Opinion
No. 04 C 8299.
May 15, 2006.
James McIntyre Pietz, Malakoff, Doyle Finberg, P.C., Pittsburgh, PA, Adam Martin Mergenthaler, Craig M. Shapiro, O. Randolph Bragg, Horwitz, Horwitz Associates, Ltd., Chicago, IL, for Plaintiffs.
Michael C. O'Neil, Albert Edward Hartmann, Roger L. Longtin, DLA Piper Rudnick Gray Cary U.S. LLP, Chicago, IL, for Defendant.
MEMORANDUM OPINION AND ORDER
Heather Gillespie and Angela Cinson have sued Trans Union, LLC on behalf of themselves and all others similarly situated. They allege that Trans Union violated the Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681g(a)(1) 1681e(a), by failing to disclose information that was allegedly part of their consumer files (Count 1) and by not maintaining reasonable procedures to avoid violations of § 1681c (Count 2). Trans Union has moved for summary judgment. For the following reasons, the Court grants Trans Union's motion.
Facts
Trans Union is a credit reporting agency (CRA) that gathers consumer credit information and provides it to businesses in connection with credit transactions. When a furnisher of credit information sends Trans Union information about a delinquent account, Trans Union requires the furnisher to include a "date of delinquency," a date that is 180 days after the date of the delinquency "which immediately preceded the collection activity, charge to profit and loss, or similar action." See 15 U.S.C. § 1681c(c)(1). Trans Union uses the date of delinquency, along with other information, to calculate a "Purge Date," which is used to determine when an account should be removed from a consumer's credit report.
Trans Union removes an account from a consumer's file six years and eleven months after the account's Purge Date. See Def. L.R. 56.1 Stmt. ¶ 99.
In 2004, plaintiff Cinson requested a file disclosure from Trans Union under § 1681g(a)(1). Trans Union responded by providing a disclosure that included records pertaining to delinquent accounts with Sears and Sherman Acquisitions but did not include the "date of delinquency" or "Purge Date" pertaining to those accounts. In 2004, plaintiff Gillespie also requested a file disclosure from Trans Union. The disclosure she received included records pertaining to delinquent accounts with Direct Merchants and Sherman Acquisitions, but — like Cinson's disclosure — did not include the "date of delinquency" or "Purge Date" pertaining to those accounts.
Plaintiffs argue that Trans Union, by failing to disclose these dates, willfully violated the FCRA. First, they claim that Trans Union violated § 1681(g)(a)(1) by not disclosing all information in their files at the time of their requests. Second, they claim that Trans Union violated § 1681e(a) by failing to "maintain reasonable procedures designed to avoid violations of section 1681c." Section 1681c prohibits CRAs from making consumer reports that contain information about "accounts placed for collection or charged to profit and loss which antedate the report by more than seven years." 15 U.S.C. § 1681c(a)(4).
Discussion
Entry of summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).
1. Section 1681g(a)(1)
Before 1996, § 1681g(a)(1) required CRAs to provide consumers, upon request, with the nature and substance of the information in their consumer files. See S. Rep. No. 104-185, at 41 (1995). In 1996, Congress, having determined that the "nature and substance" language of § 1681g(a)(1) did not provide consumers with sufficient access to the information in their files, see id., amended this section to require CRAs to provide consumers, upon request, with all of the information in their files. See 15 U.S.C. § 1681g(a)(1). Plaintiffs claim that Trans Union wilfully violated this provision by not disclosing the date of delinquency and Purge Date, which plaintiffs claim are part of their files. Trans Union responds that its practice does not violate § 1681g(a)(1), because the date of delinquency and Purge Date are not part of the consumer's file and are thus not subject to the statute's disclosure requirement. The Court must determine, therefore, the meaning of the word "file" in § 1681g(a)(1).
The parties have not cited, and the Court has not found, any case law addressing this question.
We begin with the FCRA's language, which provides that "[e]very consumer reporting agency shall, upon request, and subject to section 1681h(a)(1) of this title, clearly and accurately disclose to the consumer: All information in the consumer's file at the time of the request." Id. The word "file" is defined in § 1681a(g) as "all of the information on the consumer recorded and retained by a consumer reporting agency regardless of how the information is stored."
Trans Union contends that the date of delinquency is not part of a consumer's file because it is not retained within the meaning of § 1681a(g). Trans Union says that once the date of delinquency is received from a furnisher, it is used to calculate a Purge Date and is then removed from Trans Union's database. Plaintiffs concede that the date of delinquency is not retained as such but contend that it is retained in a different form as the Purge Date. For purposes of this motion, the Court assumes that Trans Union retains the date of delinquency. In addition, because there are no other distinctions between these dates that are relevant to the present inquiry, the Court refers to the dates collectively as the Purge Date.
Plaintiffs argue that the meaning of the word "file" in § 1681g(a)(1) includes the Purge Date, because § 1681a(g) says that a file is " all of the information on that consumer recorded and retained." 15 U.S.C. § 1681a(g) (emphasis added). Trans Union responds that the wording of § 1681g(a) as well as commentary adopted by the Federal Trade Commission (FTC) suggests that the definition of the word "file" in § 1681g(a)(1), includes only the information contained in a consumer's credit report. See 16 C.F.R. Pt. 600, App. § 603.
