Gorman v. Wolpoff & Abramson

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
JOHN C. GORMAN, an individual,  No. 06-17226
Plaintiff-Appellant, D.C. No.
v.
 CV-04-04507-JW
WOLPOFF & ABRAMSON, LLP; ORDER AND
MBNA AMERICA BANK, N.A., AMENDED
Defendants-Appellees.
 OPINION
Appeal from the United States District Court
for the Northern District of California
James Ware, District Judge, Presiding
Argued and Submitted
July 17, 2008—San Francisco, California
Filed January 12, 2009
Amended October 21, 2009
Before: Richard A. Paez and Marsha S. Berzon,
Circuit Judges, and Harold Baer,* District Judge.
Opinion by Judge Berzon
*The Honorable Harold Baer, Jr., Senior United States District Judge
for the Southern District of New York, sitting by designation.
14653
14658 GORMAN v. WOLPOFF & ABRAMSON
COUNSEL
John C. Gorman and Charles J. Stiegler, San Jose, California,
for the plaintiff-appellant.
Tomio B. Narita and Jeffrey A. Topor, San Francisco, Cali-
fornia, for the defendants-appellees.
ORDER
The opinion filed January 12, 2009, is hereby amended.
The amended opinion is attached hereto.
GORMAN v. WOLPOFF & ABRAMSON 14659
With these amendments, the panel unanimously has voted
to deny Appellant’s petition for rehearing en banc and Appel-
lee’s petition for panel rehearing and petition for rehearing en
banc.
The full court has been advised of the petitions for rehear-
ing en banc, and no judge has requested a vote on whether to
rehear the matter en banc. Fed. R. App. P. 35.
The petition for panel rehearing is DENIED and the peti-
tions for rehearing en banc are DENIED. No further petitions
for rehearing or rehearing en banc may be filed.
OPINION
BERZON, Circuit Judge:
John Gorman tried to buy a satellite television system using
his credit card, issued by MBNA America Bank. He was
unsatisfied with the system purchased, and lodged a challenge
with MBNA to dispute the charge. Unhappy with MBNA’s
response, Gorman instituted this lawsuit against MBNA,
alleging violations of the Fair Credit Reporting Act, 15 U.S.C.
§§ 1681-1681x, libel, and violations of California Civil Code
section 1785.25(a). The district court dismissed his California
statutory claim and granted MBNA summary judgment on the
other causes of action. Gorman v. Wolpoff & Abramson, LLP
(“Gorman I”), 370 F. Supp. 2d 1005 (N.D. Cal. 2005); Gor-
man v. Wolpoff & Abramson, LLP (“Gorman II”), 435 F.
Supp. 2d 1004 (N.D. Cal. 2006). We affirm in part and
reverse in part.
I. BACKGROUND
In December 2002, John Gorman paid for the delivery and
installation of a new satellite TV system on a Visa credit card
14660 GORMAN v. WOLPOFF & ABRAMSON
issued by MBNA America Bank (“MBNA”). The charge,
$759.70, was posted on his January 2003 credit card state-
ment. According to Gorman, the merchant, Four Peaks Home
Entertainment (“Four Peaks”), delivered a used and defective
TV system and botched the installation, damaging his house
in the process. Gorman told Four Peaks he was refusing deliv-
ery of the goods and asked for a refund, but Four Peaks
refused to refund the charges unless Gorman arranged to
return the TV system. The defective equipment is still in Gor-
man’s possession.1
In February 2003, Gorman notified MBNA that he was dis-
puting the charges and submitted copies of emails between
himself and Four Peaks. The attached emails showed that
Gorman had informed a Four Peaks representative that the
delivered goods were “unacceptable and [were] rejected.” He
also noted damage from the installation and notified Four
Peaks that he “plan[ned] to dispute the credit card charges in
their entirety, as the damage exceeds the amount of the
charges.”
MBNA responded to the dispute notice with a request for
additional information from Gorman about the dispute,
including proof that the merchandise had been returned. A
month passed, and MBNA wrote Gorman again, stating that
as he had not responded, it assumed the charge was no longer
1
MBNA claims that Four Peaks shipped Gorman new, replacement
equipment and that Gorman retains both the defective and replacement
equipment. Gorman disputes having received any replacement system.
Gorman also claims that he made the merchandise available to Four Peaks
for pickup, and that doing so was sufficient to require a refund under Cal.
Com. Code section 2602(2)(b) (“If the buyer has before rejection taken
physical possession of goods in which he does not have a security interest
under the provisions of this division (subdivision (3) of Section 2711), he
is under a duty after rejection to hold them with reasonable care at the sell-
er’s disposition for a time sufficient to permit the seller to remove them.”).
He also testified in his deposition that Four Peaks never sent him pre-paid
shipping labels. It is not clear whether he would have shipped the mer-
chandise back had he received such labels.
GORMAN v. WOLPOFF & ABRAMSON 14661
disputed. Gorman answered that he continued to dispute the
charge, and referred MBNA to his original notice of dispute.
He did not claim to have returned the equipment, but stated
that the merchandise “has been available for the merchant to
pick up.” MBNA again requested proof that the goods had
been returned; Gorman did not reply.
In April 2003, MBNA informed Gorman that it was “un-
able to assist [him] because the merchandise has not been
returned to the merchant.” Gorman called an MBNA repre-
sentative saying, again, that all relevant information was in
his original letter. MBNA then contacted Four Peaks, which
told MBNA that it had shipped replacement equipment to
Gorman but that he had not sent the old equipment back to
them.
In July 2003, MBNA again informed Gorman that it could
not obtain a credit on his behalf without further information
from him. Gorman, who is a lawyer, responded in writing on
his law firm’s letterhead, stating that MBNA had all the infor-
mation it needed, that he had left several unanswered mes-
sages with MBNA asking to speak with someone about the
dispute, and that he would “never” pay the disputed charge.
He further stated that MBNA had violated the Fair Credit
Billing Act, that he was “entitled to recover attorneys’ fees for
MBNA’s violation,” and that he was offsetting his legal fees
against his current account balance and so would make no
more payments on the card, for the TV system or anything else.2
The balance at that time was more than $6,000.3
Gorman’s letter to MBNA worked, at least temporarily. In
2
Gorman has not indicated any specific basis for his fees claim. He
refused to answer questions at his deposition about whether these fees
were for services he had personally performed, claiming attorney-client
and work product privilege. No suit had been filed at the time Gorman
claimed entitlement to these fees.
3
As far as the record reveals, the entire balance remains unpaid.
14662 GORMAN v. WOLPOFF & ABRAMSON
August 2003, MBNA removed the Four Peaks charge and
related finance charges and late fees from Gorman’s credit
card bill. Over the next two months, MBNA again contacted
Four Peaks, which once more informed MBNA that it would
not issue a credit for Gorman’s charge until he returned the
refused equipment. When MBNA called Gorman, he
informed them he had the merchandise and “ha[d] no inten-
tion of ever [returning] it.” In October, MBNA reposted the
charge to Gorman’s account.
After he stopped making payments on his card, Gorman
claims, he received numerous harassing phone calls. During
one of these calls, Gorman alleges, an MBNA representative
told him, “We’re a big bank. You either pay us or we’ll
destroy your credit.”
In January 2004, MBNA reported Gorman’s account to the
credit reporting agencies (“CRAs”) as “charged-off.”4
Between May 2004 and November 2005, Gorman informed
the three major credit reporting agencies (Equifax, Trans-
Union, and Experian) that their credit reports included inaccu-
rate information.
As required by federal law, the CRAs sent MBNA notices
of dispute containing descriptions of Gorman’s complaints (as
understood by the CRAs) and asking the bank to verify the
accuracy of his account records. MBNA responded by
reviewing the account records and notes. After ascertaining
that its prior investigation did not support Gorman’s claimed
dispute, MBNA notified the CRAs that the delinquency was
not an error. According to Gorman, MBNA did not notify the
4
MBNA also referred the debt to a law firm, Wolpoff & Abramson, for
collection. The firm’s attempt to collect the debt gave rise to unfair debt
collection practices claims in Gorman’s complaint. Gorman does not
appeal the district court’s entry of judgment against him on these claims.
GORMAN v. WOLPOFF & ABRAMSON 14663
CRAs that the charges remained in dispute, and the CRAs did
not list the charges as disputed.5
Since his credit reports began listing his MBNA account as
delinquent, Gorman has been denied credit altogether or
offered only high interest rates on at least three occasions. He
contends that the MBNA account is the only negative entry on
his credit report.
In September 2004, Gorman sued MBNA. The complaint
alleges violations of the federal Fair Credit Reporting Act
(“FCRA”), 15 U.S.C. §§ 1681-1681x and a California credit
reporting law, California Civil Code section 1785.25(a), and
also alleges a claim for libel. Gorman seeks injunctive relief,
damages resulting from MBNA’s reporting of his account,
and damages from lost wages for the time he spent dealing
with his credit that he would have otherwise spent billing cli-
ents. The district court dismissed Gorman’s California statu-
tory claim as preempted and granted MBNA summary
judgment on all other claims. Gorman timely appeals.
For the reasons stated below, we affirm in part and reverse
in part the district court’s grant of summary judgment on the
FCRA claims; we affirm the district court’s grant of summary
judgment on Gorman’s libel claim; and we reverse the district
court’s dismissal of Gorman’s California statutory claim.
II. ANALYSIS
This case comes to us on summary judgment. We review
a grant of summary judgement de novo. Bodett v. CoxCom,
Inc., 366 F.3d 736, 742 (9th Cir. 2004). Summary judgement
is appropriate where, “drawing all reasonable inferences sup-
5
Gorman did not initially supply the district court with his credit reports.
In support of his motion to reconsider the district court’s summary judg-
ment order, however, Gorman submitted copies of his credit reports,
which include no indication that the MBNA account is disputed.
14664 GORMAN v. WOLPOFF & ABRAMSON
ported by the evidence in favor of the non-moving party,” the
court finds “that no genuine disputes of material fact exist and
that the district court correctly applied the law.” Id. (internal
quotation omitted). The non-moving party “must make a
showing sufficient to establish a genuine dispute of material
fact regarding the existence of the essential elements of his
case that he must prove at trial.” Galen v. County of Los
Angeles, 477 F.3d 652, 658 (9th Cir. 2007) (citing Celotex
Corp. v. Catrett, 477 U.S. 317, 321-23 (1986)).
