*1 1020 Ajene Edo, Plaintiff-Appellant, the elements of con
unаble to establish categori purposes viction for modified v. cal accord analysis); Huerta-Guevara v. Casualty Company, Defendant, Geico (9th Cir.2003) 883, Ashcroft, F.3d 888 321 (“The difficulty is that the conviction’s la and far; bel goes so conviction itself Company; General Geico Insurance Gei generic must meet of theft definition Indemnity Company; co Government it.”). no matter what state calls Company, Employees Insurance Sub Merely language the stat reciting corporation, sidiaries Geico Defen ute tells the court no more would a than dants-Appellees. recitation of the code section-number particularly 03-35695, alone. This is in this ease so Nos. 04-35279. given activity breadth criminalized of Appeals, United States Court 10851(a).11 § chargeable and under Ninth Circuit. 10851(a) Therefore, § does not 8, and Argued Submitted March 2005. qualify categorically as an aggravated felo- ny Sentencing “theft offense” for Guide- 03, Filed 2005. Oct. enhancement, lines and because the record 24, Amended Oct. 2005. unequivocally does not establish that Vidal offense,” pled guilty fact to a “theft I reverse 8-level sentence en- hancement, sentence, vacate Vidal’s and resentencing.
remand for Ray REYNOLDS;
Jason Matthew
Rausch, Plaintiffs-
Appellants,
v.
HARTFORD FINANCIAL SERVICES
GROUP, INC.; Hartford Fire Insur- Company,
ance Defendants-Appellees. 10851(a) § California law is clear that driving taking cov- with both vehicle without 11. consent, range ers a of conduct in necessarily charges concert the owner’s statutes, (California's larceny joy-riding § and contains "joy- violation both” 499b distinct, statute) Ivans, "taking” riding” § alternate theories of 2 Cal. See, Ivans, merely “driving.” e.g., People App.4th Cal.Rptr.2d v. 2 4 66. Cal.Penal 1654, 1663, Cal.App.4th Cal.Rptr.2d §§ 4 66 permit argument Code 971 (1992); Austell, People Cal.App.3d v. charging 223 papers Vidal's establish he was 1249, 1251-52, (1990); Cal.Rptr. 273 principal 212 as a and not as an accesso- Donnell, 762, 769, However, People Cal.App.3d ry. 10851(a) text because the (1975). Cal.Rptr. accessories, imprecision liability itself extends mere ref- charging plea Vidal's general provisions is not documents erence of California's law, insignificant; e.g., under if a unequivocally support California Penal Code cannot charging "charges document a defendant such a conclusion. *3 T. Schwartz Heidi S. Wick-
Gilbert er, LLP, & Bailen on behalf of Schwartz Association, The American Insurance Casualty Insurers Property Association America, The National Association of Pro- Agents, and The Na- fessional Insurance of Mutual Insurance tional Association Companies, support as Amicus Curiae in Appellees, Hartford Financial Services Inc., Group, and Hartford Fire Insurance *4 Company. Shorr, A. D. Larson and Scott
Steve PC, Lokting & Berne Shlachter Stoll
Stoll Edo, Rausch, OR,
Portland, Appellants for REINHARDT, BERZON, Before and Reynolds. and BYBEE, Judges. Circuit Meloney Cargil D. Allen and Robert McKenzie, Dallas, Texas; Perry, Baker & REINHARDT, Judge. Circuit Gundy, Baker & McKen- Van Christopher Repоrting the Fair Credit Act Under Gordon, CA; zie, Francisco, Thomas San (“FCRA”), are re Portland, OR, Polscer, LLC, for Gordon & action notices to quired to send adverse Company, Casualty Appellees GEICO they increase the consumers whenever Company, Insurance GEICO General informa rates insurance on the basis of Govern- Indemnity Company, and reports. tion in consumer credit contained Company. Insurance Employees ment 161m(a)).1 1681a(k)(l)(B)(i), §§ 15 U.S.C. Houser, Lear, Douglas G. Loren Lisa E. us is question before principal Grade, Podwill, and Bullivant D. Andrew Does adverse straightforward: FCRA’s Portland, OR, PC, Bailey Ap- Houser to the requirement notice rate apply Group, Financial Services pellees Hartford policy in an initial insur charged first Inc., Compa- Fire Insurance yes: is ance? hold answer We ny. requires compa that an insurance The Act Counsel, an Kovacic, ny the consumer adverse action send E. General William is rate for notice whenever Daly, Deputy F. General Counsel John obtains, of credit information DeMilleWagman, because Litigation, and Lawrence the rate is contained regardless whether Trade Commis- on behalf of Federal or re policy in an initial or extension Appel- support Amicus Curiae sion as of wheth- policy regardless Edo, Rausch, Reynolds. newal of lants of, 1681m(a) an increase in any person denial or cancellation provides "a 1. Section for, any any charge other ad who adverse action with or a reduction or "takes any whole change is based in or consumer that in the terms verse or unfavorable part any of, insurance, contained in con any coverage exist or amount provide report” "notice of sumer must for, applied with the in connection or Section action to the consumer.” underwriting of insurance.” 1681a(k)(1)(B)(i) an “adverse action” defines 1024 previously charged
er for a willful violation FCRA if “know- rate. consumer lower ingly intentionally committed act in disregard for the of oth- rights conscious questions. five ancillary also resolve ers.” Cushman v. Trans Corp., Union First, hold that FCRA’s adverse action we (3d Cir.1997) 115 F.3d (quoting requirement applies whenever a Philbin v. Trans Corp., Union F.3d consumer would have received lower (3d Cir.1996) (as amended)). had his rate for insurance credit informa- Circuit, favorable, regardless tion Like the Third been more hold con- rating his credit or disregard whether above below knowing scious means “either requirement average. Specifically, be in contravention of the covers those credit information whose rights possessed by pursuant disregarded replaced purposes of a or disregard in reckless computation average neutrаl the policy whether contravened those figure, long so as the insurance rights.” Id. at 227. rates would have been lower had the cred-
it information more I. favorable. Sec- THE ACT AND THE APPEALS ond, charging we hold that for insur- *5 more Reporting Fair Credit seeks Act the a ance on basis of transmission stating “[ajccuracy ensure the and fairness of that no credit or information insufficient through credit reporting” variety a of credit information available constitutes means. 15 U.S.C. 1681. Central on adverse action based information in goal, persons FCRA limits the who may a report requires consumer therefore obtain consumer reports and re- Third, the of giving notice under FCRA. quires reports notify users such con- that, comply we hold with FCRA’s no- when, in sumers on reliance a consumer must, inter tice requirement, a report, “adverse action” has been taken. alia, communicate to the consumer that an 1681a, 1681b, §§ 15 U.S.C. Specif- 1681m. adverse action on a report based consumer 1681m(a) ically, § provides: person “If a taken, action, the specify describe the takes any adverse action with upon consumer, effect of the action the any consumer that is based in or whole in identify party parties the or taking part any information contained in a Fourth, the action. we hold that when a report,” person provide cоnsumer shall applies consumer for insurance with a fam- “notice of the adverse action con- ily companies and is a charged higher sumer.” Adverse action notices advise rate for insurance because of his credit consumers an adverse action has been report, or two more within that them, taken against and the nature of that family may jointly severally be liable. action, may and alerts that they them view requirement The notice applies any copy a of the consumer report trig- company that makes a decision that a gered the charge adverse action free of higher imposed, rate poli- shall be issues any and correct affecting errors their eco- cy rate, at a provide refuses to well-being. nomic if reports Even are free rate, policy if lower company’s error, from adverse action give notices action is based in or in part whole on the important information about consumer’s credit Finally, information.2 how improved we adopt ben- Third Circuit’s definition of “willfully,” as that term efit them employed they in and how can receiving avoid FCRA, a company and hold that is liable ratings unfavorable credit in the future. 2. We do not intend this list to be exhaustive. Finally, ting policy issuance. defen- that have the various issues