The parties do not discuss whether 16 C.F.R. Pt. 600, App. § 603 is a federal regulation, which carries the force of law, or an interpretive rule, which does not. See Ala. Tissue Center of Univ. of Ala. Health Serv. Found., P.C. v. Sullivan, 975 F.2d 373, 377 (7th Cir. 1992) ("[R]egulations," "substantive rules" or "legislative rules" are those which create law, usually implementary to an existing law; whereas interpretive rules are statements as to what the administrative officer thinks the statute or regulation means) (quoting Indiana Dep't of Pub. Welfare v. Sullivan, 934 F.2d 853, 856 (7th Cir. 1991)). Nor do the parties discuss whether 16 C.F.R. Pt. 600, App. § 603 is entitled to deference under Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843-44 (1984).
Regardless, the Court's independent research reflects that the FCRA does not empower the FTC to pass regulations after traditional notice-and-comment procedures. See 16 U.S.C. § 1681s(a); Trans Union Corp. v. FTC, 81 F.3d 228, 230-31 (D.C. Cir. 1996); Estiverne v. Sak's Fifth Ave., 9 F.3d 1171, 1173 (5th Cir. 1993). Accordingly, 16 C.F.R. Pt. 600, App. § 603 is an interpretive rule, Lauer v. Apfel, 169 F.3d 489, 492 (7th Cir. 1999); Atchison, Topeka Santa Fe Ry. Co. v. Pena, 44 F.3d 437, 442 (7th Cir. 1994), and, as such, it is entitled to something less than so-called Chevron deference. See United States v. Mead Corp., 533 U.S. 218, 234 (2001); Atchison, 44 F.3d at 442. This means that the Court defers to the FTC's interpretation only to the extent its reasoning is valid, thorough, and consistent with earlier and later pronouncements. See Atchison, 44 F.3d at 442.
16 C.F.R. Pt. 600, App. § 603 reads as follows:
Consumer reporting agencies are required to make disclosures of all information in their "files" to consumers upon request (section 609) and to follow reinvestigation procedures if the consumer disputes the completeness or accuracy of any item of information contained in his "file" (section 611).
. . .
The term "file" denotes all information on the consumer that is recorded and retained by a consumer reporting agency that might be furnished, or has been furnished, in a consumer report on that consumer.
Plaintiffs argue that the Court should not defer to the FTC's definition of the word "file", because it is inconsistent with the clear language of the FCRA. Specifically, plaintiffs maintain that the FTC's definition, which says that a "file" is that information contained in a consumer report, is inconsistent with § 1681a(g), which defines a file as "all of the information on that consumer recorded and retained" by a CRA. The Court agrees that there is some inconsistency between these two provisions. Nevertheless, this case concerns § 1681g(a), not § 1681a(g). If one carefully examines § 1681g(a)'s disclosure requirements, one readily determines that — despite the apparent inconsistency between the interpretive rule and § 1681a(g) — the meaning of the word "file" in § 1681g(a) is narrower than the definition found in § 1681a(g).
Section 1681g(a) begins with paragraph one, which requires CRAs to disclose all information in the consumer's file at the time of the consumer's request. Then, paragraphs three, four, and five go on to list three other types of information about consumers that CRAs must disclose as well: the name of each person that procured a consumer report; the dates, original payees, and amounts of any checks that form the basis of an adverse credit entry; and a record of all credit inquiries received by the CRA during the one-year period preceding the request that identified the consumer. If, as plaintiffs argue, the word "file" in paragraph one means "all information on the consumer recorded and retained" by a CRA, then paragraphs three, four, and five are rendered superfluous. These paragraphs would be nothing more than specific examples of information already described in paragraph one.
If, on the other hand, the word "file" in paragraph one means all information contained in a consumer report, as defined by 16 C.F.R. Pt. 600, App. § 603, then paragraphs three, four, and five retain independent significance, because the information described in those paragraphs is not routinely included in consumer reports. In fact, CRAs are expressly prohibited from including the information discussed in paragraph five in consumer reports. See 15 U.S.C. § 1681b(c)(3). Courts should avoid interpretations of statutes which render words superfluous. See Duncan v. Walker, 533 U.S. 167, 174 (1995). For this reason, regardless of whether the interpretive rule in 16 C.F.R. Pt. 600, App. § 603 is entitled to deference, the Court concludes that the rule articulates the correct definition of the word "file" in § 1681g(a)(1): information included in a consumer's report.
The Court's conclusion is buttressed by language in the Senate Committee Report discussing the 1996 amendments to the FCRA. See S. Rep. No. 104-185, at 41 (1995). That report indicates that Congress agreed with the position taken in FTC's interpretive rule: "[S]ection 408 explicitly requires consumer reporting agencies to provide, upon request, all information in the consumer's file. The Committee intends this language to ensure that a consumer will receive a copy of that consumer's report, rather than a summary of the information contained therein." Id. (emphasis added). The quoted passage suggests that the Senate, like the FTC, interpreted the word "file" to mean all information in a consumer's report, not all information recorded and retained by a CRA.
