The Court of Appeals for the Ninth Circuit has reversed a lower court’s dismissal of a Fair Credit Reporting Act lawsuit, ruling that separate allegations that the defendant failed to properly reinvestigate a dispute do not count as one continuous violation.
The Background: The plaintiff accused the defendant of willfully violating the FCRA on nine occasions by failing to reinvestigate disputed information. The plaintiff also appeared to claim the defendant violated the FCRA 40 times based on 40 inaccurate credit reports.
- The District Court dismissed the suit, saying it was barred by the theory of res judicata, which states that if a ruling has already been issued, the matter cannot be relitigated. In this case, the plaintiff had sued the defendant in small claims court, raising four of the nine failures to reinvestigate the disputed information.
- The District Court assumed that each of the nine times the plaintiff disputed the reporting of false information to the defendant the each of the 40 times the defendant generated a credit report with false information constituted separate causes of action under the FCRA.
The Ruling: The small claims court only investigated four of the nine disputes, the Appeals Court noted. Whether the defendant conducted a reasonable reinvestigation in the other five disputes remains unanswered.
- The small claims court determined that the plaintiff’s bank was at fault for the false reporting, and made no finding whether the defendant conducted reasonable reinvestigations of the disputes or was at fault for preparing 40 credit reports with false information.
- The Appeals Court did note that it was not making any judgments or determinations whether the plaintiff’s allegations constitute separate violations and which claims, if any, are precluded by the small claims court case.
