Young v. Equifax Credit Information Services, Inc. , 294 F.3d 631 ( 2002 )

REVISED JULY 1, 2002
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 00-31254
JAMES YOUNG,
Plaintiff-Appellant,
versus
EQUIFAX CREDIT INFORMATION
SERVICES INC; ET AL,
Defendants,
EQUIFAX CREDIT INFORMATION SERVICES
INC; J C PENNEY CO., INC.; CREDIT
BUREAU OF LAKE CHARLES INC,
Defendants-Appellees.
_______________________
JAMES YOUNG,
Plaintiff-Appellant,
versus
CREDIT BUREAU OF LAKE CHARLES
INC; EQUIFAX CREDIT INFORMATION
SERVICES INC; J C PENNY CO, INC,
Defendants-Appellees.
Appeal from the United States District Court
for the Western District of Louisiana
June 11, 2002
Before GARWOOD, WIENER, and CLEMENT,1 Circuit Judges.
GARWOOD, Circuit Judge:
Plaintiff-appellant James Young (Young) appeals the dismissal
on summary judgment of his action against defendants-appellees J.C.
Penney Co. (Penney), Equifax Credit Information Services, Inc.
(Equifax), and Credit Bureau of Lake Charles (CBLC). We affirm in
part and vacate and remand in part.
Facts and Proceedings Below
Young contends that the defendants injured him by publishing
defamatory credit information concerning a Penney department
store charge account (the Penney account) that another person
fraudulently opened in his name. On January 27, 1999, Young filed
suit against the defendants in the 9th Judicial District Court
for the Parish of Rapides, Louisiana alleging breaches of earlier
1
Judge Edith Brown Clement participated by designation in the oral argument of this case as
a United States District Judge for the Eastern District of Louisiana. Since that time she has been
appointed as a Fifth Circuit Judge.
2
settlement agreements and new torts, including violations of the
Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 - 1681u.
Young alleges that Pamela Odom (Odom), who was formerly
Young’s live-in girlfriend and who is the mother of Young’s minor
daughter, opened the joint charge account in Young’s name without
his consent in 1992. The Penney account became delinquent and
the delinquency appeared on Young’s credit report. Penney
allegedly reported information concerning the delinquent account
to CBLC and Equifax. CBLC and Equifax are affiliated entities
that share a common credit reporting database and issue consumer
credit reports to potential creditors. Young alleges he was
denied credit based on the information about the Penney account
that appeared on credit reports issued by CBLC and Equifax.
Young disputed the Penney account with each of the defendants.
Odom allegedly opened other fraudulent accounts in Young’s
name with other creditors; these accounts are not at issue in the
present case. In 1996, Young filed a suit in state court (Young
I) against the current defendants and several others in regard to
the various disputed accounts, including the Penney account. In
September 1997, Young settled his claims against Penney, Equifax,
and CBLC, and the court dismissed his claims against those
defendants with prejudice. At that time, Young executed releases
evidencing the settlement.
The relevant language of the release to Penney (the Penney
3
Release) provided:
James Young releases, acquits, discharges, and
covenants to hold harmless J.C. Penny [sic] Co., Inc. .
. . from any and all actions, causes of action, . . .
and claims of every type, and also any injuries or
damages not now known or which may later develop, all
resulting from the alleged theft of his identity
relative to the allegedly erroneous and/or fraudulent
extension of credit in his name and all other claims as
are more particularly described in that certain suit
styled [Young I] on the docket of the Ninth Judicial
District Court, State of Louisiana, bearing Civil
Docket Number 186,314.
The relevant language of the release to Equifax and CBLC (the
Equifax/CBLC Release) provided as follows:
[Young] does hereby release, acquit and forever
discharge Credit Bureau of Lake Charles, Inc. and
Equifax Credit Information Services, their agents,
employees, insurers, successors, assigns and attorneys,
of and from any and all actions or cause of action
whatever, which he now has or may hereafter have
arising out of the occurrence as set forth in the above
mentioned suit, including all claims for costs,
expenses, loss of earnings, pecuniary and non-pecuniary
damages, compensatory damages, punitive and exemplary
damages and damages of any nature whatsoever.
