United States Court of Appeals
For the First Circuit
No. 07-1896
BRIAN DIXON,
Plaintiff, Appellant,
v.
SHAMROCK FINANCIAL CORPORATION,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge]
Before
Howard, Circuit Judge,
Stahl and Siler*, Senior Circuit Judges.
Daniel A. Edelman, with whom Cathleen M. Combs, James O.
Latturner, Edelman, Combs, Latturner & Goodwin, LLC, Christopher
Lefevbre, Claude Lefebvre, and Christopher Lefebvre, P.C. were on
brief, for appellant.
Jeffrey R. Martin, with whom Burns & Levinson LLP was on
brief, for appellee.
James W. McGarry, Thomas M. Hefferon, Joseph F. Yenouskas, and
Goodwin Procter LLP, on brief for amicus curiae American Financial
Services Association, Consumer Mortgage Coalition, and Mortgage
Bankers Association.
April 3, 2008
*
Of the Sixth Circuit, sitting by designation.
HOWARD, Circuit Judge. Plaintiff Brian Dixon, for
himself and a class, claims that defendant Shamrock Financial
Corporation unlawfully accessed his credit report, in violation of
the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681. The
district court granted Shamrock's motion to dismiss, and Dixon now
appeals. Guided largely by our recent ruling in Sullivan v.
Greenwood Credit Union,___ F.3d ___, 2008 WL 726135, (1st Cir. Mar.
19, 2008), we affirm.
I.
Plaintiff Brian Dixon received a mailer from Shamrock
Financial Corporation ("Shamrock"), the contents of which are the
subject of this appeal. Dixon claimed that Shamrock unlawfully
accessed his credit report in order to solicit him, in violation of
the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681.
The FCRA regulates access to individuals' "consumer
reports" (commonly known as credit reports). An entity may gain
access to an individual's consumer report only with the written
consent of the individual, unless the consumer report is to be used
for certain "permissible purposes," in which case written consent
is not required. Id. § 1681b. One such permissible purpose is to
extend a firm offer of credit or insurance. Id. § 1681b(c).
Lenders thus do not need written consent in order to access certain
information about individuals from their consumer reports, provided
they make a firm offer of credit to those individuals. Within this
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framework, lenders do not gain access to any individual consumer's
full consumer report. Rather, lenders receive names and addresses
of consumers who fit a given credit profile. Id. § 1681b(c)(2).
Lenders must then extend to those consumers whose names and
addresses it has received a "firm offer of credit." This term has
a specific meaning in the statute which we will discuss later.
Essentially, however, a "firm offer of credit" is defined by the
FCRA as an offer that may be conditioned on additional preexisting
internal criteria set by a lender.
Dixon received a pre-screened mailer from Shamrock. The
mailer opens with the heading: "IMPORTANT CREDIT INFORMATION OPEN
IMMEDIATELY." A personal invitation to Dixon follows, from a
"Kathy Kelly." Kelly addresses Dixon as follows:
. . . Shamrock Financial's expertise is helping
homeowners exactly like you. In just a few minutes, I
can show you how you may restructure your debt, maximize
tax benefits, improve your credit score and most
importantly, save lots of money every month.
Call [number] for a free consultation and a complete
credit profile . . . .
Shamrock Financial can pay off your revolving debt and
refinance your mortgage balance at a lower rate. Your
credit score could then increase 100 points or more.
The mailer also contained a set of disclaimers on the
reverse side, as follows:
TERMS & CONDITIONS: This offer is made by Shamrock
Financial Corporation who is not affiliated with your
current lender nor is it an agency of the government.
This is not a commitment to make a loan. All approvals
are subject to underwriting guidelines. Minimum and
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maximum loan amount apply. Rates and programs subject to
change at any time . . . .
PRE-SCREEN & OPT-OUT NOTICE: This "prescreened" offer of
credit is based on information in your credit report
indicating that you meet certain criteria. This offer is
not guaranteed if you do not meet our criteria (including
providing acceptable property collateral). If you do not
want to receive prescreened offers of credit from this
and other companies, call the consumer reporting agencies
at [number] . . . .
