Shimon v. Equifax Information Services LLC ( 2021 )

20-689
Shimon v. Equifax Information Services LLC
In the
United States Court of Appeals
For the Second Circuit
______________
August Term, 2020
(Submitted: January, 20, 2021 Decided: April 9, 2021)
Docket No. 20-689
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JACOB Y. SHIMON,
Plaintiff-Appellant,
–v.–
EQUIFAX INFORMATION SERVICES LLC,
Defendant-Appellee.
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B e f o r e:
KEARSE, LEVAL, and CARNEY, Circuit Judges.
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Asset Acceptance, LLC (“Asset Acceptance”), brought a debt collection action
against Plaintiff-Appellant Jacob Shimon in New York State court. In March 2013, the
Clerk of Kings County Civil Court entered a $21,692.09 default judgment against
Shimon in Asset Acceptance’s favor. On the strength of the default, Asset Acceptance
began garnishing Shimon’s wages. Shimon then appeared in the action and, in
December 2013, he and Asset Acceptance signed a stipulation of settlement. In 2014,
Shimon learned that Defendant-Appellee Equifax Information Services LLC
(“Equifax”), a credit reporting service, was including the 2013 default judgment on his
credit report. Shimon objected, and Equifax updated its report to describe the default
judgment as “satisfied.” Shimon corresponded with Equifax throughout 2016, disputing
the accuracy of this description and asking for details regarding the source of Equifax’s
information.
Shimon then sued Equifax, alleging that, in reporting the judgment as “satisfied”
and in its subsequent dealings with Shimon, Equifax willfully and negligently violated
the source-disclosure, accurate reporting, and reinvestigation provisions of the Fair
Credit Reporting Act (“FCRA”). 15 U.S.C. §§ 1681g(a)(2), 1681e(b), 1681i(a)(6)-(7).
Shimon now appeals from the district court’s dispositions of these claims in Equifax’s
favor by dismissal (as to one) and grant of summary judgment (as to the others). We
conclude that the district court correctly determined that Equifax’s credit report was
accurate; that Shimon could not establish damages arising from Equifax’s allegedly
negligent conduct; and that Equifax need not prove it actually interpreted the FCRA in
line with its claimed reasonable interpretation to rely on the reasonable-interpretation
defense established by Safeco Insurance Company of America v. Burr, 551 U.S. 47, 57 (2007).
AFFIRMED.
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Daniel Zemel, Zemel Law LLC, Clifton, NJ, for Appellant.
John Christopher Toro, Gabriel Krimm, Zachary Andrew
McEntyre, Katherine M. Stein, King & Spalding,
Atlanta, GA, Washington, D.C., and Austin, TX, for
Appellee.
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CARNEY, Circuit Judge:
In this case, we apply the source-disclosure, accurate reporting, and
reinvestigation provisions of the Fair Credit Reporting Act (“FCRA”), 15 U.S.C.
§§ 1681g(a)(2), 1681e(b), 1681i(a)(6)-(7), to a credit reporting service’s actions. We
conclude that the district court correctly determined that the service’s report that a
judgment was “satisfied” was accurate; that the consumer did not establish damages
arising from the service’s allegedly negligent conduct; and that the service need not
prove that it actually interpreted the FCRA in line with its claimed reasonable
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interpretation to avail itself of the reasonable-interpretation defense established by
Safeco Insurance Company of America v. Burr, 551 U.S. 47, 57 (2007). Accordingly, we
AFFIRM the judgment of the district court.
BACKGROUND
Jacob Shimon was named as defendant in a 2012 New York state court action in
which Asset Acceptance, LLC, sought to collect on a debt incurred with a credit card
issued to Shimon. In March 2013, the Clerk of Kings County Civil Court entered a
default judgment on the action against Shimon in the amount of $21,692.09 (the
“Judgment”). On the strength of the Judgment, Asset Acceptance began to garnish
Shimon’s wages.
