to comply with a FCRA requirement “with respect to any
consumer” liable “to that consumer.”
Furthermore, even if the sort of analysis that the Carney court engaged in were
appropriate, its proper application would only reinforce the availability of a
consumer cause of action here. Congress made abundantly clear that one of the
overarching purposes of the FCRA was to require practices that ensure fairness
and equity to consumers. See 15 U.S.C. § 1681. Although the practices
5 In the court below, Chase suggested that the caption of Section 623 —
referring to “responsibilities of furnishers of information to consumer reporting
agencies” — evinces a duty owed “only to” CRAs. Chase Motion to Dismiss, Apr.
5, 1999, Dkt. No. 4, at 7. This argument is erroneous, for at least three reasons. First,
the language of the caption is at best grammatically ambiguous. While Chase
presumes that the prepositional phrase “to consumer reporting agencies” modifies
“responsibilities,” it is at least equally plausible that it modifies “furnishers” — i.e.,
the caption simply refers to the duties owed by “furnishers of information to consumer
reporting agencies,” without specifying to whom those duties are owed. Second, as
the DiMezza court recognized, Congress expressly indicated that, in the interpretation
of the FCRA and related statutes, “[c]aptions and catchlines are intended solely as
aids to convenient reference,” and are not to be used to draw interpretive inferences.
See Pub. L. No. 90-321, § 502, 82 Stat. 167 (1968), reported as note following 15
U.S.C. § 1601; DiMezza, 2000 WL 708458 at *3. Finally, even without such clear
congressional guidance, the general rule is that a statutory caption “‘[is] of use only
when [it] shed[s] light on some ambiguous word or phrase’ in the statute itself.”
Carter v. United States, 120 S. Ct. 2159, 2168 (2000) (quoting Pennsylvania Dep’t
of Corrections v. Yeskey, 524 U.S. 206, 212 (1998)). Here the only ambiguity is in the
caption, and that ambiguity certainly cannot trump the clear language of the statute.
-14-
addressed by the Act initially focused on CRAs and users, the addition of
Section 623 to the Act in 1996 expressly extended its reach to certain furnisher
practices, and there is no reason to doubt that Congress intended these
expanded protections also to inure to the benefit of consumers.5 Indeed, as
another district court that thoroughly surveyed the policies and legislative
history of the FCRA concluded, “it is apparent that [consumers] are members
of the class of people sought to be protected by the enactment of the FCRA.”
See Dornhecker, supra, 99 F. Supp. 2d at 926; cf. note 4, supra.
-15-
III. The Statutory Framework, Legislative History, and Administrative
Guidance All Confirm the Availability of a Private Cause of Action.
In analyzing a statute, a court may consider not only the language Congress
used, but also what it omitted. In one case involving a different part of the
FCRA, for example, the court stated that, “‘[w]here Congress includes
particular language in one section of a statute but omits it in another section of
the same Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion [or] exclusion.’” Thomas v. Pierce,
Hamilton, and Stern, Inc., 967 F. Supp. 507, 510 (N.D. Ga. 1997) (quoting
Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991)). This principle is
directly pertinent in here: the language of Section 623(c) that limits the
availability of consumer causes of action expressly refers to actions for
violations of Section 623(a), but pointedly omits any reference to Section
623(b). The implication of this omission is clear: by intentionally restricting the
Section 623(c) limitation to one type of violation, Congress itself recognized the
availability of a private cause of action for violations of the omitted Section
623(b).
This distinction also comports with the structure of the obligations imposed on
credit information furnishers. Sections 623(a) and 623(b) impose two distinct
-16-
sets of duties. Section 623(a) obligations are generally broader in scope,
applying in some degree to all consumers. Section 623(b) obligations, by
contrast, are more focused, and are triggered only in those instances where a
consumer has disputed a specific entry in his consumer report. In those
instances, moreover, the stakes may be substantial for the consumer, who may
face the identity theft problem asserted by the plaintiff in DiMezza, or otherwise
may have reason to believe that his credit report is in error. Congress’s
allowance of a private right of action in the latter circumstance but not the
former simply reflects part of the balance struck between consumer and creditor
interests. See DiMezza, 2000 WL 708458 at *3. The district court’s ruling in
the present case distorts that balance, by failing to give effect to the consumer
rights Congress expressly granted.
In light of the foregoing textual analysis, there is no need here for the Court to
resort to other guides to statutory construction. Still, as one district court
recently noted, “[i]t is, nonetheless, reassuring to observe that the Court’s
reading of the statute’s plain meaning is consistent with both the legislative
history and the Federal Trade Commission’s interpretation * * * .” McMillan,
supra, slip op. 8-9. Perhaps the most salient aspect of the legislative history of
the 1996 FCRA amendments is the simple fact that they included both the
-17-
addition of Section 623 and the alteration of Sections 616 and 617. Before
those amendments, the FCRA imposed no specific duties on furnishers of
information; Congress filled that gap by adding Section 623, which imposes the
substantive obligations described above. See Pub. L. No. 104-208, Div. A,
§ 2413, 110 Stat. 3009, 3009-447-48 (1996). Within the same enactment,
Congress altered the language of Sections 616 and 617, which previously
created private causes of action only against “[a]ny consumer reporting agency
or user of information.” 110 Stat. at 3009-446; cf. 15 U.S.C. §§ 1681n, 1681o
(1994). By expanding that language to provide a private cause of action against
“any person” who violated FCRA requirements, Congress recognized that other
classes of persons could incur such liability. That change, made in tandem with
the express addition of substantive requirements applicable only to furnishers,
clearly evinces a congressional intent to make furnishers liable to consumers for
specified FCRA violations.