Dixon does not allege that he ever contacted Shamrock, or
was denied credit by Shamrock. His claim is that Shamrock violated
the FCRA by accessing his consumer report without extending to him
a "firm offer of credit." Dixon filed suit in United States
District Court for the District of Massachusetts, on behalf of
himself and a class of consumers in Massachusetts, Rhode Island,
New Hampshire and Maine. He sought relief under the FCRA's penalty
provision, 15 U.S.C. § 1681n, providing statutory damages in the
event of a willful violation of the statute, and also sought
injunctive relief and class certification.
The district court granted Shamrock's motion to dismiss,
finding that Shamrock had not violated the FCRA.
II.
We review de novo the district court's Rule 12(b)(6)
dismissal. Torromeo v. Town of Fremont, 438 F.3d 113, 115 (1st
Cir. 2006).
To survive a motion to dismiss, Dixon must plead facts
that "raise a right to relief above the speculative level . . . ."
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Bell Atl. Corp. v. Twombly, 127 S. Ct. 1955, 1965 (2007) (internal
citation omitted). We accept Dixon's well-pleaded facts as true,
but reject "unsupported conclusions or interpretations of law."
Wash. Legal Found. v. Mass. Bar Found., 993 F.2d 962, 971 (1st Cir.
1993).
Dixon's central thesis is that Shamrock's mailer did not
constitute a "firm offer of credit," and thus Shamrock's act of
accessing information from his consumer report was prohibited by
the FCRA. Dixon argues this thesis along two lines: first, that
Shamrock did not present him with a "firm offer"; and second, that
the mailer did not in fact represent an offer of "credit."
We may dispense with the latter claim first. Dixon
alleges that the mailer is just a "solicitation for business," but
he has pled no facts in support of this claim. He tries to liken
Shamrock's mailer to the mailer at issue in Cole v. U.S. Capital,
389 F.3d 719, 722 (7th Cir. 2004), where a pre-screened offer of
credit was found to be a solicitation to sell cars and not an offer
of credit at all. But unlike in Cole, here there are no
allegations that Dixon or any other consumer was denied credit by
Shamrock despite meeting Shamrock's internal criteria, or that
Dixon or any other consumer would have been denied credit had they
contacted the company. At the motion to dismiss stage, there has
been no discovery of Shamrock's lending practices and whether
Shamrock would have approved for a home loan any recipient of the
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mailer who also met Shamrock's internal criteria. This does not
matter, however, because of Dixon's inadequate pleading.1 Dixon's
argument that the mailer is a sham that does not actually represent
an offer of credit goes no further.
Dixon's main argument thus focuses on whether Shamrock's
mailer was sufficiently "firm" to constitute a "firm offer of
credit" under the FCRA. Dixon argues that the mailer is not a firm
offer because it violates common law conceptions of an "offer": it
is not sufficiently definite, in that there are further conditions
attached, and it fails to contain adequate loan terms.
In support of this proposition, Dixon cites to the
Supreme Court’s recent decision interpreting the FCRA, Safeco Ins.
Co. of Am. v. Burr, 127 S. Ct. 2201, 2209 (2007). Dixon argues
that under Safeco, common law terms used in the FCRA incorporate
their common law meanings. A common law "offer," according to
Dixon, is a set of terms that can be immediately accepted, in that
the bargain could be concluded on terms that were clear to both
parties. See Bourque v. FDIC, 42 F.3d 704, 708 (1st Cir. 1994);
see also Restatement (Second) of Contracts, §§ 24, 26 (1981).
Because Shamrock's mailer contained no terms and was not a common
law offer immediately acceptable by the consumer, the argument
runs, Shamrock violated the FCRA. 15 U.S.C. § 1681a(l).
1
Dixon attempted to amend his complaint after the district court
granted Shamrock's motion to dismiss. That motion to amend his
complaint was denied. Dixon has not appealed the denial.
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Our analysis of this question is largely controlled by
our understanding of the FCRA in Sullivan.2 The explicit
definition within the FCRA of "firm offer of credit" precludes the
operation of a common law definition of offer. See Safeco, 127
S.Ct. at 2209 ("[T]he general rule [is] that a common law term in
a statute comes with a common law meaning, absent anything pointing
another way.") (emphasis added); see also Sullivan, 2008 WL 726135
at *6.