In October 2013, Shimon appeared in the action, moving for vacatur of the
Judgment and asserting a counterclaim against Asset Acceptance. In December,
however, before the state court acted on the vacatur motion, Shimon and Asset
Acceptance jointly filed a stipulation that “resolved” the action and “discontinued” all
claims “with prejudice” (the “Stipulation”). App’x 166. Under the Stipulation, Asset
Acceptance retained whatever sums it had collected by its garnishment of Shimon’s
wages and Shimon was precluded from further pursuing his counterclaim. The court
“so-ordered” the Stipulation by a notation on the document, and, on the court’s docket,
the Clerk of Court entered the notation, “Settled.” App’x 75-76.
In 2014, Equifax’s credit report regarding Shimon showed that a judgment had
been entered against him in a court proceeding. (The full text is set out in the margin.) 1
By letter dated May 1, 2014, Shimon informed Equifax that the report was inaccurate
1The entire entry read: “03/2013, JUDGEMENT, 404VC00036 , $17953, DEF - SHIMON JACOB
Y, CV02310712KI ASSET ACCEPTANCE LLC.” App’x 215.
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because (as he phrased it) the judgment had been “dismissed after Trial.” App’x 217. In
the same letter, he also requested that this part of the report be “removed” and that
Equifax “correct the information.” Id.Equifax’s records reflect that it received Shimon’s May 1 request on May 12, and
that, within days, it amended its notation regarding the Judgment to read “JUDGMENT
SATISFIED.” App’x 81.
The record is not clear about whether Shimon contacted Equifax again in 2014 or
in 2015 to further dispute aspects of its credit report about him. The record is clear,
however, that over the course of 2016, Shimon contacted Equifax repeatedly by phone
and letter, disputing the accuracy of the “JUDGMENT SATISFIED” statement and
asking Equifax how it had verified the statement. Equifax responded to Shimon’s
inquiries, advising him that the disputed entry was verified by the Kings County Civil
Court and asserting that it was accurate. During this time, it continued to report that the
Judgment was “satisfied.”
In May 2018, purporting to sue on behalf of a class, Shimon sued Equifax in the
United States District Court for the Eastern District of New York. He alleged that
Equifax willfully and/or negligently violated various FCRA provisions by persisting in
publishing this report and failing to follow certain of the FCRA’s procedural notice
requirements. The district court (Cogan, J.) dismissed one of his FCRA claims under
Fed. R. Civ. P. 12(b)(6), denied leave to amend that claim, and granted summary
judgment to Equifax on Shimon’s remaining FCRA claims. Shimon timely appealed.
DISCUSSION
I. Standard of Review
We review de novo the dismissal of a complaint for failure to state a claim.
Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). We also review de novo a
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grant of summary judgment, drawing all reasonable inferences in favor of the non-
moving party. Morales v. Quintel Ent., Inc., 249 F.3d 115, 121 (2d Cir. 2001). Although we
generally review denials of leave to amend for abuse of discretion, in cases in which the
denial is based on futility, we review de novo that legal conclusion. Starr v. Sony BMG
Music Ent., 592 F.3d 314, 321 (2d Cir. 2010).
II. Shimon’s FCRA Claims
The FCRA “was enacted in 1970 amidst concerns about the accuracy of
information disseminated by credit reporting agencies.” Galper v. JP Morgan Chase Bank,
N.A., 802 F.3d 437, 444 (2d Cir. 2015). If a reporting agency “willfully fails to comply
with any requirement” of the FCRA, it may be held liable for actual damages “of not
less than $100 and not more than $1000” per consumer, as well as potentially for
punitive damages. 15 U.S.C. § 1681n. If a reporting agency negligently violates a
provision of the FCRA, it may be held liable for actual damages arising from the
violation. Id. § 1681o.
