Smith v. Lexisnexis Screening Solutions Inc.
138 F. Supp. 3d 872
E.D. Mich.2015Background
- David Alan Smith applied to work for Great Lakes Wine & Spirits; GLWS ordered a background report from LexisNexis Screening Solutions (Defendant).
- The report erroneously included fraud-related convictions belonging to a different person (David Oscar Smith), and GLWS rescinded the job offer.
- Smith sued under the Fair Credit Reporting Act (FCRA) § 1681e(b), alleging negligent and willful failure to follow reasonable procedures to assure maximum possible accuracy.
- A jury awarded $75,000 in compensatory damages and $300,000 in punitive damages for willful violations; the Court previously denied Defendant's Rule 50(a) motion.
- Defendant renewed a Rule 50(b) motion and alternatively moved under Rule 59 for a new trial and/or remittitur; after briefing and oral argument the Court denied the JMOL, granted remittitur in part, and reduced punitive damages to $150,000.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether evidence was sufficient to submit negligence to jury | Smith argued internal report discrepancies and LexisNexis's non‑mandatory middle‑name field supported negligence without needing to propose alternate procedures | LexisNexis claimed plaintiff must identify reasonable alternative procedures (or show notice) to prove unreasonable procedures | Court: Evidence sufficient; plaintiff need not propose alternatives or show prior notice; jury properly decided negligence |
| Whether evidence supported willfulness/recklessness under FCRA | Smith argued risk from ignoring obvious discrepancies and failing to require middle names was so obvious that it demonstrated reckless disregard | LexisNexis relied on Safeco and argued punitive liability requires authoritative notice or systemic prior problems; conduct was not so obviously reckless | Court: Jury could find unjustifiably high risk (Safeco standard allows fact questions); willfulness verdict upheld |
| Sufficiency of compensatory damages (emotional distress and lost wages) | Smith presented detailed testimony (and corroboration) linking the report to emotional distress and six weeks' lost wages | LexisNexis argued distress was attributable to preexisting financial vulnerability and plaintiff’s testimony about the merchandiser job was inconsistent | Court: Plaintiff testimony and corroboration were sufficient for jury to award emotional and economic damages; JMOL denied |
| Excessiveness and constitutionality of punitive damages | Smith argued constitutional challenge only; asked court to reduce only if required | LexisNexis argued $300,000 punitive award (4:1 ratio) was excessive given low reprehensibility and compensatory award magnitude | Court: Applying Gore/State Farm guideposts and Sixth Circuit precedent, reduced punitive award to 2:1 ratio ($150,000) as the constitutional maximum and entered modified judgment |
Key Cases Cited
- Nelski v. Trans Union, LLC, [citation="86 F. App'x 840"] (6th Cir. 2004) (elements of a § 1681e(b) claim and reasonableness standard)
- Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47 (2007) (standard for willfulness/recklessness under FCRA)
- Tisdale v. Fed. Express Corp., 415 F.3d 516 (6th Cir. 2005) (standard of review for Rule 50 JMOL motions)
- Stewart v. Credit Bureau, Inc., 734 F.2d 47 (D.C. Cir. 1984) (inaccuracies can themselves evidence unreasonable procedures)
- BMW of N. Am., Inc. v. Gore, 517 U.S. 559 (1996) (guideposts for assessing punitive damages)
- State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) (reprehensibility and ratio guidance for punitive damages)
- TXO Prod. Corp. v. Alliance Resources Corp., 509 U.S. 443 (1993) (consideration of harm likely to result in punitive/compensatory relationship)
- Cortez v. Trans Union, LLC, 617 F.3d 688 (3d Cir. 2010) (FCRA damages and emotional distress precedents)
- Sloane v. Equifax Info. Servs., LLC, 510 F.3d 495 (4th Cir. 2007) (emotional distress awards in FCRA identity‑theft context)
- Bach v. First Union Nat'l Bank, [citation="149 F. App'x 354"] (6th Cir. 2005) (upholding significant emotional‑distress and punitive awards under FCRA)