74 F.4th 38
2d Cir.2023Background
- Sessa leased a Subaru in Nov. 2018; lease gave her an option to purchase at a residual value but did not require a balloon payment.
- Hudson Valley furnished lease data to Trans Union that reported a $19,444 balloon payment and treated the residual as a debt/high balance.
- Sessa sued Trans Union under 15 U.S.C. §1681e(b) (FCRA) alleging the balloon-payment reporting was inaccurate.
- The District Court granted Trans Union summary judgment, adopting a bright-line rule that legal disputes about debt validity are not actionable under the FCRA and that CRAs are liable only for transcription/furnisher-mismatch errors.
- The Second Circuit reversed: it held the FCRA does not impose a threshold legal-vs-factual inquiry and adopted the Mader standard that an inaccuracy is actionable only if it is "objectively and readily verifiable."
- Because the District Court never addressed whether Trans Union followed "reasonable procedures" under §1681e(b), the Court vacated and remanded for further proceedings on that issue.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether §1681e(b) requires a threshold legal vs. factual inquiry before a claim proceeds | Sessa: No; accuracy should be measured by objective verifiability, not a legal/factual label | Trans Union: Yes; information requiring legal determination about debt validity is non-cognizable under FCRA | Court: Rejects the legal/factual bright-line; no threshold inquiry — apply objective and readily verifiable test (per Mader) |
| Whether the reported balloon payment was inaccurate | Sessa: Lease only gave an option to purchase; reporting a required balloon payment was factually inaccurate | Trans Union: It reported what the furnisher supplied; any error stems from legal interpretation by creditor | Court: Noted the lease language shows no required balloon and Trans Union conceded furnisher had no colorable claim; but remanded because District Court did not reach reasonable-procedures inquiry |
| How to determine when reported information is "inaccurate" under the FCRA | Sessa: Follows Mader—focus on objective, readily verifiable information | Trans Union: Invokes Mader to argue legal issues are categorically non-actionable | Court: Adopts Mader’s objective/readily verifiable standard and rejects a categorical legal/factual bar |
| Whether summary judgment for Trans Union was appropriate without analyzing CRA procedures | Sessa: Trans Union failed to show it followed reasonable procedures to assure accuracy | Trans Union: Reported furnisher information accurately or error was non-cognizable | Court: Vacated summary judgment and remanded for District Court to assess whether Trans Union followed reasonable procedures under §1681e(b) |
Key Cases Cited
- Mader v. Experian Info. Solutions, Inc., 56 F.4th 264 (2d Cir. 2023) (defines FCRA "accuracy" as requiring information be objectively and readily verifiable)
- TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (U.S. 2021) (discusses standing and harms under the FCRA)
- Shimon v. Equifax Info. Servs. LLC, 994 F.3d 88 (2d Cir. 2021) (plaintiff must establish inaccuracy to prevail under §1681e(b))
- Podell v. Citicorp Diners Club, Inc., 112 F.3d 98 (2d Cir. 1997) (FCRA §1681e(b) requires showing CRA failed to follow reasonable procedures even when inaccuracy exists)