PRECEDENTIAL
UNITED STATES COURT OF APPEALS
PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 08-2465 & 08-2466
_____________
SANDRA CORTEZ,
Appellant in 08-2465
v.
TRANS UNION, LLC
SANDRA CORTEZ
v.
TRANS UNION, LLC,
Appellant in 08-2466
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(Civ. No. 05-cv-5684)
District Judge: Hon. John P. Fullam
Argued: June 11, 2009
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2
Before: McKEE, Chief Judge, HARDIMAN and VAN
ANTWERPEN,
Circuit Judges
(Opinion filed: August 13, 2010)
____________
James A. Francis (ARGUED)
John Soumilas
Francis Mailman Soumilas, P.C.
Land Title Building, 19th Floor
100 South Broad Street
Philadelphia, Pennsylvania 19110
Counsel for Appellant/Cross-Appellee
Mark E. Kogan
Bruce S. Luckman (ARGUED)
Timothy P. Creech
Kogan, Trichion & Wertheimer, P.C.
1818 Market Street, 30th Floor
Philadelphia, Pennsylvania 19103
Counsel for Appellee/Cross-Appellant
_____________
OPINION
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Additionally, 1 Cortez appeals the district court’s order
reducing attorney’s fees and costs. “We review the
reasonableness of an award of attorney’s fees for an abuse of
discretion.” Rode v. Dellarciprete, 892 F.2d 1177, 1182 (3d
Cir. 1990). Our review of the record does not support the
conclusion that the district court abused its discretion in
reducing Cortez’s attorney’s fees and costs. Furthermore,
there is nothing in Cortez’s limited discussion of attorney’s
fees and costs to support an abuse of discretion.
2Both Trans Union’s and Cortez’s notice of appeal
only directly reference the District Court’s Memorandum and
3
_____________
McKEE, Chief Judge.
Sandra Cortez appeals the district court’s order remitting
a jury’s punitive damages award of $750,000 to $100,000 on
claims she brought under the Fair Credit Reporting Act
(“FCRA”), codified at 15 U.S.C. §§ 1681-1681x.1 In its crossappeal,
Trans Union, LLC appeals the district court’s order
denying its motion for judgment as a matter of law and rejecting
Trans Union’s challenge to the jury’s compensatory damages
award of $50,000. For the reasons that follow, we will affirm
the district court’s orders.2
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Judgment Order (collectively referred to as “May order”)
entered May 1, 2008. However, in their briefs it is clear that
both parties are also appealing the district court’s
Memorandum and Order and Order (collectively referred to as
“September order”) entered September 13, 2007.
It is a requirement of Federal Rule of Appellate
Procedure 3(c)(1)(b) that a notice of appeal “designate the
judgment, order, or part thereof being appealed.” “If an
appeal is taken only from a specified judgment, the court does
not acquire jurisdiction to review other judgments not
specified or fairly inferred by the Notice.” Sulima v.
Tobyhanna Army Depot, 602 F.3d 177, 184 (3d Cir. 2010)
(quotations omitted) (citing Elfman Motors, Inc. v. Chrysler
Corp., 567 F.2d 1252, 1254 (3d Cir. 1977)). We have
previously held that because “only a final judgment or order is
appealable, the appeal from a final judgment draws in
question all prior non-final orders and rulings which produced
the judgment.” Elfman, 567 F.2d at 1253. Additionally, we
have held that we exercise appellate jurisdiction over “orders
that are not specified in the notice of appeal where: (1) there
is a connection between the specified and unspecified orders;
(2) the intention to appeal the unspecified order is apparent;
and (3) the opposing party is not prejudiced and has a full
opportunity to brief the issues.” Polonski v. Trump Taj Mahal
Assocs., 137 F.3d 139, 144 (3d Cir. 1998).
The district court’s September order: (1) denied Trans
Union’s motion for judgment as a matter of law; (2) denied
Trans Union’s motion for a new trial as to liability; (3)
partially granted Cortez’s motion for counsel fees and
expenses; and (4) granted Trans Union’s motion for a new
trial as to damages, unless the Plaintiff accepted a remittitur.
On October 12, 2007, Cortez filed a notice of appeal in which
she appealed the September order. On February 14, 2008, we
dismissed Cortez’s appeal for lack of appellate jurisdiction
4
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because the September order was not a final judgment. On
May 1, 2008, the district court issued a final judgment. The
May order specifically referenced the September order and
the district court judge stated that the final judgment was
entered as a result of Plaintiff’s acceptance of the remittitur.
The May order entered judgment in favor of Plaintiff and
awarded her remitted damages, counsel fees, and costs.
It is clear from this procedural history that the
September order is “fairly inferred” by both parties’ notice of
appeal. Cortez attempted to appeal the September order, but
because it was not a final order, she was unable to do so. The
final judgment of May 1, 2008 cannot be understood without
the September order and is clearly a product of that order.
Additionally, there is a clear connection between the two
orders; the intention to appeal the September order is apparent
in both parties’ briefs; and neither party has been prejudiced
as evidenced by their in-depth briefing of the issues raised in
the September order. Hence, we have appellate jurisdiction
over both orders.
5
I. BACKGROUND
A. Factual History
This dispute began when Cortez encountered problems
with a credit report that Trans Union sent to a car dealership
where she was trying to purchase a car. It stemmed from a
Trans Union product called “OFAC Advisor” that confused
Cortez’s identity with the identity of someone with a similar
name who was on a list compiled by the Treasury Department’s
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6
Office of Foreign Assets Control (“OFAC”).
We will discuss the OFAC List and Trans Union’s related
product in greater detail below. We note now that OFAC
administers and enforces economic and trade sanctions based on
U.S. foreign policy and national security goals against threats to
the national security, foreign policy, or economy of the United
States. Those sanctions are aimed at specific regimes,
individuals thought to be terrorists, international narcotics
traffickers, as well as persons involved in activities related to the
proliferation of “weapons of mass destruction.”
http://www.treas.gov/offices/enforcement/ofac/ (visited on June
17, 2010).
OFAC maintains and publishes a list:
[a]s part of its enforcement efforts, OFAC
publishes a list of individuals and companies
owned or controlled by, or acting for or on behalf
of, targeted countries. It also lists individuals,
groups, and entities, such as terrorists and
narcotics traffickers designated under programs
that are not country-specific. Collectively, such
individuals and companies are called “Specially
Designated Nationals” or “SDNs.” Their assets
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See also OFAC 3 Specially Designated Nationals List at 461,
http://www.ustreas.gov/offices/enforcement/ofac/sdn/t11sdn.p
df (visited on June 17, 2010).
7
are blocked and U.S. persons are generally
prohibited from dealing with them.
http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht
ml#17 (visited on June 17, 2010). The persons and
organizations in OFAC’s Specially Designated Nationals &
Blocked Persons List (“SDN List”) are so designated pursuant
to a patchwork of federal laws, regulations, and executive
orders. See, e.g., 31 C.F.R. §§ 536.101-36.901 (Narcotics
Trafficking Sanctions Regulations) & 594.101-94.901 (Global
Terrorism Sanctions); Exec. Order No. 13,399, 71 Fed. Reg.