To resolve аd- regarding summary judg- FCRA’s seek arisen dants both cases requirement a set re- verse ground ment on the alternative cases, consolidated two we have lated their actions not willful as matter were opinion: of this purposes for appeals contention, To last law. address this Financial Services Reynolds v. Hartford meaning term must define Inc., 2005 2714503 and Edo Group, WL “willfully” as applies FCRA. co., 2004 WL Casualty v. GEICO princi- Reynolds presents A. Reynolds v. Financial Ser- Hartford charged May issue: rate first pal Inc. Group, vices constitute initial of insurance Reynolds remaining Jason is the sole purposes rate an increased named-plaintiff in this class action require- adverse action notice Company Fire Insurance that a rate Fire asserts ment? Hartford (“Hartford Fire”).3 statutory He seeks qualify as increased unless low- cannot damages, punitive as well reason- charged to previously er attorneys company’s vio- able fees presents Reynolds also the customer. re- lation of FCRA’s adverse action notice a communication stat- the issues whether quirement. Reynolds’ claims relate or insuffi- that no credit information obtained, policies two insurance he one information is available con- cient credit other for automobile and the homeowners report” under the a “consumer stitutes us, insurаnce. On the record before an adverse action and whether statute to be Hartford Fire set rates tell the consumer notice that does not *6 Property and policies. an taken Hartford adverse action both and him, that action against describe of Casualty Company Insurance Hartford consumer, identify the and upon (“PCIC Hartford”) effect Reynolds the issued taking action is sufficient parties the the Hart- policy insurance and homeowners presents the issue under FCRA. Edo the Company ford Insurance of Midwest when- whether an adverse occurs (“Hartford Midwest”) him auto- issued the a have received ever consumer would policy. mobile insurance refer had rate if his credit lower PCIC, Fire, Hartford and Hart- Hartford favorable; an in- or whether been more Compa- “Hartford ford Midwest as the company’s practice providing surance nies.” if the action notice con- Fire Hartford Reynolds originally sued aver- credit information is below sumer’s sought complaint his and later to amend (or “neutral”) results and factor age Mid- add and Hartford PCIC Hartford if of a rate than imposition in the summary sought Fire west.4 Hartford average, rating had been is his credit court judgment, granted which the district Both Edo and consistent with FCRA. First, that “the grounds. on it held two which require us to decide Reynolds also contracting policyholder with the entity under FCRA for companies are liable taker of ad- only possible statutory the give an increased the failure contracting only the action because verse several affiliated rate when premium increasing the entity capable process of rate-set- are involved company, pursuing his claims longer appeal. but is pursuing his 3. Rausch is no against entity. Reynolds also Hartford Financial named Inc., Group, as a which serves hold- Services insurance, changing for or the terms of the insurance which issued automobile Second, with the insured.” contract Hartford, which PCIC issued homeowners alternative, it that an held so, In doing insurance. Fire’s Hartford new issues employees would obtain credit information policy-holder to] held ‘increase’ “cannot[be Union, from Trans a consumer information charge for insurance unless the insurer bureau, through a contract to which Hart- payment an initial makes demand for ford Fire and signato- Trans Union were subsequently the insured and increases conveyed ries. This information would be amount of that demand based informa- through Fire Hartford the risk assess- report.” tion the insured’s credit The firm, ChoicePoint, supply ment data holding second and relies on alternative form an High “insurance score.” court, previous decision Mark same insurance scores correlаted fa- with more Co., Valley F.Supp.2d Insurance reports. vorable regard With (D.Or.2003). 1307, 1317 On basis insurance, decision, if AARP that earlier automobile member district court also amend, Reynolds denied reasoning leave high enough score, had he that he could not “state viable FCRA qualify percent would for a ten discount. defendants,” proposed claims insurance, regard to With homeowners In PCIC Hartford and Hartford Midwest. only if the member obtained a insur- top words, other leave was denied on the assigned top ance score could he be to the ground policies that the were initial issues of insurance tier with the best rate. previous no charge had been made customer at a lower rate. If, when Hartford Fire a request sent score, for an insurance no credit informa- Companies’ Use tion the name matched and address of the Credit Information if consumer or the information that did During the relevant period, time Hart- match generate was insufficient to in- ford Fire and the American Association of score, surance this information be (“AARP”) Retired Persons an agree- had company, transmitted to the con- *7 which ment under Hartford Fire or one sumer be labeled a “no hit” or “no its subsidiaries would issue automobile and score” and be assigned would not an insur- homeowners insurance to AARP members score, ance score. an Without insurance premium if those en- individuals qualify the consumer could not for ten joyed ratings. favorable credit While the percent Midwest, discount with Hartford procedures issuing used for the two kinds placed top nor could he be in the insurance slightly, they insurance varied were result, tier with PCIC Hartford. As in same respects. most relevant In both hit” “no or “no score” consumer would cases, employees of Hartford Fire would pay numerous instances more insur- all concerning make of the decisions AARP ance than if he high had received a policies members’ insurance for all insur- subsidiaries, Midwest, including Hartford ance score.5 database, Reynolds' request In connection up information in the the informa- insurance, automobile he generate was labeled a "no tion was insufficient to an insurance hit" because his name and address did not score. As both a label “no hit” and "no any person’s effect, practical match in the national database. score” have the same for con- In connection with his homeowners insur- we venience's sake will here after refer request, ance he opinion report category was labeled a "no score” to a in either "no as a because, while his name and address did call hit." (“Government Company Employ- Companies’ ance Adverse