APPEARER AGREES this release includes all claims
asserted against Credit Bureau of Lake Charles, Inc.
and Equifax Credit Information Services in the above
mentioned suit and authorizes his attorney to dismiss
those claims with prejudice.
In consideration for these releases, each of the defendants paid
Young a sum of money.
Young filed the present suit (Young II) in state court in
January 1999, alleging that after the above settlement and
releases the defendants continued to report the Penney account
data, in violation of the settlement agreements, the FCRA, and
4
state tort law. Young’s complaint contended that the settlement
agreements included an agreement that the defendants would remove
the Penney account data from Young’s credit file. Young alleged
that he was denied credit from other potential creditors because
of the continued reporting, after Young I was settled, of the
Penney account data. The defendants removed Young II to the
United States District Court for the Western District of
Louisiana on February 25, 1999.
On August 10, 2000, the district court entered judgment for
Penney pursuant to Penney’s Motion for Summary Judgment/Exception
of Res Judicata and dismissed Young’s claims against Penney with
prejudice. The court found that the Young I settlement agreement
imposed no obligation on Penney to clear its credit records of
the offending information. Young filed a motion for
reconsideration, or, in the alternative, to amend the judgment to
dismiss only his claim for breach of the settlement agreement.
Young argued that, just before the district court entered its
order, Equifax’s designee, Janet Mullins, testified in a
deposition that Penney had reported the Penney account
information to Equifax in July 1998, ten months after the Young I
settlement. Young contended that Mullins’s deposition evidence
established a prima facie case for the new defamation alleged in
Young II. The district court denied the motion because the
deposition did not add any information previously unavailable and
5
also failed to establish the elements of defamation. Within
thirty days, Young filed a notice of appeal from the grant of
summary judgment and the denial of the motion for
reconsideration.2
On November 7, 2000, the district court granted summary
judgement for Equifax and CBLC. The court again stressed that
the plain language of the settlement agreement did not require
that Equifax and CBLC delete the Penney account information or
otherwise modify Young’s credit records. The court held that the
claims were barred as res judicata because, although the Penney
account information had since been reported repeatedly, it was
the same information that was at issue in Young I. Thus, Young’s
new claims arose from the same occurrence set out in the first
suit and were barred by the settlement agreement. Young could
have negotiated for removal of the offending information in the
Young I settlement agreement, but did not do so. Young filed a
timely notice of appeal from the grant of summary judgment to
2
Young’s notice of appeal of the summary judgment in favor of
Penney was technically premature; the district court’s order was
not a final judgment because it neither disposed of the claims
against all the defendants nor was it certified as a final judgment
pursuant to Fed. R. Civ. P. 54(b). See Riley v. Wooten, 999 F.2d
802, 804 (5th Cir. 1993). However, because the order would have
been appealable if the district court had certified it pursuant to
Rule 54(b) and because the district court did subsequently (and
prior to oral argument herein) dispose of all remaining parties and
claims, this court has jurisdiction over the appeal of the summary
judgment in favor of Penney. Barrett v. Atlantic Richfield Co., 95
F.3d 375, 379 (5th Cir. 1996).
6
Equifax and CBLC.
Discussion
I. Standard of Review
This court reviews a district court’s grant of summary
judgment de novo. Guillory v. Domtar Indus., Inc., 95 F.3d 1320,
1326 (5th Cir. 1996). Summary judgment is proper if, after
adequate opportunity for discovery, the pleadings, depositions,
answers to interrogatories, and admissions on file, together with
any affidavits filed in support of the motion, show that there is
no genuine issue as to any material fact and that the moving
party is entitled to judgment as a matter of law. See Fed. R.
Civ. P. 56(c); Anderson v. Liberty Lobby, Inc., 106 S. Ct. 2505,
2511 (1986). The moving party bears the burden of identifying an
absence of evidence to support the nonmoving party’s case.
