Summary
finding that “there is ‘no logical reason why the mere fact that the harmful inaccuracy appeared in another individual's credit report should shield a credit reporting agency for harm to an individual flowing from a negligent violation of the [FCRA].”
Summary of this case from Neclerio v. Trans Union, LLCOpinion
Civil Action No. 02-10345-RWZ
January 13, 2003
MEMORANDUM OF DECISION AND ORDER
On July 21, 2000, plaintiff Mirza Arifuz Haque drove two friends to a CompUSA computer store in Cambridge, Massachusetts, and remained in the car while his friends went shopping. One friend, Mukul Hassan, attempted to purchase two laptop computers with a personal check. In order to authorize the transaction, a CompUSA employee called defendant Certegy Check Cashing Services, Inc. ("Certegy"), a reporting agency that provides businesses with check security services. A Certegy employee informed the CompUSA store manager, defendant Todd Wesman, that Hassan was part of a New York-based "fraud ring" that steals computer equipment, and asked Wesman to get Hassan's license plate number. Wesman replied that he was going to call the police and promptly did so. Two Cambridge police officers, defendants John Poirier and Donald Bombino ("police officers" or "officers"), responded to the call, arrested plaintiff's two friends inside the store, and then approached and arrested plaintiff in his car. Plaintiff was charged with uttering a false document, forgery, and attempting to commit a crime. Certegy's report about the "fraud ring" had been based on information supplied by the Dime Savings Bank. One day later, Certegy learned that the information was inaccurate, yet somehow the police were never informed of the mistake. As a result, plaintiff spent 90 days behind bars before the charges were dismissed. He has sued CompUSA and Wesman, Certegy, and Poirier and Bombino, alleging unlawful arrest, in violation of 42 U.S.C. § 1983 and Mass. Gen. Laws ch. 12, § 11H; negligent credit reporting, in violation of the Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq.; false imprisonment; and malicious prosecution. Both Certegy and defendant police officers have filed motions to dismiss for failure to state a claim for which relief can be granted. Both motions are allowed in part.
Defendant police officers are alleged to have violated section 1983 and Mass. Gen. Laws ch. 12, § 11H and to have falsely imprisoned plaintiff. The section 11H claim is dismissed with leave to amend because that statutory section contains no private right of action. Although the unlawful arrest allegations form a basis for all three causes of action, the false imprisonment claim additionally alleges that the officers "illegally imprisoned" plaintiff. Defendant officers make no argument with respect to their liability for plaintiff's 90-day jail stay, during which presumably even cursory follow-up investigation would have revealed the inaccuracy of the fraud allegations. The "illegal imprisonment" claim therefore awaits further factual development.
With respect to the false arrest allegations, if defendant officers had probable cause to arrest plaintiff, they have qualified immunity from state and federal civil rights claims and a complete defense to the tort claim. See Vargas-Badillo v. Diaz-Torres, 114 F.3d 3, 6 (1st Cir. 1997) (citations and internal quotation marks omitted) (holding that qualified immunity bars section 1983 claims "unless there clearly was no probable cause at the time the arrest was made"); Duarte v. Healy, 405 Mass. 43, 47, 537 N.E.2d 1230 (Mass. 1989) (applying federal qualified immunity principles to violations of the State Civil Rights Act); Julian v. Randazzo, 380 Mass. 391, 395, 403 N.E.2d 931 (1980) (holding that a false arrest suit fails if police "believed upon reasonable cause that the person being arrested had committed a felony") (citing Muniz v. Mehlman, 327 Mass. 353, 356, 99 N.E.2d 37 (1951)). Courts outside this jurisdiction have found probable cause to arrest people who have driven or otherwise accompanied accused criminals to the scenes of their crimes. In United States v. Kayode, 254 F.3d 204 (D.C. Cir. 2001), for example, the D.C. Circuit found that officers had probable cause to arrest a man waiting in a car outside a bank, after the two men he drove there attempted to commit bank fraud. Id. at 209-10.
A finding of probable cause is similarly appropriate in the present case. Defendant officers arrested plaintiff based on specific and credible information. Defendant Wesman told the police that two men at CompUSA were attempting to purchase computers with a forged check and were part of a New York fraud ring. When the police arrived, Wesman identified plaintiff's friends as the culprits. Defendant officers were justified in inferring that plaintiff, the driver for the alleged out-of-town thieves, was also part of the fraud ring. Therefore, as against defendant officers, the motion to dismiss the first and third causes of action and the false arrest claim is allowed.