Questions of statutory interpretation and federal preemption
are, of course, reviewed de novo. J & G Sales Ltd. v. Truscott,
473 F.3d 1043, 1047 (9th Cir. 2007); Davis v. Yageo Corp.,
481 F.3d 661, 673 (9th Cir. 2007).
A. Fair Credit Reporting Act Claims
1. Statutory Background
Congress enacted the Fair Credit Reporting Act (“FCRA”),
15 U.S.C. §§ 1681-1681x,6 in 1970 “to ensure fair and accu-
rate credit reporting, promote efficiency in the banking sys-
tem, and protect consumer privacy.” Safeco Ins. Co. of Am. v.
Burr, 127 S. Ct. 2201, 2205 (2007). As an important means to
this end, the Act sought to make “consumer reporting agen-
cies exercise their grave responsibilities [in assembling and
evaluating consumers’ credit, and disseminating information
about consumers’ credit] with fairness, impartiality, and a
respect for the consumer’s right to privacy.” 15 U.S.C.
§ 1681(a)(4). In addition, to ensure that credit reports are
accurate, the FCRA imposes some duties on the sources that
provide credit information to CRAs, called “furnishers” in the
statute.7 Section 1681s-2 sets forth “[r]esponsibilities of fur-
6
All references to the FCRA hereafter are to 15 U.S.C.
7
“The most common . . . furnishers of information are credit card issu-
ers, auto dealers, department and grocery stores, lenders, utilities, insurers,
collection agencies, and government agencies.” H.R. Rep. No. 108-263, at
24 (2003).
GORMAN v. WOLPOFF & ABRAMSON 14665
nishers of information to consumer reporting agencies,”
delineating two categories of responsibilities.8 Subsection (a)
details the duty “to provide accurate information,” and
includes the following duty:
(3) Duty to provide notice of dispute
If the completeness or accuracy of any information
furnished by any person to any consumer reporting
agency is disputed to such person by a consumer, the
person may not furnish the information to any con-
sumer reporting agency without notice that such
information is disputed by the consumer.
§ 1681s-2(a)(3).
Section 1681s-2(b) imposes a second category of duties on
furnishers of information. These obligations are triggered
“upon notice of dispute”— that is, when a person who fur-
nished information to a CRA receives notice from the CRA
that the consumer disputes the information. See § 1681i(a)(2)
(requiring CRAs promptly to provide such notification con-
taining all relevant information about the consumer’s dispute).
Subsection 1681s-2(b) provides that, after receiving a notice
of dispute, the furnisher shall:
(A) conduct an investigation with respect to the dis-
puted information;
(B) review all relevant information provided by the
[CRA] pursuant to section 1681i(a)(2) . . . ;
(C) report the results of the investigation to the
[CRA];
8
This section was added by the Consumer Credit Reporting Reform Act
of 1996, Pub. L. No. 104-208, § 2413, 110 Stat. 3009-447. Additional
amendments, not relevant here, were made by the Fair and Accurate
Credit Transactions Act of 2003, Pub. L. No. 108-159, 117 Stat. 1952.
14666 GORMAN v. WOLPOFF & ABRAMSON
(D) if the investigation finds that the information is
incomplete or inaccurate, report those results to all
other [CRAs] to which the person furnished the
information . . . ; and
(E) if an item of information disputed by a con-
sumer is found to be inaccurate or incomplete or
cannot be verified after any reinvestigation under
paragraph (1) . . . (i) modify . . . (ii) delete [or] (iii)
permanently block the reporting of that item of infor-
mation [to the CRAs].
§ 1681s-2(b)(1). These duties arise only after the furnisher
receives notice of dispute from a CRA; notice of a dispute
received directly from the consumer does not trigger furnish-
ers’ duties under subsection (b). See id.; Nelson v. Chase
Manhattan Mortgage Corp., 282 F.3d 1057, 1059-60 (9th Cir.
2002).
The FCRA expressly creates a private right of action for
willful or negligent noncompliance with its requirements.
§§ 1681n & o; see also Nelson, 282 F.3d at 1059. However,
§ 1681s-2 limits this private right of action to claims arising
under subsection (b), the duties triggered upon notice of a dis-
pute from a CRA. § 1681s-2(c) (“Except [for circumstances
not relevant here], sections 1681n and 1681o of this title do
not apply to any violation of . . . subsection (a) of this section,
including any regulations issued thereunder.”). Duties
imposed on furnishers under subsection (a) are enforceable
only by federal or state agencies.9 See § 1681s-2(d).
9
Nelson explained the likely reason for allowing private enforcement of
subsection (b) but not subsection (a) as follows:
Congress did not want furnishers of credit information exposed
to suit by any and every consumer dissatisfied with the credit
information furnished. Hence, Congress limited the enforcement
of the duties imposed by § 1681s-2(a) to governmental bodies.
But Congress did provide a filtering mechanism in § 1681s-2(b)
GORMAN v. WOLPOFF & ABRAMSON 14667
Gorman alleges that MBNA violated several of the FCRA
“furnisher” obligations. We hold that some of the alleged vio-
lations survive summary judgment and some do not.
2. MBNA’s “investigation” upon notice of dispute
Gorman’s first allegation is that MBNA did not conduct a
sufficient investigation after receiving notice from the CRAs
that he disputed the charges, as required by § 1681s-
2(b)(1)(A). As Gorman’s claim arises under subsection (b), it
can be the basis for a private lawsuit. See Nelson, 282 F.3d
at 1059-60. We must decide (1) whether § 1681s-2(b)(1)(A)
requires a furnisher to conduct a “reasonable” investigation,
and if so, (2) whether a disputed issue of material fact exists
as to the reasonableness of MBNA’s investigation.
a. Must an Investigation be Reasonable?
[1] The text of the FCRA states only that the creditor shall
conduct “an investigation with respect to the disputed infor-
mation.” § 1681s-2(b)(1)(A). MBNA urges that because there
is no “reasonableness” requirement expressly enunciated in
the text, the FCRA does not require an investigation of any
particular quality; any investigation into a consumer’s dispute
— even an entirely unreasonable one — satisfies the statute.
[2] This court has not addressed MBNA’s contention about
by making the disputatious consumer notify a CRA and setting
up the CRA to receive notice of the investigation by the fur-
nisher. See 15 U.S.C. § 1681i(a)(3) (allowing CRA to terminate
reinvestigation of disputed item if CRA “reasonably determines
that the dispute by the consumer is frivolous or irrelevant”). With
this filter in place and opportunity for the furnisher to save itself
from liability by taking the steps required by § 1681s-2(b), Con-
gress put no limit on private enforcement under §§ 1681n & o.
Nelson, 282 F.3d at 1060.
14668 GORMAN v. WOLPOFF & ABRAMSON
the FCRA’s investigation requirement.10 But, MBNA made —
and lost — the same argument before the Fourth Circuit.
Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 429-31 (4th
Cir. 2004). Concluding that the statute includes a requirement
that a furnisher’s investigation not be unreasonable, the
Fourth Circuit first noted that the plain meaning of the term
“investigation” is a “ ‘detailed inquiry or systematic examina-
tion,’ ” which necessarily “requires some degree of careful
inquiry.” Id. at 430 (quoting Am. Heritage Dictionary 920
(4th ed. 2000)). Second, the Fourth Circuit reasoned that
because the purpose of the provision is “to give consumers a
means to dispute — and, ultimately, correct — inaccurate
information on their credit reports,” id. at 430-31, a “superfi-
cial, unreasonable inquir[y]” would hardly satisfy Congress’
objective. Id. at 431. The Seventh Circuit, without discussing
the issue, has also found an implicit reasonableness require-
ment. See Westra v. Credit Control of Pinellas, 409 F.3d 825,
827 (7th Cir. 2005) (“Whether a defendant’s investigation
[pursuant to § 1681s-2(b)(1)(A)] is reasonable is a factual
question normally reserved for trial.”); see also Johnson, 357
F.3d at 430 n.2 (“[D]istrict courts that have considered the
issue have consistently recognized that the creditor’s investi-
gation must be a reasonable one.” (citing cases)).
[3] The Fourth Circuit’s reasoning in Johnson is entirely
persuasive. By its ordinary meaning, an “investigation”
requires an inquiry likely to turn up information about the
underlying facts and positions of the parties, not a cursory or
sloppy review of the dispute. Moreover, like the Fourth Cir-
cuit, we have observed that “a primary purpose for the FCRA
[is] to protect consumers against inaccurate and incomplete
credit reporting.” Nelson, 282 F.3d at 1060. A provision that
10
District courts in this circuit have assumed that § 1681s-2(b)(1)(A)
requires a reasonable investigation. See, e.g., Smith v. Ohio Sav. Bank, No.
2:05-cv-1236, 2008 WL 2704719, at *2 (D. Nev. July 7, 2008); Thomas
v. U.S. Bank, N.A., No. CV 05-1725, 2007 WL 764312, at *4 (D. Or. Mar.
8, 2007).
GORMAN v. WOLPOFF & ABRAMSON 14669
required only a cursory investigation would not provide such
protection; instead, it would allow furnishers to escape their
obligations by merely rubber stamping their earlier submis-
sions, even where circumstances demanded a more thorough
inquiry. MBNA counters by pointing to § 1681i(a)(1)(A),
which provides, in relevant part (with emphasis added):
[I]f the completeness or accuracy of any item of
information contained in a consumer’s file at a con-
sumer 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 . . . .
Thus, MBNA argues, Congress specified a “reasonable”
investigation in another part of the statute, and purposely
chose not to do so for furnishers of information.
It is most often the case that “[w]here Congress includes
particular language in one section of a statute but omits it in
another section of the same Act, it is generally presumed that
Congress acts intentionally and purposely in the disparate
inclusion or exclusion.” Russello v. United States, 464 U.S.
16, 23 (1983) (internal quotation and citation omitted). But
we should be careful not to read too much into the apparent
disparity in language upon which MBNA relies. Where, as
here, there are convincing alternative explanations for a dif-
ference in statutory language, the presumption applies with
much less force. See Field v. Mans, 516 U.S. 59, 67-69 (1995)
(“Without more, the [negative] inference might be a helpful
one. But [where] there is more . . . the negative pregnant argu-
ment should not be elevated to the level of interpretive trump
card.”).
