Wright v. Experian Information Solutions, Inc. , 805 F.3d 1232 ( 2015 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS November 10, 2015
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
GARY A. WRIGHT,
Plaintiff - Appellant,
v. No. 14-1371
EXPERIAN INFORMATION
SOLUTIONS, INC.; TRANS UNION
LLC,
Defendants - Appellees.
_________________________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
(D.C. No. 1:12-CV-03268-CMA-CBS)
_________________________________
Peter R. Bornstein, Law Offices of Peter Bornstein, Greenwood Village, Colorado,
appearing for Plaintiff-Appellant.
Nathaniel P. Garrett (Meghan E. Sweeney, with him on the brief), Jones Day, San
Francisco, California, appearing for Appellee Experian Information Solutions, Inc.
Martin E. Thornthwaite (Paul L. Myers, with him on the brief), Strasburger & Price, LLP,
Frisco, Texas, appearing for Appellee Trans Union LLC.
_________________________________
Before BRISCOE, MATHESON, and BACHARACH, Circuit Judges.
_________________________________
MATHESON, Circuit Judge.
_________________________________
On May 27, 2009, the Internal Revenue Service (“IRS”) filed a notice of federal
tax lien (“NFTL”) with the Pitkin County Recorder (the “Recorder”) in Colorado listing
as name of taxpayer:
Attorneys Title Insurance Agency of
Wright Gary A Member
On May 8, 2009, Mr. Wright had sent a check to the IRS for the unpaid employment
taxes underlying the lien.
The Recorder listed the lien on its indexing website as against Gary A. Wright in
his personal capacity. Credit reporting agencies (“CRAs”) Experian Information
Services, Inc. (“Experian”) and Trans Union LLC (“Trans Union”) received this
information about the lien from their contractor, LexisNexis, and included it in their
reports of Mr. Wright’s credit history.
In 2011, Mr. Wright learned about the lien appearing in his credit reports. He sent
letters to the CRAs disputing the lien, asserting (1) the IRS had withdrawn the lien
because the taxes had subsequently been paid, and (2) the NFTL inaccurately stated the
lien was assessed against him when it should have been assessed only against Attorneys
Title Insurance Agency of Aspen (“ATA”). In response to these letters, the CRAs
checked the information provided by Mr. Wright with LexisNexis and listed the lien on
his credit report as released because it had been paid in full. The CRAs did not remove
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the lien entirely from Mr. Wright’s credit report because the IRS treated it as released
rather than withdrawn.
Mr. Wright brought suit in the district court under the Fair Credit Reporting Act
(“FCRA”) and Colorado Consumer Credit Reporting Act (“CCCRA”), claiming the
credit reports were inaccurate, the CRAs acted unreasonably in reporting the lien and
responding to his letters, and the foregoing caused him to suffer damages.
The district court granted summary judgment to the CRAs, concluding they used
reasonable procedures to prepare Mr. Wright’s credit report and to reinvestigate in
response to Mr. Wright’s letters.
Exercising jurisdiction under 28 U.S.C. § 1291, we affirm.
I. BACKGROUND
A. Factual History
1. The IRS Issued an NFTL Naming Mr. Wright and ATA, and Pitkin County
Recorded It
On April 9, 2007, the IRS assessed $726.83 for ATA’s nonpayment of its 2004
employment taxes. On May 27, 2009, the IRS filed the following NFTL with the
Recorder:
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Aplt. App. at 504.
ATA is a Colorado limited liability corporation that provides title insurance for
real estate transactions. Mr. Wright is the manager, attorney, and registered agent for
ATA.1
The NFTL indicates the lien was for nonpayment of Form 941 employment taxes.
Under “Residence,” the NFTL lists ATA’s business address. It also lists only ATA’s
taxpayer identification number. After receiving the NFTL, the Recorder indexed the lien
on its website as imposed against Mr. Wright in his individual capacity.
The IRS apparently informed Mr. Wright of the NFTL because on September 10,
2009, Mr. Wright sent a letter and an application to the IRS to withdraw the NFTL. In
this letter, Mr. Wright stated he paid the taxes in full by a check dated May 8, 2009,
before the NFTL was filed. On December 15, 2010, the IRS released the lien, but it did
not withdraw it. A withdrawal would have required the IRS to erase the NFTL, “as if the
withdrawn notice had not been filed,” and notify the CRAs of the erasure. 26 U.S.C.
§ 6323(j); see also 26 C.F.R. § 301.6323(j)-1. A release does not require either. See id.;
15 U.S.C. § 1681c(a)(3); 26 C.F.R. § 301.6325-1.2
1
During the litigation, the CRAs learned that Mr. Wright was not a “member” of
ATA, but they did not have this information, including from Mr. Wright, before the tax
lien was initially reported or during their reinvestigation when Mr. Wright disputed its
inclusion on his credit report.
2
By treating the lien as released rather than withdrawn after Mr. Wright paid the
taxes, the IRS appeared to consider the lien as properly imposed notwithstanding that Mr.
Continued . . .