The Hartford ees”), Policy Company Action GEICO General Insurance (“GEICO General”), Indemni- and GEICO of the Fire is the one Hartford (“GEICO ty Corporation Indemnity”).6 Companies developed to have or companies, These are affiliated all which parties action notices. The sent adverse Corporation are subsidiaries of the GEICO actually Hartford Fire dispute whether by collectively and are referred to Reynolds, an action notice sent parties Companies.” as the “GEICO question of fact for the fact- that is but compa- sometimes to that group Hartford Fire refer finder. Whether adequate designation under nies sometimes contends sent was discuss question is a law simply as GEICO. below. Fire, Unlike Hartford the GEICO Com that adverse actions can panies concede Reynolds’ Insurance Policies respect occur with first rates Reynolds applied both automobile in an initial of insurance. policy by contacting insurance homeowners for an They do not assert order He no ex- Companies. had the Hartford adverse action to occur there must be an An em- isting group. with that policy to a rate that the consumer has increase personal ployee of Hartford Fire collected Nevertheless, previously charged. attempted Rey- to obtain information and granted summary judg the district court twice, nold’s insurance score once for various ment with to the application. The credit each insurance grounds. on a entities number of different Reynolds both times that reported bureau First, Edo the court held that have Al- supra. a “no hit.” See n. standing bring FCRA claim him though Hartford Midwest issued he Employees because “was Government policy insurance and Hartford automobile coverage eligible for insurance from him a insur- PCIC issued homeowners regardless of consumer company] his [that “no a result of his hit” policy, ance Employ credit score because Government Reynolds did not receive either of status coverage only to gov ees offers insurance premium the AARP rates. military personnel.” employees ernment Next, summary judgment granted Casualty Co. B. Edo v. GEICO com favor of GEICO General The second of consolidated cases Plaintiff to pany “did not contract with relates to automobile poli issue or underwrite by Ajene Reynolds, Like obtained Edo. *8 with the cy.” ruling This was accord statutory damages, punitive Edo seeks previous holdings other district court’s fees, attorney as well as reasonable only company related cases for violation behalf of a class to policy the insurance can be held issues require- FCRA’s action noticе adverse action under have taken adverse He, too, remaining sole ment. Inc., Group, Ashby FCRA. v. Farmers See district appeals Edo named-plaintiff. (D.Or.2003); 1213, 1222 Ra F.Supp.2d summary judgment de- grant court’s Co., 242 Mut. v. Nationwide Ins. Employees Insur- zilov fendants Government Casualty issue a pursuing appeal against rates. GEICO did not GEI- est 6. Edo is not his Edo, (“GEICO policy Edo did not Casualty Corporation Casual- insurance CO policy unfavorable policies at the ty”), company seek obtain that writes insurance company charged. charges high- rates the high for risk consumers and (D.Or.2003). weights assigned 989-90 Final- with other insur- F.Supp.2d other granted summary judgment factors, to GEI- ly, it ance age such as and number of “the Indemnity premium CO accidents to arrive at a final insur- total by Indemnity GEICO charged [Edo] weight. weight, ance Based on that final the same even if would have been GEICO the assigns sales counselor the customer to Indemnity information in consider Companies one of the deter- GEICO history.” Plaintiffs consumer credit appropriate mines the insurance tier. This determination serves to establish the rate
GEICO’s Credit Use of Information charged. the consumer bewill After the Companies organized are The GEICO provided information the customer has by provides pre- risk. GEICO General verified, been he is issued policies rates for those ferred with low who at rate. are risks. lesser insurance Govеrnment provides preferred poli- Employees also Policy GEICO’s Adverse Action cies, employees. government but Companies’ original The GEICO Indemnity policies GEICO issues standard policy, adopted in was to send ad- with rates for risk mid-level moderate con- verse action notices to all consumers Finally, Casualty sumers. GEICO issues reports whose credit used in making were policies high non-standard rates for insurance decisions. Later same who greater those are risks. The GEICO year, changed GEICO least in policy, Companies began using consumer credit part to reduce costs. of sending Instead reports early everyone, adverse action notices to GEICO insurance, In purchase order to consum- system developed which determining ers call toll-free number and talk to a by actions deemed comparing GEICO sales counselor. The sales coun- charged the rate that it would employed by Employ- selor is Government have had the credit information ees of all but works on behalf of the GEI- been “neutral.” Indeed, Companies. CO all of work system, however, GEICO’s new did not Companies performed by the GEICO comply with requirements. FCRA’s workers, Government Employees as the Companies’ policy during peri- GEICO employ- other do any not have od relevant to this case was to compare thе Upon ees. learning that a customer consumer’s place- actual and tier insurance, to purchase wishes automobile (which, above, ment as described the sales basic counselor elicits part based in on his rating) with the asks whether he use custom- company and tier which he would have er’s credit arranging information when assigned had a “neutral” credit policy. his If acquiesces, the customer weight been substituted his actual sales counselor obtains the credit informa- weight calculating when the final tion in the form an insurance score total weight. The Com- analysis calculated data firm Fair panies’ weight “neutral” credit was de- supplied by Isaacs from information Trans fined, generally speaking, weight as the Employees Union. Government is the *9 average reflected the rating credit only company GEICO that has a contract all Companies consumers. The with GEICO pro- Trans Union and Fair Isaacs would two vide this calculate final total Using information. a Govern- insurance weights, only ment Employees computer system, using one actu- variable —the case, sales al weight counselor converts the insurance credit in one and the “neu- score to a weight credit and combines it tral” credit weight Only the other. if ance, improve “neutral” using did not when the weight total insurance the final surprising, as Edo’s weight have result- was used weight would “neutral” credit weight with a than aver- placement actual credit was better in the consumer’s ed however, age. policy, or in a different tier its the GEI- Under different actu- Companies the consumer was did not issue him ad- than to which CO if such different ally assigned, action notice. verse in the con- have resulted would