As we have noted, the term “investigation” on its own force
implies a fairly searching inquiry. It is thus likely that, if any-
14670 GORMAN v. WOLPOFF & ABRAMSON
thing, the “reasonable” qualifier with regard to reinvestiga-
tions by CRAs signals a limitation on the CRAs’ duty, not an
expansion of it beyond what “investigation” itself would sig-
nal. And, indeed, the statute goes on to spell out the CRA’s
investigative duty in some detail, requiring, inter alia, that the
CRA provide notification of the dispute within five business
days of receipt of notice of a dispute. The furnisher’s investi-
gation obligation under § 1681 is triggered by receiving the
CRA notification, required as a central aspect of the CRA’s
own investigation, and includes the obligation to “report the
results of [its] investigation to the [CRA].” § 1681s2-
(b)(1)(C). In other words, the CRA’s “reasonable reinvestiga-
tion” consists largely of triggering the investigation by the
furnisher. It would make little sense to deem the CRA’s
investigation “reasonable” if it consisted primarily of request-
ing a superficial, unreasonable investigation by the furnisher
of the information.
[4] Nevertheless, MBNA urges that “Congress intended to
impose a more rigorous duty of investigation on CRAs than
on furnishers of information.” But MBNA does not tell us
why Congress would mandate shoddy or superficial furnisher
investigations, not calculated to resolve or to explain the
actual disagreement or to aid in the CRA’s “reasonable rein-
vestigation.” Indeed, as the statute recognizes, the furnisher of
credit information stands in a far better position to make a
thorough investigation of a disputed debt than the CRA does
on reinvestigation. With respect to the accuracy of disputed
information, the CRA is a third party, lacking any direct rela-
tionship with the consumer, and its responsibility is to “rein-
vestigate” a matter once already investigated in the first place.
§ 1681i(a)(1) (emphasis added). It would therefore make little
sense to impose a more rigorous requirement on the CRAs
than the furnishers. Instead, the more sensible conclusion is
that, if anything, the “reasonable” qualifier attached to a
CRA’s duty to reinvestigate limits its obligations on account
of its third-party status and the fact that it is repeating a task
already completed once. Requiring furnishers, on inquiry by
GORMAN v. WOLPOFF & ABRAMSON 14671
a CRA, to conduct at least a reasonable, non-cursory investi-
gation comports with the aim of the statute to “protect con-
sumers from the transmission of inaccurate information about
them.” Kates v. Crocker Nat’l Bank, 776 F.2d 1396, 1397 (9th
Cir. 1985).
[5] We thus follow the Fourth and Seventh Circuits and
hold that the furnisher’s investigation pursuant to § 1681s-
2(b)(1)(A) may not be unreasonable.
b. MBNA’s Investigation was Reasonable
[6] As discussed, a furnisher’s obligation to conduct a rea-
sonable investigation under § 1681s-2(b)(1)(A) arises when it
receives a notice of dispute from a CRA. Such notice must
include “all relevant information regarding the dispute that the
[CRA] has received from the consumer.” § 1681i(a)(2)(A). It
is from this notice that the furnisher learns the nature of the
consumer’s challenge to the reported debt, and it is the receipt
of this notice that gives rise to the furnisher’s obligation to
conduct a reasonable investigation. The pertinent question is
thus whether the furnisher’s procedures were reasonable in
light of what it learned about the nature of the dispute from
the description in the CRA’s notice of dispute.11 See Westra,
409 F.3d at 827 (“[The furnisher’s] investigation in this case
was reasonable given the scant information it received regard-
ing the nature of [the consumer’s] dispute.”).
MBNA received four notices of dispute regarding Gor-
man’s account. Gorman argues that the district court erred in
granting summary judgment as to the reasonableness of
MBNA’s investigation in response to these notices because
triable issues of fact remain. We have held that “summary
judgment is generally an inappropriate way to decide ques-
11
In deciding that the notice determines the nature of the dispute to be
investigated, we do not suggest that it also cabins the scope of the investi-
gation once undertaken.
14672 GORMAN v. WOLPOFF & ABRAMSON
tions of reasonableness because ‘the jury’s unique compe-
tence in applying the ‘reasonable man’ standard is thought
ordinarily to preclude summary judgment.’ ” In re Software
Toolworks Inc., 50 F.3d 615, 621 (9th Cir. 1994) (quoting
TSC Indus. v. Northway, Inc., 426 U.S. 438, 450 n.12 (1976)).
However, summary judgment is not precluded altogether on
questions of reasonableness. It is appropriate “when only one
conclusion about the conduct’s reasonableness is possible.”
Id. at 622; see also Westra, 409 F.3d at 827. We thus consider
the sufficiency of MBNA’s investigation with respect to each
of the notices.
i. “Claims Company will Change”
[7] In a notice of dispute received May 13, 2004, Trans-
Union provided the following information concerning Gor-
man’s MBNA account: “Claims company will change. Verify
all account information.” The notice provided no further
information about the nature of the dispute. In response to this
notice, MBNA “review[ed] the account notes to determine
whether MBNA had agreed to delete any charges or to modify
the account information in any way.” It concluded that “[n]o
such commitment had been made.” MBNA’s review of the
account information provided by TransUnion did reveal
“some minor differences.” As a result, MBNA submitted
updated address, date of birth, and account delinquency infor-
mation to TransUnion.
[8] The cursory notation, “[c]laims company will change,”
provided no suggestion of the nature of Gorman’s dispute
with Four Peaks. We conclude therefore that a jury could not
find MBNA’s response unreasonable. MBNA reasonably read
the vague notice as indicating that MBNA had previously
agreed to change certain account information. MBNA’s
review of its internal account files to determine whether any
such agreement had been reached was all that was required to
respond reasonably to this notice of dispute. The account
notes reveal that MBNA had communicated with Four Peaks
GORMAN v. WOLPOFF & ABRAMSON 14673
several times and do not reveal any agreement by MBNA to
credit those charges, or any others. MBNA could not have
reasonably been expected to undertake a more thorough
investigation of the Four Peaks incident based on the scant
information contained in this notice.
ii. “Fraudulent Charges”
MBNA received two notices disputing “fraudulent charges”
on Gorman’s account. A notice of dispute from Experian,
dated May 18, 2004, stated: “Consumer claims account take-
over fraudulent charges made on account. Verify Signature
provide complete ID.” In response to this notice, MBNA
“verif[ied] that the name, address, date of birth and social
security number reported by Experian matched the informa-
tion that was contained in MBNA’s records concerning the
account.” It also “review[ed] the account notes and check[ed]
with the fraud department to determine whether there had
ever been a fraud claim submitted with respect to the
account.” Because the identification information matched and
no fraud claim had been submitted, MBNA reported to
Experian that the information it previously reported was accu-
rate and requested that Experian tell Gorman to contact
MBNA if he suspected fraud.
MBNA received another dispute notice from TransUnion,
dated November 29, 2005, that listed two disputes: (1) “Dis-
putes present/previous Account Status History. Verify accord-
ingly;” (2) “Consumer claims account take-over fraudulent
charges made on account. Verify Signature provide or con-
firm complete ID.” MBNA conducted the following inquiry:
[V]erif[ied] that the account history that was being
reported matched the account history data in
MBNA’s records, including the balance, the amount
past due, the high credit and credit limit for the
account. . . . [V]erif[ied] that the name, address, date
of birth and social security number reported by
14674 GORMAN v. WOLPOFF & ABRAMSON
TransUnion matched the information that was con-
tained in MBNA’s records concerning the
account. . . . [R]eview[ed] the account notes and
check[ed] with the fraud department to determine
whether there had ever been a fraud claim submitted
with respect to the account.
Because this investigation did not reveal that any information
was inaccurate, MBNA verified the information previously
submitted to TransUnion.
[9] Neither notice identified the nature of Gorman’s dispute
as centering on the Four Peaks charge or indicated that the
dispute concerned rejection of the goods charged for. Indeed,
the notices did not describe the fraudulent transactions in any
detail; they were silent as to the approximate date of the
charges, their amount, and the identity of the merchant. More-
over, Gorman has never contended that the disputed charges
were initially unauthorized or were the result of identity theft,
as the dispute notices indicated. Not surprisingly, MBNA’s
review of its internal account notes showed no evidence of
fraudulent activity, and all previous account data reported by
the CRAs matched MBNA’s records. We conclude that, as in
the case of the first notice of dispute, MBNA could not rea-
sonably have been expected to investigate Gorman’s chal-
lenge to the Four Peaks charge based on the vague and
inaccurate information it received from the CRAs in these
notices.12
12
Gorman complains that he had no control over the information the
CRAs gave MBNA, and that MBNA should have asked the CRAs for
more detail on Gorman’s complaints. But Gorman’s letters to the CRAs
do not provide much more detail concerning his dispute than the CRAs’
description to MBNA. Two of the dispute notices were prompted by let-
ters from Gorman to the CRAs stating:
MBNA posted certain fraudulent credit card charges to a former
VISA account in or about early 2003. I timely notified MBNA
that the charges were disputed and should be removed from my
GORMAN v. WOLPOFF & ABRAMSON 14675
iii. “Promised Goods/Services Not Delivered”
One notice of dispute did provide more accurate and spe-
cific information relating to Gorman’s dispute with MBNA.
A December 2004 notice from Experian stated: “Claims inac-
curate information. Did not provide specific dispute. Provide
complete ID and verify account information.” The notice fur-
ther provided, in a section for “FCRA Relevant Information”:
“PROMISED GOODS/SERVICES NOT DELIVERED. I
TIMELY DISPUTED THE CHARGES UNDER THE TIL
ACT.”13 In response to this notice, MBNA
review[ed] its records to confirm that all of the
account information that was being reported by
Experian matched MBNA’s records. MBNA also
reviewed the account notes to determine if any dis-
pute submitted by Gorman concerning the account
had been resolved in his favor. Since the reported
information matched the information in MBNA’s
account yet MBNA failed to removed [sic] them and is wrong-
fully claiming that my account is delinquent. No money is owed
to MBNA. Moreover, MBNA has been repeatedly advised by me,
both orally and in writing, that the debt is disputed but is unlaw-
fully refusing to note the existence of the dispute on my credit
record.
The November 2005 dispute notice was prompted by an on-line complaint
form filled out by Gorman stating: “I have never made a late payment,”
and “Fraudulent charges were made on my account.”
It is the duty of the CRA — not the furnisher — to ensure that the fur-
nisher has all relevant information about the dispute. See § 1681i(a)(2)(A)
(the CRA’s notice to furnisher “shall include all relevant information
regarding the dispute that the agency has received from the consumer
. . . .”). Moreover, as it is not hard to see why the CRAs interpreted Gor-
man’s messages as they did, MBNA likely would have interpreted them
in the same way had it obtained them, and so would have made the same,
limited investigation.