Plaintiffs also argue that other parts of the FCRA demonstrate an overall intent to require disclosure of information like the Purge Date. Plaintiffs point out that the FCRA requires furnishers to provide the date of delinquency to CRAs when submitting adverse credit information so that CRAs can determine an account's obsolescence as defined by § 1681c. See 15 U.S.C. § 1681s-2(a)(5)(A). If CRAs are required to use this information, plaintiffs argue, then the information must be a part of the consumer's file. Plaintiffs also note that § 1681i provides a mechanism for consumers to request reinvestigation of the information supplied by furnishers and that this mechanism would be thwarted unless CRAs were required to disclose dates of delinquency. Plaintiffs maintain that without access to this information, consumers cannot determine which accounts should be reinvestigated, because they cannot find out whether accounts are obsolete.
The Court disagrees that if the definition of the word "file" includes only that information contained in a consumer's report, there is a conflict or inconsistency between § 1681g(a)(1) and §§ 1681s-2(a)(5)(A) and 1681i. There is nothing inconsistent about Congress requiring furnishers to provide CRAs with dates of delinquency along with adverse credit information, but not requiring CRAs to provide those dates to consumers requesting their files. There is also nothing inconsistent about Congress giving consumers a right to contest information in their files, but limiting those rights to information provided in consumer reports.
Plaintiffs also argue that the Purge Date is a part of a consumer's file, even as defined by the FTC's interpretive rule, because Trans Union hypothetically could begin selling a consumer report that includes the Purge Date. See Def. Mem. at 7 n. 7. For this reason, plaintiffs contend, the Purge date "might be furnished" in a consumer report. See 16 C.F.R. Pt. 600, App. § 603. The Court rejects this argument. Any piece of information that the CRA possesses on a consumer hypothetically could end up in a consumer report. If the phrase "information . . . that might be furnished, or has been furnished" meant any piece of information possessed by a CRA, then the "might be furnished, or has been furnished" language in the interpretive rule would be completely superfluous. The interpretive rule would retain the same meaning if it defined file as "all information on the consumer that is recorded or retained by the CRA." Courts are to avoid interpretations of agency regulations which render words superfluous. See Hercules Inc. v. United States, 516 U.S. 417, 429 (1996); Jewett v. C.I.R., 455 U.S. 305, 316 (1982). It is fair to assume the same rule applies to an agency's interpretive rules. Consequently, a more reasonable understanding of the phrase "might be furnished or has been furnished" requires the plaintiffs to offer some evidence — aside from the information's mere existence in a CRA's database — that the CRA has included similar information in a consumer report in the past or that the CRA plans to include such information in the future. Plaintiffs have offered no such evidence.
Finally, plaintiffs argue that a non-binding FTC staff opinion letter provided to Trans Union in 2000 suggests that information like the Purge Date is subject to disclosure under § 1681g(a)(1). The Court rejects this argument as well. The letter in question responded to Trans Union's inquiry about whether, in an effort to fight identity theft, Trans Union could scramble or truncate account and social security numbers when including them in § 1681g(a)(1) disclosures. See Pl. Ex. 6. The FTC said that this practice would violate the FCRA because CRAs are required to clearly and accurately disclose all information in a file. Social security and account numbers — unlike Purge Dates — are ordinarily included in consumer reports. For this reason, the FTC staff opinion letter offered by plaintiffs does not address the issue presented here: whether information not included in consumer reports must nevertheless be disclosed under § 1681g(a)(1).
Because plaintiffs have not offered evidence from which a jury reasonably could find that Trans Union failed to disclose information in their consumer files, the Court grants Trans Union's motion for summary judgment on Count 1.
2. Section 1681e(a)
In Count 2, plaintiffs allege that by failing to disclose the Purge Date of certain accounts listed in their consumer reports, Trans Union did not maintain reasonable procedures to avoid violations of § 1681c. Plaintiffs concede that their allegations in Count 2 involve the same legal issue involved in a related case plaintiffs filed in this Court against another CRA, Equifax Information Services, LLC. See Gillespie v. Equifax Info. Svcs. LLC, No. 05 C 138, 2006 WL 681059, *2 (N.D. Ill. March 9, 2006). The relevant issue is whether a CRA can be held liable under § 1681e(a) without disclosing inaccurate or obsolete credit information to a third party. In Equifax, the Court concluded, citing Washington v. CSC Credit Svcs. Inc., 199 F.3d 263, 267 (5th Cir. 2000) and Wantz v. Experian Info. Solutions., 386 F.3d 829, 834 (7th Cir. 2004), that disclosure is a prerequisite to liability under § 1681e(a). Plaintiffs have not cited any legal authority or factual distinction that demands a different result in this case. Accordingly, the Court grants Trans Union's motion for summary judgment on Count 2.
Conclusion
For the foregoing reasons, the Court grants Trans Union's motion for summary judgment [docket no. 76]. The Clerk is directed to enter judgment in favor of the defendant. Plaintiffs' motion for class certification is terminated as moot [docket no. 46]