Celotex Corp. v. Catrett, 106 S. Ct. 2548, 2554 (1986). Summary
judgment is properly granted if the record does not contain
appropriate summary judgment evidence which would sustain a
finding in the nonmovant’s favor on any issue as to which the
nonmovant would bear the burden of proof at trial. Id. at 2552-
53.
II. Res Judicata
Because Young I was in state court, the settlement of that
suit has the same preclusive effect it would have under Louisiana
law. Marnese v. Amer. Acad. of Orthopaedic Surgeons, 105 S. Ct.
7
1327, 1331 - 32 (1985); St. Paul Mercury Ins. Co. v. Williamson,
224 F.3d 425, 436 (5th Cir. 2000). The Louisiana Code provision
governing res judicata is La. Rev. St. § 13:4231:
4231. Res judicata
Except as otherwise provided by law, a valid and final
judgment is conclusive between the same parties, except
on appeal or other direct review, to the following
extent:
(1) If the judgment is in favor of the plaintiff, all
causes of action existing at the time of final judgment
arising out of the transaction or occurrence that is
the subject matter of the litigation are extinguished
and merged in the judgment.
(2) If the judgment is in favor of the defendant, all
causes of action existing at the time of final judgment
arising out of the transaction or occurrence that is
the subject matter of the litigation are extinguished
and the judgment bars a subsequent action on those
causes of action.
(3) A judgment in favor of either the plaintiff or the
defendant is conclusive, in any subsequent action
between them, with respect to any issue actually
litigated and determined if its determination was
essential to that judgment.
A “transaction or compromise is an agreement between two or
more persons, who, for preventing or putting an end to a lawsuit,
adjust their differences by mutual consent, in the manner upon
which they agree and which every one of them prefers to the hope
of gaining, balanced by the danger of losing.” La. Civ. Code
Ann. art. 3071. For res judicata purposes, “[t]ransactions have,
between the interested parties, a force equal to the authority of
things adjudged.” La. Civ. Code Ann. art. 3078.
8
The Penney account data at issue in the instant case is the
same as that at issue in Young I and res judicata would clearly
bar a subsequent action based on the publications of that data
occurring before final judgment was rendered in Young I. See La.
Rev. St. § 13:4231. But res judicata is not a per se bar to the
present suit, which is based on publications occurring after
final judgment was entered in Young I. To be barred under the
plain language of Louisiana’s res judicata statute, a cause of
action must have existed “at the time of final judgment arising
out of the transaction or occurrence that is the subject matter
of the litigation.” Id. A plaintiff cannot state a cause of
action until he can identify “both a wrongful act and resultant
damages.” Guitreau v. Kucharchuk, 763 So. 2d 575, 580 (La.
2000). Under the Louisiana law of defamation, each subsequent
publication of a defamatory statement is a new and separate
delictual cause of action. Nolan v. Jefferson Parish Hosp. Serv.
Dist. No. 2, 790 So. 2d 725, 730 (La. App. 5 Cir. 2001); Wiggins
v. Creary, 475 So. 2d 780, 781 (La. App. 1 Cir. 1985), writ
denied, 478 So. 2d 910 (La. 1985); Neyrey v. Lebrun, 390 So. 2d
722, 725 (La. App. 4 Cir. 1975). We have adopted a similar rule
in our interpretation of the FCRA; the republication of credit
information resulting in a new denial of credit constitutes a
distinct harm and thus gives rise to a cause of action that is
separate from that arising from the original publication. Hyde
9
v. Hibernia Nat. Bank, 861 F.2d 446, 450 (5th Cir. 1988).
Young’s current causes of action did not exist at the time
final judgment was entered in Young I. Young alleges new
wrongful acts, i.e., new publications of the Penney account data,
resulting in new damages, i.e., new denials of credit.
Therefore, the Young I compromises are only a bar to the present
suit if they comprehended future claims arising from future
republications. See La. Civ. Code art. 3073.