13
This is likely referring to the Truth in Lending Act, Pub. L. No. 90-
321, Title I, 82 Stat. 146 (1968) (codified at 15 U.S.C. § 1601 et seq.).
14676 GORMAN v. WOLPOFF & ABRAMSON
records, and because the prior investigation of the
charge with Four Peaks Entertainment had not been
resolved in favor of Gorman, MBNA verified all the
information that it had reported about the account as
accurate.
[10] Unlike the other three notices of dispute, the Decem-
ber 2004 notice contained enough information to alert MBNA
to the specific nature of Gorman’s actual claim: the reported
debt was not owed because he had not received the goods he
was promised. Simply verifying that the basic reported
account data matched MBNA’s internal records may not have
been a reasonably sufficient investigation of this particular
dispute.
But MBNA’s investigation was more thorough than simply
a review of bare account data. The review of internal records
revealed that MBNA had previously investigated the Four
Peaks charge and that the dispute had not been resolved in
Gorman’s favor.
Nevertheless, Gorman claims that a jury could still find
MBNA’s efforts unreasonable, because it failed to reinvesti-
gate the dispute. As an initial matter, there is no evidence that
MBNA’s original investigation of the Four Peaks incident
was deficient or unreliable.14 MBNA contacted both Gorman
and Four Peaks several times as part of the investigation. Its
requests that Gorman provide more information were met
with refusals to supply additional information or no response
at all. MBNA’s correspondence with Four Peaks also evi-
dences a diligent attempt to ascertain the validity of the
14
The reasonableness of MBNA’s initial investigation is not directly
before us. That investigation was conducted before MBNA reported Gor-
man’s account to the CRAs. To the extent that it is governed by the FCRA
at all, it falls under § 1681s-2(a)(1), the duty of furnishers to provide accu-
rate information to CRAs. Although MBNA is required under § 1681s-
2(a)(1) to provide accurate information, Gorman cannot enforce that obli-
gation in a private cause of action. See § 1681s-2(c), (d).
GORMAN v. WOLPOFF & ABRAMSON 14677
charges. For example, MBNA asked about Goman’s opportu-
nity to return the merchandise and was told that Gorman
received shipping labels to return the merchandise.
[11] Importantly, the CRA notice of dispute that triggered
MBNA’s duty to investigate did not identify any reason to
doubt the veracity of the initial investigation. Furthermore, the
notice of dispute did not provide any new information that
would have prompted MBNA to supplement the initial inves-
tigation with any additional procedures or inquiries.
[12] We agree that “[w]hether a reinvestigation conducted
by a furnisher in response to a consumer’s notice of dispute
is reasonable . . . depends in large part on . . . the allegations
provided to the furnisher by the credit reporting agency.” Kra-
jewski v. Am. Honda Fin. Corp., 557 F. Supp. 2d 596, 610
(E.D. Pa. 2008). Without any indication in the allegations that
the initial investigation lacked reliability or that new informa-
tion was available to discover, MBNA’s decision not to repeat
a previously-conducted investigation cannot have been unrea-
sonable. Congress could not have intended to place a burden
on furnishers continually to reinvestigate a particular transac-
tion, without any new information or other reason to doubt the
result of the earlier investigation, every time the consumer
disputes again the transaction with a CRA because the investi-
gation was not resolved in his favor. Thus, although reliance
on a prior investigation can be unreasonable, cf. Bruce v. First
U.S.A. Bank, Nat’l Ass’n, 103 F. Supp. 2d 1135, 1143-44
(E.D. Mo. 2000) (concluding that a furnisher’s investigation
was not necessarily reasonable when an initial investigation
was deficient for, among other reasons, failing to contact the
consumer), that was not the case here.
Gorman disputes this conclusion, insisting that under the
Fourth Circuit’s opinion in Johnson, it is per se unreasonable
for a furnisher to rely solely on internal account records when
investigating a consumer dispute. Gorman misreads Johnson,
which recognized that the reasonableness of an investigation
14678 GORMAN v. WOLPOFF & ABRAMSON
depends on the facts of the particular case, most importantly
the CRA’s description of the dispute in its notice. See John-
son, 357 F.3d at 431 (noting that confining the investigation
to internal computer notes was not necessarily reasonable in
light of the specificity of the description of the dispute in the
notice).
In Johnson, the CRA’s notice to MBNA read: “CON-
SUMER STATES BELONGS TO HUSBAND ONLY;”
“WAS NEVER A SIGNER ON ACCOUNT. WAS AN
AUTHORIZED USER.” Id. at 429. The underlying facts were
that Johnson’s future husband opened an MBNA credit card
account. Some years later, after they were married, Johnson’s
husband filed for bankruptcy, and MBNA told Johnson she
was responsible for the balance, maintaining that she was a
co-applicant, and therefore a co-obligor, on the account. John-
son, 357 F.3d at 428-29. Johnson argued that she was merely
an authorized user. Id.
In response to the notice to the CRAs, MBNA only con-
firmed Johnson’s identifying information and confirmed that
its internal computer system indicated she was the sole
responsible party on the account. Id. at 431. At no time did
MBNA try to ascertain whether Johnson’s information — that
she had not signed the application form — was correct. The
Fourth Circuit held this investigation unreasonable:
The MBNA agents also testified that, in investigat-
ing consumer disputes generally, they do not look
beyond the information contained in the CIS
[MBNA’s internal computer system] and never con-
sult underlying documents such as account applica-
tions. Based on this evidence, a jury could
reasonably conclude that MBNA acted unreasonably
in failing to verify the accuracy of the information
contained in the CIS.
Id.
GORMAN v. WOLPOFF & ABRAMSON 14679
[13] In contrast to Johnson, in Gorman’s case MBNA did
review all the pertinent records in its possession, which
revealed that an initial investigation had taken place in which
MBNA contacted both Gorman and the merchant. Thus,
unlike in Johnson, MBNA had — albeit earlier — gone out-
side its own records to investigate the allegations contained in
the CRA notice, and on reading the notice, did consult the rel-
evant information in its possession. Johnson does not indicate
that a furnisher has an obligation to repeat an earlier investi-
gation, the record of which is in the furnisher’s records.
We emphasize that the requirement that furnishers investi-
gate consumer disputes is procedural. An investigation is not
necessarily unreasonable because it results in a substantive
conclusion unfavorable to the consumer, even if that conclu-
sion turns out to be inaccurate.
[14] In short, although “reasonableness” is generally a
question for a finder of fact, summary judgment in this case
was appropriate.
3. MBNA’s failure to provide notice of dispute
Gorman next argues that MBNA failed to notify the CRAs
that he continued to dispute the delinquent charges on his
account. He contends that in reporting the delinquency with-
out also reporting his ongoing dispute, MBNA violated its
obligations under 12 C.F.R. § 226.13,15 and thus furnished
“incomplete or inaccurate” credit information in violation of
15
This requirement is imposed by Regulation Z, promulgated pursuant
to the Truth in Lending Act, 15 U.S.C. § 1601 et seq. The regulation pro-
vides that, if a consumer timely disputes a charge with a creditor but the
creditor concludes that the charge is valid, the creditor “[m]ay not report
that an amount or account is delinquent because the amount due . . .
remains unpaid, if the creditor receives [within a specific time peri-
od] further written notice from the consumer that any portion of the billing
error is still in dispute, unless the creditor also . . . [p]romptly reports that
the amount or account is in dispute.” 12 C.F.R. § 226.13(g)(4).
14680 GORMAN v. WOLPOFF & ABRAMSON
the FCRA. MBNA neither concedes nor disputes that it was
so obligated,16 but argues on summary judgment that the stat-
ute does not permit Gorman to raise this claim. Also, in the
alternative, MBNA contends that Gorman did not submit
enough evidence to show whether his credit reports included
a notice that the delinquency was disputed or whether MBNA
did not so notify the CRAs. We must decide (1) whether the
failure to notify the CRAs that the delinquent debt was dis-
puted is actionable under § 1681s-2(b), and if so, (2) whether
Gorman introduced sufficient evidence on summary judgment
to show that MBNA so notified the CRAs.
a. Gorman’s Claim is Actionable
[15] If a consumer disputes the accuracy of credit informa-
tion, the FCRA requires furnishers to report that fact when
reporting the disputed information. Section 1681s-2(a)(3) pro-
vides: “If the completeness or accuracy of any information
furnished by any person to any consumer reporting agency is
disputed to such person by a consumer, the person may not
furnish the information to any consumer reporting agency
without notice that such information is disputed by the con-
sumer.” As noted, however, the statute expressly provides that
a claim for violation of this requirement can be pursued only
by federal or state officials, and not by a private party.
§ 1681s-2(c)(1) (“Except [for circumstances not relevant
here], sections 1681n and 1681o of this title [providing pri-
vate right of action for willful and negligent violations] do not
apply to any violation of . . . subsection (a) of this section,
including any regulations issued thereunder.”); see also Nel-
son, 282 F.3d at 1059. Thus, Gorman has no private right of
action under § 1681s-2(a)(3) to proceed against MBNA for its
initial failure to notify the CRAs that he disputed the Four
Peaks charges.
16
Gorman does not bring a claim under either Regulation Z or the perti-
nent section of the Truth in Lending Act. We therefore need not decide
whether in this case MBNA violated its obligations under those provi-
sions.
GORMAN v. WOLPOFF & ABRAMSON 14681
[16] Gorman does have a private right of action, however,
to challenge MBNA’s subsequent failure to so notify the
CRAs after receiving notice of Gorman’s dispute under
§ 1681s-2(b). In addition to requiring that a furnisher conduct
a reasonable investigation of a consumer dispute, § 1681s-
2(b) also requires a creditor, upon receiving notice of such
dispute, to both report the results of the investigation and, “if
the investigation finds that the information is incomplete or
inaccurate, report those results” to the CRAs. § 1681s-
2(b)(1)(C), (D). Gorman argues that MBNA’s reporting of the
Four Peaks charge and delinquency, without a notation that
the debt was disputed, was an “incomplete or inaccurate”
entry on his credit file that MBNA failed to correct after its
investigation. As this claim alleges that obligations imposed
under § 1681s-2(b) were violated, it is available to private
individuals.