placement if It is uncontested that the GEICO rate, would being charged a lower sumer’s Companies highest had used the credit Companies issue an adverse action GEICO weight that a consumer could receive rath- words, Com- In the GEICO notice. other er than neutral credit rate deter- sending from policy was refrain panies’ placement, mine Edo’s alternate GEICO if use of consumer’s statutory a placed would have Edo with GEICO Gen- appli- information caused actual credit eral, him preferred company, a and offered entity a placed cant with to be short, if In Edo’s lower rate. charging of the tier that resulted information more favor- credit had been rate, that he rate than same or lower (even though already able above was charged had the calcula- would have been average), charged he would have been less ensuing assignment been tion and 2002, In for his insurance. the GEICO average a “neutral” or credit based on begаn to Companies changed policy its policy, even if the rate Under rating. action notices issue adverse whenever higher than the ultimately charged was report with more credit informa- favorable would have rate which the consumer in a tion have resulted lower insur- would he had a more favorable been entitled had policy, rate. the new Edo ance Under rating, statutory notice credit statutory have notice. received the actual of the “neutral” and the sent if use assign- have led credit data would II. ANALYSIS Thus, entity and tier. ment to the same A. Initial Policies Insurance policy to adverse send was not GEICO’s principal question The in this and to all consumers who would action notices of related cases7 constitutes number they had charged have lower rates been impression: Does FCRA’s matter first rating. enjoyed a more favorable apply to requirement action notice adverse Application Edo’s Insurance charged in an initial the rates first it limited to an increase of insurance or is toll- Following call to GEIGO’s Edo’s previously in a rate that the consumer has number, counselor used the free the sales statutory charged? As with all inter been place he its obtained begin the text of the pretation, we with Indemnity. with new customer GEICO See, e.g., statute. Underwriters then Companies applied The GEICO N.A., Bank, Ins. Co. v. Union Planters determining whether an adverse policy for 1942, 147 L.Ed.2d U.S. 120 S.Ct. calculated action had occurred. GEICO (2000). respect to An action with that, weight had the neutral credit by 15 is defined U.S.C. weight, Edo’s actual credit used instead of 1681a(k)(1)(B)(i) as “a denial or cancella weight resulting final total would still for, of, any charge tion an increase being placed have resulted in Edo’s or unfavorable reduction or other adverse Indemnity. place- That Edo’s or amount change coverage in the terms ment, for his insur- and the dispositions separately. filed are memoran- dum related cases resolved *10 nary (2d 1989) (“The of, insurance, for, existing applied action, any or ed. or process, in- underwriting in of making aug- connection with fact of or becoming greater; mentation, surance.” growth, enlargement, exten- Dictionary sion.”); WebsteR’s New World Specifically, we must decide whether English (3d ed.1988) college of American price for initial charging higher insur- (defining “growth, “increase” as enlarge- ance than insured would otherwise etc[.]”). ment, “Charge” price means the charged have been because of information See, for goods demanded or services. e.g., in a consumer credit an report constitutes English Dictionary (2d 1989) in ed. any charge” within the “increase mean- Oxford (“The First, FCRA. price required of we еxamine the defini- or demanded ser- (less “charge.” rendered, tions of “increase” and Hart- usually) vice for goods or that, ford Fire contends limited to their supplied.”); Webster’s New World Dictio- definitions, nary ordinary English these apply words (3d college ed. of American only has previously when consumer been 1988) (“[T]he article, or of price cost an charged and that charge etc.”). service, Nothing in the of definition by thereafter been increased the insurer. these implies words the term “in- phrase, previously The “has been any charge crease in for” should be limited Hartford, charged,” as used refers to cases which a raises the only to a rate that previ- the consumer has previously rate that individual has been ously paid for but also to a rate charged. previously the consumer has no While court has considered whether quoted, even if that rate was increased requires previous an increase charge made any payment. before consumer FCRA, meaning within the the Sixth Reynolds that, disagrees, asserting under employed Circuit has the term “increase” ordinary term, definition analogous circumstance, in an stating, “An charge increase also occurs whenever price increase the base of an automobile charges higher insurer rate than customer, charged is not to а cash but charged otherwise have because customer, charged solely is to a credit any factor —such as adverse credit infor- customer, because ishe a credit triggers mation, age, driving or regard- record8 — in Lending [the Truth Act’s] disclosure less of previous- whether the customer was requirements.” Cornist B.J.T. Auto ly charged some other rate. According to Sales, Inc., (6th 272 F.3d Cir. Reynolds, he was an increased 2001). manner, Defined in this an in rating because his he when charge creased charge higher compelled pay a rate than than it would otherwise have been but for premium rate because he failed to the existence of some factor that causes high Thus, obtain a insurance score. he charge insurer to a higher price. argues, the definitions “increase” and “charge” encompass the insurance compa- Second, statutory definition of “ad- practice. Reynolds nies’ is correct. action,” verse is made applicable to insurance, something explicitly
“Increase” means to encompasses make in- “any English See, greater. e.g., surance, existing applied for.” Oxford Dictio- can, 8. An adverse action under reports. charges While increases in course, only charge factors, occur if the increase in many plaintiffs occur was due to "infоrmation contained in a con- contest the increases due to unfavorable 1681m(a). report.” sumer 15 U.S.C. credit information. reports consumer issue these cases are