25,059 (April 25, 2006) (Blocking Property of Additional
Persons in Connection With the National Emergency With
Respect to Syria).3 Individuals and businesses in the United
States are generally prohibited from conducting any business
with anyone named on OFAC’s SDN List. See, e.g., 31 C.F.R.
§ 536.201 (“[N]o property or interests in property of a specially
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See also OFAC Frequently Asked 4 Questions and Answers,
http://www.ustreas.gov/offices/enforcement/ofac/faq/index.sh
tml#sdn (then follow “What is an SDN?” hyperlink) (visited
on June 17, 2010).
5 We assume that this is a “FICO” score. Individuals
with FICO scores between 760 and 850 are generally eligible
8
designated narcotics trafficker that are in the United States . . .
may be transferred, paid, exported, withdrawn or otherwise dealt
in.”).4 Trans Union describes its product, the OFAC Advisor,
which is also discussed in greater detail below, as a “screening
solution that provides credit grantors with a simple, automatic
method for use in complying with new federal regulations as set
forth in the USA PATRIOT Act.” J.A. 808.
Sandra Cortez was born in 1944 in Chicago. She was
living in Colorado when, in March of 2005, she decided to buy
a new car. Before visiting a car dealer, she decided to check
her credit report to learn her credit score. Her score was
approximately 760, which is a very good credit rating. J.A. 80;
see also J.A. 526-27 (listing Cortez’s score as 761 in the credit
r e p o r t o b t a i n e d b y t h e d e a l e r s h i p ) ; 5
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for the most favorable interest rates for loans. The Fair Isaacs
Company (“FICO”) is in the business of analyzing credit
factors electronically for the credit industry in general,
including banks and credit card companies. The score that it
calculates is intended to be a numerical indicator that
correlates with the strength of one’s credit history. That score
has come to be known as the “FICO” score after the Fair
Isaacs Company. See In re Nguyen, 235 B.R. 76, 80 (Bankr.
N.D. Cal. 1999). Only about 27 percent of the population
have scores between 750 and 799. See
http://www.myfico.com/CreditEducation/CreditScores.aspx
(visited on June 17, 2010).
Trans Union later acknowledged 6 that personal credit
reports, which it provides to consumers, never show any
9
http://www.myfico.com/myfico/CreditCentral/LoanRates.aspx
(visited on June 17, 2010). The credit report that Cortez
downloaded before going to the car dealership was compiled
and furnished by Trans Union, one of the three major companies
providing credit reports in the United States. That report
contained no information about OFAC’s SDN List and did not
suggest that Cortez was a “Specially Designated National” or
SDN, nor did it contain any information that would suggest that
she was suspected of being associated with anyone who was an
SDN.6
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information or alerts from its OFAC Advisor that it provides
to creditors. J.A. 205.
10
Cortez planned to finance her car purchase through the
dealership. Armed with knowledge of her strong credit score
and a copy of her credit report, Cortez went to John Elway
Subaru a car dealership in Colorado, to purchase a car. She
arrived at the dealership at approximately 1:00 pm and was
ready to proceed with a purchase about thirty minutes later. She
began completing the required paper work and furnishing the
information required to obtain a car loan through the dealership.
The dealership’s finance manager, Tyler Sullivan, used the
information Cortez provided to obtain Cortez’s credit report.
J.A. 468. It was a Trans Union credit report because the
dealership subscribed to Trans Union’s credit reporting services,
including the OFAC Advisor. Unlike the credit report Cortez
had downloaded before going to the dealership, the Trans Union
credit report that the dealership obtained contained what
Sullivan later referred to as an “advisor alert,” which was an
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The credit 7 report Trans Union sends to creditors who
subscribe to the OFAC Advisor does not contain any further
information about the significance of an OFAC alert, nor does
it provide any information about contacting anyone at the
Treasury Department who handles OFAC alerts. J.A. 187-89.
11
alert from the OFAC Advisor. J.A. 471.
This was the first time that Sullivan had ever seen such
an alert. Id. He called the regional finance director to determine
how he should respond. J.A. 472-73. He then went to OFAC’s
SDN List on the Treasury Department’s website “to check
[Cortez’s] name against the actual list.” J.A. 473. In searching
the list, he first “look[ed] for a matching name” and if there was
a match, he planned to check birth dates. J.A. 474.7
Sullivan then returned to Cortez and started asking her
questions including whether she had “always lived in the United
States, if [she] had ever lived outside of the country” and other
“really strange questions.” J.A. 83. He then showed Cortez the
credit report Trans Union had provided to the dealership. When
she looked at it, she saw that “it had all of these OFAC Alerts,
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It is 8 not clear from her testimony who exactly asked
Cortez to wait.
12
talk alerts.” Id. Cortez was very confused, she explained to
Sullivan that she had “never been out of the country and that
[she] was born in Chicago.” Id. Sullivan responded by telling
Cortez that “he was going to have to check with the FBI . . . [t]o
see if [she] was this person” in the OFAC alert on her credit
report. J.A. 84. As this was occurring, Cortez was waiting in
the salesperson’s office, and the dealership had her car keys. Id.
Finally, at about 5:00 pm, Cortez said she had to leave, but
someone asked her to wait.8 J.A. 84-85. When she asked what
the person was going to do, again she was told that the FBI
would be called. At this point, hours had passed and the
dealership was holding Cortez’s down payment on the car. Id.
A short time later, Cortez finally left the dealership. She
called the dealership that same evening and was told that they
had determined that she “probably” was not the person in the
OFAC alert, and that she could pick up the car. J.A. 85. That
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She later testified t 9 hat while she was sitting at the
dealership, she was “watching people stare at [her] walking
back and forth, and it was pretty humiliating. They all knew
what was going on, and [she] was afraid that they thought
[she] was this person.” J.A. 86.
10 Trans Union’s website describes “HAWK alerts” as
follows:
TransUnion provides creditors with HAWK alert
message [sic] to notify them of potentially
fraudulent information and advises them to check
that information more carefully.
Special messages such as HAWK alert messages
inform creditors that they need to verify specific
information. The message is based on the
personal information used to access your credit
report. It may also be based on the personal
information recorded in your credit report. In
response to special messages, creditors may
request that you verify your personal information
you submitted at the time of application.
http://www.transunion.com/corporate/personal/persona
13
evening, she did go back to the dealership and she eventually got
the car.9 Before leaving the dealership with her new car, she
asked for a copy of the credit report that the dealership had
received from Trans Union. The dealership provided a copy,
and pointed out the OFAC and HAWK alerts on the report.10
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l.page (follow “Consumer Support” hyperlink; then
follow “Get answers to your questions” hyperlink
under “Related Topics”; then search “Answers” for
key words “Hawk alert”; then follow “What is a
HAWK alert?” hyperlink) (last visited June 1, 2010).
