HENRY LOSCH, a.k.a. John Losch, Plaintiff - Appellant, versus NATIONSTAR MORTGAGE LLC, d.b.a. Cooper, Mr., Defendant, EXPERIAN INFORMATION SOLUTIONS, INC., Defendant - Appellee.
No. 20-10695
United States Court of Appeals, Eleventh Circuit
April 28, 2021
D.C. Docket No. 2:18-cv-00809-PAM-MRM. Appeal from the United States District Court for the Middle District of Florida.
[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT
Before JORDAN, NEWSOM, and TJOFLAT, Circuit Judges.
In 2017, Henry Losch found himself in dire financial straits, so he filed for Chapter 7 bankruptcy and discharged his debts—including the mortgage on his home. Not long thereafter, though, Losch discovered that his credit report still showed that he was delinquent on the mortgage. Concerned, he contacted the reporting agency, Experian, to correct the error. But Experian‘s own inquiry with its data furnisher led it to confirm inaccurately, as it turns out—its previous reporting. It thus continued to report the outstanding mortgage. Losch filed suit under the Fair Credit Reporting Act.
On appeal, we must decide whether Experian violated the FCRA‘s requirements that a credit-reporting agency (1) employ “reasonable procedures to assure maximum possible accuracy of the information concerning the individual” when preparing a credit report,
I
A
In 2012, Henry Losch took out a mortgage through CitiMortgage on his home in Apopka, Florida. Five years later, he declared Chapter 7 bankruptcy. In an attempt to keep his house, however, Losch reaffirmed his mortgage, and thus retained the debt, instead of allowing the bankruptcy trustee to liquidate it. Even so, despite the reaffirmation, and for reasons unexplained in this litigation, the trustee subsequently sold the Apopka property. CitiMortgage then transferred the servicing of
Those notices prompted Losch—who no longer had any reason to hold onto the mortgage—to move the bankruptcy court to rescind his reaffirmation. Although his motion came after the statutory deadline, the bankruptcy court granted it, and Losch rescinded the reaffirmation.
Believing that he had a “fresh start,” Losch was dismayed when he found that his Experian credit report still showed that he had a debt with Nationstar for nearly $140,000, with a past-due balance of more than $10,000. In June 2018, he wrote to Experian to dispute the report:
I am writing this letter to dispute the Nationstar Mortgage account - account no. 614148XXXX. This mortgage was discharged in my chapter 7 bankruptcy that I filed in 2017. We filed a reaffirmation of this mortgage, but we rescinded the reaffirmation in 2018 and the court approved that so I no longer own this debt. Please correct the information on my credit report.
After receiving Losch‘s dispute letter, Experian sent an automated consumer data verification (ACDV) form to the furnisher, Nationstar, seeking to verify the alleged debt.1 Nationstar responded that the loan balance was correct and added past-due amounts that had since accumulated. Experian then relayed the same information to Losch. Experian took no further steps to verify the debt on Losch‘s account, and it didn‘t correct Losch‘s credit report until February 2019, after this litigation had commenced.
B
In December 2018, Losch sued Experian and Nationstar in federal district court for violating the Fair Credit Reporting Act,
The district court granted Experian summary judgment, concluding that under both
Losch timely appealed.3
II
Before reaching the merits, a threshold question: Does Losch have Article III standing? Neither party raised the standing issue, either before the district court or on appeal. But they vigorously contested whether Losch had shown any damages sufficient to survive summary judgment4—which, given Article III‘s “injury in fact” requirement, prompted us to ask for supplemental briefing about standing. After careful consideration, we conclude that Losch has standing to pursue his claims under
To have Article III standing, a plaintiff must show that he “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). This case primarily involves the injury-in-fact requirement and in particular, the sub-requirement of “concrete[ness].” See id. at 1548 (“To establish injury in fact, a plaintiff must show that he or she suffered ‘an invasion of a legally protected interest’ that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.‘” (quoting Lujan v. Defs. of Wildlife, 504 U.S. 555, 560 (1992))).
An “intangible injury,” such as the alleged violations of the FCRA here, may nonetheless constitute a concrete injury. See id. at 1549. In deciding whether an intangible harm is concrete, we consider “both history and the judgment of Congress.” Muransky v. Godiva Chocolatier, Inc., 979 F.3d 917, 926 (11th Cir. 2020) (en banc) (quoting Spokeo, 136 S. Ct. at 1549). Although that test can often be difficult to apply, its application to the FCRA provisions at issue here is made considerably easier by our decision in Pedro v. Equifax, Inc., 868 F.3d 1275, 1279–80 (11th Cir. 2017).