Congress established within the FCRA a definition of a
"firm offer of credit" that points to a meaning distinct from the
common law definition. That definition is as follows:
The term “firm offer of credit or insurance”
means any offer of credit or insurance to a
consumer that will be honored if the consumer
is determined, based on information in a
consumer report on the consumer, to meet the
specific criteria used to select the consumer
for the offer, except that the offer may be
further conditioned on one or more of the
following:
(1) The consumer being determined, based on
information in the consumer's application for
the credit or insurance, to meet specific
criteria bearing on credit worthiness or
insurability, as applicable, that are
established--
2
There are two significant differences between these facts and the
facts of Sullivan: (1) Sullivan involved an appeal from a district
court's grant of summary judgment to the defendant lender, and (2)
the mailer at issue in Sullivan contained a maximum loan amount for
the loan offered ("up to 100% of the value of your home"), a term
that the mailer in Dixon did not. Id. 2008 WL 726135 at *1. We
will explicitly acknowledge where we extend Sullivan to encompass
the facts here.
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(A) before selection of the consumer
for the offer; and
(B) for the purpose of determining
whether to extend credit or insurance
pursuant to the offer.
(2) Verification
(A) that the consumer continues to meet
the specific criteria used to select
the consumer for the offer, by using
information in a consumer report on the
consumer, information in the consumer's
application for the credit or
insurance, or other information bearing
on the credit worthiness or
insurability of the consumer; or
(B) of the information in the
consumer's application for the credit
or insurance, to determine that the
consumer meets the specific criteria
bearing on credit worthiness or
insurability.
(3) The consumer furnishing any collateral
that is a requirement for the extension of the
credit or insurance that was--
(A) established before selection of the
consumer for the offer of credit or
insurance; and
(B) disclosed to the consumer in the
offer of credit or insurance.
15 U.S.C. § 1681a(l) (emphasis added). By explicitly defining
"firm offer of credit," Congress has excluded other meanings,
including those derived from the common law.
Moreover, the plain meaning of statutory language within
the section excludes the common law meaning of "offer," because the
FCRA specifically permits lenders to impose post-offer criteria
that would be antithetical to the common law understanding of an
"offer" as an immediately-acceptable set of terms. The statute
allows a "firm offer of credit" to be conditioned on the consumer
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meeting "specific criteria bearing on credit worthiness . . . for
the purpose of determining whether to extend credit . . . pursuant
to the offer." Id. § 1681a(l)(1). The statute also allows for
verification that the consumer meets the lenders’ additional
specific criteria and that the consumer continues to meet the
original specific criteria used to select the consumer for the
offer. Id. § 1681a(l)(2). Thus, "firm offers of credit" cannot be
immediately accepted because they may be conditioned on the
consumer meeting the lender's internal criteria; and because the
consumer might also be required to verify that he or she meets
those additional internal criteria, and that he or she continues to
meet the original, pre-screening, criteria. Because extension of
credit can be contingent on post-offer information, application of
the traditional common law "offer" definition requiring immediate
acceptability would run contrary to the plain meaning of the
statute.
Taking a slightly different tack, Dixon suggests further
that the lack of terms within the mailer constitutes a violation of
the FCRA. The mailer from Shamrock contained almost no material
terms. There was no mention of an interest rate or even a range of
possible interest rates, or of the method for compounding interest.
There was also no loan amount or range of possible loan amounts
disclosed; nor did the mailer set forth the term of the loan or any
costs or fees associated with the loan. The disclaimers on the
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reverse side stated that "[m]inimum and maximum loan amount apply"
and that "[r]ates and programs subject to change at any time;" and
also explained that "[this] offer is not guaranteed if you do not
meet our criteria . . . ." Dixon argues that the failure to
include terms such as the interest rate or the loan amount within
the mailer render the mailer not a "firm offer of credit" under the
FCRA.
We rejected a similar argument in Sullivan: "The term
'firm offer of credit' does not require [that] the offeror include
additional terms other than the pre-selection criteria." Id., 2008
WL 726135 at *6; see also Hoge v. Parkway Chevrolet, No. H-05-2686,
2007 WL 3125298 at *13 (S.D. Tex. Oct. 23, 2007) ("Disclosure of
the exact terms of an auto loan during the preapproval and
solicitation process is not only beyond what the FCRA requires, it
may be an unrealistic standard."); Soroka v. JP Morgan Chase & Co.,
500 F. Supp. 2d 217, 222 (S.D.N.Y. 2007) ("The FCRA simply does not
require that such terms [interest rate, repayment period] be
included in firm offers of credit made pursuant to the statute.")