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2. The CRAs Reported the Tax Lien, Mr. Wright Discovered the Report in 2011
and Disputed it in 2012, and the CRAs Reinvestigated and Revised the Report
On August, 26, 2009, LexisNexis, a contractor employed by CRAs Experian and
Trans Union, collected the tax lien information from the Recorder’s website and reported
it to the CRAs. The CRAs included the lien in their reports of Mr. Wright’s credit
history.
In 2011, when Mr. Wright tried to refinance his home mortgage, he first became
aware that his credit reports included reference to the tax lien. In July 2012, Mr. Wright
sent a letter to the CRAs disputing their reports of the lien. He asserted the lien had been
paid in full and the CRAs incorrectly attributed the lien to him in his personal capacity
and should have attributed it only to ATA. Mr. Wright included with this letter the
following documentation: a copy of the NFTL, his September 10, 2009 letter and
application to the IRS for withdrawal of the lien, and the IRS’s release of the lien.
Experian sent a description of Mr. Wright’s dispute to LexisNexis. LexisNexis
responded that the NFTL listed Mr. Wright as one of the taxpayers and updated the lien
to “satisfied/released” based on the documentation Mr. Wright provided. Aplee. Supp.
App. at 161. Trans Union sent the letter to a different contractor, Intelenet, which
determined Mr. Wright’s credit report should be updated to reflect a “Paid Federal Tax
Lien.” Aplt. App. at 323. Neither CRA removed the lien from its report, but they
changed their reports to show the lien had been released. They also sent Mr. Wright
Wright paid the taxes by check dated May 8, 2009 and the NFTL was dated May 15,
2009.
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summaries of the results of their investigations. The summaries stated that if Mr. Wright
disagreed with the results, he could add a statement to his credit report disputing its
accuracy or contact the furnisher of the information, apparently the IRS.
In September 2012, Mr. Wright sent a second letter to the CRAs requesting them
to remove the lien from his reports. He attached the same documentation as before.
Experian did not perform a second investigation. It determined, based on LexisNexis’s
earlier investigation, that the lien against Mr. Wright was accurately reported. Experian
sent a response to Mr. Wright suggesting he contact the furnisher of the information,
apparently the IRS.
Trans Union requested LexisNexis to review the documentation. When
LexisNexis reported the same result that Intelenet reached, Trans Union sent a summary
of the investigation to Mr. Wright.
B. Procedural History
In December 2012, Mr. Wright sued the CRAs in federal district court, alleging
negligent and willful violations of the FCRA and CCCRA. Mr. Wright alleged the NFTL
showed the IRS imposed the tax lien only against ATA. He asserted claims against the
CRAs under 15 U.S.C. § 1681e(b) and Colo. Rev. Stat. § 12-14.3-103.5 for failing to
follow reasonable procedures to assure maximum possible accuracy in preparing the
credit report that showed the lien was imposed against him. [Aplt. App. at 16.] He also
asserted a claim under 15 U.S.C. § 1681i(a)(1) and Colo. Rev. Stat. § 12-14.3-106 for
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failing to reasonably reinvestigate his dispute.3 The FCRA uses the term “dispute” to
describe a consumer’s challenge to the accuracy of the information CRAs include in a
credit report. See 15 U.S.C. § 1681i(a)(1). Mr. Wright also alleged he suffered economic
damages and emotional distress.
The district court granted summary judgment to the CRAs, finding it “was
reasonable to interpret the NFTL as extending to Plaintiff” and that the IRS “can issue [a
tax lien] against both a business entity and its member.” Aplt. App. at 1397-98. The
court held the CRAs’ initial reporting of the lien and their reinvestigation into the dispute
were both reasonable because “no additional procedure implemented by Defendants
would have allowed them to more accurately determine the scope of the NFTL. . . .”
Aplt. App. at 1397.
3
Mr. Wright’s complaint included FCRA claims under § 1681e(b) and
§ 1681i(a)(1) and their CCCRA counterparts, Colo. Rev. Stat. §§ 12-14.3-103.5 and 12-
14.3-106. In district court, the CRAs moved for summary judgment on all of these
claims. In response, Mr. Wright did not cite to either CCCRA provision, seeming to treat
the CCCRA claims as co-extensive with the FCRA claims. When it granted summary
judgment to the CRAs, the district court noted Mr. Wright’s CCCRA claim under Colo.
Rev. Stat. § 12-14.3-103.5, which is corollary to the § 1681e(b) reasonable procedures
claim, but stated in a footnote, “It does not appear that Plaintiff raises a parallel state-law
claim regarding Defendants’ reinvestigation, but such a claim would fail for the same
reasons that the FCRA reinvestigation claim fails.” Aplt. App. at 1393. On appeal,
neither Mr. Wright nor the CRAs cite the specific provisions of the CCCRA, but Mr.
Wright does state that the district court “dismissed the CCCRA [reinvestigation] claim,
noting that the elements under the state law claim paralleled those under the federal
statute.” Aplt. Br. at 24 n.2. Because the parties treat the FCRA claims and CCCRA
claims as essentially the same and regard the district court’s opinion as disposing of all of
Mr. Wright’s FCRA and CCCRA claims, we address Mr. Wright’s FCRA and CCCRA
claims here.
