978 F.3d 669
9th Cir.2020Background
- Plaintiffs Christopher Marino and Josh and Kristin Hardin had mortgage debts discharged in bankruptcy but the mortgage liens survived and they retained title to the properties.
- After discharge, defendant Ocwen Loan Servicing obtained the plaintiffs’ consumer credit reports.
- Plaintiffs sued under the FCRA, alleging Ocwen willfully obtained reports without a permissible purpose and sought statutory and punitive damages; district court granted summary judgment for Ocwen.
- On appeal, the Ninth Circuit affirmed: it held the record did not show Ocwen lacked a permissible purpose because servicers may obtain reports to evaluate loss-mitigation options for secured loans that survive bankruptcy.
- The court also held that, given its interpretation of the statute, Ocwen could not have recklessly or knowingly violated the FCRA, and thus any willfulness claim failed; the panel encouraged courts to decide the antecedent statutory-violation question before reaching negligence/willfulness when feasible.
- A concurring opinion agreed with the result but criticized the majority’s broad discussion of statutory interpretation and hypothetical scenarios as unnecessary dicta.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ocwen lacked a permissible purpose to pull post-discharge credit reports | After discharge and (allegedly) surrender/vacatur, Ocwen had no reason to pull reports except to foreclose | Liens survived; Ocwen could permissibly review reports to evaluate loss-mitigation, review, or collection under §1681b(a)(3)(A) | Plaintiffs failed to show no permissible purpose; reviewing credit for loss-mitigation is within §1681b(a)(3)(A) |
| Whether any violation was willful under the FCRA | Ocwen willfully obtained reports without permissible purpose | Even if mistaken, Ocwen’s interpretation was reasonable, not knowing or reckless | No willful violation; summary judgment affirmed because interpretation was not reckless or intentional misreading |
| Whether courts should resolve statutory-violation question before negligence/willfulness | (implicit) focus on willfulness | (implicit) courts can decide sequence based on record | Court endorses deciding the antecedent statutory-violation issue first when feasible to develop precedent, but not mandatory |
| Whether plaintiffs’ surrender/vacatur of properties negates permissible purpose | If plaintiffs vacated and surrendered, servicer couldn’t legitimately evaluate alternatives, so no permissible purpose | Even a vacated property occupant might accept a loss-mitigation offer; servicer may assess eligibility absent clear notice of disinterest | Vacatur/surrender (as alleged) did not, on this record, eliminate Ocwen’s permissible purpose absent clear consumer notice of no interest |
Key Cases Cited
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (willfulness requires knowing or reckless violation; reckless means running a risk substantially greater than careless reading)
- Syed v. M-I LLC, 853 F.3d 492 (9th Cir. 2017) (negligent FCRA violation requires an objectively unreasonable statutory interpretation)
- Vanamann v. Nationstar Mortg., LLC, [citation="735 F. App'x 260"] (9th Cir. 2018) (assumed lack of permissible purpose but held no willfulness where servicer could reasonably have believed it had a permissible purpose)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (summary-judgment standard: no genuine dispute of material fact warrants judgment as a matter of law)
- Saucier v. Katz, 533 U.S. 194 (2001) (describes value of answering antecedent constitutional question before qualified-immunity analysis)
- Pearson v. Callahan, 555 U.S. 223 (2009) (qualified-immunity sequencing is discretionary)