Consumer Reporting Agency’s Motion Denied by Federal District Court in Fair Credit Reporting Act Case

A federal jury previously issued a $60 million dollar verdict against the Defendant, a consumer reporting agency, for violations of the federal Fair Credit Reporting Act (FCRA).  The underlying activities involved Defendant incorrectly indicating on consumer reports that individuals were on the Office of Foreign Assets Control (OFAC) Specially Designated Nationals and Blocked Persons List.  Defendant then moved, in the alternative, to set aside the jury verdict as wrong, to be granted a new trial, to have the damages set aside, or at least to have the damages reduced. On November 7, 2017, the U.S. District Court for the Northern District of California denied these motions, concluding that the verdict is supported by substantial evidence and there is no basis to set aside the damages award.

The three grounds on which Defendant challenged the jury’s verdict were: (1) that it was entitled to judgment as a matter of law because the evidence did not support the finding of willful violations of FCRA; (2) that it was entitled to a new trial due to Plaintiff’s counsel’s improper and prejudicial arguments and statements during trial; and (3) the damages verdicts need to be set aside since they are excessive and unconstitutional.

Regarding the first challenge, the court identified a number of pieces of evidence from which the jury could conclude that Defendant willfully violated certain provisions of FCRA, including that it used name-only matching logic to associate class members with the OFAC list, it had repeated notice of problems with its OFAC procedures (e.g., from consumer inquiries and government communications), and it could not identify a single instance in which its OFAC Alert product identified someone actually on the OFAC list.  Thus, the court denied this motion for judgment as a matter of law.

As for the second challenge, the court found that there were not sufficient grounds to meet the high threshold necessary for a new trial.  Therefore, this motion also was denied by the court.

With regard to the damages awarded at trial, the court determined that there is no basis for setting aside the statutory damages award, highlighting, for example, that: (i) FCRA clearly provides that a willful violation of any one of its prongs entitles a plaintiff to a statutory damages award range of $100 to $1,000 (which damages are not capped under law), and (ii) the jury’s award of damages is supported by the evidence, proportionate to the harm shown, and within this statutory range.  The court further determined that the Defendant should not be granted its request for a remittitur or new trial regarding punitive damages because, for example: (i) the damages are proper (i.e., the statute contemplates that both statutory and punitive damages under FCRA for willful violations may be appropriate); (ii) the punitive damages jury instruction was not improper; (iii) the Defendant cannot supplement the record with additional evidence of its product’s profitability when such evidence was not originally introduced during the punitive damages phase of the trial; and (iv) the punitive damages award is not constitutionally excessive, focusing, for instance, on the harms to the Plaintiffs as financially vulnerable victims (persons who were falsely flagged as persons on the OFAC list and the result when such information is provided to lenders making consumer credit decisions) and on a reprehensibility analysis of the Defendant’s actions.

The court also, once again, rejected Defendant’s challenges to Plaintiff’s class certification.  It provided, for example, that the Defendant falsely identified every class member as a potential match on the list and that each of these members received an incomplete disclosure which did not properly tell them about their rights to challenge this OFAC information.

The article regarding the underlying case can be found at: https://www.thewbkfirm.com/industry/federal-jury-awards-class-consumers-60-million-damages-stemming-violations-fair-credit-reporting-act.

The case is Ramirez v. Trans Union, LLC.