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II. DISCUSSION
Mr. Wright appeals, contending the district court should not have granted
summary judgment to the CRAs because he raised genuine issues of material fact about
the accuracy of the tax lien information on the reports and the reasonableness of the
CRAs’ procedures in reporting and reinvestigating this information. We affirm the
district court’s determination that Mr. Wright could not establish the CRAs employed
unreasonable procedures in reporting and reinvestigating the tax lien information.
A. Standard of Review
“We review a district court’s decision to grant summary judgment de novo,
applying the same standard as the district court.” Lundstrom v. Romero, 616 F.3d 1108,
1118 (10th Cir. 2010) (quotations omitted). Summary judgment is appropriate if “there is
no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “When applying this standard, we view the
evidence and draw reasonable inferences therefrom in the light most favorable to the
nonmoving party.” Doe v. City of Albuquerque, 667 F.3d 1111, 1122 (10th Cir. 2012)
(quotations omitted).
B. Reasonable Procedures under 15 U.S.C. § 1681e(b) and Colo. Rev. Stat. § 12-14.3-
103.5
Mr. Wright’s first claim is that the CRAs failed to use reasonable procedures in
reporting the tax lien information in the first instance. Based on the legal requirements of
the FCRA and CCCRA, we conclude the district court properly granted summary
judgment on this issue.
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1. Legal Background
The FCRA and the CCCRA require CRAs to employ reasonable procedures in
preparing credit reports.
When CRAs initially report information, 15 U.S.C. § 1681e(b) requires:
Whenever a consumer reporting agency prepares a consumer
report it shall follow reasonable procedures to assure
maximum possible accuracy of the information concerning
the individual about whom the report relates.
Colo. Rev. Stat. § 12-14.3-103.5 similarly requires:
Whenever a consumer reporting agency prepares a consumer
report, the agency shall follow reasonable procedures to
assure maximum possible accuracy of the information
concerning the consumer about whom the report relates . . . .
To prevail on a claim under these provisions, a plaintiff must “establish that:
(1) [the CRA] failed to follow reasonable procedures to assure the accuracy of its reports;
(2) the report in question was, in fact, inaccurate; (3) [the plaintiff] suffered injury; and
(4) [the CRA’s] failure caused his injury.” Eller v. Trans Union, LLC, 739 F.3d 467, 473
(10th Cir. 2013), cert. denied, 134 S. Ct. 2158 (2014); see also Cassara v. DAC Servs.,
Inc., 276 F.3d 1210, 1217 (10th Cir. 2002). We resolve this appeal based on Mr.
Wright’s inability to prove the first element of his claim.
The FCRA does not define “reasonable procedures,” and the Tenth Circuit has not
yet addressed this term. Other circuits applying § 1681e(b) have recognized the
“reasonableness of the procedures” is a fact-dependent inquiry, “and whether the agency
followed them will be jury questions in the overwhelming majority of cases.” Guimond
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v. Trans Union Credit Info. Co., 45 F.3d 1329, 1333 (9th Cir. 1995); see also Cahlin v.
Gen. Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991). But in cases
where CRAs clearly employ reasonable procedures, the issue may be decided on
summary judgment. See Crabill v. Trans Union, L.L.C., 259 F.3d 662, 664 (7th Cir.
2001) (stating summary judgment may be appropriate under § 1681e(b) when “the
reasonableness or unreasonableness of the procedures is beyond question”).
Courts have held CRAs must look beyond information furnished to them when it
is inconsistent with the CRAs’ own records, contains a facial inaccuracy, or comes from
an unreliable source. See Cortez v. Trans Union, LLC, 617 F.3d 688, 708-11 (3d Cir.
2010); Stewart v. Credit Bureau, Inc., 734 F.2d 47, 51-53 (D.C. Cir. 1984); Dennis v.
BEH–1, LLC, 520 F.3d 1066, 1069 (9th Cir. 2008); Cushman v. Trans Union Corp., 115
F.3d 220, 225 (3d Cir. 1997). CRAs are not required to research further when “the cost
of verifying the accuracy of the source” outweighs the “possible harm inaccurately
reported information may cause the consumer.” Henson v. CSC Credit Servs., 29 F.3d
280, 285 (7th Cir. 1994); see also Childress v. Experian Info. Sols., Inc., 790 F.3d 745,
747 (7th Cir. 2015).
2. The CRAs Used Reasonable Procedures
As noted above, the CRAs relied on LexisNexis to collect information from the
Recorder’s office. LexisNexis employs a collector to retrieve information from the
Recorder’s office and send it to the CRAs. LexisNexis certifies its collectors on
document recognition, certifies them on the process and procedures for collecting public
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record information, and audits them to assure understanding and compliance with
collection requirements. LexisNexis and the CRAs check the information they collect for
accuracy.
Mr. Wright contends summary judgment should not have been granted to the
CRAs because he raised a genuine issue of material fact as to whether the CRAs followed
reasonable procedures in reporting the tax lien under § 1681e(b). He asserts reasonable
procedures would have required the CRAs to employ individuals trained in American tax
law to examine the NFTL and determine whether it applied to him. He offers no
authority to support this position.