As the above citation shows, getting information other
than sales information is cumbersome at best on Trans
Union’s website.
14
That credit report was a two-page document entitled:
“TRANSUNION CREDIT REPORT.” J.A. 526-27. It
contained identifying information about Cortez including her
name, Social Security number, birth date, current and former
addresses, telephone number, and employer. A number of
sections appeared directly below that information in the same
font and style. The first such section was labeled: “SPECIAL
MESSAGES.” That “SPECIAL MESSAGES” section contained
the OFAC and HAWK alerts. It was followed by: “MODEL
PROFILE,” which contained several numbers including
Cortez’s FICO credit score. The report then contained the
following four sections: “CREDIT SUMMARY”, “TRADES”,
“INQUIRIES”, and “END OF CREDIT REPORT —
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15
SERVICED BY.” Id.
The “SPECIAL MESSAGES” section on the first page
stated: “HAWK ALERT: INPUT ISSUED: 1959-60; STATE:
CA; (EST. AGE OBTAINED 00+ TO ) . . . HAWK ALERT:
FILE ISSUED: 1959-60; STATE CA; (EST. AGE OBTAINED
+14 TO +16).” This was followed by eight entries titled:
“OFAC ADVISOR ALERT – INPUT NAME MATCHES
NAME ON THE OFAC DATABASE.” The information in
those eight entries was similar to the information in OFAC’s
SDN List, including the name: “Cortes Quintero, Sandra.” J.A.
526-27.
That report is not visually the same as the report Trans
Union provides to consumers. It also does not have the same
exact content. The report that was sent to the dealership
contained no additional information about the significance of the
OFAC alerts and no information about how to follow up or
contact anyone regarding any OFAC alerts that may appear.
J.A. 187-89.
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16
In the aftermath of her visit to the car dealership, Cortez
contacted Trans Union a total of four times in an effort to
correct her credit report. J.A. 199. She first telephoned Trans
Union on March 31, 2005, soon after she purchased the car.
J.A. 93. On that day, she spoke with Trans Union’s customer
service representatives who told Cortez that there were no
OFAC alerts on her credit report. J.A. 207. Cortez responded
by faxing a copy of the report she had obtained from the
dealership along with a letter that summarized her experience
there. J.A. 93. In that letter, she told the customer service
representative that she had spent a total of six and a half hours
in the dealership, that she was told the FBI would have to be
contacted, and that she was asked not to leave while the
dealership looked into the issue. J.A. 94-95; J.A. 533.
On April 6, 2005, not having received any response to her
letter, Cortez sent another letter to Trans Union. J.A. 96; J.A.
219; J.A. 534. In that letter, she again explained that there were
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17
“several terrorist alerts” on her credit report and she asked for “a
response from [the] company regarding these alerts.” J.A. 96-
97. Cortez received a generic written response to that letter.
The letter she received was dated April 18, 2005, and was
unsigned. It stated:
After reviewing your correspondence, we were
unable to determine the nature of your request.
To investigate information contained in your
credit report, please list the account name and
number, and specify why you are disputing it (for
example, “this is not my account”, “I have never
paid late”, “I have paid this account in full”, etc.).
Unless you provide us this information, your
request will be considered frivolous under the
federal Fair Credit Reporting Act, and we will be
unable to initiate an investigation.
J.A. 537. By letter dated April 24, 2005, Cortez responded to
Trans Union’s April 18, 2005 letter. J.A. 99. She included
copies of her prior correspondence and explained, “[w]ith this
letter, this makes my fourth request to have this incorrect
information removed from my credit report. If you look at the
credit report enclosed you will notice 10 Hawk and OFAC
Advisor alerts. . . . I am disputing these alerts because they do
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11 Trans Union acknowledged that this was a form
letter. J.A. 212.
18
not belong to me. The name is different, the birthdate is
different and I do not have a passport. I want these alerts
removed from my account.” J.A. 539. Cortez also notified
Trans Union a second time that it had the wrong employer listed
for her. Id. Cortez received a response from Trans Union dated
May 10, 2005. Under the heading “Re: Dispute Status – No
Hawk Alerts or OFAC Advisor Alerts,” the letter stated,
“[b]ased on the information provided to TransUnion, our
records show that the information you disputed does not
currently appear on your TransUnion credit report.” J.A. 545.11
Based on this letter, Cortez believed that Trans Union had
removed the HAWK and OFAC alerts from her credit report.
J.A. 102.
On June 3, 2005, Cortez returned to the dealership and
asked for another credit report in order to confirm that the alerts
had in fact been removed. Despite Trans Union’s representation
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19
to the contrary, the credit report the dealership furnished to
Cortez still had OFAC alerts. J.A. 103. There were, however,
some changes from the report that had initially been sent to the
dealership the day Cortez went to buy a car. The June 3, 2005
report no longer had the phrase: “HAWK ALERT.” Instead, the
report now stated: “HIGH RISK FRAUD ALERT: CLEAR
FOR ALL SEARCHES PERFORMED.” J.A. 546. It still
stated: “OFAC NAME SCREEN ALERT – INPUT NAME
MATCHES NAME ON THE OFAC DATABASE.” Id. It then
had four entries with information from OFAC’s SDN List (as
opposed to eight in the original credit report furnished by the
dealership).
Cortez next went online to the Treasury Department
website to determine whether her name actually appeared on
OFAC’s SDN List. She discovered a similar name and emailed
the Treasury Department to ask how she might correct the error
and remedy her situation. J.A. 104-05. The Treasury
Department referred her to information on its website, which she
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20
later testified stated the following:
If credit bureaus choose to place OFAC
information on their credit reports [sic] they
should consider the following guidelines. The
text on the report should explain that the
individual’s information is similar to the
information of an individual on OFAC’s SDN list.
It should not state . . . that the information
matches, or that the credit applicant is, in fact, the
individual on the SDN list unless the credit
bureau has already verified that the person is
indeed on the SDN [list].
J.A. 106-07.
In June of 2006, a landlord pulled Cortez’s Trans Union
credit report when she tried to rent an apartment. Cortez told
him about the OFAC alerts before he reviewed the credit report,
in an effort to explain and minimize their effect. That credit
report, dated June 12, 2006, was substantially similar to the
second report Cortez had received from the dealership more than
a year earlier. J.A. 549-51. Although it did not contain any
“HAWK ALERT” messages, it still stated, “OFAC NAME
SCREEN ALERT – INPUT NAME MATCHES NAME ON
THE OFAC DATABASE”. Id. It also still had four entries
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21
with information from OFAC’s SDN List. Nevertheless, Cortez
was able to rent the apartment. J.A. 112.
From the first day in Elway Subaru, when Cortez learned
about the OFAC alerts on her credit report, Cortez spoke with
her daughter, Anna Marie Schen, about her ordeal. J.A. 141.