As in this case, the plaintiff in Pedro asserted that a credit-reporting agency had violated
In response, Experian says that Losch hasn‘t shown that it sent his credit report to third parties, as the defamation analogy would require. But as Losch points out, the reports themselves show otherwise. Losch‘s January 3, 2019 report, for instance, indicates that Experian supplied the report at least 26 times to six different entities. At oral argument, Experian sought to distinguish those communications by explaining that they were in response to “soft” inquiries, not “hard” inquiries—that is, inquiries not tied to a specific credit application, as opposed to those that are (and can thus affect a person‘s credit score). See Oral Arg. Tr. at 18:24–19:04; see also Brown v. Vivint Solar, Inc., 2020 WL 1332010, at *1 n.2 (M.D. Fla. Mar. 23, 2020). For “soft” inquiries, Experian says, “most” merely involve “prescreen inquiries,” where the creditor receives “only confirmation that a consumer meets a set of criteria selected by the creditor,” as opposed to the consumer‘s complete report. Oral Arg. Tr. at 18:36–18:45; Doc. 85-1, at 5. But in saying “most,” Experian implicitly acknowledges the possibility that a creditor received Losch‘s full report, and it admits that it can‘t say for certain whether the Nationstar account was disclosed to third parties in connection with the prescreen inquiries. Drawing all factual inferences in Losch‘s favor at summary judgment, as we must, the evidence of inquiries on his credit report is sufficient to show that the report was sent to third parties.
Separately, Losch has shown a concrete injury in the form of the emotional distress and time he spent contesting the inaccurate information. In his deposition testimony and affidavit, he testified that he “suffered ... from stress, anxiety, and lack of sleep” from the aftermath of his Chapter 7 bankruptcy discharge, and that he devoted nearly 400 hours to correcting the inaccurate information on his credit report. See Pedro, 868 F.3d at 1280 (explaining that Pedro also had standing because she had “lost time ... attempting to resolve the credit inaccuracies“). Experian offers two responses, neither of which is availing. First, it says that even if those injuries are concrete, they aren‘t fairly traceable to it. But Experian‘s argument doesn‘t go far enough: It says only that most of Losch‘s emotional distress and the time he spent resolving his financial troubles resulted from the bankruptcy itself. See Appellee‘s Supplemental Brief at 10 (“[Losch] testified that he spent at most an hour dealing with his dispute to Experian ....“). Because there is no question that wasted time is a concrete harm, see Salcedo v. Hanna, 936 F.3d 1162, 1172–73 (11th Cir. 2019), Losch has standing to pursue his claims so long as even a small part of the injury is attributable to Experian. And construing the facts in the light most favorable to Losch, we can‘t say that Experian caused none of Losch‘s damage.
III
On, then, to the merits. Section 1681e provides that in preparing a consumer report, a consumer reporting agency “shall follow reasonable procedures to assure maximum possible accuracy” about an individual.
A plaintiff may recover damages for both negligent and willful violations of
A
1
Before addressing whether Experian‘s report-preparation procedures and reinvestigation were reasonable, a prefatory matter: Has Losch shown that his file contained,
Experian‘s premise is right, but its conclusion doesn‘t follow. Although a bankruptcy discharge doesn‘t “expunge” a debt, Experian‘s report was still factually inaccurate. Experian didn‘t just report the existence of a debt but also the balance that Losch owed, the amount that Losch was past due, and how long Losch was past due. For instance, Losch‘s May 2018 report stated that as of March 2018, he (1) had a balance of $139,853, (2) had a past due amount totaling $10,006, and (3) was more than 180 days late. None of that was true following the bankruptcy-debt discharge—Losch was no longer liable for the balance nor was he “past due” on any amount for more than 180 days. Cf. Midland Funding, LLC v. Johnson, 137 S. Ct. 1407, 1414 (2017) (noting, as a general matter, that “discharge means that the debt (even if unenforceable) will not remain on a credit report“).
2
Having concluded that Experian reported factually inaccurate information, we turn to the parties’ primary dispute: whether Experian “reasonabl[y]” discharged its report-preparation and reinvestigation obligations by forwarding an ACDV form regarding the contested information to the data furnisher, Nationstar. Our circuit hasn‘t had much occasion to address the meaning of the term “reasonable” under either
Our sister circuits have laid out two corollary principles. First, a reporting agency‘s procedures will not be deemed unreasonable unless the agency has a reason to believe that the information supplied to it by a data furnisher is unreliable. See Sarver v. Experian Info. Sols., 390 F.3d 969, 972 (7th Cir. 2004). Because “lenders report many millions of accounts to Experian daily,” requiring it to examine each report individually for errors would be unduly costly. Id. But on the flip side of the same coin, when a “credit reporting agency ... has been notified of potentially inaccurate information in a consumer‘s credit report[,] [it] is in a very different position than one who has no such notice.” Henson v. CSC Credit Servs., 29 F.3d 280, 286–87 (7th Cir. 1994). That‘s because “once a claimed inaccuracy is pinpointed, a consumer reporting agency conducting further investigation incurs only the cost of reinvestigating that one piece of disputed information.” Cushman v. Trans Union Corp., 115 F.3d 220, 225 (3d Cir. 1997). We think those principles make good sense, and we now adopt them.