The information LexisNexis collected from the Pitkin County Recorder’s website
and sent to the CRAs was not inaccurate on its face, inconsistent with information the
CRAs already had on file, or obtained from a source that was known to be unreliable.
See Cortez, 617 F.3d at 713; Stewart, 734 F.2d at 51-53; Dennis, 520 F.3d at 1069;
Cushman, 115 F.3d at 224-26. The cases that have addressed reasonable procedures
show the CRAs acted reasonably here.
In Cortez, a jury determined a CRA failed to follow reasonable procedures in
erroneously reporting a consumer’s name that appeared on the Treasury Department’s
Office of Foreign Assets Control List (“OFAC List”). 617 F.3d at 705. The district court
denied the CRA’s motion for judgment as a matter of law. Id. The Third Circuit
affirmed, determining there was sufficient evidence for a jury to find the CRA’s
procedures were unreasonable. 617 F.3d at 710. The CRA’s records showed the
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consumer was born in 1944 and her middle name was “Jean.” Id. at 710. The actual
person on the OFAC List had the same first name as the consumer, but her middle name
was “Quintero,” her last name was spelled “Cortes,” and she was born in 1971. Id. The
court upheld the jury’s verdict because these differences supported a determination that
the CRA “did not exercise sufficient care” in carrying out its responsibilities under §
1681e(b). Id. Unlike the evidence in Cortez, Mr. Wright has provided no evidence to
show the tax lien information taken from the Recorder’s website was inconsistent with
the information the CRAs had on file about him.
In Dennis, the Ninth Circuit reversed summary judgment for the CRA because the
CRA reported an unlawful detainer judgment had been entered against the consumer.
520 F.3d at 1069. The court docket in the unlawful detainer action actually stated the
parties had stipulated to dismissal of the case and that the case was dismissed without
prejudice. Id. at 1068. Unlike the consumer in Dennis, Mr. Wright has failed to establish
any inaccuracy that was apparent from the face of the Recorder’s website. He has not
shown the CRAs knew or should have known that the tax lien information provided to
them was inaccurate. See also Stewart, 734 F.2d at 52 (holding a CRA was required to
initially verify furnished information because it was inconsistent with the consumer’s
credit history).
The pertinent case law also shows that the costs to the CRAs of employing
individuals trained in American tax law to examine every NFTL outweighs the potential
of harm to consumers like Mr. Wright. See Childress, 790 F.3d at 747; Henson, 29 F.3d
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at 285. In Childress, the Seventh Circuit upheld a district court’s summary judgment
determination that it was reasonable under § 1681e(b) for a CRA to report a bankruptcy
petition without later reporting the petition had been withdrawn. 790 F.3d at 747. The
court noted that bankruptcy courts are often unclear in reporting withdrawals and that it
would be unreasonable to require CRAs to independently verify whether a bankruptcy
petition had been dismissed or withdrawn because this would require “a live human
being, with at least a little legal training, to review every bankruptcy dismissal and
classify it as either voluntary or involuntary.” Id.
In Henson, the Seventh Circuit affirmed dismissal on the ground that it was
reasonable under § 1681e(b) for a CRA to report a state court judgment even though
the state court had erroneously noted a money judgment against the plaintiff on the
Judgment Docket. 29 F.3d at 285. The court held, “as a matter of law, a credit
reporting agency is not liable under the FCRA for reporting inaccurate information
obtained from a court’s Judgment Docket, absent prior notice from the consumer that
the information may be inaccurate.” Id. To hold otherwise would require CRAs “to go
beyond the face of numerous court records to determine whether they correctly report
the outcome of the underlying action” and “substantially increase the cost of their
services.” Id.
The plaintiff-consumers in Childress and Henson argued for procedures similar
to those Mr. Wright espouses—requiring CRAs to employ individuals trained in
American tax law to examine every NFTL filed in a county recorder’s office. No court
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has required a CRA to go this far to meet the reasonable procedures requirement of
§ 1681e(b).
The CRAs’ reliance on LexisNexis to report the tax lien on Mr. Wright’s credit
report was reasonable. We affirm the district court’s determination that the CRAs
employed reasonable procedures under § 1681e(b) and Colo. Rev. Stat. § 12-14.3-103.5
in reporting Mr. Wright’s tax lien.
C. Reasonable Reinvestigation under 15 U.S.C. § 1681i(a)(1)(A)
Mr. Wright’s second claim is that the CRAs failed to use reasonable procedures in
reinvestigating the tax lien information after he disputed his credit report. Based on the
FCRA’s requirements for reinvestigation, we conclude the district court properly granted
summary judgment on this issue.
1. Legal Background
15 U.S.C. § 1681i(a)(1)(A) requires the following from CRAs’ reinvestigation of
consumer disputes:
[I]f the completeness or accuracy of any item of information
contained in a consumer’s file at a consumer reporting agency
is disputed by the consumer and the consumer notifies the
agency directly, or indirectly through a reseller, of such
dispute, the agency shall, free of charge, conduct a reasonable
reinvestigation to determine whether the disputed information
is inaccurate and record the current status of the disputed
information, or delete the item from the file . . . before the end
of the 30-day period beginning on the date on which the
agency receives the notice of the dispute from the consumer
or reseller.