[17] The Fourth Circuit has recently held that after receiv-
ing notice of dispute, a furnisher’s decision to continue report-
ing a disputed debt without any notation of the dispute
presents a cognizable claim under § 1681s-2(b). See Saunders
v. Branch Banking & Trust Co. of Va., 526 F.3d 142, 150 (4th
Cir. 2008). In Saunders, a consumer alleged that he incurred
late fees and penalties as a result of a creditor’s own admitted
accounting errors; the creditor, Branch Banking & Trust
(BB&T), refused to waive the fees, and the consumer
responded by withholding payments on the loan. Id. at 145-
46. BB&T reported the loan to the CRAs as “in repossession
status,” and, after suffering adverse credit decisions, the con-
sumer contacted the CRAs to report the dispute. Id. at 146.
The CRAs sent a notice of dispute to BB&T, triggering its
obligations to investigate and verify the accuracy of the
reported information under § 1681s-2(b)(1). BB&T responded
by updating the consumer record to reflect that it had written
off the debt as uncollectible, but failed to indicate that the
consumer still disputed the validity of the obligation. Id. The
consumer brought suit under § 1681s-2(b) and a jury found
that BB&T had violated its obligations.
14682 GORMAN v. WOLPOFF & ABRAMSON
The Fourth Circuit affirmed. The court reasoned that in
enacting § 1681s-2(b)(1)(D), “Congress clearly intended fur-
nishers to review reports not only for inaccuracies in the
information reported but also for omissions that render the
reported information misleading.” Id. at 148. Although the
report may have been “technically accurate” in the sense that
it reflected the consumer’s failure to make any payments on
the loan, the court noted that it had previously held that “a
consumer report that contains technically accurate informa-
tion may be deemed ‘inaccurate’ if the statement is presented
in such a way that it creates a misleading impression.” Id. (cit-
ing Dalton v. Capital Associated Indus., Inc., 257 F.3d 409,
415-16 (4th Cir. 2001)). The Fourth Circuit went on to note
that a consumer’s failure to pay a debt that is not really due
“does not reflect financial irresponsibility,” and thus the omis-
sion of the disputed nature of a debt could render the informa-
tion sufficiently misleading so as to be “incomplete or
inaccurate” within the meaning of the statute. Id. at 150.
Saunders went on to reject the contention that Congress
meant to exempt furnishers of information from private liabil-
ity by placing the initial obligation to report disputes in sub-
section (a), stating that “[n]o court has ever suggested that a
furnisher can excuse its failure to identify an inaccuracy when
reporting pursuant to § 1681s-2(b) by arguing that it should
have already reported the information accurately under
§ 1681s-2(a).” Id. at 149-50.
[18] This reasoning is persuasive. Like Saunders, several
other courts have held that a credit entry can be “incomplete
or inaccurate” within the meaning of the FCRA “because it is
patently incorrect, or because it is misleading in such a way
and to such an extent that it can be expected to adversely
affect credit decisions.” Sepulvado v. CSC Credit Servs., Inc.,
158 F.3d 890, 895 (5th Cir. 1998); see also Koropoulos v.
Credit Bureau, Inc., 734 F.2d 37, 40 (D.C. Cir. 1984)
(“Certainly reports containing factually correct information
that nonetheless mislead their readers are neither maximally
accurate nor fair to the consumer . . . .”). As the Fourth Circuit
GORMAN v. WOLPOFF & ABRAMSON 14683
observed, holding otherwise would create a rule that, as a
matter of law, an omission of the disputed nature of a debt
never renders a report incomplete or inaccurate. See Saunders,
526 F.3d at 150. Not only might such a rule intimidate con-
sumers into giving up bona fide disputes by paying debts not
actually due to avoid damage to their credit ratings, but it also
contravenes the purpose of the FCRA, to protect against “un-
fair credit reporting methods.” See 15 U.S.C. § 1681(a)(1).
Holding that there is a private cause of action under
§ 1681s-2(b) does not mean that a furnisher could be held lia-
ble on the merits simply for a failure to report that a debt is
disputed. The consumer must still convince the finder of fact
that the omission of the dispute was “misleading in such a
way and to such an extent that [it] can be expected to have an
adverse effect.” Saunders, 526 F.3d at 150 (quotation omit-
ted). In other words, a furnisher does not report “incomplete
or inaccurate” information within the meaning of § 1681s-
2(b) simply by failing to report a meritless dispute, because
reporting an actual debt without noting that it is disputed is
unlikely to be materially misleading. It is the failure to report
a bona fide dispute, a dispute that could materially alter how
the reported debt is understood, that gives rise to a furnisher’s
liability under § 1681s-2(b). Cf. id. at 151 (“[W]e assume,
without deciding that a furnisher incurs liability under
§ 1681s-2(b) only if it fails to report a meritorious dispute.”).
[19] It is true, as we have said, that a furnisher’s initial fail-
ure to comply with this requirement is not privately enforce-
able. But as the Fourth Circuit noted, this does not excuse the
furnisher’s failure to correct the omission after investigating
pursuant to § 1681s-2(b). See Saunders, 526 F.3d at 150. The
purpose of § 1681s-2(b) is to require furnishers to investigate
and verify that they are in fact reporting complete and accu-
rate information to the CRAs after a consumer has objected
to the information in his file. See Johnson, 357 F.3d at 431
(“[Congress] create[d] a system intended to give consumers a
means to dispute—and, ultimately, correct—inaccurate infor-
14684 GORMAN v. WOLPOFF & ABRAMSON
mation on their credit reports.”). A disputed credit file that
lacks a notation of dispute may well be “incomplete or inac-
curate” within the meaning of the FCRA, and the furnisher
has a privately enforceable obligation to correct the informa-
tion after notice. § 1681s-2(b)(1)(D). We thus conclude that
the statute permits Gorman to bring his claim regarding
MBNA’s failure to report the charge still disputed.
b. Evidentiary Challenges
MBNA argues that summary judgment is nevertheless
appropriate on this claim because Gorman failed to introduce
sufficient admissible evidence that (1) his credit reports
lacked a notation that the Four Peaks debt was disputed and
(2) MBNA failed to report the account as disputed in this
respect to the CRAs.
Gorman did not submit his credit reports to the district
court until after the court issued its summary judgment order.17
We ordinarily will not consider on appeal “[p]apers submitted
to the district court after the ruling that is challenged.” Kirsh-
ner v. Uniden Corp. of Am., 842 F.2d 1074, 1077 (9th Cir.
1988). We need not decide, however, whether the credit
reports are properly before us, because Gorman has submitted
other admissible evidence that creates a triable issue of fact as
to whether his credit reports lacked a notice of dispute.
[20] Gorman previously stated in his declaration that he
had reviewed many of his personal credit reports, and that
none of them included a notice that he disputed the delinquent
charges. This statement is admissible evidence. Gorman has
personal knowledge, having seen the reports. The evidence is
not inadmissible hearsay, as Gorman does not rely on the
credit reports for the truth of the matter asserted therein; in
fact, as he notes, he disputes the truth of their contents.
17
Gorman submitted the credit reports in support of his motion for leave
to file a motion for reconsideration.
GORMAN v. WOLPOFF & ABRAMSON 14685
Instead, Gorman offers them to prove that no statement notic-
ing the dispute was made. “If the significance of an offered
statement lies solely in the fact that it was made . . . the state-
ment is not hearsay.” United States v. Dorsey, 418 F.3d 1038,
1044 (9th Cir. 2005) (quoting Fed. R. Evid. 801 advisory
committee’s note). He thus submitted sufficient evidence for
a jury to conclude that his credit reports contained no notice
of dispute.
[21] There is also sufficient evidence from which a jury
could infer that MBNA did not notify the CRAs that the debt
was disputed. Gorman himself has no personal knowledge of
what MBNA actually submitted to the CRAs in response to
its investigations.18 However, the dispute verification forms
MBNA returned to the CRAs contained no notice that the
debt was disputed; rather, they indicated that the information
previously provided was “accurate as reported.” Yet,
MBNA’s review of Gorman’s account notes revealed that he
continued to dispute the debt even after MBNA concluded its
initial investigation and reposted the Four Peaks charges.
Moreover, according to MBNA’s witness’s declaration,
MBNA told the CRAs that all of the information reported on
Gorman’s account was accurate, and Gorman has produced
sufficient evidence that no notice of dispute appeared on the
credit reports. Gorman has thus submitted sufficient evidence
to create an issue of fact concerning whether MBNA failed to
inform the CRAs, in response to the dispute notice, that Gor-
man still disputed the debt.
[22] In sum, we hold that any investigation under § 1681s-
2(b)(1)(A) must be reasonable; that any reasonable trier of
fact would conclude that MBNA’s investigation was reason-
18
The only evidence he submitted was his sworn declaration that
MBNA “report[ed] my account as delinquent without indicating that some
or all of the debt was disputed by the account holder.” Gorman Decl. ¶ 12,
Apr. 12, 2006. But Gorman provided no indication that he had personal
knowledge of the contents of MBNA’s report.
14686 GORMAN v. WOLPOFF & ABRAMSON
able; that § 1681s-2(b) permits Gorman to bring his claim that
MBNA failed to inform the CRAs that the information about
his delinquency was “incomplete or inaccurate” after investi-
gating the December 2004 notice from the CRAs; and that
Gorman has submitted sufficient evidence to survive sum-
mary judgment on this claim.19
B. Libel Claim
Gorman also advanced a state law libel claim on which the
district court made two rulings. On MBNA’s motion to dis-
miss, the court held that the FCRA did not preempt Gorman’s
libel claim because he alleged malice or willful intent to
injure, satisfying the requirements of § 1681h(e). Gorman I,
370 F. Supp. 2d at 1009-10. MBNA contests this conclusion.
The district court granted MBNA’s motion for summary judg-
ment on the libel claim however, holding that Gorman failed
to submit evidence creating a disputed issue of material fact
with respect to malice or willful intent. Gorman II, 435 F.
Supp. 2d at 1009-10. Gorman appeals this ruling.
1. Preemption
The preemption question presents a difficult issue of first
impression. The difficulty arises from the interaction of two
provisions of the FCRA. Section 1681h governs the
“[c]onditions and form of disclosure to consumers,” disclo-
sures that CRAs are required or permitted to make under other
19
Because the district court held that there was no private right of action
under § 1681s-2(b), it did not reach the merits of Gorman’s claim. Gor-
man II, 435 F. Supp. 2d at 1008-09. On appeal, MBNA’s arguments as to
this claim are only that there is no private right of action, and, in the alter-
native, that Gorman has failed to introduce admissible evidence that
MBNA failed to report the debt as disputed. We do not go beyond the
arguments made, and so conclude only that Gorman can go forward with
his claim, having produced admissible evidence that MBNA failed to
report the debt as disputed. We take no position as to whether MBNA’s
failure to report the debt as disputed violated § 1681s-2(b).
