A plaintiff suing under the Fair Credit Reporting Act (FCRA) need not prove actual damages as a result of a willful violation in order to recover statutory damages, according to the Eleventh Circuit, joining several other circuits in that conclusion. Santos v. Healthcare Revenue Recovery Group, LLC, 2023 WL 7289662(11th Cir. Nov. 6, 2023).
The case arose from an error by Experian, a consumer reporting agency subject to FCRA. The error involved information furnished by a medical debt collector concerning the tradelines indicating when a debt was first placed for collection. The error resulted in “status dates” on the debt collector’ s tradelines in the consumers’ credit reports improperly updating each month to display the current month. The error continued for more than a year and half before it was corrected, and affected 2.1 million consumers. Santos and a co-plaintiff sued, seeking class-action status though their own credit scores were not lowered by the errors. However, according to the court, creditworthiness can be affected by how long an account has been collection. More recent collection accounts have a greater negative impact. The plaintiffs sought statutory damages under FRCA section 1681n(a)(1)(A), which allows awards ranging from $100-$1000.
The district court, in considering Experian’s motion for summary judgment, reasoned that some proof of actual damages was required to be eligible for statutory damages. The district court relied on a 1991 Eleventh Circuit decision in reaching that conclusion, Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151. The court accordingly denied the plaintiffs’ motion for class certification because individual issues would predominate over common issues (thus failing under Fed R. Civ. P. 23(b)(3)) given that the court would need to determine whether each class member suffered actual damages. The plaintiffs petitioned for interlocutory review under Rule 23(f), which the Eleventh Circuit granted.
In a per curiam decision, the court held a consumer does not have to prove actual damages to recover statutory damages for a willful FCRA violation and vacated the order denying class certification. First, the court held that the plaintiffs had Article III standing to sue because there was evidence that Experian inaccurately reported to creditors that the plaintiffs’ accounts entered collections more recently than they actually did, a FCRA violation with a sufficiently close relationship to the analogous harm caused by publication of defamatory information, a wrong traditionally recognized as the basis for lawsuits in American courts. The court then turned to statutory construction of FCRA section 1681n(a)(1)(A). In the course of its detailed statutory analysis, the court pointed out that statutory damages were not available for merely negligent FCRA violations. Negligent violations permit recovery of only actual damages, a bifurcation the court found significant. The court also looked to the statutory damages provision of the Truth-in-Lending Act, which does not require proof of actual damage, either. The court found further support in the holdings of the Seventh, Eighth, Ninth and Tenth Circuits that actual damages are not required under FCRA to recover statutory damages for willful violations. The court rejected the district court’s premise that its 1991 decision in Cahlin controlled the outcome, because that case preceded the 1996 amendment adding the statutory damages alternative. The opinion brushed aside the fact that some post-1996 Eleventh Circuit cases continued to cite Cahlin for other points, and further rejected Experian’s argument concerning the federal Privacy Act’s statutory damage provision, the language of which, the court concluded, was far too different to be analogous.
The court vacated the class certification order and directed the district court to address other arguments concerning class certification, pro and con, on remand.