III. Principles of Interpretation
A transaction or compromise is a written contract and it is
construed according to the same general rules applicable to
contracts. Brown v. Drillers, Inc., 630 So. 2d 741,748 (La.
1994). As a general rule of construction, “[w]hen the words of a
contract are clear and explicit and lead to no absurd
consequences, no further interpretation may be made in search of
the parties’ intent.” La. Civ. Code art. 2046; see also Brown,
630 So. 2d at 748. A supplementary rule of construction governs
the interpretation of a compromise agreement; La. Civ. Code art.
3073 provides:
Transactions regulate only the differences which appear
clearly to be comprehended in them by the intention of
the parties, whether it be explained in a general or
particular manner, unless it be the necessary
consequence of what is expressed; and they do not
extend to differences which the parties never intended
to include in them.
La. Civ. Code art. 3073.
10
In determining the preclusive effects of the compromise
agreements in this case, we look to Louisiana law. See St. Paul
Mercury Ins. Co., supra. In Brown, the Louisiana Supreme Court
considered whether a compromise entered into by an injured worker
and his wife precluded the widow’s subsequent wrongful death suit
against the employer. Applying the principles discussed above,
the Brown court held that the compromise did not, as a matter of
law, cover the widow’s wrongful death suit. Brown, supra at 758.
The release agreement in Brown contained general recitals
purporting to release the defendants from liability on any claims
arising “on account of or relating in any way to injuries
suffered by Buel Brown on or about [the date of the claimed
tort].” Id. at 752. Although the widow’s wrongful death claim
alleged that her husband’s death resulted from the same injury at
issue in the compromise, the court found that this separate,
future wrong was not within the scope of the differences that the
parties intended to settle by the compromise. Id. at 757.
The Louisiana courts appear reluctant to construe a
compromise agreement broadly, especially with regard to future
claims: “[R]eleases of future actions are narrowly construed to
assure that the parties fully understand the rights released and
the resulting consequences. As a result, if the release
instrument leaves any doubt as to whether a particular future
action is covered by the compromise, it should be construed not
11
to cover such future action.” Id. at 753. Further, the party
interposing a release instrument to support an exception of res
judicata bears the burden of proof “to establish the requisites
for a valid compromise, including the parties’ intent to settle
the differences being asserted in the action in which it is
interposed.” Id. at 747.
IV. The Equifax/CBLC Release
Applying these principles of construction to the
Equifax/CBLC Release, we conclude that it does not preclude
Young’s present suit as a matter of law. That release purported
to settle all claims “which [Young] now has or may hereafter have
arising out of the occurrence as set forth in the above mentioned
suit [i.e., Young I].” Both Young I and the present suit
involved publication of the same Penney account information.
However, as explained above, the occurrences that give rise to
Young’s presently existing causes of action include the new
publications and the damages resulting from them. These new
claims did not exist at the time the Equifax/CBLC Release was
executed and there is at least ambiguity as to whether they arise
from the same “occurrence as set forth in” Young I.3 The plain
3
Equifax and CBLC direct our attention to Martens v. Davis,
No. Civ. A. 97-2997, 1998 WL 240411 (E.D. La. May 12, 1998)
(holding that a compromise agreement barred subsequent defamation
claims for publication of the same material). Even if Martens were
controlling precedent, that case is distinguishable. In Martens,
the allegedly defamatory material had been published before the
compromise was executed; indeed, that publication took place
12
language of the release suggests that only the then-existing
causes of action were compromised, and this would not be an
absurd consequence. Cf. La. Civ. Code art. 2046. The settlement
did encompass future harm resulting from the original
publications, but did not unambiguously comprehend future
repetition of the libel. That is, it did not unambiguously
preclude Young from suing again when repetition of the libel
causes new damages and, thus, a new cause of action accrues. The
release was a matter on which Equifax and CBLC would have had the
burden of proof at trial. Under the Louisiana law of compromise
interpretation, a genuine issue of material fact regarding what
the parties intended to compromise precludes summary judgment.