The OFAC alerts came up at least once during every
communication between Cortez and Schen after the incident at
Elway Subaru, and subsequent trial testimony established that
the alerts often reduced Cortez to tears. The alerts also caused
Cortez to lose weight and they interfered with her ability to
sleep to such an extent that she resorted to medication. J.A. 142.
According to Schen, the credit report issue “is the number one
stressor in [Cortez’s] life. . . . [T]his is a big stressor over the
past two years.” J.A. 143-44. It has been “very . . .
devastating.” J.A. 146.
B. The Significance of OFAC Alerts and the SDN List
The Uniting and Strengthening America by Providing
Appropriate Tools Required to Intercept and Obstruct Terrorism
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22
Act of 2001, better known as the USA PATRIOT Act, further
codified the obligations of financial institutions in their dealings
with individuals on OFAC’s SDN List. 115 Stat. 272 (Oct. 26,
2001). Under the USA PATRIOT Act, the Treasury Department
must “require financial institutions to implement . . . reasonable
procedures for . . . consulting lists of known or suspected
terrorists or terrorist organizations provided to the financial
institution by any government agency to determine whether a
person seeking to open an account appears on any such list.” 31
U.S.C. § 5318(l)(2); see 31 C.F.R. § 103.121(b)(4) (The
Customer Identification Program “must include procedures for
determining whether the customer appears on any list of known
or suspected terrorists or terrorist organizations issued by any
Federal government agency.”). “[T]ransactions are prohibited
. . . if either such transactions are by, or on behalf of, or pursuant
to the direction of any designated foreign country, or any
national thereof.” 31 C.F.R. § 500.201. In most cases, it is
unlawful to extend credit to a person whose name is on OFAC’s
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12 OFAC has procedures to unblock funds in the case of
mistaken identity, 31 C.F.R. § 501.806, and to have a name
removed from designated lists, 31 C.F.R. § 501.807.
13 19 U.S.C. § 3907 (maximum fine for willful violation of
laws governing clean diamond trade).
23
SDN List.1
2
Depending on the applicable law, regulation, or executive
order involved, failure to comply with these restrictions may
result in civil as well as criminal penalties. Willful violations
carry criminal penalties with fines ranging from $50,00013 to
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14 21 U.S.C. § 1906 (maximum fine of $10,000,000 for willful
violation of laws governing international narcotics
trafficking); see also 31 U.S.C. § 5322 (maximum fine of
$250,000 for willful violation of the USA PATRIOT Act,
including 31 U.S.C. § 5318(l)(2), which requires financial
institutions to consult suspected terrorist lists such as OFAC’s
SDN List before transacting with individuals, with the amount
increasing to $500,000 for aggravating circumstances); 50
U.S.C. § 1705(c) (maximum fine of $1,000,000 for willful
violation of the International Emergency Economic Powers
Act and its implementing regulations, which include
regulations governing many OFAC programs, see, e.g., 31
C.F.R. § 536.701 (penalties under Narcotics Trafficking
Sanctions)); 50 App. U.S.C. § 16(a) (maximum fine of
$1,000,000 for willful violations of the Trading with the
Enemy Act of 1917).
15 31 U.S.C. § 5322 (maximum imprisonment term of 5 years
for willful violation of the USA PATRIOT Act, including 31
U.S.C. § 5318(l)(2), which requires financial institutions to
consult suspected terrorist lists such as OFAC’s SDN List
before transacting with individuals with term increasing to 10
years for aggravating circumstances).
16 18 U.S.C. § 2332d (maximum imprisonment term of 10
years for engaging in financial transactions with a country
supporting international terrorism); 21 U.S.C. § 1906
(maximum imprisonment of 10 years for willful violation of
laws governing international narcotics trafficking); 50 App.
U.S.C. § 16(a) (maximum imprisonment of 10 years for
willful violations of the Trading with the Enemy Act of
1917); 50 U.S.C. § 1705(c) (maximum imprisonment term of
20 years for willful violation of the International Emergency
24
$10,000,00014 as well as imprisonment ranging from 515, 1016 to
Case: 08-2465 Document: 003110250747 Page: 24 Date Filed: 08/13/2010
Economic Powers Act and its implementing regulations,
which include regulations governing many OFAC programs,
see, e.g., 31 C.F.R. § 536.701 (penalties under narcotics
trafficking sanctions)).
21 U.S.C. § 1906 17 (maximum imprisonment term of 30 years
for any officer, director, or agent of an entity who knowingly
participates in violation of laws governing international
narcotics trafficking).
18 18 U.S.C. § 2339B (maximum imprisonment term of 15
years for providing material support to a foreign terrorist
organization, which term increases to life if the death of any
person results).
19 19 U.S.C. § 3907 (maximum civil penalty of $10,000 for
violation of laws governing clean diamond trade); 31 U.S.C. §
5321 (maximum civil penalty of $100,000 for violation of the
USA PATRIOT Act, including 31 U.S.C. § 5318(l)(2), which
requires financial institutions to consult suspected terrorist
lists such as OFAC’s SDN List before transacting with
individuals); 50 App. U.S.C. § 16(b) (maximum civil penalty
of $50,000 for violations of the Trading with the Enemy Act
of 1917); 18 U.S.C. § 2339B (maximum civil penalty of
$50,000 or twice the amount of the transaction that is the
basis for the violation for providing material support to a
foreign terrorist organization); 50 U.S.C. § 1705(b)
(maximum civil penalty of $250,000 for violation of the
International Emergency Economic Powers Act and its
25
3017 years, or even life.18 Civil penalties range from $10,000 to
$1,000,000, or twice the amount of each underlying transaction
per violation.19
Case: 08-2465 Document: 003110250747 Page: 25 Date Filed: 08/13/2010
implementing regulations, which include regulations
governing many OFAC programs, see, e.g., 31 C.F.R. §
536.701 (penalties under Narcotics Trafficking Sanctions));
21 U.S.C. § 1906 (maximum civil penalty of $1,000,000 for
violation of laws governing international narcotics
trafficking).
26
In a “Q&A” section included on its website, OFAC posts
the following question: “What Is This OFAC Information On
My Credit Report?” It then offers the following reply:
Credit bureaus and agencies in particular have
adopted new measures to ensure compliance with
OFAC regulations. Before issuing a credit report,
they use special “interdiction” software developed
by the private sector to determine if a credit
applicant is on the SDN list. This software
matches the credit applicant’s name and other
information to the individuals on the SDN list. If
there is a potential match, the credit bureaus are
placing a “red flag” or alert on the report. This
does not necessarily mean that someone is
illegally using your social security number or that
you have bad credit. It is merely a reminder to the
person checking your credit that he or she should
verify whether you are the individual on the SDN
list by comparing your information to the OFAC
information. If you are not the individual on the
SDN list, the person checking your credit should
disregard the OFAC alert, and there is no need to
contact OFAC. However, if the person checking
your credit believes you are the person on the
SDN list, then he or she should call the OFAC
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27
Hotline to verify and report it.
http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht
ml#consumer1 (visited on June 17, 2010). On that same
website, OFAC also answers the question: “How Can I Get The
OFAC Alert Off My Credit Report?” as follows:
A consumer has the right under the Fair Credit
Reporting Act (FCRA), 15 U.S.C. 1681 et seq., to
request the removal of incorrect information on
his/her credit report. To accomplish this,
consumers should contact the credit reporting
agency or bureau that issued the credit report. For
more information on consumers’ rights under the
FCRA, visit the Federal Trade Commission’s
w e b s i t e a t
http://www.ftc.gov/os/statutes/fcrajump.shtm
http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht
ml#consumer2 (visited on June 17, 2010).