The contents of this mailer satisfy the FCRA, for two
main reasons. First, Congress's choice to omit from the FCRA any
requirement for the inclusion of loan terms is properly interpreted
to mean that Congress did not intend to require any such terms.
Sullivan, 2008 WL 726135 at *6. The FCRA's detailed requirements
in some areas, i.e., disclosure statements regarding the use of
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consumer reports in the pre-screening process and regarding opt-out
provisions, 15 U.S.C. § 1681m(d)(1)(A)-(E), accompanied by silence
on whether specific loan terms are required, indicates that
disclosure of such terms is not required by the FCRA.
Second and moreover, a related statutory scheme, the
Truth in Lending Act ("TILA"), id. § 1601, regulates the disclosure
of loan terms. Regulations promulgated under the TILA specify how
and when lenders must communicate specific loan terms to consumers.
See 12 C.F.R. §§ 226.5a & 226.5b. The specificity of the TILA on
disclosure of interest rates and repayment periods, and the FCRA's
countervailing silence on the same, lead to the conclusion that
failure to include specific terms in a firm offer of credit does
not violate the FCRA. See, e.g., Sullivan, 2008 WL 726135 at *6;
Soroka, 500 F. Supp. 2d at 222.3
In short, we agree with the district court that the
statutory language of the FCRA does not mandate that pre-screened
offers of credit conform to a common law definition of "offer," or
that specific loan terms must be included in a firm offer of
credit.4
3
The mailer sent to Dixon does not implicate the TILA requirements,
as lenders are only required to disclose specific credit terms by
a particular stage in the transaction: for mortgage loans, at the
time a loan application is provided to the consumer. 12 C.F.R. §
226.5b(b).
4
Even under the Seventh Circuit's "value" test from Cole, 389 F.3d
at 726-27, requiring "firm offers of credit" to provide some
"value" to the consumer, the mailer sent by Shamrock satisfies the
requirements of the FCRA. There is value simply in the potential
for improving one's credit score. See Perry v. First Nat'l Bank,
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Finally, we address consumer privacy interests, an
explicit focus of the FCRA: "There is a need to insure that
consumer reporting agencies exercise their grave responsibilities
with fairness, impartiality, and a respect for the consumer's right
to privacy." 15 U.S.C. § 1681(a)(4). A statutory scheme that
permits lenders to access portions of an individual's consumer
report, a repository of highly personal information, without that
individual's consent countenances a non-trivial invasion of
consumer privacy. Such an invasion was justified by Congress in
enacting the FCRA by, on the one hand, the benefits it brings
consumers in terms of greater access to credit, and by the presence
of a safety valve -- the ability of consumers to opt out of the
practice entirely -- on the other. See S. Rep. No. 103-209, 13-14
(1993) ("[Congress] seeks to balance any privacy concerns created
by pre-screening with the benefit of a firm offer of credit or
insurance" and "[Congress] is aware that some consumers may find
that direct marketing and pre-screening entail an undesirable
invasion of their privacy. Therefore . . . [the FCRA] creates an
459 F.3d 816, 825 (7th Cir. 2006). In addition, a reasonable
interpretation of the mailer's promise to Dixon that Shamrock would
"pay off [his] revolving debt and refinance [his] mortgage balance
at a lower rate" is that Shamrock was offering Dixon a loan with an
interest rate at least lower than what he was currently paying on
his outstanding debt, and of an amount equivalent to his revolving
debt balance. The opportunity to contact Shamrock to see if he was
eligible for such a loan, based on other pre-existing conditions,
had some value for Dixon: he might be able to save money by
refinancing his loan at a lower interest rate than his current
rate. See Murray v. HSBC Auto Fin., No. 05 C 4040, 2006 WL 2861954
at *3 (N.D. Ill. Sept. 27, 2006).
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'opt-out' procedure"). We cannot deny that Dixon suffered an
invasion of privacy, but under this statutory regime, his remedy
lies in the opt-out provision and not in the courts.
Affirmed.
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