1031 1681a(k)(1)(B)(i) important them about the ben- add information (emphasis U.S.C. rating improving efits their credit in the ed). phrase the latter use of Congress’ in even assist them learn- future that “adverse ac its intent demonstrates ing to do how so. all transactions— insurance apply tions” to a policy of an initial from contention that Hartford Fire’s text of long-held policy. The of a renewal charged the in apply does rate not imposition permit the the statute does not seriously initial policies would limitation. Hartford any temporal purpose. undermine The Congress’s clear reading alternative no sensible suggested reports help use of credit determine the Thus, reading for.” “existing applied or charged rates to be for initial insurance in “charge” the “increase” and the terms it is these policies is common. Moreover whole, partic as a provision the context of economically unsophisti that policies the applied phrase, ularly “existing or for” the likely to purchase. are most Con cated ordinary affording them their supports strong protec gress not such create meaning. render tions for consumers them in inapplicable so critical a circumstance. Third, of the terms at interpretation our Furthermore, is pro a consumer as FCRA pur- stated comports with the issue best statute, it must construe so as tection we “[accuracy of FCRA: to ensure pose objectives. Guimond further reporting.” of credit and fairness Co., 45 F.3d Trans Union Credit Info. § 1681. FCRA’s adverse U.S.C. (9th Cir.1995). 1329, 1333 our inter While tool important is requirement one, sup is this canon pretation plain broad, created, en- using Congress that result. ports our Through this re- compassing language. Congress sought promote quirement, because of his We hold that whenever by them rights giving consumers company charges credit information cred- information about how their essential it initial than consumer used, they report it has in- charged, otherwise have way. The infor- could no other obtain meaning of charge within the creased two im- Congress mandated serves Therefore, Reynolds’ mation the fact FCRA. foremost, one, once portant ends. First his rate was an initial policy was they possess this information consumers no charged, is of conse- the initial rate any their and correct errors Reynolds’ can check rate was increased quence. increases the chances reports. This have otherwise credit that which would above stability financial will As the report. consumer’s of his credit been because clear, faulty informa- resort hampered not be text is need statute’s accuracy improves interpretations9 agency’s tion. It also overall to either the dis- op- history. facilitates the reports, legislative which of credit statute’s Second, summary granting even trict erred our markets. court eration of accurate, judgment ground inform- Fire on reports are when credit rate first apply to the rating their FCRA does when policy.10 gives in an initial hurting marketplace them Council, U.S. v. Natural Res. holding is Inc. that our consistent 9. note Def. 2778, 81 L.Ed.2d interpreta- 104 S.Ct. Trade Commission's Federal (1984). Because we find FCRA the statute. tion of however, we our deci- unambiguous, reach to, principally re- of, Although our discussion has independently and do not defer sion U.S.A., policies, our inter- lated to initial insurance agency’s interpretation. See Chevron *12 B. What Constitutes An Adverse Action not limit its FCRA does adverse action requirement notice to actions that result Companies The GEICO contend higher the customer paying a rate than he of determining their method which charged would otherwise be his because were entitled to receive consumers is rating average credit worse than the comported FCRA, action notices with Instead, requires consumer’s. it such no- that under while Edo assеrts GEICO’s tices a a pays higher whenever consumer procedure numerous consumers who were rate his rating because credit is less than charged rates increased their potential words, top score. In if other rating credit to receive the failed statutori the consumer would have a received lower ly required notice. At time Edo rate for his insurance had the information sought policy, an initial insurance it was report his consumer been more favor- practice GEICO’s send adverse ac able, an adverse action has been taken only tion to a consumer if the notice use of against him.11 Such is the case with Edo. his actual credit information resulted his Because Edo would placed have been with placement entity with an and tier that GEICO General instead of GEICO Indem- higher provided a insurance rate than the nity and thus would have charged been entity tier which he would have lower rate if his rating credit had been assigned been if “neutral” or average cred higher, an adverse action occurred and it information been had used instead. In adverse action notice was short, required under it was GEICO’s to send ad formula, FCRA.12 Under the GEICO only verse action notices some fact that rating actually credit who Edo would have received more higher received was than they enjoyed average favorable rates had rat- a better ing did not mean rating. Specifically, credit that Edo would not be notices were charged a only higher rate than average sent those below he would have charged been charged credit who would have had he had an even better report, lower credit they insurance had but received ensured that he would an average rating. credit not receive an GEICO con adverse action notice when only tends that such circumstance he rate. increased an adverse action occurred. GEICO is district court erred in granting GEICO incorrect. Indemnity summary judgment on the pretation of any charge” “increase in is Making slightly obvi- argument, different ously not limited policy. rhetorically, to consumer's Companies first least the GEICO also explained, As we charge have argue they increased is that the action took Edo a charge that is than would other- was not he placed adverse because was in the wise have been but for the existence of some company same that he would have been charge factor that placed causes insurer to in had his credit information not been higher price. statement, applies equally This definition used. While this a true it is issues, amendments, to initial and renewals of so because if the сonsumer refuses to allow policies. used, his credit information to be the sales assigns counselor the consumer the “neutral” Therefore, weight. 11. We require note that statute credit Compa- does not the GEICO argument an insurance nies' issue an adverse that the action was not ad- simply because a consumer verse because it was does the same as if no credit get possible the best rate. If a better functionally had been used is report argument have reduced the con- identical to its that the action was rate, report sumer's insurance his credit not adverse because it was not detrimental higher price not the cause of the compared and there- using when to the result a "neu- Thus, fore no adverse action rating. based on a re- tral” credit argument fails port has occurred. as well. information on file has insufficient credit not increased rate was ground that Edo’s conveys message regarding the consum- report. of his credit on the basis creditworthiness, standing, capaci-
