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Safeco Insurance Company of America, et al. v. Charles Burr, et al.
No. 06-84
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Safeco Insurance Company of America, et al. v. Charles Burr, et al.
(Argued with GEICO General Insurance Company, et al. v. Ajene Edo)
Subject:
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Fair Credit Reporting Act, Willful Violation, Mens Rea, Consumer Credit, Adverse Action
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In 06-100:
- Whether the Ninth Circuit’s construction of “willfully” under § 1681n of FCRA
impermissibly permits a finding of willfulness to be based upon nothing more than
negligence, gross negligence, or a completely good-faith but incorrect interpretation
of the law, and upon conduct that is objectively reasonable as a matter of law,
rather than requiring proof of a defendant’s knowledge that its conduct violated
FCRA or, at a minimum, recklessness in its subjective form?
- Whether the Ninth Circuit improperly expanded § 1681m of FCRA by holding that
an “adverse action” has occurred and notice is required thereunder, even when a
consumer’s credit information has had either no impact or a favorable impact on the
rates and terms of the insurance that would otherwise have been offered or
provided?
The Fair Credit Reporting Act (“FCRA” or the “Act”) requires a user of consumer credit information to notify a consumer when the consumer has been treated adversely on the basis of his or her credit information. To enforce this requirement, Congress provided two tiers of civil remedies. Under § 1681o of the Act, if a consumer shows that a user’s failure to send an adverse-action notice was negligent, the consumer is entitled to recover actual damages. But under § 1681n of the Act, if the consumer makes a higher showing and proves that the user’s failure to send an adverse-action notice was “willful,” the consumer is entitled to recover statutory damages between $100 and $1,000 (in lieu of actual damages) and punitive damages.
A conflict exists between the Fourth, Fifth, Sixth, Seventh, and Eighth Circuits, and the Third and (now) Ninth Circuits over the mens rea required for a “willful” violation of FCRA. Separating itself from any other circuit to have decided the issue and compounding the circuit split, the Ninth Circuit held that a company may be deemed to have acted recklessly—and thereby willfully under the Act—if the company relied, even in good faith, upon an interpretation of the Act that a court later determines to be “unreasonable [],“ “implausible,” “creative,” or “untenable,” even if that interpretation was derived from a legal opinion that the company sought for the very purpose of ensuring compliance with the law.
Two questions are presented:
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In 06-84:
Whether the Ninth Circuit erred in holding that a defendant can be found liable for a “willful” violation of the Fair Credit Reporting Act (FCRA) upon a finding of “reckless disregard” for FCRA’s requirements, in conflict with the unanimous holdings of other circuits that “willfulness” requires actual knowledge that the defendant’s conduct violates FCRA.
- U.S. Court of Appeals - 9th Circuit
Opinion in GEICO Filed: January 25, 2006
- United States Supreme Court, Cert. Granted: September 26, 2006
Resources:
- Docket Sheet From the U.S. Supreme Court.
- Northwestern University - Medill School of Journalism: On the Docket