GORMAN v. WOLPOFF & ABRAMSON 14687
sections of the Act. Section 1681h(e) sets forth, in relevant
part, the following “[l]imitation of liability” (with emphasis
added):
Except as provided in sections 1681n and 1681o of
this title, no consumer may bring any action or pro-
ceeding in the nature of defamation, invasion of pri-
vacy, or negligence with respect to the reporting of
information against any consumer reporting agency,
any user of information, or any person who furnishes
information to a consumer reporting agency, based
on information disclosed pursuant to section 1681g,[20]
1681h,[21] or 1681m[22] of this title or based on infor-
mation disclosed by a user of a consumer report to
or for a consumer against whom the user has taken
adverse action, based in whole or in part on the
report except as to false information furnished with
malice or willful intent to injure such consumer
Section 1681t addresses more generally the FCRA’s
“[r]elation to State laws.” In general, the FCRA does not pre-
empt any state law “except to the extent that those laws are
inconsistent with any provision of this subchapter, and then
only to the extent of the inconsistency.” § 1681t(a). But this
general rule has several exceptions, added in 1996, including
the following:
20
Section 1681g addresses “[d]isclosures to consumers.” It provides in
detail the information CRAs must disclose to consumers, the rights of con-
sumers to obtain credit reports and scores and to dispute information in
credit reports, and the information that must be made available to identity
theft victims and mortgage applicants.
21
Section 1681h, as noted above, deals with the “[c]onditions and form”
of these disclosures.
22
Section 1681m addresses the duties of “users of consumer reports.” In
essence, it imposes certain responsibilities on persons who take adverse
actions based on credit reports or another source of information about a
person’s credit, or who make solicitations on the basis of credit reports.
14688 GORMAN v. WOLPOFF & ABRAMSON
No requirement or prohibition may be imposed
under the laws of any State . . . with respect to any
subject matter regulated under . . . section 1681s-2 of
this title, relating to the responsibilities of persons
who furnish information to consumer reporting agen-
cies, except that this paragraph shall not apply—
(i) with respect to section 54A(a) of chapter
93 of the Massachusetts Annotated Laws
(as in effect on September 30, 1996); or
(ii) with respect to section 1785.25(a) of the
California Civil Code (as in effect on Sep-
tember 30, 1996).
§ 1681t(b)(1)(F).[23] No changes were made to § 1681h(e) with
these amendments.
Although § 1681t(b)(1)(F) appears to preempt all state law
claims based on a creditor’s responsibilities under § 1681s-2,
23
The parties assume that, if § 1681t(b)(1)(F) applies, it bars Gorman’s
libel claim. We note, however, that the application of that section to any
given common law claim is not self-evident. In Cipollone v. Liggett
Group, Inc., 505 U.S. 504 (1992), the Supreme Court discussed whether
a preemption provision containing the same “No requirement or prohibi-
tion . . . shall be imposed” language applied to some, but not all, common
law claims. A plurality of the Court analyzed the question as follows: “we
ask whether the legal duty that is the predicate of the common-law dam-
ages action constitutes a ‘requirement or prohibition based on smoking
and health . . . imposed under State law with respect to . . . advertising or
promotion,’ giving that clause a fair but narrow reading.” Id. at 523-24
(alterations in original). See also Medtronic, Inc. v. Lohr, 518 U.S. 470,
485 (1996) (applying a “ ‘presumption against the pre-emption of state
police power regulations’ to support a narrow interpretation of such an
express [statutory] command.”). Assuming this is the right inquiry, libel
law probably entails a “prohibition . . . with respect to” what a furnisher
of information can report to a CRA. We do not decide the question, how-
ever, given our conclusion that Gorman has not presented sufficient evi-
dence to state a libel claim.
GORMAN v. WOLPOFF & ABRAMSON 14689
§ 1681h(e) suggests that defamation claims can proceed
against creditors as long as the plaintiff alleges falsity and
malice. Attempting to reconcile the two sections has left dis-
trict courts in disarray. The district court in this case held that
§ 1681h(e), the more specific preemption provision, trumped
the more general preemption provision of § 1681t(b)(1)(F).24
Gorman I, 370 F. Supp. 2d at 1009-10 (citing Gordon v.
Greenpoint Credit, 266 F. Supp. 2d 1007, 1013 (S.D. Iowa
2003)). Other district courts have followed different
approaches. Some have concluded that the later-enacted
§ 1681t(b)(1)(F) effectively repeals the earlier preemption
provision, § 1681h(e). Jaramillo v. Experian Info. Solutions,
Inc., 155 F. Supp. 2d 356, 361 (E.D. Pa. 2001) (footnote omit-
ted) (the “total preemption” approach). Attempting to give
meaning to both sections, other courts have observed that
§ 1681t(b)(1)(F) relates to “any subject matter regulated under
section 1681s-2,” the section which regulates the responses of
furnishers to notices of dispute. Hence, these courts apply a
“temporal approach,” holding that “causes of action predi-
cated on acts that occurred before a furnisher of information
had notice of any inaccuracies are not preempted by
§ 1681t(b)(1)(F), but are instead governed by § 1681h(e).”
Kane v. Guar. Residential Lending, Inc., 2005 WL 1153623,
at *8 (E.D.N.Y. May 16, 2005).
Gorman advocates a still different “statutory” analysis,
under which “t(b)(1)(F) preempts only state law claims
against credit information furnishers brought under state stat-
utes, just as 1681h(e) preempts only state tort claims.” Manno
v. Am. Gen. Fin. Co., 439 F. Supp. 2d 418, 425 (E.D. Pa.
24
We note that both provisions are specific in different ways:
§ 1681t(b)(1)(F) is specific as to the target of suits, governing require-
ments placed on furnishers of information; § 1681h(e) is specific as to the
nature of the claim, permitting certain common law claims if falsity and
malice is shown. So, in some sense, both provisions are “specific.” But
§ 1681h(e) may be more specific for preemption purposes, because the
tension is the nature of the claims preempted, and § 1681h(e) specifies
certain claims that can be brought.
14690 GORMAN v. WOLPOFF & ABRAMSON
2006) (describing the approach).25 Finally, MBNA argues that
§ 1681h(e) is not a broad preemption provision at all, but sim-
ply a “grant of protection for statutorily required disclosures.”
(quoting McAnly v. Middleton & Reutlinger, P.S.C., 77 F.
Supp. 2d 810, 814 (W.D. Ky. 1999)). But, of course, granting
entities immunity from state law tort suits in exchange for
making required disclosures is just another way of saying that
certain state law claims are preempted.26
In the end, we need not decide this issue. As we conclude
below, even if Gorman could bring a state law libel claim
under § 1681h(e), and such a claim were not preempted by
§ 1681t(b)(1)(F), he has not introduced sufficient evidence to
survive summary judgment on this claim.
25
Support for this view rests on the proposition that “Congress seems to
have been most concerned with protecting credit information furnishers
from state statutory obligations inconsistent with their duties under the
FCRA.” Manno, 439 F. Supp. 2d at 425. Section 1681t(b)(1)(F) exempts
two specific state statutes from preemption, suggesting, some courts say,
that Congress “had state statutes in mind.” Id. Other subsections of
§ 1681t also exempt state statutes; none addresses common law claims.
Yet, this distinction does not appear in the text of the statute. In fact, “[t]he
phrase ‘[n]o requirement or prohibition’ sweeps broadly and suggests no
distinction between positive enactments and common law; to the contrary,
those words easily encompass obligations that take the form of common-
law rules.” Cipollone, 505 U.S. at 521 (1992) (plurality opinion) (second
alteration in original); see also Riegel v. Medtronic, Inc., 128 S. Ct. 999,
1008 (2008) (adopting this position for a majority of the Court).
26
McAnly offers one reason why Congress may have chosen to preempt
such state law claims:
Since various parts of the federal statute require consumer report-
ing agencies and information users to disclose information to
consumers under certain circumstances, this section guarantees
that the agencies or users cannot be sued for those required dis-
closures under state tort law. It makes sense that acts required to
be done by the FCRA are immunized from state tort liability.
77 F. Supp. 2d at 814-15. However illuminating this explanation may be,
it does not help resolve the apparent conflict between §§ 1681h(e) and
1681t(b)(1)(F).
GORMAN v. WOLPOFF & ABRAMSON 14691
2. Evidence
[23] Under California law, “[l]ibel is a false and unprivi-
leged publication . . . which exposes any person to hatred,
contempt, ridicule, or obloquy, or which causes him to be
shunned or avoided, or which has a tendency to injure him in
his occupation.” Cal. Civ. Code § 45. Even if Gorman’s libel
claim is not preempted by § 1681t(b)(1)(F), it is still subject
to § 1681h(e), and so he must prove, in addition to the com-
mon law elements of libel, that the information was “false”
and “furnished with malice or willful intent to injure.”
[24] The FCRA does not define the appropriate standard
for “malice.” The two circuits that have interpreted
§ 1681h(e) have applied the standard enunciated in New York
Times v. Sullivan, 376 U.S. 254, 279-80 (1964), requiring the
publication be made “with knowledge that it was false or with
reckless disregard of whether it was false or not.” See Morris
v. Equifax Info. Servs., LLC, 457 F.3d 460, 471 (5th Cir.
2006); Thornton v. Equifax, Inc., 619 F.2d 700, 705 (8th Cir.
1980). Under New York Times, to show “reckless disregard,”
a plaintiff must put forth “sufficient evidence to permit the
conclusion that the defendant in fact entertained serious
doubts as to the truth of his publication.” St. Amant v. Thomp-
son, 390 U.S. 727, 731 (1968); see also Morris, 457 F.3d at
471 (applying St. Amant). We agree with the courts that have
adopted the New York Times standard for purposes of
§ 1681h(e), and so apply it here.
Gorman’s libel claim is based on two pieces of information
reported by MBNA: the underlying debt itself and the report-
ing of the debt without a notation that it was disputed.