C. Trans Union’s OFAC Advisor
OFAC recognizes the need to ensure that its reports do
not mistakenly associate innocent and unsuspecting persons with
persons who are properly labeled “SDN.” Thus, OFAC
cautions: “organizations involved in the credit reporting process
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28
. . . . can make an important contribution by identifying
sanctioned individuals in order to block their ability to use the
U.S. financial system and to do business in the United States,
but at the same time they should strive to protect consumers
from erroneous or misleading information appearing on credit
reports.” Department of Treasury, OFAC REGULATIONS FOR
THE CREDIT REPORTING INDUSTRY, Apr. 13, 2004,
http://www.treas.gov/offices/enforcement/ofac/regulations/fac
cr.pdf (visited June 17, 2010).
In September of 2002, Trans Union announced a “new
product for USA Patriot Act Compliance” which it called:
“OFAC Advisor.” Trans Union lauded the product as a
“screening solution that provides credit grantors with a simple,
automatic method for use in complying with new federal
regulations as set forth in the USA PATRIOT Act.” J.A. 808.
Trans Union refers to the SDN information that it reports from
OFAC as an “OFAC Name Screen Alert.” See, e.g., J.A. 549,
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29
570.
The OFAC alert on Trans Union credit reports was
developed by a team that included individuals from Trans
Union’s business and systems units, as well as people from the
legal and compliance sections. J.A. 311. In the normal course
of developing any such product, a legal and compliance team do
preliminary reviews to determine whether the product is “going
to require permissible purpose, disclosure, [and/or have]
contractual issues.” J.A. 312. After the product is developed,
another final review is done by a legal team. Id.
The information in Trans Union’s OFAC alert is
provided to purchasers through a third party vendor called
“Accuity.” J.A. 574, 809. Trans Union decided not to include
the underlying information for its OFAC product in Trans
Union’s own database. That database is called “CRONUS.”
Trans Union decided to do that because “the only common
denominator in all the entries [referring to OFAC’s SDN List]
was a name.” J.A. 313. Unlike CRONUS, the entries in the
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20 That agreement states in relevant part:
TransUnion agrees to make available as an add-on
to consumer reports (including as an exclusion
criteria on an input prescreen list, or an append to
a prescreened list), and as an add-on to certain
ancillary products offered by TransUnion from
30
SDN List do not always include birth dates, addresses, or Social
Security numbers that Trans Union routinely stores and relies on
when associating a given consumer with information. Id.
Having decided to use Accuity rather than maintain the
information itself, Trans Union then marketed the OFAC
information as part of a separate product called “OFAC
Advisor.” J.A. 313-14, 808-09.
Trans Union does not sell the OFAC alert information as
a stand alone product; creditors must first purchase a Trans
Union product such as credit report services and the OFAC alert
is added to that product. Purchasers of Trans Union’s credit
reports who wanted to subscribe to the OFAC Advisor were
required to sign an addendum to their agreement with Trans
Union in order to subscribe to the OFAC Advisor.20 Those who
Case: 08-2465 Document: 003110250747 Page: 30 Date Filed: 08/13/2010
time to time an indicator whether the consumer’s
name appears on the United States Department of
Treasury Office of Foreign Asset Control File
(“OFAC File”). The service is referred to as
OFAC Advisor. Subscriber may receive the
OFAC Advisor service under the following terms:
. . . . In the event Subscriber obtains OFAC
Advisor services from TransUnion in conjunction
with Consumer Report or as an append to an
ancillary service, Subscriber shall be solely
responsible for taking any action that may be
required by federal law as a result of a match to
the OFAC File, and shall not deny or otherwise
take any adverse action against any consumer
based solely on TransUnion’s OFAC Advisor
Services.
J.A. 568.
31
purchased OFAC Advisor received one credit report from Trans
Union with the OFAC information contained in it. However,
Trans Union created the report from at least two separate
sources: its own CRONUS database and information stored with
Accuity. Trans Union requires creditors to provide at least a
name and address of a consumer to retrieve information from
CRONUS. J.A. 319. However, when retrieving OFAC
information, Trans Union sends only a name to Accuity, even
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32
though Trans Union may have more information about the
person who is the subject of the inquiry. J.A. 318. Trans Union
reports a “match” whenever names are “similar.” J.A. 180.
Trans Union enters the information it receives from
Accuity under the “SPECIAL MESSAGES” section appearing
on its credit reports. Trans Union does no other comparison or
due diligence with the data it receives from Accuity to attempt
to match it to the consumer whose credit report is being
furnished. Thus, Trans Union neither compares the OFAC
information to other information about a given consumer already
in its files, nor does it compare it to any information provided by
the creditor/subscriber. J.A. 179. Moreover, once Trans Union
receives the OFAC information it does not check or confirm its
accuracy; in fact, Trans Union has a policy of never
reinvestigating disputes involving OFAC alerts. J.A. 203-04.
Trans Union merely “report[s] back that the input information
is a match to the OFAC report.” J.A. 204.
In a presentation that Trans Union gives to potential
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33
subscribers to the OFAC Advisor, Trans Union states, “The U.S.
Treasury Department requires that all institutions comply to
insure that they are not extending credit or financial services to
customers on the Office of Foreign Assets Control, OFAC list,
of known terrorists, drug traffickers, and money launderers.”
J.A. 155, 570. The presentation represents that Trans Union acts
in “partnership” with Accuity and lauds the advantages of this
product. J.A. 574. Trans Union describes Accuity as
an“[i]ndustry leader in OFAC screening services.” Id. The
slide boasts that the product is “[e]ndorsed” by the American
Bankers Association and that it has “[b]roader and more
comprehensive file coverage.” Id. Trans Union also claims its
database has “[e]ffective matching logic” that will “[r]educe
[the] number of false positives.” J.A. 574-75.
As Cortez discovered, the information in the “SPECIAL
MESSAGES” section of Trans Union’s credit reports is not
included in credit reports that Trans Union sends to consumers
on request. J.A. 157. The credit reports sent to consumers do
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34
have a public records section, which contains information such
as tax liens, judgments, or bankruptcies. That information is
retrieved from CRONUS. J.A. 214. If Trans Union receives a
dispute related to information in the public record section of a
report, it investigates the dispute by either checking with its
public record vendor or checking court records containing the
disputed information. J.A. 199-200. Trans Union does not,
however, conduct any investigation in response to disputes
related to OFAC alerts. J.A. 201.