er’s Actions Hit” Adverse C. “No obtaining his credit far ty that makes *13 suggests a report more difficult. Such ar separate a Hartford Fire makes the cannot that he that consumer show no why Reynolds’ case as to gument timely in a That in- pays debts manner. the Specifically, taken. action was The agеncy be false: credit formation that no adverse action company argues name wrong used the or Reynolds may have against “based was taken records, missing data any wrong con part on information searched whole or applicant that within the that have shown report” a tained in consumer 1681m(a). creditworthy. Providing § When is indeed meaning of U.S.C. information statutory purpose credit therefore serves the requested Hartford Fire pos allowing Trans Union did not errors in Reynolds, about the consumer correct generate necessary Accordingly, information hold reports. sess the credit that this and transmitted an insurance score a communication that a consumer has no Reynolds was finding the insurer. information available or an insufficient 5,n. a hit.” See considered “no therefore permit of a history credit calculation designated, he was so supra. Because rating qualifies as “a consumer re- credit ineligible for Reynolds was rendered meaning within the of FCRA. Be- port” to AARP mem rates available premium Reynolds it cause is uncontested that and, ratings, credit qualifying bers charged insurance would have been lower in his result, a a was credit rat- qualifying had he received rates argues, Fire initial Hartford policies. of the “no ings application however, ac that were not adversе these receiving rule him from precluded hit” because, contends, ac an “adverse tions ac- we hold that an adverse ratings, such only if it is based “informa tion” occurs him on the basis tion was taken report” and contained in a consumer tion report. contained in credit respect received with report no such was court’s order Accordingly, district reject Fire’s Reynolds. Hartford We summary judgment may not be affirmed argument. that ground on the its actions with such infor- Reynolds were not based on “consumer re
FCRA’s definition of mation. unquestionably It encom port” is broad. commu reporting agency’s a credit
passes Notice Adequacy D. TheOf company nication to us to af urges Fire also Hartford enough have informa consumer does not summary grant court’s firm district to be insurance score tion on file that, ground judgment on the alternative 15 U.S.C. Specifically, calculated. (in view) required although was 1681a(d)(1) term explains § “[t]he no adverse action under send oral, FCRA written, report’ any means ‘consumer tices, Compa the Hartford the notices that any communication of or other informa to meet its sufficient nies send were agency bear reporting consumer tion reject ar worthiness, responsibilities. credit ing on consumer’s ” inade the notices were gument because .... standing, capacity [or] added). as matter of law. Under U.S.C. quate that an Reporting (emphasis 1681m(a)(1), ad company takes re any information agency cannot obtain consumer of a action on the basis or a consumer verse a consumer garding oral, written, “provide report reject must elec- latter. We therefore tronic notice of the adverse action to the argument upholding Fire’s alternative as well as meet a number of consumer” the district court’s order. specific requirements.13
other While the term “notice of an adverse action” is not E. Is Liable Who statute, that, defined in the we hold at a The defendants all contend that minimum, a notice must communicate such one can be liable when that an consumer adverse action taken, contains an report based on a consumer increase action, specify issuing company. plain describe effect of rates —the *14 consumer, upon identify action and statute, the the text of the as well its purposes, as party parties taking the or the action.14 Here, contrary. are the we hold that all Acceptance See Fischl General Motors potentially of the defendants are un liable (5th Cir.1983) F.2d Corp., 708 150 der the statute. (requiring disclosure of “reliance on data requires “any person” that who report” in[a contаined consumer’s] takes adverse action is liable. providing when notice of an adverse ac- 1681m(a). § U.S.C. The definition of tion). See, “any” plural. includes the e.g., Web- Reynolds The notices received did Dictionary New stee’s WORLD of AMERICAN comply any require not of above the (3d ed.1988) a, college (“one, an, ENGLISH They any ments. did not tell him that some; or specification one or more without adverse action had taken him. identification”). or regard With to insur They simply that stated Hartford’s “[t]he transactions, liability ance attaches when eligibility pricing and decisions are based ever an adverse action is “in taken connec in part report(s) on consumer from a con tion underwriting with the of insurance.” reporting sumer agency” allowed him 1681a(k)(1)(B)(i). § 15 U.S.C. This broad request amake written in order to find “in connection with” language confirms Reynolds out more. was entitled be that variety of entities be liable. informed that rate his for insurance was No in provision the statute nor comment increased of his legislative the history suggests that Con report. He was also entitled to be gress only single that intended company that Fire told made the pricing responsible be under FCRA when a con decision and that Hartford PCIC and sumer is an increased policies Hartford Midwest issued him Therefore, insurance. the find defendants recognizes those rates. FCRA the themselves in the position per difficult telling difference between a consumer that suading us that Congress his credit information could affect his in intended some thing surance rate and that it did adversely different from what it wrote. We rate, affect his requires analyze notice the their arguments three separately. 13. The agency, notice must also contain information setting and a statement forth the con- regarding reporting agency. the consumer right dispute directly It sumer’s with the name, address, provide agency must the accuracy completeness any and tele- phone agency provided report. number of the that information in the See 15 U.S.C. report, 1681m(a)(2)-(3); § agency § statement that the did App. not 16 C.F.R. H. make the adverse decision and is not able to consumer, explain it setting a statement descrip- We do not decide whether a fuller right forth the consumer's specific to obtain free tion what information was adverse disclosure of required the consumer’s file from question is is not before us. Congress clearly subject First, words that intended argues GEICO requirements. in the adverse to FCRA’s for” definition “applied 1681a(k)(1)(B)(i), action, § demonstrate Second, argue all the defendants liable issuing company is any that “takes adverse action” limits basis, On that GEICO under the statute. requirement FCRA’s adverse “applied for” us hold that Edo asks actually issue insur Indemnity be only with GEICO policy. find no ance such limitation company issued cause that was by Congress’s statute virtue of use of frivolous, The policy. argument him a the word “takes” or otherwise. U.S.C. As a factually legally. matter both 1681m(a). contrary, § ac To fact, but apply Edo to one broadly just far more tion defined than from the GEI- requested instead 1681a(k). “issuance.” 