As to the debt itself, there is no evidence that MBNA knew
the debt was false or acted with reckless disregard as to its fal-
sity. As an initial matter, the bulk of the delinquent debt —
about $5,000 — derives from non-disputed credit card pur-
chases, unrelated to the disputed Four Peaks charge. Gorman
14692 GORMAN v. WOLPOFF & ABRAMSON
contends that he does not owe these charges, claiming an off-
set for his attorneys’ fees incurred in the dispute over the Four
Peaks debt. But he has presented no authority whatever sup-
porting his entitlement to these fees, nor any evidence that
these fees are reasonable. Absent any evidence or colorable
argument that this portion of the debt to MBNA was invalid,
no reasonable jury could find that MBNA acted maliciously
in reporting this portion of the debt to the CRAs.
Gorman has also failed to introduce sufficient evidence of
malice with respect to the remaining portion of the debt, the
roughly $750 disputed Four Peaks charge. Even assuming that
the debt was indeed invalid, we cannot say that a reasonable
jury could conclude that MBNA acted with “reckless disre-
gard” as to the invalidity of the debt.27
MBNA conducted an investigation into Gorman’s dispute
in which it contacted both Gorman and Four Peaks. As a
result of the investigation, it initially agreed to remove the
charges, reinstating them only after learning that Gorman had
failed to return the merchandise. The remaining controversy
involves a legal and factual disagreement between Gorman
and Four Peaks.28 MBNA did not act recklessly by failing to
wade through this complex legal and factual debate. See
Bloom v. I.C. Sys., Inc., 972 F.2d 1067, 1069 (9th Cir. 1992)
27
We do not decide whether the debt related to the Four Peaks charge
is valid, as the question is not before us.
28
Gorman’s essential claim is that in rejecting the goods and making
them available to Four Peaks for pickup, he has done all that is required
under California law. See Cal. Com. Code § 2602 (“If the buyer has before
rejection taken physical possession of the goods . . . he is under a duty
after rejection to hold them with reasonable care at the seller’s disposition
for a time sufficient to permit the seller to remove them.”). Four Peaks
claimed to have sent Gorman pre-paid shipping labels for the defective
merchandise’s return, but insisted that Gorman would have to pay to
return the replacement equipment it claims to have sent. Gorman insists
that he did not receive any replacement merchandise or shipment labels
and, in any event, he refuses to pay any shipping costs.
GORMAN v. WOLPOFF & ABRAMSON 14693
(concluding that a furnisher does not act with malice when it
takes “reasonable steps to verify the information” in its credit
report). That it reposted the debt in reliance on Four Peaks’s
version rather than resolving the dispute in Gorman’s favor
does not demonstrate that MBNA “entertained serious doubts
as to the truth of [its] publication.” St. Amant, 390 U.S. at 731.
Additionally, even if MBNA violated its obligations to
report that Gorman disputed the debt, this failure does not
render the information that was reported “false” so as to sup-
port a libel claim meeting the § 1681h(e) malice standard. The
obligation to report a disputed debt is a protective regulatory
requirement imposed by the FCRA. § 1681s-2(a)(3); see also
12 C.F.R. § 226.13. Any failure by MBNA to meet this
requirement may render its reporting deficient under the stat-
ute, but it does not render the information MBNA did furnish
maliciously or wilfully false. So long as the creditor has a
good faith reason for believing that the debt is in fact owed,
reporting the debt without reporting the dispute does not con-
vey “false” information “with malice or willful intent to injure
the consumer.” See Francis v. Dun & Bradstreet, Inc., 4 Cal.
Rptr. 2d 361, 364 (Ct. App. 1992) (holding that a defamation
claim cannot be sustained for truthful information in a credit
report, even if the information reported supports misleading
inferences).
Gorman has offered no evidence that MBNA seriously
doubted that the debt was owed, or that MBNA believed Gor-
man had a meritorious dispute. The record suggests instead
that MBNA investigated the debt and determined that it was
valid. Despite its conclusion, MBNA may still have faced a
regulatory obligation to report the continuing dispute, but its
failure to do so was not malicious.
[25] Gorman’s sole evidence of MBNA’s malice or intent
to injure is the statement in his declaration that an MBNA
representative told him, during a collection call, “We’re a big
bank. You either pay us or we’ll destroy your credit.” But this
14694 GORMAN v. WOLPOFF & ABRAMSON
incident does not evidence a knowledge on MBNA’s part that
the debt was not valid. In the context of other evidence in the
record — including Gorman’s refusal to pay any of his credit
card bill because of supposed attorneys’ fees owed him by
MBNA — there is no basis for concluding that MBNA issued
that threat knowing no debt was due or recklessly disregard-
ing the invalidity of the debt.
[26] As Gorman cannot state a claim for libel consistent
with the limited exception contained in § 1681h(e) of the
FCRA, we affirm the district court’s grant of summary judg-
ment to MBNA on Gorman’s libel claim.
C. California Civil Code § 1785.25(a)
[27] Finally, Gorman brings a claim under California Civil
Code section 1785.25(a), which provides:
A person shall not furnish information on a specific
transaction or experience to any consumer credit
reporting agency if the person knows or should know
the information is incomplete or inaccurate.
Section 1681t(b)(1)(F), the FCRA’s preemption provision,
expressly exempts this subsection — California Civil Code
section 1785.25(a) — from its general exclusion of state law
claims on matters governed by § 1681s-2.29
29
As noted above, § 1681t(b)(1)(F) provides:
No requirement or prohibition may be imposed under the laws of
any State . . . with respect to any subject matter regulated under
. . . section 1681s-2 of this title, relating to the responsibilities of
persons who furnish information to consumer reporting agencies,
except that this paragraph shall not apply—
(i) with respect to section 54A(a) of chapter 93 of the Massa-
chusetts Annotated Laws (as in effect on September 30,
1996); or
(ii) with respect to section 1785.25(a) of the California Civil
Code (as in effect on September 30, 1996).
The Massachusetts statute sets forth procedures to ensure accuracy of
information reported to consumer reporting agencies.
GORMAN v. WOLPOFF & ABRAMSON 14695
On MBNA’s motion to dismiss, the district court neverthe-
less held the California statutory claim preempted, because
the private right of action to enforce California Civil Code
section 1785.25(a) is found in other sections not specifically
exempted from the federal preemption provision, namely,
California Civil Code sections 1785.25(g)30 and 1785.31.31
Because these specific sections were not excluded from the
preemption section of the FCRA, the district court concluded,
violations of California Civil Code section 1785.25(a) could
only be enforced by federal or state officials. Gorman I, 370
F. Supp. 2d at 1010-11.
We do not find the district court’s reasoning persuasive. As
an initial matter, the court did not cite any provision of Cali-
fornia law authorizing enforcement of section 1785.25(a) by
state officials. Lin v. Universal Card Services Corp., 238 F.
Supp. 2d 1147 (N.D. Cal. 2002), on which the district court
relied, similarly fails to identify authorization for enforcement
by state officials. Such authorization may reside elsewhere in
California law, but if it does, it almost surely lies in provi-
sions also not specifically excluded by the FCRA preemption
provision. The district court’s analysis would thus lead to the
conclusion that Congress explicitly retained the portions of
the California statutory scheme that create obligations, with-
out leaving in place any enforcement mechanism. This would
be an unlikely result at best.32
30
Section 1785.25(g) provides:
A person who furnishes information to a consumer credit report-
ing agency is liable for failure to comply with this section, unless
the furnisher establishes by a preponderance of the evidence that,
at the time of the failure to comply with this section, the furnisher
maintained reasonable procedures to comply with those provi-
sions.
31
Section 1785.31 provides that “[a]ny consumer who suffers damages
as a result of a violation of this title by any person may bring an action”
to recover damages.
32
In Islam v. Option One Mortgage Corp., 432 F. Supp. 2d 181 (D.
Mass. 2006), the court examined the Massachusetts provision, Mass. Gen.
14696 GORMAN v. WOLPOFF & ABRAMSON
[28] Moreover, the district court construed the statutory
exception in isolation, disregarding the affirmative preemp-
tion language of the statute that “[n]o requirement or prohibi-
tion may be imposed” with respect to subjects regulated under
§ 1681s-2. (emphasis added). Neither California Civil Code
section 1785.25(g) nor section 1785.31 imposes a “require-
ment or prohibition.” Rather, these sections merely provide a
vehicle for private parties to enforce other sections, which do
impose requirements and prohibitions. In other words, Con-
gress had no need to include these enforcement provisions in
the § 1681t(b)(1)(F) exception to save the California statutory
scheme from preemption, because those provisions were not
preempted by the affirmative language of the preemption pro-
vision. By the plain language of the statute, therefore, these
sections are not preempted by § 1681t(b)(1)(F).
MBNA argues that this plain reading of the statute is fore-
closed by the Supreme Court’s decision in Cipollone. Inter-
preting the phrase “any requirement or prohibition” in the
Federal Cigarette Label and Advertising Act, a majority of the
Cipollone Court held that common law damages actions can
Law 93 § 54A(a), that is also excluded from § 1681t(b)(1)(F). As with the
California statute, the FCRA explicitly identifies the portion of the Massa-
chusetts statute that creates the reporting obligations for furnishers, but
does not expressly mention the section that provides for private enforce-
ment. Id. at 185-86. The court held that absent any evidence that state offi-
cials were authorized to enforce this provision, the construction urged by
the district court here could not stand: “it is absurd to conclude that Con-
gress would have explicitly excepted [Mass. Gen. Law 93 § 54A(a)] while
not leaving an enforcement mechanism.” Id. at 189. Finding that the par-
ties stipulated to the Attorney General’s authority, however, Islam held the
private state claim preempted. Id.
The Islam court also felt itself constrained by the First Circuit’s affir-
mance of Gibbs v. SLM Corp., 336 F. Supp. 2d 1 (D. Mass. 2004), aff’d,
Gibbs v. SLM Corp., No. 05-1057, 2005 WL 5493113 (1st Cir. Aug. 23,
2005), which also construed § 1681t(b)(1)(F) as preempting private causes
of action under the Massachusetts statute, and was summarily affirmed by
the First Circuit without analysis. As we engage in more thorough statu-
tory construction analysis, we reach a different conclusion.
GORMAN v. WOLPOFF & ABRAMSON 14697
impose “requirement[s] or prohibition[s],” because “regula-
tion can be as effectively exerted through an award of dam-
ages as through some form of preventive relief.” 505 U.S. at
521 (plurality opinion) (citation omitted).33 But, as the court
later made clear in a majority opinion relying on the
Cipollone plurality’s discussion on this point, it is not the
common law enforcement mechanisms that are requirements
or prohibitions, but the “common law duties” underlying such
actions. Riegel v. Medtronic, Inc., 128 S. Ct. 999, 1008 (2008)
(emphasis added). As Riegel went on to explain, again relying
on the Cipollone plurality, “common-law liability is premised
on the existence of a legal duty, and a tort judgment therefore
establishes that a defendant has violated a state-law obliga-
tion.” Id. (quoting Cipollone, 505 U.S. at 522) (emphasis
added). Thus, a “requirement” is “a rule of law that must be
obeyed,” Bates v. Dow Agrosciences LLC, 544 U.S. 431, 445
(2005), whether it arises from common law principles
enforceable in damages actions or in a statute. But the dam-
ages remedy itself is not a “requirement or prohibition.”