It is not clear what Trans Union’s customer service
representatives tell consumers who dispute OFAC alerts.
According to one of Trans Union’s group managers who
testified at the trial, the company’s policy is to refer consumers
who complain about an OFAC alert to the Treasury Department.
J.A. 205; 211. However, this did not occur in Cortez’s case.
According to Trans Union, when the dealership first
reviewed Cortez’s credit report, Trans Union could not block
OFAC information from being included if Accuity determined
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35
that her name matched a name on OFAC’s SDN List. J.A. 182-
83. This continued to be true at least through September of
2006. However, when this case came to trial, Trans Union had
blocked several similar names and any “Sandra Cortez” was
blocked from having an OFAC alert on her credit report. J.A.
183-84.
The Fair Credit Reporting Act will be discussed in detail
below. However, it is helpful at this point to note that the Act
affords certain protections to consumers by regulating the
disclosure and use of “consumer credit reports” as defined by
the Act. Trans Union made an internal determination that the
OFAC Advisor was not governed by the FCRA. According to
Trans Union’s director of solutions and business development,
“[a]fter review by our legal and compliance department they
determined that this was not FCRA data.” J.A. 169.
D. Procedural History
Cortez brought this action under the Fair Credit
Reporting Act after Trans Union failed to correct the problems
with her credit report or respond satisfactorily to her inquiries.
The suit proceeded to verdict. The jury found that Trans Union
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36
failed to follow reasonable procedures to assure maximum
possible accuracy in producing Cortez’s credit report and was
negligent in doing so. The jury concluded that Trans Union
willfully failed to reasonably reinvestigate Cortez’s disputes
after she informed the company of the erroneous OFAC alert it
had included on her credit report. The jury also found that Trans
Union willfully failed to note Cortez’s dispute on subsequent
reports and that it willfully failed to provide Cortez all of the
information in her file despite her requests. The jury awarded
Cortez $50,000 in actual damages and $750,000 in punitive
damages.
Thereafter, Trans Union moved for judgment as a matter
of law or in the alternative a new trial or remittitur of the
damages awards. The district court denied Trans Union’s
motion for judgment as a matter of law. The court concluded
that the OFAC information was part of Cortez’s credit report
and thus, governed by the FCRA. Cortez v. Trans Union, LLC,
Civ. No. 05-5684, 2007 WL 2702945, at **1-2 (E.D. Pa. Sept.
13, 2007). The court also held that there was no basis for
granting defendant a new trial, “except with respect to the
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37
alleged excessiveness of the jury’s verdict.” Id. at *2. The court
confirmed the $50,000 compensatory damages award but found
that the $750,000 punitive damages award “exceeded
permissible limits.” Id. The district court concluded that “an
award of punitive damages . . . [of] double the amount of the
compensatory award [was the] maximum which this record
would support.” Id. The court then entered an order which
stated in pertinent part: “Defendant’s motion for a new trial is
GRANTED with respect to damages, unless, within 30 days,
plaintiff accepts a remittitur, limiting the award to $50,000
compensatory damages and $100,000 punitive damages, for a
total award of $150,000.” Id. at *3.
Cortez appealed that order on October 12, 2007. The
same day that she filed her notice of appeal, she conditionally
accepted the district court’s remittitur by appending the
following statement: “In the event that the District Court was
acting properly within its power and jurisdiction in entering its
Order of September 13, 2007, which is a subject of Plaintiff’s
Notice of Appeal . . . Plaintiff hereby accepts the remittitur.”
See E.D. Pa. Docket No. 71.
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38
We dismissed Cortez’s appeal for lack of jurisdiction
because the order she appealed was not a final appealable order.
Thereafter, Trans Union moved for final judgment. The district
court granted judgment to Trans Union “[b]ecause [Cortez]
accepted the remittitur.” Cortez v. Trans Union LLC, Civ. No.
05-5684, 2008 WL 1944160, at *1 (E.D. Pa. May 1, 2008). This
appeal and cross-appeal followed. Cortez challenges the
remittitur that reduced her punitive damages award, and Trans
Union challenges the district court’s denial of its motion for
judgment as a matter of law, as well as the damages award that
the court did approve.
II. THE FAIR CREDIT REPORTING ACT
“The . . . FCRA . . . was crafted to protect consumers
from the transmission of inaccurate information about them, and
to establish credit reporting practices that utilize accurate,
relevant, and current information in a confidential and
responsible manner.” Guimond v. Trans Union Credit Info. Co.,
45 F.3d 1329, 1333 (9th Cir. 1995) (citations omitted).
Congress intended to promote efficiency in the nation’s banking
system and to protect consumer privacy. TRW Inc. v. Andrews,
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39
534 U.S. 19, 24 (2001) (citing 15 U.S.C. § 1681(a)). Congress
addressed the latter concern by including provisions intended “to
prevent consumers from being unjustly damaged because of
inaccurate or arbitrary information in a credit report.” S. Rep.
No. 91-517, at 1 (1969). Congress also hoped to address a
number of related problems, including “the inability at times of
the consumer to know he is being damaged by an adverse credit
report,” the lack of “access to the information in [his] file,” the
“difficulty in correcting inaccurate information,” and “getting
[his] version of a legitimate dispute recorded in . . . [his] credit
file.”Id. at 3 (1969). “These consumer oriented objectives
support a liberal construction of the FCRA,” and any
interpretation of this remedial statute must reflect those
objectives. Guimond, 45 F.3d at 1333.
In its cross-appeal, Trans Union first argues that its
OFAC alert is not covered by the Fair Credit Reporting Act.
According to Trans Union, the FCRA does not apply to OFAC
information because the “OFAC Screen” is not part of a
“consumer report.” Trans Union Br. at 18. Inasmuch as that
claim goes to the validity of the jury’s verdict, we will first
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21 We review the denial of Trans Union’s motion for
judgment as a matter of law de novo, “viewing the evidence in
the light most favorable to the prevailing party.” Acumed
LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d
Cir. 2009) (quotation omitted).
40
discuss Trans Union’s cross-appeal.21
A. Reasonable Procedures for Maximum Accuracy, 15
U.S.C. § 1681e(b)
15 U.S.C. § 1681e(b) provides in relevant part:
“Whenever a consumer reporting agency prepares a consumer
report it shall follow reasonable procedures to assure maximum
possible accuracy of the information concerning the individual
about whom the report relates.” As noted, the jury concluded
that Trans Union had breached the standard of care required by
§ 1681e(b). However, Trans Union claims that since the OFAC
alert is not covered by § 1681e(b), the district court erred in
denying Trans Union’s motion for judgment as a matter of law.
15 U.S.C. § 1681a(d)(1) defines a consumer report, in
relevant part, as:
any written, oral, or other communication of any
information by a consumer reporting agency
bearing on a consumer’s credit worthiness, credit
standing, credit capacity, character, general
reputation, personal characteristics, or mode of
living which is used or expected to be used or
collected in whole or in part for the purpose of
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22 The statute exempts certain reports or
communications that are not relevant here. See 15 U.S.C. §
1681a(d)(2).