A. Reporting Claims
Shimon maintains that Equifax’s description of the Asset Acceptance Judgment
as “satisfied” was inaccurate and rendered Equifax liable to him under § 1681e(b). As a
district court within the Circuit recently observed, “the overwhelming weight of
authority holds that a credit report is inaccurate either when it is patently incorrect or
when it is misleading in such a way and to such an extent that it can be expected to
have an adverse effect.” Khan v. Equifax Information Services, LLC, No. 18-cv-6367 (MKB),
2019 WL 2492762, at *3 (E.D.N.Y. June 14, 2019) (collecting cases). 2 See Dalton v. Capital
Associated Industries, Inc., 257 F.3d 409, 415 (4th Cir. 2001) (“A report is inaccurate when
2Unless otherwise indicated, this Opinion omits internal quotation marks, alterations, citations,
and footnotes in text quoted from reported decisions.
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it is patently incorrect or when it is misleading in such a way and to such an extent that
it can be expected to have an adverse effect.”). In its ruling on Equifax’s summary
judgment motion, the district court found that the description of the judgment as
“satisfied” was accurate. We agree.
Shimon acknowledges that the New York court reported that the case against
him was “settled.” Appellant’s Br. 3. He also does not dispute that Equifax was
following a standard practice in the credit reporting industry by reporting a settled
debt-collection judgment as “satisfied.” Shimon nonetheless argues that, when the
Kings Country Civil Court “so-ordered” the Stipulation, it also implicitly vacated the
judgment. He accordingly maintains that Equifax was obligated to report the judgment
as “vacated.” But the state court docket did not reflect a vacatur, so this argument
misses the mark.
Shimon contends further that, by denoting the judgment “satisfied,” Equifax
misled its readers: it thereby “impl[ied] that a judgment remains.” Appellant’s Br. 37.
Describing a judgment as “satisfied,” however, does not imply that it “remains”—if
anything, it implies the opposite. See Satisfy, Merriam-Webster’s Collegiate Dictionary
(11th ed. 2003), 1b: “to discharge, meet a financial obligation to.” Shimon advances no
persuasive argument that Equifax’s description of the Asset Acceptance Judgment as
“satisfied” was “patently incorrect” or “misleading” in any way. Khan, 2019 WL
2492762, at *3.
The accuracy of Shimon’s credit report is fatal to his § 1681e(b) claims that
Equifax engaged in willful or negligently inaccurate reporting. Because we agree with
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the district court that Shimon’s credit report was accurate in this respect, we affirm its
judgment dismissing those claims. 3
B. Source-Disclosure and Reinvestigation Negligence Claims
We also affirm the district court’s judgment with respect to Shimon’s claims that
Equifax negligently violated the FCRA’s source-disclosure and reinvestigation
provisions. See 15 U.S.C. § 1681g(a) (providing that “[e]very consumer reporting agency
shall, upon request . . . clearly and accurately disclose to the consumer . . . [t]he sources
of the information [in the consumer’s file]”); id. § 1681i(a)(2), (6)-(7) (requiring consumer
reporting agencies to “provide notification of the dispute to any person who provided
any item of information in dispute,” to “promptly provide to the person who provided
the information in dispute all relevant information regarding the dispute,” and, “after
receiving a request from the consumer,” to provide to the consumer within 15 days of
the consumer’s request “a description of the procedure used to determine the accuracy
and completeness of the information . . . , including the business name and address of
any furnisher of information contacted in connection with such information and the
telephone number of such furnisher”).
A successful claim for a negligent violation of an FCRA provision entitles the
consumer plaintiff to recover “actual damages sustained . . . as a result of the failure.”
3In his opening brief, Shimon also argues that the district wrongly disposed of his claim under
15 U.S.C. § 1681i(a)(1) based on the accuracy of his credit report. Section 1681i(a)(1) concerns a
consumer reporting agency’s general obligation to reinvestigate information a consumer
disputes as inaccurate or incomplete in his or her credit report. Although our review of the
record suggests that Shimon did not bring a claim under this provision, Shimon’s argument on
appeal would nonetheless fail. As with the § 1681e(b) claims, Shimon argues only that the
district court wrongly determined that the credit report was accurate and dismissed his
§ 1681i(a)(1) claim on that basis. Because the district court correctly concluded that the credit
report was accurate, Shimon’s argument on appeal with respect to his § 1681i(a)(1) claim would
fail even if the claim were properly before this Court.