Colo. Rev. Stat. § 12-14.3-106 similarly requires:
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If the completeness or accuracy of any item of information
contained in the consumer's file is disputed by the consumer
and the consumer notifies the consumer reporting agency
directly of such dispute, the agency shall reinvestigate the
item free of charge and record the current status of the
disputed information on or before thirty business days after
the date the agency receives notice conveyed by the
consumer.
To prevail on a § 1681i(a) claim or its nearly identical CCCRA counterpart,
plaintiffs must prove essentially the same elements as those for a § 1681e(b) claim—
unreasonable procedures in reinvestigating a report, inaccuracy of the report, injury, and
causation—in addition to proving they informed the CRA about the inaccuracy. See
Cushman, 115 F.3d at 225; Cortez, 617 F.3d at 712-13. As with Mr. Wright’s first claim,
we resolve the reinvestigation appeal based on his inability to prove the first element of
the claim.
Although § 1681i(a) does not define the term “reasonable reinvestigation,” courts
have consistently held a reasonable reinvestigation requires more than “making only a
cursory investigation into the reliability of information that is reported to potential
creditors.” Cortez, 617 F.3d at 713. Thus, “[a] credit reporting agency that has been
notified of potentially inaccurate information in a consumer’s credit report is in a very
different position than one who has no such notice.” Henson, 29 F.3d at 286. “In short,
when one goes from the § 1681e(b) investigation to the § 1681i(a) re investigation, the
likelihood that the cost-benefit analysis will shift in favor of the consumer increases
markedly.” Cushman, 115 F.3d at 225.
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A reasonable reinvestigation, however, does not require CRAs to resolve legal
disputes about the validity of the underlying debts they report. See Carvalho v. Equifax
Info. Servs., LLC, 629 F.3d 876, 892 (9th Cir. 2010) (“We agree that reinvestigation
claims are not the proper vehicle for collaterally attacking the legal validity of consumer
debts.”); DeAndrade v. Trans Union LLC, 523 F.3d 61, 68 (1st Cir. 2008) (holding a
reasonable reinvestigation does not entail resolving “legal issue[s] that a credit
agency . . . is neither qualified nor obligated to resolve under the FCRA”).
2. The CRAs’ Reinvestigation Was Reasonable
After Mr. Wright disputed the tax lien information, Trans Union sent Mr. Wright’s
dispute letter and documentation, which included the NFTL and the IRS’s release of the
NFTL, to Intelenet. Experian sent a description of Mr. Wright’s dispute to LexisNexis.
LexisNexis and Intelenet considered the information sent to them and reported to the
CRAs that the lien was properly recorded against Mr. Wright and had been released but
not withdrawn. The CRAs updated their credit reports to reflect that the lien had been
released and provided summaries of their reinvestigations to Mr. Wright.
Mr. Wright contends that this reinvestigation was unreasonable. He argues
(a) entries on the NFTL showed the tax lien did not apply to him, which would have been
apparent to the CRAs if they had employed individuals trained in American tax law to
examine the NFTL; (b) the CRAs should have contacted the IRS to inquire whether the
tax lien applied to him; and (c) the CRAs should have determined whether the tax lien
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applied to him. All three arguments fail. We therefore affirm the district court’s
determination that the CRAs’ reinvestigation under § 1681i(a) was reasonable.
a. Entries on the Face of the NFTL
Mr. Wright argues that entries on the NFTL—ATA’s address, ATA’s taxpayer
identification number, and information that the lien was imposed for employment taxes
—show it applied only to ATA. He contends the CRAs would have reached this
conclusion had they employed individuals trained in American tax law to examine the
NFTL. He provides no support to show this is so. The CRAs point to tax expert
evidence that the NFTL could and did apply to Mr. Wright. The CRAs also provide
authority that the IRS may impose a tax lien against a limited liability company and its
single member in certain circumstances.4 Trans Union’s expert testified that Mr. Wright’s
being “named as a Taxpayer on the Wright Lien means that the IRS asserted a Federal
4
The CRAs cite authority stating the IRS may impose tax liens against a member
of a limited liability company if “the LLC and its sole member are a single taxpayer or
entity.” Med. Practice Sols., LLC v. Comm’r, 132 T.C. 125, 127 (2009); see also
Littriello v. United States, 484 F.3d 372, 378 (6th Cir. 2007) (noting that because
plaintiff’s companies were disregarded entities, “he is . . . liable individually for the
employment taxes due and owing from those businesses”). The CRAs also cite
provisions from the IRS Manual stating the IRS can hold the owner of an LLC liable for
employment taxes imposed prior to January 1, 2009. Aplt. App. at 420, 425 (IRS Manual
§§ 5.1.21.3.1, 5.1.21.5.1(2)). The taxes at issue here were for the 2004 tax year. Thus, if
the IRS understood Mr. Wright was the single member of ATA, and assuming all other
necessary conditions were satisfied, it would have been possible for the IRS to impose a
lien against Mr. Wright for ATA’s failure to pay taxes.