EM Nominee P’ship Co. v. Arkla Energy Res., 615 So. 2d 1369, 1375
(La. App. 2 Cir. 1993). Accordingly, the district court erred in
rendering summary judgment that the claims against Equifax and
CBLC were barred by the earlier release; there was at least an
issue of fact in that respect.
V. The Penney Claims
The language of the Penney Release is arguably broader than
that of the Equifax/CBLC Release. Rather than releasing only
those claims arising from the “occurrence” set forth in Young I,
it purports to release Penney of liability “from any and all
earlier than the publication that the plaintiff sued over in his
first lawsuit. Id. at *3. We do not disagree with Martens.
13
actions, causes of action, . . . all resulting from the alleged
theft of his identity relative to the allegedly erroneous and/or
fraudulent extension of credit in [Young’s] name.” It is not
clear that this language is broader than that at issue in Brown,
which purported to release all claims arising from the decedent’s
accident but was held not to preclude the widow’s wrongful death
action arising from that accident. However, we affirm the
summary judgment in favor of Penney because, as explained below,
Young has failed to identify competent evidence to support
necessary elements of his claims.
The FCRA preempts state law defamation or negligent
reporting claims unless the plaintiff consumer proves “malice or
willful intent to injure” him. 15 U.S.C. § 1681h(e); see also
Cushman v. Trans Union Corp., 115 F.3d 220, 229 (3d Cir. 1997);
Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1069 (9th Cir. 1992);
Thornton v. Equifax, Inc., 619 F.2d 700, 703 (8th Cir. 1980).
Young has pointed to no evidence supporting an inference that
Penney reported information with malice or willful intent toward
him.
Even if Young’s state law claims are not preempted, he has
failed to present competent evidence regarding at least two
elements of a defamation claim. In Louisiana, the elements of a
defamation action are “(1) defamatory words; (2) publication; (3)
falsity; (4) malice, actual or implied; and (5) resulting
14
injury.” Cangelosi v. Schegmann Bros. Giant Super Markets, 390
So. 2d 196, 198 (La. 1980). As we noted above, Young has not
produced competent evidence of malice. Further, he has not
produced competent evidence that Penney republished the Penney
account information to Equifax and CBLC after the Young I
settlement.
As evidence of the republication, Young points first to the
deposition of Equifax representative Janet Mullins. We note that
this deposition was not taken until after Young responded to
Penney’s motion for summary judgment and may not be properly part
of the Penney case summary judgment record. Even if it is
properly considered, the deposition does not support Young’s
contention. Mullins testified that an Equifax “snapshot”4 showed
that Equifax had deleted the Penney account information from
Young’s credit file in July 1998 and went on to state that the
“snapshot” “says [the Penney account information was] reported
July of ‘98". Mullins did not specify who did the reporting or
to whom the report was made.5 Young next points to his own
4
A “snapshot” or “frozen data report” is a computer printout
that summarizes the status of a consumer’s credit file at a given
point in time. It reflects the data that the credit reporting
agency has received and reports to potential creditors.
5
The “snapshot” does not state that Penney transmitted the
Penney account data to Equifax after the September 1997 Young I
settlement and Mullins did not testify that the “snapshot”
indicated such a transmission. Although it can be inferred that
Penney initially reported the data to Equifax, nothing supports the
inference that the July 1998 “snapshot” reflected a new publication
15
affidavit, which says that Penney continued to report the
allegedly fraudulent information. Conclusory affidavits are not
sufficient to defeat a motion for summary judgment. See Galindo
v. Precision Am. Corp., 754 F.2d 1212, 1216 (5th Cir. 1985).
Young also directs us to the deposition of Penney representative
Elaine Underwood. When Young’s counsel asked Underwood if she
could “refute Ms. Mullins’ testimony that J.C. Penney reported
its account in July of 1998 to Equifax,” Underwood said that she
could not. As we have noted, Mullins did not actually testify
that Penney reported the account information. In any event,
Underwood’s inability to either confirm or deny this ultimate
issue of fact is not probative.