The reports of the pertinent congressional committees similarly reflect
Congress’s understanding that enactment of Section 623 would result in
furnisher liability to consumers in some instances. The Senate Banking
Committee, for example, stated that “[S]ection 623(c), as added by the bill, bars
private citizens from bringing suit against furnishers of information for violations
6 The 1996 FCRA amendments were enacted as part of an omnibus bill and
created little direct legislative history to shed light on their meaning. The cited reports
pertained to predecessor bills that Congress had failed to enact, but which contained
proposed language very similar to that enacted in 1996. Courts have found this sort
of legislative history to provide helpful guidance in analogous circumstances. See,
e.g., King v. United States Dep’t of Justice, 830 F.2d 210, 229 n.141 (D.C. Cir. 1987)
(using history of predecessor bills in interpreting 1986 FOIA amendments).
7 Pursuant to the Commission’s standard practice with respect to the filing of
amicus briefs in the U.S. courts of appeals, the entire Commission has considered and
voted unanimously to approve the filing of the present brief.
-18-
of certain duties imposed on them * * * .” S. Rep. No. 104-185, Senate
Committee on Banking, Housing and Urban Affairs, 104th Cong., 1st Sess. 53
(1995) (emphasis added); see also H. Rep. No. 103-486, House Committee on
Banking, Finance and Urban Affairs, 103d Cong., 2d Sess. 53 (1994)
(containing similar language).6
Furthermore, although the FTC has not previously had occasion to take a
formal position on this interpretive question,7 its prior pronouncements have
consistently assumed the existence of such a private right of action. In a 1997
Federal Register notice announcing a statutorily-mandated notification of rights
and responsibilities under the FCRA, the Commission noted that “credit card
issuers [had] advocated adding a section spelling out the limitations [in Section
623] on consumers’ ability to sue furnishers * * * .” 62 Fed. Reg. 35586,
35588 (1997). Although the Commission found it inappropriate to add such a
8 The staff of the Commission’s Bureau of Consumer Protection has expressly
taken the position, in an interpretive letter made publicly available, that “Section 623(b)
* * * allows consumers to sue violators of this subsection to obtain damages (which
may be punitive if the consumer shows willful violation) and attorney fees.” See Letter
from Clarke W. Brinckerhoff to Wainwright S. Watkins, June 24, 1999, available at:
www.ftc.gov/os/statutes/fcra/watkins.htm.
-19-
section to the notice, this statement reflects the contemporaneous understanding
of the Commission (and at least some furnishers) that consumers had the
“ability to sue” to enforce some parts of the recently-enacted Section 623.
Similarly, the FTC’s form entitled “A Summary of Your Rights Under the Fair
Credit Reporting Act,” published in the Code of Federal Regulations, informs
consumers that they “may seek damages from violators. If a CRA, a user or
(in some cases) a provider of CRA data, violates the FCRA, you may sue them
in state or federal court.” 16 C.F.R. Part 601, App. A (emphasis added).8
These indications of the Commission’s understanding of the FCRA simply
reinforce the language of the statute itself, which draws a clear line between
violations of Section 623(a) and 623(b), and plainly allows consumers to sue for
violations of the latter. The district court’s refusal to apply the statute as written
deprives consumers of important rights Congress expressly provided for, and
undermines the dual public-private enforcement scheme that Congress carefully
devised.
* The Commission wishes to acknowledge the substantial contribution to the
preparation of this brief made by Julia M. Fromholz, a law clerk in the Office of the
General Counsel.
-20-
CONCLUSION
For the foregoing reasons, the Commission respectfully urges this Court to
reverse the district court’s order of dismissal, and remand the case for further
proceedings on the merits of plaintiff’s claims.
Respectfully submitted,
DEBRA A. VALENTINE
General Counsel
JOHN F. DALY
Assistant General Counsel
Federal Trade Commission*
600 Pennsylvania Ave., N.W.
Washington, D.C. 20580
(202) 326-2244
July 21, 2000
-21-
CERTIFICATE OF COMPLIANCE
I certify that this brief complies with Fed. R. App. P. 29(c), 29(d), and 32(a)(7).
The brief is proportionately spaced using Times New Roman 14-point type.
The brief contains 4,509 words.
_______________________
John F. Daly
CERTIFICATE OF SERVICE
I hereby certify that, on July 21, 2000, I dispatched the requisite number of
copies of the foregoing Brief of the Federal Trade Commission as Amicus
Curiae to the Clerk of this Court, by overnight courier.
On the same date and by the same manner of delivery, I served two copies of
the Brief on each of the following counsel:
Gerald D. Waite, Esq.
Kummer, Kaempfer, Bonner & Renshaw
3800 Howard Hughes Parkway, 7th Floor
Las Vegas, Nevada 89109
Richard J. Rubin, Esq.
1300 Canyon Road
Santa Fe, New Mexico 87501
Mitchell D. Gliner, Esq.
3017 West Charleston Blvd.
Suite 95
Las Vegas, Nevada 89102
_______________________
John F. Daly
ADDENDUM
Cited Cases Not Yet Reported
(1) McMillan v. Experian Information Servs., Inc.,
No. 3:99cv1481 (D. Conn. July 18, 2000)
(2) Hornbeak v. Gold Key Leasing, Inc.,
IP 98-0795 (S.D. Ind. Mar. 3, 2000),
appeal pending, No. 00-1728
(7th Cir., docketed Mar. 30, 2000)

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