23 We use “consumer report” and “credit report”
interchangeably. The report referred to as “consumer report”
in the statute is more commonly known as a credit report.
41
serving as a factor in establishing the consumer’s
eligibility for– (A) credit or insurance to be used
primarily for personal, family, or household
purposes . . . .22
(emphasis added). Trans Union’s argument that the OFAC alert
somehow manages to avoid the reach of the FCRA ignores the
breadth of the language that Congress used in drafting that
statute. It is not contested that the credit report that Trans Union
sent to Elway Subaru was otherwise subject to the FCRA.
Indeed, such reports are precisely what the FCRA was intended
to cover. In order to conclude that the OFAC alert is not subject
to that remedial statute even though the rest of the report clearly
falls within the definition of “consumer report,” we would have
to conclude that Congress did not mean what it said when it
unequivocally defined “consumer report” to include “any . . .
communication of any information by a consumer reporting
agency.”23 15 U.S.C. § 1681a(d)(1). Trans Union seeks to
avoid this result by arguing that the OFAC alerts were not “used
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24 Recall that OFAC has procedures to unblock funds
in the case of mistaken identity, 31 C.F.R. § 501.806, and to
have a name removed from designated lists, 31 C.F.R. §
501.807.
42
or expected to be used . . . in establishing the consumer’s
eligibility for . . . credit” because, according to its agreement
with Elway Subaru, the screen was to be used only for USA
PATRIOT Act compliance. Id.; see J.A. 568.
As noted above, businesses in the United States are
generally prohibited from dealing with anyone listed on OFAC’s
SDN List. See, e.g., 31 C.F.R. § 536.201 (“[N]o property or
interests in property of a specially designated narcotics trafficker
that are in the United States . . . may be transferred, paid,
exported, withdrawn or otherwise dealt in.”). Thus, in most
cases, it is unlawful to extend credit to a person on OFAC’s
SDN List.24
Trans Union invites us to conclude that information that
goes to the very legality of a credit transaction is somehow not
“a factor in establishing the consumer’s eligibility . . . for
credit.” 15 U.S.C. § 1681a(d)(1). It is difficult to imagine an
inquiry more central to a consumer’s “eligibility” for credit than
whether federal law prohibits extending credit to that consumer
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43
in the first instance. The applicability of the FCRA is not
negated merely because the creditor/dealership could have used
the OFAC Screen to comply with the USA PATRIOT Act, as
well as deciding whether it was legal to extend credit to the
consumer.
Trans Union also relies on the subscriber addendum to its
agreements with creditors to argue that its terms establish that
the OFAC alert is not part of credit reports it prepares under the
FCRA. Pursuant to that agreement, the creditor or subscriber
agrees to be “solely responsible for taking any action that may
be required by federal law as a result of a match to the OFAC
File, and shall not deny or otherwise take any adverse action
against any consumer based solely on TransUnion’s OFAC
Advisor services.” J.A. 568. We are not persuaded that Trans
Union’s private contractual arrangements with its clients can
alter the application of federal law, absent a statutory provision
allowing that rather unique result.
As described more fully above, the “SPECIAL
MESSAGES” section of Trans Union’s credit reports that
contain the OFAC alerts is on the first page between the
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44
identifying information and the consumer’s credit score and in
the same formatting as that information. Thus, the OFAC alerts
allow the creditor to seamlessly determine a consumer’s
eligibility for a loan even before looking at the consumer’s
credit score.
Trans Union also argues that, even if the OFAC alert is
covered by the FCRA, the jury’s verdict cannot stand because
the evidence did not allow a reasonable fact finder to conclude
that it was negligent in dealing with Cortez, as required for
liability under 15 U.S.C. § 1681e(b). We disagree.
B. Negligence
According to Trans Union, its credit report contained the
most accurate information possible because Trans Union simply
included the information furnished by the government. Hence,
it was not reasonable to expect Trans Union to do anything more
than it did to insure the accuracy of the information it sold in its
credit report. Trans Union argues that it merely informed the
dealership that Cortez was a possible match with someone listed
on OFAC’s SDN List, and it met § 1681e(b)’s requirement of
maximum possible accuracy because “match” connotes
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45
“possible match” rather than “exact match.” N e g l i g e n t
noncompliance with § 1681e(b), consists of the following four
elements: “(1) inaccurate information was included in a
consumer’s credit report; (2) the inaccuracy was due to
defendant’s failure to follow reasonable procedures to assure
maximum possible accuracy; (3) the consumer suffered injury;
and (4) the consumer’s injury was caused by the inclusion of the
inaccurate entry.” Philbin v. Trans Union Corp., 101 F.3d 957,
963 (3d Cir. 1996).
In rejecting Trans Union’s claim and upholding the jury’s
verdict, the district court correctly concluded that Trans Union’s
use of the OFAC alert created the impression that Cortez was
actually the person named on OFAC’s SDN List. While the
word “match” may be ambiguous in some circumstances, the
jury was entitled to view Trans Union’s actions in their proper
context. Trans Union provided the credit report with the OFAC
alerts to the dealership in response to receiving identifying
information about a specific consumer, Cortez. The dealership
relied upon the information about Cortez that Trans Union
provided to determine whether or not to finance her car
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46
purchase. The alert on Cortez’s credit report does not state that
the names are “similar” to someone on the SDN List or that a
match is “possible.” It reported a “match” with someone on the
SDN List.
Thus, the jury and district court correctly determined that
Trans Union could have taken reasonable measures to assure
maximum possible accuracy of its credit report with respect to
these alerts. “Reasonable procedures are those that a reasonably
prudent person would undertake under the circumstances.
Judging the reasonableness of a credit reporting agency’s
procedures involves weighing the potential harm from
inaccuracy against the burden of safeguarding against such
inaccuracy.” Philbin, 101 F.3d at 963 (alterations, quotations,
and citations omitted). It is important to note that § 1681e(b)
erects a standard of “maximum possible accuracy.” That
requires more than merely allowing for the possibility of
accuracy.
In Philbin, the plaintiff’s credit report contained a lien
that actually belonged to his father. 101 F.3d at 960. He wrote
to the credit reporting agency, which corrected the error and
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47
added a notation to the credit report stating, “Do not confuse
with father James Philbin Sr different address different social
security number.” Id. Two and a half years later, the plaintiff
applied for and was denied credit a number of times. Id. at 960-
61. The plaintiff then requested his credit report from Trans
Union Corp. (“TUC”) and TRW Credentials, Inc. Id. At 961.
The TRW report had no errors. Id. When he finally obtained
the report from TUC, it still noted the tax lien. Id. After filing
suit, the plaintiff was again denied credit and learned that the tax
lien was still on his credit report, along with other erroneous
information. Id.