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Id. § 1681o(a). A plaintiff “bears the burden of proving actual damages sustained as a
result of [the reporting agency’s] activities,” and, in the absence of such proof, the
plaintiff’s FCRA claim cannot survive summary judgment. Casella v. Equifax Credit Info.
Servs., 56 F.3d 469, 473-74 (2d Cir. 1995). Shimon’s negligence claims under § 1681g and
§ 1681i thus require that he put forth evidence that he suffered actual damages when
Equifax failed to disclose and to treat LexisNexis as the “source” and “furnisher” of the
information from the Kings County Civil Court that Equifax ultimately relied on.
The district court granted summary judgment to Equifax on Shimon’s § 1681g
source-disclosure negligence claim based upon its conclusion that, even if Equifax
should have disclosed LexisNexis as a “source,” Shimon presented no evidence that he
suffered any actual damages resulting from the failure. On appeal, Equifax adopts the
district court’s “no-actual-damages” approach to argue for affirming the judgment with
regard to Shimon’s § 1681i reinvestigation negligence claim as well as with regard to the
source-disclosure claim.
We agree that Shimon has failed to present any evidentiary basis for concluding
that he suffered actual damages as a result of Equifax not disclosing or treating
LexisNexis as a “source” or “furnisher” of information to it about the Judgment. Since
the characterization provided by Equifax in its credit report was accurate, for Shimon to
have learned that LexisNexis was the intermediary source of Equifax’s information
from the court would not have enabled Shimon to avoid the emotional damage he
claims to have suffered as a result of Equifax’s report that the debt was “satisfied.” Nor
would he have avoided any of the costs he claims to have incurred in disputing the
credit report. Shimon points to no damages to him arising from Equifax’s failure to treat
LexisNexis as a “source” or “furnisher” of the information and notify it of Shimon’s
dispute. Accordingly, Equifax is entitled to judgment with respect Shimon’s § 1681g
and § 1681i negligence claims.
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C. Source-Disclosure and Reinvestigation Willfulness Claims
Shimon also brought claims against Equifax for willful violations of § 1681g and
§ 1681i. In Safeco Insurance Company of America v. Burr, the Supreme Court held that a
credit reporting agency may “willfully” violate the FCRA by acting in “reckless
disregard of statutory duty.” 551 U.S. 47, 57 (2007) (“Safeco”). The Court explained that a
company does not act in “reckless disregard” of the FCRA, however, if its “reading of
the statute . . . was not objectively unreasonable.” Id. at 69.
The district court dismissed Shimon’s § 1681g willfulness claim after concluding
that Equifax reasonably interpreted “source” not to include a contractor-intermediary
doing what LexisNexis did in this case. In responding to Shimon’s arguments on
appeal, Equifax argues that its position that LexisNexis did not constitute a “furnisher
of information” under § 1681i was reasonable as well, despite the district court’s
determination otherwise (and despite its award to Equifax of summary judgment on the
claim on a different basis). See 15 U.S.C. § 1681i(a)(6). Shimon, for his part, challenges
both the district court’s determination with respect to § 1681g and Equifax’s position on
appeal with respect to § 1681i. In addition to contending that these interpretations are
objectively unreasonable, Shimon argues that, to prevail on the Safeco defense, Equifax
must demonstrate at summary judgment that it actually adopted these legal positions
that it points to now as objectively reasonable.
The FCRA’s reinvestigation provision requires that, under certain circumstances,
consumer reporting agencies provide information about “any furnisher of information
contacted in connection with such information,” id. § 1681i(a)(6), and also that
consumer reporting agencies provide notice of consumer disputes to “furnisher[s] of
information.” It defines “furnisher” to include “any person who provided any item of
information in dispute.” Id. § 1681i(a)(2). Equifax argues that it is reasonable for an
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agency to construe this provision to exclude its own contractor charged with gathering
public records on the agency’s behalf.