Defendant Certegy also brings a motion to dismiss. First, Certegy argues that plaintiff lacks standing to sue under the Fair Credit Reporting Act ("FCRA") because plaintiff's friend Hassan was the subject of the credit report at issue. The FCRA requires credit reporting agencies to follow "reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates." 15 U.S.C. § 1681e(b). This section does not limit the FCRA's protections to the specific subject of a credit report. Rather, this Court agrees with the D.C. Circuit that there is "no logical reason why the mere fact that the harmful inaccuracy appeared in another individual's credit report should shield a credit reporting agency for harm to an individual flowing from a negligent violation of the [Fair Credit Reporting] Act." Koropoulos v. Credit Bureau, Inc., 734 F.2d 37, 47 (D.C. Cir. 1984); see also Barron v. Trans Union Corp., 82 F. Supp.2d 1288, 1296 (M.D.Ala. 2000) (citations and internal quotation marks omitted) ("[I]ndividuals other than the subject of a consumer report can have standing to bring a lawsuit under the FCRA. However, in order to have standing under the FCRA, the disputed consumer report must relate to the individual bringing suit."); Williams v. Equifax Credit Info. Svces., 892 F. Supp. 951, 955 (E.D.Mich. 1995) ("Section 1681 . . . provide[s] standing to a party when a credit report damages that party's individual credit worthiness."). The essential inquiry is whether a credit report was a "communication bearing on" a plaintiff or whether the "injuries are merely derivative of the injury to another party's credit worthiness." Id.
In the present case, the facts alleged in the Complaint suggest that Certegy's report on Hassan directly related to the plaintiff. The report referred to Hassan as a member of a "fraud ring," necessarily implying that he had co-conspirators. Certegy also directed defendant Wesman to record Hassan's license plate number. It is no great leap to infer, as the parties who acted on Certegy's information certainly did, that the driver of Hassan's car was part of the "fraud ring." Plaintiff therefore has standing to pursue his claim under the FCRA.
Moreover, at this stage in the litigation, Certegy's reliance on information provided by Dime Savings Bank does not shield the defendant from liability under the FCRA. A credit reporting agency may be "initially entitled to rely on information contained in the reports issued by credit grantors," such reliance is "neither reasonable nor justified" once the agency has reason to believe the reports are inaccurate. The Complaint alleges that one day after Certegy made its report, it learned that it had relied on bad information. Yet plaintiff remained in prison for three months. Plaintiff states a claim for negligence under the FCRA for which relief can be granted.
Second, Certegy argues that the allegations of false imprisonment fail because it provided information about Hassan only, the CompUSA defendants were the ones who called the police and initiated criminal process, and probable cause existed for plaintiff's arrest. These arguments are without merit at this stage of the litigation. In the light most favorable to plaintiff, the Complaint alleges that Certegy accused Hassan of being one in a "ring" of felons and asked defendant Wesman to obtain Hassan's license plate number — in essence, to investigate a ring of felons. Defendant Wesman made the wise decision to leave the investigation of felons to the police and informed Certegy that he was calling them. Certegy's accusations logically, predictably, and with the company's knowledge led to the arrest of Hassan and his "ring" of friends. Even if the police had probable cause to arrest plaintiff, Certegy knew after one day that plaintiff was in jail on false charges of its own making yet did nothing to end plaintiff's confinement. Such allegations state a valid false imprisonment claim.
Finally, Certegy moves to dismiss the malicious prosecution cause of action, which alleges that Certegy instituted and continued criminal proceedings against plaintiff with malice and without probable cause. Because probable cause existed for the arrest, the claim for instituting a malicious prosecution fails. However, the facts as alleged in the Complaint do not warrant dismissing the claim of malicious continuation of prosecution. Such a claim normally requires a defendant's active participation in continuing a criminal prosecution. Restatement 2d Torts § 655. However, if a defendant owes plaintiff a duty to act affirmatively, it can be liable for failing to inform police of information that would directly lead to plaintiff's release. See Banks v. Nordstrom, Inc., 787 P.2d 953, 958 (Wash.Ct.App. 1990). In the present case, the Complaint alleges that Certegy knew that its report was the basis for possible arrests of Hassan and his "fraud ring," learned that its information was false, but did nothing. Under such circumstances, Certegy may well owe a duty to act affirmatively to exonerate plaintiff. The allegations are sufficient to survive a motion to dismiss.
Accordingly, defendant officers' and defendant Certegy's motions to dismiss are allowed as to Counts I and III of the Complaint, and as to those claims in Counts II and IV that relate to false arrest and malicious initiation of prosecution. The remaining portions of defendant officers' and defendant Certegy's motions to dismiss are DENIED.