In reversing the district court’s grant of summary
judgment in favor of TUC on Philbin’s § 1681e(b) claim, we
held that an unspecified “quantum of evidence” beyond a mere
inaccuracy is sufficient for a jury to find negligent failure to
assure maximum possible accuracy unless a credit reporting
agency convinces the jury otherwise. Id. at 965. We also
reiterated that inconsistencies between two different reports
concerning a single consumer are sufficient to meet this
standard. Id. at 964, 966. Cortez’s evidence is even stronger.
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48
Here, the jury could consider evidence of an inconsistency
between identifying information provided by Trans Union, for
example, Cortez’s birth date, and the information on the SDN
List. The jury could reasonably conclude that Trans Union
could have taken steps to minimize the possibility that it would
erroneously place an OFAC alert on a credit report, such as
checking the birth date of the consumer against the birth date of
the person on the SDN List.
Moreover, the distinction between “accuracy” and
“maximum possible accuracy” is not nearly as subtle as may at
first appear, it is in fact quite dramatic. For example, in Pinner
v. Schmidt, 805 F.2d 1258 (5th Cir. 1986), the Court of Appeals
for the Fifth Circuit described that distinction as the difference
between reporting that “a person was ‘involved’ in a credit card
scam” and reporting that the consumer “was in fact one of the
victims of the scam.” Id. at 1263. The former statement was
undoubtedly true as the consumer had been “involved” in the
scam. It was also woefully misleading because it did not inform
people that she was involved as a victim of the scam, and not as
the perpetrator.
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49
Moreover, the reasonableness of a credit reporting
agency’s procedures is “normally a question for trial unless the
reasonableness or unreasonableness of the procedures is beyond
question.” Sarver v. Experian Info. Solutions, 390 F.3d 969,
971 (7th Cir. 2004). In Philbin, we listed three different
approaches that various courts have taken in determining if a
plaintiff has introduced sufficient evidence to reach the jury
under § 1681e(b). Those approaches are: “that a plaintiff must
produce some evidence beyond a mere inaccuracy in order to
demonstrate the failure to follow reasonable procedures; that the
jury may infer the failure to follow reasonable procedures from
the mere fact of an inaccuracy; or that upon demonstrating an
inaccuracy, the burden shifts to the defendant to prove that
reasonable procedures were followed.” Philbin, 101 F.3d at
965. We did not have to decide upon any one approach in
Philbin because the plaintiff had produced evidence sufficient
to meet any of the three standards. Id. at 966. The same is true
here.
Trans Union’s own records showed that Cortez was born
in May of 1944 and her middle name was “Jean.” J.A. 526-527.
Case: 08-2465 Document: 003110250747 Page: 49 Date Filed: 08/13/2010
50
The person on OFAC’s SDN List was named Sandra Quintero
Cortes and was born in June of 1971. Id. Within Trans Union’s
own records there existed a large discrepancy in regard to
Cortez’s last name, middle name, and even her date of birth.
There were other discrepancies as well, including citizenship.
Despite those distinctions, the credit report Trans Union sent to
the dealership stated: “INPUT NAME MATCHES NAME ON
THE OFAC DATABASE.” Trans Union included that
“warning” even though it had information that should have
made it apparent that the OFAC alert had no place in Cortez’s
credit report.
There are, of course, inherent dangers in including any
information in a credit report that a credit reporting agency
cannot confirm is related to a particular consumer. Such
information is nearly always “used or expected to be used or
collected in whole or in part for the purpose of serving as a
factor in establishing the consumer’s eligibility for . . . credit.”
15 U.S.C. § 1681a(d)(1). Allowing a credit agency to include
misleading information as cavalierly as Trans Union did here
negates the protections Congress was trying to afford consumers
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51
and lending institutions involved in credit transactions when it
enacted the FCRA.
Congress surely did not intentionally weave an exception
into the fabric of the FCRA that would destroy its remedial
scheme by allowing a credit reporting agency to escape
responsibility for its carelessness whenever misleading
information finds its way into a credit report through the agency
of a third party. Thus, Trans Union’s argument that it does not
control the accuracy of the SDN List is as misleading as the
information it provided about Cortez. Trans Union does not
know for sure that a consumer has habitually been delinquent in
paying his/her credit cards bills, or that s/he does not promptly
pay obligations to merchants or taxing authorities. Rather, it
collects such information from the primary sources, summarizes
it, and reports it to those who will subsequently rely on the
resulting reports in making consumer credit decisions.
Therefore, the OFAC information is not substantially different
from all other information in a credit report, including
information taken from public records.
Trans Union remains responsible for the accuracy in its
Case: 08-2465 Document: 003110250747 Page: 51 Date Filed: 08/13/2010
2 5 See also Cousin v. Trans Union Corp., 246 F.3d 359,
368 (5th Cir. 2001) (when a creditor continues to provide a
consumer reporting agency information about a consumer that
the agency has determined to be inaccurate, under § 1681e(b)
“it is incumbent on the consumer reporting agency to
permanently delete and cloak the erroneous information”).
52
reports under the FCRA and it cannot escape that responsibility
as easily as it suggests here. Congress clearly intended to ensure
that credit reporting agencies exercise care when deciding to
associate information with a given consumer, and the record
clearly supports the jury’s determination that Trans Union did
not exercise sufficient care here. See Philbin, 101 F.3d at 966;
see also Stewart v. Credit Bureau, Inc., 734 F.2d 47, 52 (D.C.
Cir. 1984) (“Certainly, inconsistencies within a single file or
report involving an inaccuracy as fundamental as a falsely
reported wage earner plan, as well as inconsistencies between
two files or reports involving less fundamental inaccuracies, can
provide sufficient grounds for inferring that an agency acted
negligently in failing to verify information.”).25
C. Trans Union’s Liability Under 15 U.S.C. § 1681g
15 U.S.C. § 1681g(a) states in relevant part that “[e]very
consumer reporting agency shall, upon request, . . . clearly and
accurately disclose to the consumer: (1) All information in the
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53
consumer’s file at the time of the request.” (emphasis added).
Here, the jury found that Trans Union willfully violated §
1681g, and Trans Union appeals the district court’s denial of its
motion for judgment as a matter of law on Cortez’s § 1681g
claim.
Trans Union concedes that Cortez requested her credit
report on multiple occasions; nevertheless, it failed to provide
her with the HAWK and OFAC alert information on her report.
However, Trans Union again makes an argument similar to that
discussed above. It argues that the OFAC and HAWK
information is not part of the consumer’s “file” under the FCRA
and that, it was not required to disclose the information to
Cortez.
The FCRA defines “file” when used in connection with
information on any consumer, as “all of the information on that
consumer recorded and retained by a consumer reporting agency
regardless of how the information is stored.” 15 U.S.C. §
1681a(g). Trans Union attempts to avoid the obvious reach of
that language by relying on the fact that the SDN List
information was not part of its database; rather, as explained
Case: 08-2465 Document: 003110250747 Page: 53 Date Filed: 08/13/2010
Cortez argues th 26 at Trans Union failed to make this
argument in the dis