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Tax Lien interest against his personal assets for the underlying tax debt of Attorney’s
Title Insurance Agency of Aspen LLC.” Aplt. App. at 334.5
Even if the IRS did not intend to impose a tax lien against Mr. Wright, the NFTL
nonetheless reflects on its face that it did because the IRS placed his name on it. Mr.
Wright has not shown that hiring tax experts at the CRAs to examine NFTLs on their face
would have produced a different result here. Indeed, the only tax expert evidence in the
record supports the CRAs.
b. Contact the IRS
Mr. Wright next contends a reasonable reinvestigation of his dispute would require
the CRAs to contact the IRS. The only authority Mr. Wright cites is a district court case,
later vacated, about a consumer who provided a release to the CRAs to contact the IRS
after the consumer disputed the credit report. Soghomonian v. United States, 278 F.
Supp. 2d 1151, 1158 (E.D. Cal. 2003), vacated in 2005 WL 1972594 (E.D. Cal. June 20,
2005). This case is inapposite because Mr. Wright provided no release to the CRAs.
Further, federal law appears to prohibit the IRS from providing the CRAs with Mr.
Wright’s tax information. See 26 U.S.C. § 6103; Church of Scientology v. IRS, 484 U.S.
9, 16 (1987) (holding the IRS could not release confidential information, even where
5
In his Reply Brief, Mr. Wright states that he is not a member of ATA and that the
NFTL is inaccurate in stating he is. The implication is that the NFTL could not apply to
him and that the CRAs’ authority stating the IRS can impose liens against limited liability
companies and their single-member owners is inapposite. Because Mr. Wright did not
state in his letters to the CRAs that he was not a member of ATA, he cannot contend the
CRAs needed to investigate information they did not have.
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identifying taxpayer information was redacted, because “[o]ne of the major purposes in
revising § 6103 was to tighten the restrictions on the use of return information by entities
other than [the IRS]”).6
6
In his opening brief, Mr. Wright cites to § 1681i(a)(5), which requires:
If, after any reinvestigation . . . of any information disputed
by a consumer, an item of the information is found to be
inaccurate or incomplete or cannot be verified, the consumer
reporting agency shall—
(i) promptly delete that item of information from the
file of the consumer, or modify that item of
information, as appropriate, based on the results of the
reinvestigation; and
(ii) promptly notify the furnisher of that information
that the information has been modified or deleted from
the file of the consumer.
We decline to decide whether the IRS’s apparent inability to provide the CRAs
information requires the CRAs to delete the tax lien information under § 1681i(a)(5) for
three reasons. First, Mr. Wright failed to cite to § 1681i(a)(5) or raise this argument in
district court. See Ecclesiastes 9:10-11-12, Inc. v. LMC Holding Co., 497 F.3d 1135,
1141 (10th Cir. 2007) (“An issue is preserved for appeal if a party alerts the district court
to the issue and seeks a ruling.”).
Second, the district court did not address this argument, so we would potentially
be reversing on an alternative ground not raised or ruled on in district court. The rule that
an issue not raised to the district court is forfeited “is particularly apt when dealing with
an appeal from a grant of summary judgment, because the material facts are not in
dispute and the trial judge considers only opposing legal theories.” Tele–Commc’ns, Inc.
v. Comm’r of Internal Revenue, 104 F.3d 1229, 1232 (10th Cir. 1997). If this court were
to consider new arguments on appeal to reverse the district court, we would “undermine[
] important judicial values. In order to preserve the integrity of the appellate structure,
we should not be considered a ‘second-shot’ forum, a forum where secondary, back-up
theories may be mounted for the first time.” Id. at 1233.
Third, although Mr. Wright cites to § 1681i(a)(5) in his opening brief and quotes
its language, neither he nor the CRAs develop any argument based on this statute in their
Continued . . .
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c. Validity of the NFTL
Mr. Wright argues the CRAs should have determined the validity of the NFTL.
The FCRA and relevant case law do not impose such a duty on the CRAs. See Carvalho,
629 F.3d at 892; DeAndrade, 523 F.3d at 68.
The FCRA expects consumers to dispute the validity of a debt with the furnisher of
the information or append a note to their credit report to show the claim is disputed. See
15 U.S.C. §§ 1681i(a)(6)(B)(iii), (iv);(b)-(c) (stating that, upon reinvestigation, CRAs
must provide consumers two notices, one stating that a consumer may request any
reasonably available contact information from the furnisher of the information and the
other stating “that the consumer has the right to add a statement to the consumer’s file
disputing the accuracy or completeness of the information”); Carvalho, 629 F.3d at 892
(construing 15 U.S.C. § 1681i and determining “a consumer who disputes the legal
validity of an obligation should do so directly at the furnisher level”). The CRAs
informed Mr. Wright of these two avenues of relief, and Mr. Wright pursued neither.
In Carvalho, a consumer thought her insurer should have paid her medical bill.
629 F.3d at 882. When the medical bill appeared on her credit report, she requested it be
removed. Id. The CRAs reinvestigated the bill, found it was still unpaid, and refused to
remove it. Id. at 882-83. The Ninth Circuit upheld a district court’s summary judgment
determination that a reasonable reinvestigation would not have discovered the purported
briefing. Without a developed argument from Mr. Wright or a response from the CRAs,
whose failure to respond is excusable given Mr. Wright’s undeveloped argument, we
decline to exercise our discretion to reach this issue.