The FCRA’s source-disclosure rule requires consumer reporting agencies to
disclose to the consumer, on request, the “sources of the information” in the consumer’s
file. Id. § 1681g(a)(2). Equifax argues that it is a reasonable construction of the statute to
understand “sources of information” as referring to the original source of the reported
information, as opposed to the identity of any contractors that gathered the information
on an agency’s behalf.
We agree with Equifax that these are reasonable interpretations of both of these
provisions. It is an objectively reasonable reading of these provisions to exclude from
“furnisher” and “sources” a contractor such as LexisNexis working on the reporting
agency’s behalf when the information in question is contained in a particular set of files,
the consumer reporting agency identified the court and its files as the “furnisher” or
“source” of the information, and the function of the undisclosed contractor was to check
those files to determine the accuracy of the report.
For Shimon, this conclusion does not exonerate Equifax. He parries that, even if,
invoking Safeco, Equifax can point to reasonable interpretations of these statutes that
support its conduct, the agency is entitled to the defense only if it can establish that it
actually interpreted § 1681g and § 1681i in these objectively reasonable ways before
deciding not to disclose. It is on this basis, further, that Shimon moved for leave to
amend his complaint for a third time, seeking to add allegations that Equifax had not
actually adopted an interpretation of § 1681g(a)(2) when it declined to disclose
LexisNexis as a “source” of the disputed information.
Like the other Circuit Courts to have addressed this question, we reject the
proposition that a defendant must show that it actually and contemporaneously
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adopted a particular statutory interpretation to avail itself of the Safeco defense. The
Safeco Court emphasized that whether a company committed a willful violation of the
FCRA must be an objective inquiry and dismissed arguments that “evidence of
subjective bad faith” could create liability in the face of objectively reasonable
interpretations. Safeco, 551 U.S. at 70 n.20. In the Court’s view, “Congress could not have
intended such a result for those who followed an interpretation that could reasonably
have found support in the courts, whatever their subjective intent may have been.” Id.Shimon’s proposed reading of Safeco would introduce just the sort of subjective
inquiry whose relevance the Safeco Court rejected. Accordingly, we conclude that
Equifax did not need to prove that it actually adopted the interpretations that we
conclude were “not objectively unreasonable” to avoid liability under § 1681g and
1681i. Id. at 69; see Long v. Tommy Hilfiger U.S.A., Inc., 671 F.3d 371, 377 (3d Cir. 2012);
Levine v. World Financial Network National Bank, 554 F.3d 1314, 1318-19 (11th Cir. 2009);
see also Van Straaten v. Shell Oil Products Co. LLC, 678 F.3d 486, 491 (7th Cir. 2012)
(describing Safeco as “treat[ing] willfulness as a question of law” that “concerns objective
reasonableness, not anyone’s state of mind”). We therefore affirm the district court’s
dismissal of Shimon’s § 1681g willfulness claim; affirm the district court’s judgment for
Equifax on Shimon’s § 1681i willfulness claim; and affirm the district court’s denial of
Shimon’s motion for leave to file a second amended complaint as futile.
CONCLUSION
Shimon chose to expend considerable time and energy contesting an accurate
credit report: when Equifax advised its customers that the judgment against Shimon
was “satisfied,” it gave an accurate report. Further, in response to his repeated
inquiries, Equifax told Shimon—accurately—that Equifax obtained the information that
appeared in the credit report from the Kings County Civil Court. We do not decide
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whether the FCRA might be read to obligate Equifax to respond to Shimon’s source-
disclosure and reinvestigation requests by informing him of LexisNexis’s role in
gathering from the Kings County Civil Court and verifying the information. We decline
to reach that question for two independent reasons: First, because § 1681g and § 1681i
can be reasonably interpreted not to require such a disclosure and no more need be
shown; and second, because even if Equifax was negligent in determining its
obligations under those provisions, Shimon can point to no harm he suffered as a result.
We have considered Shimon’s remaining arguments on appeal and find in them
no basis for reversal. The judgment of the district court is AFFIRMED.
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