Here, it is California Civil Code section 1785.25(a), and
only section 1785.25(a), that imposes legal duties — “rule[s]
of law that must be obeyed” — on furnishers of information.
Congress explicitly saved this section from preemption in the
FCRA. Private enforcement of these obligations does not
impose “requirement[s] or prohibition[s]” but, instead, pro-
vides enforcement mechanisms for “requirement[s] or prohi-
bition[s] imposed separately. Sections 1785.25(g) and
1785.31 do not impose any additional standards “designed to
be . . . potent method[s] of governing conduct and controlling
policy,” Riegel, 128 S. Ct. at 1008, nor do these sections
33
Although only a plurality of the Court signed onto the portion of the
opinion containing this specific language, a majority of justices adopted
the position that the language “requirement or prohibition” sweeps broadly
enough to encompass state common-law rules. See Cipollone, 505 U.S. at
548-49 (Scalia and Thomas, JJ., concurring in the judgment in part and
dissenting in part).
14698 GORMAN v. WOLPOFF & ABRAMSON
require furnishers to obey any additional rules of law. The
rules that must be obeyed already exist in the reporting obli-
gations specified by section 1785.25(a) and saved in the
FCRA. See Bates, 544 U.S. at 445.
MBNA’s argument that Congress’s desire for uniformity
and consistency compels an alternative construction is also
unpersuasive in this context. MBNA maintains that the FCRA
preemption provision evidences a desire for uniform credit
reporting obligations, and that the California statute was
saved only because it was not inconsistent with obligations
imposed by the federal statute. The legislative history sur-
rounding § 1681t(b)(1)(F) is murky, but there is evidence that
the statutory scheme, which establishes national requirements
and preempts most state regulation, was motivated at least in
part by a desire for uniformity of reporting obligations. See S.
Rep. No. 103-209, at 7 (1993) (“Recognizing the national
scope of the consumer reporting industry and the benefits of
uniformity, the Committee bill includes provisions preempt-
ing state law in several key areas of the FCRA.”). It is also
true that the excepted state law provisions are largely consis-
tent with obligations imposed in the FCRA; indeed, the
requirements imposed in the California and Massachusetts
laws appear, in nearly identical fashion, in § 1681s-2(a).34
34
Compare Cal. Civ. Code section 1785.25(a) (“A person shall not fur-
nish information on a specific transaction or experience to any consumer
credit reporting agency if the person knows or should know the informa-
tion is incomplete or inaccurate.”), and Mass. Gen. Law 93 § 54A(a)
(“Every person who furnishes information to a consumer reporting agency
shall follow reasonable procedures to ensure that the information reported
to a consumer reporting agency is accurate and complete. No person may
provide information to a consumer reporting agency if such person knows
or has reasonable cause to believe such information is not accurate or
complete.”), with § 1681s-2(a)(1)(A) (“A person shall not furnish any
information relating to a consumer to any consumer reporting agency if
the person knows or has reasonable cause to believe that the information
is inaccurate.”).
As MBNA indicates, when the California exception was added in 1996,
the relevant portion of the FCRA was worded differently. See 15 U.S.C.
GORMAN v. WOLPOFF & ABRAMSON 14699
But the difference between the California statute and the
FCRA regarding remedies does not offend the purported goal
of uniformity of credit reporting obligations. The enforcement
sections do not impose inconsistent or conflicting obligations
on furnishers of information; as we have noted, they impose
no such requirements or prohibitions at all. As such, the
enforcement provisions do not add to a patchwork of confus-
ing obligations with which a furnisher must struggle to com-
ply. They instead allow for additional avenues through which
consumers can ensure that furnishers are complying with the
obligations Congress specifically meant to impose.
Moreover, exempting specific state statutes from preemp-
tion is very unusual in federal statutes. To suppose Congress
would do so for little or no purpose — as would be the case
if the private cause of action under California law were pre-
empted — is simply not plausible. See Geier v. Am. Honda
Motor Co., 529 U.S. 861, 868 (2000) (“The saving clause
assumes that there are some significant number of . . . cases
to save.”).
[29] Because the plain language of the preemption provi-
sion does not apply to private rights of action, and because the
likely purpose of the express exclusion was precisely to per-
mit private enforcement of these provisions, we hold that the
§ 1681s-2(a)(1)(A) (1996) (prohibiting furnishing of information that fur-
nisher “knows or consciously avoids knowing” is inaccurate). Congress
later amended the FCRA to more closely track the language of the Califor-
nia statute. MBNA argues that it was originally reasonable for Congress
expressly to exclude the California statute from preemption simply
because it imposed broader, and potentially inconsistent, obligations on
furnishers. Although this may be true, when Congress later amended the
FCRA essentially to match the California statute, it did not then remove
the California exception, as it could have done. The decision to retain the
exception for California Civil Code section 1785.25(a) thus suggests that
Congress likely intended to preserve the remaining unique provisions of
the California scheme, including the private enforcement provisions.
14700 GORMAN v. WOLPOFF & ABRAMSON
private right of action to enforce California Civil Code section
1785.25(a) is not preempted by the FCRA.35
35
On petition for rehearing en banc, MBNA raises for the first time an
argument that allowing private enforcement of California Civil Code sec-
tion 1785.25(a) is inconsistent with the purpose of the FCRA and thus is
preempted under both FCRA § 1681t(a) and ordinary conflict preemption
provisions. MBNA did not advance this contention before us initially, so
the argument is waived. See Smith v. Marsh, 194 F.3d 1045, 1052 (9th Cir.
1999).
Even if we were to entertain MBNA’s conflict preemption argument,
however, we would reject it for several reasons. First, a complete reading
of the statutory language continues to convince us that Congress intended
to except the California statute—including the private enforcement
provisions—from preemption. As we note, the remedial provisions do not
impose any “requirement[s] or prohibition[s]” on furnishers of information
as those terms are ordinarily understood, and so the private enforcement
provisions do not fall within the statute’s express preemption provision.
Even more importantly, the savings provision, § 1681t(b)(1)(F)(ii), pro-
vides that FCRA’s preemption provisions do not apply “with respect to”
California Civil Code section 1785.25(a). Unlike other state laws
expressly saved by the exceptions to the express preemption provision,
which, for example, state that the FCRA “shall not apply to any State law
in effect on September 30, 1996,” see § 1681t(b)(1)(E) (emphasis added),
Congress used the broader “with respect to” language to refer to the Cali-
fornia statute.
The most sensible understanding of this difference is that Congress
intended for the exception to apply not only to the specific subsection
mentioned in the statute, but also to California laws that operate “with
respect to” that subsection, which would include the private enforcement
sections. Where Congress saves a particular state law from preemption, it
would be incoherent to hold that the state law is otherwise preempted
because it was somehow “inconsistent” with an overarching congressional
purpose.
Second, MBNA directs us to FCRA § 1681s(c) to support its contention
that the FCRA preserves state law enforcement officials’ powers to
enforce California Civil Code section 1785.25(a).
Section 1681s(c) provides, in relevant part, “In addition to other reme-
dies as are provided under State law, if the chief law enforcement officer
of a State . . . has reason to believe that any person has violated or is vio-
lating this subchapter, the State [may bring actions to enjoin the violation
and recover damages].”
GORMAN v. WOLPOFF & ABRAMSON 14701
D. Evidence of Causation/Damages
Finally, MBNA proposes an alternative ground on which to
affirm all claims: that Gorman failed in the summary judg-
ment proceedings to submit admissible evidence of causation
or damages. In Dennis v. BEH-1, LLC, 520 F.3d 1066, 1069-
70 (9th Cir. 2008), this court found sufficient evidence of cau-
sation and damages to survive summary judgment where:
Dennis [the plaintiff] testified that he hoped to start
a business and that he diligently paid his bills on
time for years so that he would have a clean credit
history when he sought financing for the venture.
The only blemish on his credit report in April 2003
was the erroneously reported judgment. According
We think this provision supports, rather than undermines, the position
that the FCRA does not preempt private enforcement of the California
statute. If anything, section 1681s(c) provides authorization for state offi-
cials to enforce violations of the FCRA, while at the same time preserving
“other remedies as are provided under State law,” including private
enforcement remedies for state law violations: Importantly, section
1681s(c) does not refer to “other remedies as are provided to chief law
enforcement officers under State law.” In other words, to the extent that
Congress saved a state liability rule from preemption, it intended also to
save “other remedies as are provided under State law” to enforce those lia-
bility rules.
Third, the available legislative history and administrative interpretation
of the FCRA supports our holding concerning the scope of the FCRA pre-
emption provisions. The Senate report concluded that “no State law would
be preempted [by the FCRA] unless compliance would involve a violation
of Federal law." S. Rep. No. 97-517, at 12 (1969). The Federal Trade
Commission, charged with enforcing the FCRA, similarly understands the
“basic rule” governing preemption under the FCRA: Section 1681t(a) pre-
empts state law “only when compliance with inconsistent state law would
result in a violation of the FCRA.” 16 C.F.R. pt. 600 appx. § 622 ¶ 1. As
we note, permitting private enforcement of state law obligations that are
nearly identical to the FCRA’s obligations would not require furnishers to
violate the FCRA to comply with state law.
14702 GORMAN v. WOLPOFF & ABRAMSON
to Dennis, that was enough to cause several lenders
to decline his applications for credit, dashing his
hopes of starting a new business. Dennis also claims
that Experian’s error caused his next landlord to
demand that Dennis pay a greater security deposit.
[30] Here, Gorman submitted evidence that he was refused
credit or offered higher than advertised interest rates; the
explanations given by the creditors were delinquencies on his
credit report; and the only delinquency is the MBNA account.
Gorman maintains that he had to borrow money at inflated
interest rates, and that he lost wages from the time spent deal-
ing with his credit problems. Under Dennis, this is sufficient
to establish causation and damages.
III. CONCLUSION
For the foregoing reasons, we AFFIRM in part and
REVERSE in part the district court’s order.