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inaccuracy. Id. at 892. The court said, “Because CRAs are ill equipped to adjudicate
contract disputes, courts have been loath to allow consumers to mount collateral attacks
on the legal validity of their debts in the guise of FCRA reinvestigation claims.” Id.at
891.
In DeAndrade, the plaintiff-consumer had financed the purchase of windows for
his home. 523 F.3d at 63. He later discovered the bank had mortgaged his home by, he
claimed, forging his and his wife’s signatures. Id. He refused to make payments on the
mortgage. Id. at 64. The bank notified the CRAs of the unpaid mortgage, which the
CRAs reported on the consumer’s credit report. Id. The consumer then requested a
reinvestigation. Id. The First Circuit, construing 15 U.S.C. § 1681i, upheld the district
court’s determination that the reinvestigation was reasonable because the bank produced
documentation of the mortgage and the question of whether the consumer “was entitled
to stop making those payments is a question for a court to resolve . . . not a job imposed
upon consumer reporting agencies by the FCRA.” Id. at 68.
Like the consumers in Carvalho and DeAndrade, Mr. Wright’s argument would
require the CRAs to do more than a reasonable reinvestigation requires. As part of their
reinvestigation, the CRAs examined the NFTL and determined it applied to Mr. Wright
because his name was listed. Mr. Wright insists the CRAs must go further and determine
the validity of the tax lien. As the foregoing cases demonstrate, that question is a matter
he should take up with the IRS.
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We affirm the district court’s determination that the CRAs’ reinvestigation of Mr.
Wright’s dispute was reasonable under § 1681i(a) and Colo. Rev. Stat. § 12-14.3-106.
III. CONCLUSION
For the foregoing reasons, we affirm.
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Gary A. Wright v. Experian Information Services, Inc. and Trans Union LLC,
14-1371
BACHARACH, J., concurring in part and dissenting in part.
I agree with the majority’s well-reasoned discussion in Parts I and II(A)
and (B), but I respectfully disagree with Part II(C). In my view, we should reverse
the award of summary judgment on the reinvestigation claim.
As the majority explains, Trans Union and Experian had a duty to conduct a
reasonable reinvestigation after learning of Mr. Wright’s dispute. The general rule
is that the reasonableness of the reinvestigation entails an issue of fact, not of
law. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005)
(stating that the reasonableness of an investigation under the Fair Credit
Reporting Act is a factual question normally reserved for trial); Seamans v.
Temple Univ., 744 F.3d 853, 864-65 (3d Cir. 2014) (stating that the
reasonableness of a consumer reporting agency’s procedure is normally a question
for trial). In my view, we should apply the general rule on the sufficiency of the
reinvestigation.
When responding to the summary judgment motion, Mr. Wright presented
evidence that he had supplied the notice of a tax lien to both Trans Union and
Experian. In light of that evidence, a fact finder could legitimately infer that
Trans Union and Experian should have consulted the actual notice rather than rely
on second-hand accounts. If the agencies had consulted the actual notice, they
would have seen this document (without the highlighting):
-2-
On its face, the notice is ambiguous. The fact finder could interpret the
notice as a lien against Mr. Wright’s agency (a limited liability company), against
Mr. Wright in his personal capacity, or against both the limited liability company
and Mr. Wright. The name of Mr. Wright’s agency is “Attorneys Title Insurance
Agency of Aspen.” The word “Aspen,” however, does not appear in the notice.
And Mr. Wright is listed only with the designation “member.” Under state law,
members of a limited liability company (like Attorneys Title Insurance Agency of
Aspen) are not subject to personal liability for the company’s debts. See Colo.
Rev. Stat. Ann. § 7-80-705 (West 2015) (“Members . . . of limited liability
companies are not liable under a judgment, decree, or order of a court, or in any
other manner, for a debt, obligation, or liability of the limited liability
company.”).
Trans Union and Experian point out that they had few opportunities to
obtain clarification. For example, Trans Union and Experian state that they could
not obtain clarification from the creditor (the Internal Revenue Service).
Appellees’ Answering Br. at 40, 44. If that is true, Trans Union and Experian
might have turned to Mr. and Mrs. Wright, who had insisted that the lien involved
only the insurance agency. But Trans Union and Experian could reasonably reject
the account of Mr. and Mrs. Wright because of their self-interest. Thus, Trans
Union and Experian were left with only the ambiguous notice of a tax lien.
-3-
Trans Union and Experian argue that it would be “unnecessary and costly”
to require consumer reporting agencies to review the actual notice of a tax lien.
Id. at 18. Here, however, Mr. and Mrs. Wright sent the actual notice to both Trans
Union and Experian. And both entities represent that they did review the actual
notice. Id. at 12-13, 19, 36, 38. With that representation, the fact finder could
justifiably infer that Trans Union and Experian should have recognized the
ambiguity in the notice, regardless of what others said about the contents. See,
e.g., id. at 39, 43-44 (arguments by Trans Union and Experian that they could
assess the dispute based on the notice of a tax lien).