Young has abandoned his breach of contract claim.
Therefore, Young’s claims arising under the FCRA are all that
remain against Penney.
Penney argues that Young does not have a private right of
action under FCRA because Penney is a “furnisher of information”
rather than a “consumer reporting agency.” We do not ultimately
resolve this argument. 15 U.S.C. §§ 1681n and 1681o impose civil
liability on “any person” violating duties under FCRA. 15 U.S.C.
§§ 1681n, 1681o. Section 1681s-2(b) imposes duties on
furnishers of information to, inter alia, investigate disputed
of that data. It is just as likely that Equifax simply retained
the previously reported data in its database.
16
information and report the results of any such investigation to
the consumer reporting agency. 15 U.S.C. § 1681s-2(b). The
plain language of FCRA thus appears to impose civil liability on
“any person” violating a FCRA duty unless some exception applies.
Section 1681s-2(c) does provide an exception to civil liability
for failure to comply with Section 1681s-2(a) (prohibiting
reporting of inaccurate information), 15 U.S.C. § 1681s-2(c), and
Section 1681s-2(d) provides that enforcement of Section 1681s-
2(a) shall be by government officials, 15 U.S.C. § 1681s-2(d).
Nothing in these sections precludes a private right of action for
violation of the investigation and reporting requirements of
Section 1681s-2(b). We need not decide, and do not decide,
whether a private right of action exists against a furnisher of
information because, as we explain below, Young has not
established an element that would be required if any such action
does exist. We observe – without approving or disapproving the
holding – that the only circuit court that has decided this issue
held that there is a private right of action. Nelson v. Chase
Manhattan Mortgage Corp., 282 F.3d 1057 (9th Cir. 2002).
However, the FCRA establishes a duty for a consumer
reporting agency (like Equifax or CBLC) to give notice of a
dispute to a furnisher of information (like Penney) within five
business days from the time the consumer notifies the consumer
reporting agency of the dispute. 15 U.S.C. § 1681i(a)(2). Such
17
notice is necessary to trigger the furnisher’s duties under
Section 1681s-2(b). 15 U.S.C. § 1681s-2(b)(1) (“After receiving
notice pursuant to [section 1681i(a)(2)] of this title of a
dispute . . . .” (emphasis added)). Thus, any private right of
action Young may have under § 1681s-2(b) would require proof that
a consumer reporting agency, like Equifax or CBLC, had notified
Penney pursuant to § 1681i(a)(2). See 15 U.S.C. § 1681s-2(b)
(cross-referencing § 1681i(a)(2) and establishing duties of
furnishers of information arising upon notice of a dispute); see
also Nelson, at 1060. Young points to no evidence tending to
prove that Penney received notice of a dispute from a consumer
reporting agency within five days, as is required to trigger
Penney’s duties under Section 1681s-2(b).6 Because Young has not
satisfied the notice element with respect to Penney, his FCRA
claims fail as a matter of law.
Conclusion
Because we hold that the district court erred in granting
summary judgment that the Equifax/CBLC Release precludes Young’s
present claims, we VACATE the judgment in favor of defendants
Equifax and CBLC and REMAND Young’s claims against those
defendants for further proceedings not inconsistent with this
6
In her deposition, Mullins did report contacting Penney
regarding the Penney account dispute in June 1997. Because Young
first disputed the Penney account information no later than 1996,
this contact clearly would not satisfy Section 1681i(a)(2)’s five-
day provision.
18
opinion. With regard to Penney, Young has not proffered
competent evidence of the elements necessary for going forward
with his state law claims. As to the FCRA claims, Young has not
pleaded nor proffered evidence that Penney received the notice
pursuant to Section 1681i(a)(2) that would give rise to duties
under Section 1681s-2(b). Therefore, we AFFIRM the judgment of
the district court in favor of Penney.
AFFIRMED in part; VACATED and REMANDED in part.
19