15 U.S.C. family spe He did not companies. CO statutory specifically includes definition In placed with GEICO cifically ask to be in denials and cancellations as well as Companies did demnity, rates, creases other unfavorable request call as interpret telephone his changes, whenever and *15 whomever that policy company particu a with neither to made. word “takes” adds lar, by by Gov as evidenced the evaluation that It de nor detracts from definition. a eligibility his for Employees ernment of engaging the act of the conduct scribes affili from several of the GEICO gives requirement. to the that rise notice with GEICO placed ates. That he below, companies all at As discussed of the Indemnity entity and not another GEICO actions,” here that issue took “adverse as by of a made Gov was the result decision is defined in the statute. term re personnel, not the Employees ernment finally, Third all the defendants ar- and Thus, by application of а limited Edo. sult only that hold liable gue we should in fact. argument has no basis GEICO’s holding issuing several company because law, Furthermore, a we re as matter for FCRA aris- companies liable violations into a “applied to turn the for” fuse words single ing out of the issuance or denial art refers to the legal term of that multiple, result in confus- application will indication issuing company. The clearest notices, which would ing adverse action intend the words Congress that pur- than further FCRA’s thwart rather to be such unusual “applied for” used and Such is not the case. Joint pose. would interpretation manner is that simply imposes obli- liability several for liability potential eliminate all companies on all of the affiliated gation disputes one that denials of insurance. No taking responsible for an adverse action the term adverse action FCRA defines that affected consumer receives ensure include denials. U.S.C. statutory describing the adverse 1681a(k)(1)(B)(i). However, GEI- under report his within that fami- affect of credit a consumer interpretation, because CO’s ly companies. Multiple notices are for” unless a “applied has not compa- from the required; single notice com and because a policy has been issued identifying companies those nies involved not, by pany that denies insurance their will suffice. respective and roles definition, action policy, adverse issued companies that take ad- Holding all the required denials notices would never be for jointly against action a consumer manifestly contrary verse This of insurance. issuing a notice furthers statute, responsible from as it would eliminate joint re- objectives. example, For important set actions FCRA’s coverage substantially sponsibility increases the Edo insurance for the reason that his cred- that prospect an adverse action notice will it rating sufficiently high. was not Hart- sent that a customer be and who seeks Fire, ford like Government Employees, from group obtain insurance affiliated made the critical rate-to-be-charged deci- companies will be informed as to the man- that, sion. It determined on the basis ner in his which credit information ad- Reynolds’ report, he was not eligible versely By joint him. imposing affected by the lower rates afforded its affiliates liability, Congress also im- several qualifying AARP members proved quality of information consum- he be would for his insurance receive, ers because each rate. Hartford Fire therefore takes for increasing Reynolds’ be held liable say consumer must so in the notice. We charges for insurance on the basis of his many doubt consumers understand rating. Hartford and Hart- PCIC compa- how a group of affiliated insurance policies Reyn- ford Midwest issued the nies operates or how consumers are as- olds at the increased rates determined signed specific entities within their over- Fire, may, accordingly, be By organizations all structure. having held liable well. explain the actions each affiliated took, Congress likely made it more sum, In Employees, Government GEI- comprehend what tran- General, CO Indemnity may spired to the increased cost of jointly be held severally liable policy. their failing to issue an adverse action notice *16 Likewise, Edo. may Hartford Fire be held On the basis of the record before all us liable failing Reyn- for to to issue notice Companies three GEICO and Hartford olds, Reynolds may may FCRA, properly Fire be and also held liable under as state the two other Hartford entities to claims as Hartford PCIC and Hart- Thus, which leave to amend was denied.15 Two ford Reynolds Midwest. should be Companies, working GEICO togeth- permitted to amend his claims on remand. er, responsible increasing are Edo’s charge for insurance: Government Em- F. Meaning Willfully Of
ployees, which made the decision as Each of the defendants asks that we which family of the GEICO of companies affirm the district court’s grant of sum- and, the insurance Edo issue in mary judgment on ground so the alternative doing, determinеd that he would be that, law, rate, as a at increased matter its conduct was GEICO Indemnity, which then not willful. must issued insur- We first define “willful- policy ance ly” appears that increased in rate. GEICO it Interestingly, FCRA.16 is responsible General denied there no legislative history is to explain parties agree every 15. While the do constituted "adverse actions” within the fact, issue of we that hold on the record meaning of FCRA. before there is no issue of us material fact as (1) Employees whether Government person "Any willfully comply who fails to Hartford Fire made the in- decisions any requirement imposed with under this title rates, Reynolds' respective- creased Edo's any respect with consumer is liable to that (2) ly, policy, GEICO General denied aEdo statutory damages, consumer” for actual or (3) Indemnity policy issued aEdo punitive damages, attorney’s and reasonable at an increased rate. All of these actions added). fees. (emphasis 15 U.S.C. 1681n by were taken involved and all
1037
required
respect
mens rea that is
with
by the use of that
Congress intended
what
Here,
Third
the law?
we follow the
Cir-
term.
Specifically,
cuit.
we hold that as used
following
five
by
all
begin
We
“willfully”
entails
“conscious dis-
that have addressed the
circuits
the other
law,
regard” of
means “either
which
with
required
rea that is
of the mens
issue
knowing
policy [or action]
be
allegedly
violates
to the act
regard
by
the rights possessed
contravention of
act
that the
must have
FCRA and hold
pursuant
FCRA or
and intention
performed “knowingly
been
disregard
of whether the
reckless
Grendahl,
v.
312 F.3d
ally.”
Phillips
See
rights.”
contravened those
[or action]
(8th Cir.2002);
357,
Capital
Dalton v.
370
Cushman,
adopt
F.3d at 227.
115
Inc.,
409,
Indus.,
257 F.3d
418
Associated
reasons.
holding
principal
two
(4th Cir.2001); Cousin v. Trans Union
First, we
that the Third Circuit’s
believe
(5th Cir.2001);
359,
Corp., 246 F.3d
372
Supreme
with
comports
definition best
Handmaker,
424,
149 F.3d
429
Duncan v.
The Court has
precedent.
Court
consis
(6th Cir.1998);
Union
Cushman
Trans
willfulness
civil
tently stated that
liabil
Cir.1997).
(3d
220,
An
226
Corp., 115 F.3d
ity
knowledge or
requires either
reckless
willful.
merely negligent
act that
disregard
to whether
ac
Co.,
Shoe
486
McLaughlin v. Richland
See
tion is unlawful. See Trans World Air
1677,
128, 133,
100 L.Ed.2d
108 S.Ct.
U.S.
111,
Thurston,
128,
lines,
469
Inc. v.
U.S.
(“The
(1988)
widely
word ‘willful’ is
613,
(1985);
126 L.Ed.2d
swers to “issues of first
Be-
“knew the
cause a
comply
the criminal defendant
reckless failure to
requirements
puni-
financial
FCRA’s
can result in
structuring [of
transactions]
unlawful”);
damages,
compa-
tive
other
engaged
which he
Cheek
States,
192, 201,
likely
objective
nies will more
seek
an-
U.S.
United
(1991)
their
swers from
counsel as to
true
(requir-
L.Ed.2d 617
S.Ct.
meaning
statute.
ing proof that
criminal “defendant knew
purportedly
duty
imposed by
of the
sum,
company
In
if a
knowingly and
he
provision
regulation
of the statute
intentionally performs an act that violates
violating”).17
accused of
FCRA,
knowing
either
that the action vio-
rights
lates the
or in reck-
consumers
Second,
approach
Circuit’s
the Third
disregard
rights,
less
those
objectives
purposes
best furthers
bewill
liable under 15
U.S.C.