The resulting question is whether a fact finder could fault Trans Union and
Experian for refusing to delete reference to the personal lien after finding
themselves unable to verify who the lien was against. To answer this question, we
must turn to federal law, 15 U.S.C. § 1681i(a)(5)(A), which requires deletion
from a personal credit report when a personal lien proves impossible to verify:
If, after any reinvestigation . . . of any information disputed by a
consumer, an item of the information is found to be . . . incomplete
or cannot be verified, the consumer reporting agency shall—
(i) promptly delete that item of information from the file of the
consumer, or modify that item of information, as appropriate,
based on the results of the reinvestigation . . . .
15 U.S.C. § 1681i(a)(5)(A) (2012).
The majority states that Mr. Wright waived reliance on § 1681i(a)(5) by
failing to cite this provision in district court. For the sake of argument, let’s
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assume that the majority is correct about waiver. But “[w]aiver . . . binds only the
party, not the court.” Planned Parenthood of Kan. and Mid-Mo. v. Moser, 747
F.3d 814, 837 (10th Cir. 2014). Even if Mr. Wright waived reliance on
§ 1681i(a)(5), we would retain discretion to address the issue. Id. In my view,
there are two strong reasons for us to consider § 1681i(a)(5) even if Mr. Wright
had waived reliance on this provision in district court.
First, Trans Union and Experian “waived the waiver” by failing to argue on
appeal that Mr. Wright had failed to preserve reliance on § 1681i(a)(5). See
United States v. Heckenliable, 446 F.3d 1048, 1049 n.3 (10th Cir. 2006)
(explaining that the government had “waived the waiver” by failing to argue that
the defendant had forfeited his appeal point).
Second, Mr. Wright argued in district court that Trans Union and Experian
had failed to verify the existence of a personal lien. Appellant’s App., vol. 2, at
663. To evaluate this argument, we must decide whether the law required the
defendants to verify the existence of a personal lien. See U.S. Nat’l Bank of Or. v.
Indep. Ins. Agents of Am., Inc., 508 U.S. 439, 447 (1993) (“[A] court may
consider an issue ‘antecedent to . . . and ultimately dispositive of’ the dispute
before it, even an issue the parties fail to identify and brief.” (quoting Arcadia v.
Ohio Power Co., 498 U.S. 73, 77 (1990))). For that decision, we must consider
the applicable law, which appears in § 1681i(a)(5). Thus, we must consider
§ 1681i(a)(5) if we are to assess whether the reinvestigation was reasonable as a
-5-
matter of law. See Kamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 99 (1991)
(holding that a party did not waive reliance on state law because “[w]hen an issue
or claim is properly before the court, the court is not limited to the particular
legal theories advanced by the parties, but rather retains the independent power to
identify and apply the proper construction of governing law”).
For both reasons, I would assess the defendants’ argument on
reinvestigation against the backdrop of the pertinent law: 15 U.S.C. § 1681i(a)(5).
Under this law, a fact finder could reasonably conclude that Trans Union
and Experian were unable to verify from the notice that it included a lien against
Mr. Wright. With this conclusion, the fact finder could reasonably determine that
the reinvestigation should have led Trans Union and Experian to delete the
personal lien from the credit reports. See Pinner v. Schmidt, 805 F.2d 1258, 1262
(5th Cir. 1986) (stating that the consumer reporting agency should have deleted
the reported information under § 1681i(a) if verification would have been possible
only through an individual known to have past disagreements with the plaintiff). 1
Notwithstanding the ambiguity in the notice, Experian said that LexisNexis
had listed Mr. Wright as a “responsible taxpayer.” Appellees’ Answering Br. at
12. But a fact finder could reasonably question Experian’s reliance on
1
For reasons ably explained by the majority, a consumer reporting agency
ordinarily will not need to verify a lien with the Internal Revenue Service. Here,
however, the existence of a personal lien was based on guesswork about how to
interpret the IRS notice.
-6-
LexisNexis’ response. In responding to Experian’s inquiry, LexisNexis identified
where the county clerk had filed the lien and the lien release. Appellees’ Suppl.
App. at 161. But LexisNexis did not say whether it had reviewed the actual
notice.
If LexisNexis, Experian, or Trans Union had looked at the actual notice
(which Mr. Wright had sent), they would have seen that it was ambiguous. The
district court recognized the ambiguity but mistakenly concluded that the
ambiguity supported summary judgment for Trans Union and Experian.
Appellant’s App., vol. 4, at 1399-400. In doing so, the court reasoned that Trans
-7-
Union and Experian could have justifiably inferred that the notice of tax lien
applied to Mr. Wright in his personal capacity. Id. In drawing this inference, the
court misunderstood the test to be applied to Trans Union and Experian’s
reinvestigation. If the notice remained ambiguous after the reinvestigations, as the
district court concluded, the existence of a personal lien would have been
impossible to verify. Thus, under federal law, a fact finder could rationally
conclude that Trans Union and Experian should have deleted the entry as a
personal debt of Mr. Wright. See 15 U.S.C. § 1681i(a)(5) (2012).
As a result, I respectfully dissent from the majority’s conclusion in Part
II(C).
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