David Smith v. LexisNexis Screening Solutions
837 F.3d 604
6th Cir.2016Background
- Great Lakes hired LexisNexis (a consumer reporting agency) to run criminal-history checks for prospective employees; Great Lakes supplied applicant David Alan Smith's DOB but not his middle name.
- Lexis's database search matched first name, last name, and birthdate and returned criminal records for David Oscar Smith (different middle name); Lexis included those records because Lexis required only first/last name and DOB to match, and the criminal records lacked SSNs.
- Great Lakes rescinded Smith's employment offer based on the Lexis report; Smith disputed the report, Lexis investigated, corrected the report, and Smith began working six weeks later.
- Smith sued under the Fair Credit Reporting Act § 1681e(b), alleging Lexis failed to follow reasonable procedures to assure maximum possible accuracy; a jury found both negligent and willful violations and awarded $75,000 compensatory and $300,000 punitive damages (later reduced to $150,000 by the district court).
- On appeal, the Sixth Circuit affirmed liability for negligence but held the evidence insufficient to support willfulness (and thus punitive damages); it affirmed compensatory damages and remanded for entry of judgment consistent with that holding.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Lexis violated § 1681e(b) by not requiring a middle name or cross-referencing the Equifax credit report | Lexis negligently failed to follow reasonable procedures (middle name field existed; credit report showed "David A. Smith") | Lexis used industry-standard procedures (first/last name + DOB; SSN when available); low dispute rate shows reliability | Lexis negligently violated § 1681e(b); failure to require middle name/cross-check supported negligence finding |
| Whether Lexis acted willfully under the FCRA (entitling Smith to punitive damages) | Failure to require middle name and not cross-referencing obvious credit-report discrepancy was an unjustifiably high, known or obvious risk | Single, quickly corrected error amid a very low (.2%) dispute rate does not show disregard of a known high risk | Willfulness not proven; judgment as a matter of law for willfulness should have been entered; punitive damages vacated |
| Sufficiency of compensatory damages for lost wages and emotional distress | Testimony and financial harm (lost wages, borrowing, shame, reputational insult) supported $75,000 award | Damages excessive and largely conclusory; comparators show lower per-week awards | Compensatory award affirmed as supported by record and not so excessive as to shock the conscience |
| Whether remittitur or constitutional reduction of punitive damages was required | 4:1 punitive-to-compensatory ratio was permissible given reprehensibility | Punitive award excessive given lack of willfulness and low reprehensibility | Because willfulness not shown, punitive damages cannot stand; district court's reduction to $150,000 is vacated and punitive award removed |
Key Cases Cited
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (willfulness requires an unjustifiably high risk of harm known or obvious)
- Dalton v. Capital Associated Indus., Inc., 257 F.3d 409 (4th Cir. 2001) (CRA negligently but not willfully reported erroneous criminal record; correction after dispute relevant)
- Sarver v. Experian Info. Sols., 390 F.3d 969 (7th Cir. 2004) (cross-referencing procedures may bear on reasonableness under § 1681e(b))
- Wantz v. Experian Info. Solutions, 386 F.3d 829 (7th Cir. 2004) (mental-distress damages may be recoverable where facts are inherently degrading)
- Bach v. First Union Nat'l Bank, [citation="149 F. App'x 354"] (6th Cir. 2005) (discussing standards for proving emotional-distress damages under FCRA)