1681n
balanced;
of the Act. It is fair and
it is
willfully violating
A
rights.
consumers’
well.
practical as
It avoids the two ex-
company will not have
acted
reckless
of excusing non-compliance
tremes
even
disregard
rights
of a consumers’
if it has
though
a previously
the answer to
undecid-
diligently
good
faith attempted to
question
objectively
apparent
ed
statutory obligations
fulfill its
and to de-
imposing liability
truly
withstanding
legal
termine the
meaning
correct
of the
inability
predict
excusable
future devel-
tenable,
thereby
statute and has
come to a
opments
evolving
in the
construction
aof
erroneous, interpretation
albeit
of the stat-
statute
It encourages
the courts.
com-
contrast,
In
ute.
neither a
fail-
deliberate
panies
reports
that use consumer credit
ure
determine the extent of its obli-
necessary
make the
to inform them-
effort
gations
lawyering
nor reliance
creative
fully
fairly
statutory
as to
selves
their
provides
indefensible answers to is-
and,
result,
obligations
carry out
as a
of first
impression
sues
is sufficient
the statutory
ensuring
mandate of
avoid a conclusion that a company acted
are
their
notified when
disregard
with willful
of FCRA’s require-
information has been used against them.
ment.18 We hold that reliance on such
preferred
Unlike the defendants’
defini-
implausible
interpretations
constitutes
tion, the Third Circuit’s standard does not
disregard
reckless
for the law and there-
perverse
create
for companies
incentives
fore amounts to a willful violation of the
by FCRA
learning
covered
to avoid
law.
by employing
law’s dictates
counsel with
Here,
the deliberate
purpose
obtaining opin-
Fire,
Gen
GEICO
eral,
ions that provide
unlikely
creative but
an-
Indemnity,
and Government
*18
Eighth
rejected
Consulting
The
has
Circuit
the reck
attorneys is
with
evidence of
17.
disregard
requires
less
and
willfulness,
standard
actual
dispositive.
lack of
but
is not
knowledge
regard
Phillips,
to
with
the law.
Lines, Inc.,
632,
Baker v. Delta Air
6 F.3d
645
("[W]ilful noncompliance
III. CONCLUSION request nold’s for leave to amend com- his conclusion, ap- In we hold that FCRA plaint to add Hartford PCIC Hartford alia, to the first rates plies, inter Likewise, Midwest for that same reason. in initial also hold policies. insurance hold that we the district court erred requires companies that FCRA insurance granting summary judgment to GEICO to send action notices whenever adverse on Indemnity the the basis that actions it insurance, they a charge rate for took not granting were adverse and sum- otherwise, policies or initial because of the mary Fire, judgment to Govern- information, simply consumer’s credit Employees, ment and GEICO General on rating the when consumer’s is below the basis that the issuer of insurance Furthermore, average. we hold that а can be Finally, liable under FCRA. we communication that there is a lack of suffi- that summary judgment may hold not be regarding cient credit information a con- granted the alternative that grounds a sumer is a credit report within the mean- that transmission a consumer has insuffi- addition, In we hold that FCRA. cient generate information to a adverse action notices must communicate report, score is not a credit that Hartford that an consumer adverse Fire’s adverse action notices were suffi- taken, report based on a consumer cient, or the defendants’ actions were that action, specify describe the effect sum, not willful. In we reverse the district consumer, upon identify the action grant court’s of summary judgment with party parties taking the action. respect to all defendants both Edo which, With in a Reynolds, reverse its of Reynolds’ denial FCRA, group may liable under we be hold request his complaint amend to add that a that company makes the rate-set- Midwest, Hartford PCIC and Hartford decision, ting that issues the and remand to the district court for fur- policy, any company proceedings ther consistent opin- with this at more favorable rate denies ion. liable, jointly severally be held and that companies .may provide such REVERSED and REMANDED. single action notice to consumers BYBEE, Judge, Circuit dissenting in
containing requisite all 'the information. part: Finally, adopt we the Third defi- Circuit’s “willfully”: disregard Reckless
nition join I majority opinion except so sufficient. much of Section II.F that concludes As a consequence rulings, these and Hartford insurance companies hold district court erred in grant- willfully violated FCRA. The district court held to have taken an adverse disregard action under amount to reckless law. Rausch, *1; Edo, op. FCRA. slip 2003 WL Under these circumstances and because the at 10-11. question applied legal of willfulness as to a law, essentially question contention is judge Because already the district ruled futile, companies' necessary, positions and indeed would on all be of the principal were correct to remand to the question issues as matter of district court law, held, fortiori, she companies -willfully has also that the whether failed to *20 companies' positions comply reliance on these with FCRA. agree majority I the com- While with to the insurance ble.” judgment awarded summary judgment understanding without the district court’s of FCRA panies on compa- the question whether reaching go the I cannot so far as to wrong, was con- comply” the “willfully with conclusion, fail[ed] nies district clude that the court’s of FCRA. U.S.C. requirements also companies’ position, like the un- 1681n(a). companies The insurance tenable. court, urged the district as alternative I Accordingly, ques- would remand the companies the did not to hold that ground, companies willfully tion whether They of law. willfully act as a matter with comply failed FCRA to the district appeal on urged position the same to us proceedings. respect- I court further affirming the ground an alternative opin- fully portion dissent as to that of the did not brief judgment. appellants The ion. reply until the question willfulness briefs, appellants each case rule
requested that decline to and remand the case companies proceed- court for further
to the district
ings. fact
I as a matter of decide companies will- behaved lawyers’ argu- fully Dwyer, the basis of their re on In Patricia A. Debtor. I on the appeal. on cannot conclude ments DWYER, Appellant, A. Patricia us that basis of the record before here so companies’ actions were “indefen- “untenable,” sible,” “implausible,” “plainly DUFFY, Appellee. J. Vincent unmeritorious,” “clearly contrary “nonsensical,” No. 04-55044. language,” FCRA’s argument” that canwe without “colorable Appeals, United States Court companies’ that the “reliance conclude Ninth Circuit. implausible interpretations such consti- disregard for the tutes reckless law” Sept. 2005. Argued and Submitted their willfulness ourselves without decide Filed Oct. findings of fact full brief- benefit ing. I thought complete,
If record was I our willfully find
would not FCRA as matter of comply
failed to majority
law. holds that we can reach The the district “neces- question because found their actions not be willful
sarily an untena-
as a of their reliance on result interpretation of the statute.”
ble “necessarily
reason the district court not to be willful”
found their actions agreed with their
because the district court majority now
legal position, position to be “nonsensical” and “untena-
declares