Applying them here, we can‘t say that Experian‘s procedures were reasonable as a matter of law. Once Losch informed Experian of a factual inaccuracy in his reports, Experian needed only to investigate that single, alleged error. Experian was thus in a “very different position” than before Losch contacted it. Henson, 29 F.3d at 286–87.6
In our view, the unique facts of this case don‘t support granting Experian summary judgment but rather cut against it. To be sure, a “reasonable reinvestigation ... does not require [credit-reporting agencies] to resolve legal disputes about the validity of the underlying debts they report.” Wright v. Experian Info. Sols., Inc., 805 F.3d 1232, 1242 (10th Cir. 2015); see also Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010). But Losch hasn‘t asked Experian to do that here. The bankruptcy court‘s discharge was unclear, but there is no doubt that Losch‘s mortgage was discharged. Thus, this case doesn‘t involve a legal dispute about the validity of the underlying debt.
This case is more analogous to Collins v. Experian Information Solutions, Inc., 775 F.3d 1330 (11th Cir. 2015), and Dennis v. BEH-1, LLC, 520 F.3d 1066 (9th Cir. 2008). Collins involved facts materially indistinguishable from those here. In response to a consumer dispute, Experian forwarded an ACDV form to its data furnisher, but didn‘t conduct any independent investigation. Collins, 775 F.3d at 1331-33. When the furnisher inaccurately confirmed the information, the consumer sued. Id. We agreed with the district court that “an issue of material fact remained as to whether Experian‘s investigation was reasonable when it disregarded the ... information Collins provided and instead relied solely on [the data furnisher] to verify the debt.” Id. at 1333.
Dennis is similar. There, Experian reported on the consumer‘s credit report that a “Civil Claim judgment” had been entered against him when, in fact, the case had been dismissed. Dennis, 520 F.3d at 1068–69. Rather than conducting its own investigation of the disputed information, Experian commissioned a third-party public-records vendor to verify the dispute. Id. at 1069. That vendor didn‘t correct the information, but rather confirmed it. Id. The Ninth Circuit held that the reasonableness of Experian‘s procedures was a jury question, where “Experian could have caught [the vendor‘s] error if it had consulted the Civil Register in Dennis‘s case.” Id. at 1070. It‘s true that the error in Dennis was clearer than the one here. The “Civil Register” there “clearly indicate[d] that the case against Dennis was dismissed,” while there is no similarly clear indication here. Id. But the result in hindsight—we know that had Experian looked in Dennis, it would have found, but not necessarily so here—can‘t dictate the reasonableness of Experian‘s procedures ex ante. Experian couldn‘t have known whether it would have found any information unless it had done even a minimal investigation—for instance, by reviewing the bankruptcy docket. It did nothing, although it easily could have done something with the information that Losch provided—an account number, a discharge in bankruptcy, and an explanation of his recission of the reaffirmation. On those facts—where Experian didn‘t even check the bankruptcy docket—a jury could find
To be clear, our holding is a narrow one. Just as we cannot hold that Experian‘s procedures were per se reasonable, we do not hold that they were per se unreasonable. Nor do we hold that in every circumstance where a plaintiff informs a credit-reporting agency of an inaccuracy, the agency must examine court records to independently discern the status of a debt. Even when a consumer has informed the agency about inaccurate information, there may be circumstances—say, when the consumer supplies insufficient detail—in which there is no jury question about the reasonableness of the agency‘s investigation or reinvestigation. Or the facts may show that the agency took alternative steps to verify information, such as contacting the consumer. Again, on the facts of this case—where (1) Losch provided a sufficiently detailed notice to Experian for it to investigate the inaccuracy and (2) Experian did nothing other than forward the letter to its data furnisher—we cannot say that Experian‘s procedures were reasonable as a matter of law, such that it was entitled to summary judgment.
B
Although Losch‘s negligence claims may proceed, the same cannot be said for his claims that Experian‘s violations were willful. To establish a willful violation, Losch must show that Experian “either knowingly or recklessly violated” the FCRA. Pedro, 868 F.3d at 1280. A credit-reporting agency recklessly violates the Act if it takes an action that “is not only a violation under a reasonable reading of the statute‘s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless.” Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 69 (2007). A violation isn‘t willful where a defendant “followed an interpretation that could reasonably have found support in the courts . . . .” Id. at 70 n.20.
Here, Experian‘s interpretation could “reasonably have found support in the courts.” As other circuits have noted, the reporting agency‘s “‘reasonable reinvestigation’ consists largely of triggering the investigation by the furnisher.” Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147, 1156 (9th Cir. 2009). And in Collins, we rejected a willfulness challenge on facts nearly identical to those here: “Taking no steps other than contacting only [the data furnisher] with an ACDV form regarding the disputed entry might have been negligent, but willfulness or recklessness is a higher standard that has not been met in this case.” Collins, 775 F.3d at 1336.7
IV
In sum, we conclude that Losch‘s claims that Experian negligently violated