United States Court of Appeals
For the First Circuit
No. 09-1214
WEN Y. CHIANG,
Plaintiff, Appellant,
v.
VERIZON NEW ENGLAND INC.,
Defendant, Appellee.
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Douglas P. Woodlock, U.S. District Judge]
Before
Lynch, Chief Judge,
Lipez and Howard, Circuit Judges.
Dean Carnahan with whom Law Offices of Dean Carnahan were on
brief for appellant.
Joshua A. Lewin with whom William A. Worth and Prince, Lobel,
Glovsky & Tye LLP were on brief for appellee.
February 9, 2010
LYNCH, Chief Judge. In July 2006, plaintiff Wen Y.
Chiang sued his telecommunications company, Verizon New England
Inc. (Verizon NE), in state court, alleging in part that the
company had billed his account for telephone service he had not
ordered. Chiang filed a second state court suit against Verizon NE
in February 2007 over a billing dispute triggered by Chiang's
conceded failure to pay telephone bills on two accounts, totaling
approximately $200. Chiang's substantive billing disputes with
Verizon NE were resolved in these state court lawsuits and are not
at issue here.
In November 2006, Chiang brought this suit against
Verizon NE in Massachusetts federal court, seeking more than $1
million for claimed violations of his rights under § 1681s-2(b) of
the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., and
under the Fair Debt Collection Practices Act (FDCPA), id. § 1692 et
seq., as to Verizon NE's handling of the disputes resolved in state
court. The district court granted summary judgment for Verizon NE
on all of Chiang's claims in January 2009. Chiang v. Verizon New
England, Inc., No. 06-cv-12144-DPW, 2009 WL 102707 (D. Mass. Jan.
13, 2009). Chiang appeals from the grant of summary judgment.
In particular, Chiang asserts that Verizon NE, as a
furnisher of information, failed to adequately investigate disputes
about the furnished information reported to it by consumer
reporting agencies (CRAs), as required under the FCRA. 15 U.S.C.
-2-
§ 1681s-2(b). He also alleges that Verizon NE was a debt collector
and its practices were abusive, in violation of the FDCPA. Id.
§ 1692a. Creditors are generally not liable under the FDCPA when
collecting on their own accounts, but Chiang asserts that Verizon
NE falls within a limited exception for creditors who collect their
own debts under a name that suggests a third party is collecting
the account. Id. § 1692a(6).
His claims raise several issues of first impression for
our court. They include whether § 1681s-2(b) of the FCRA provides
for a private right of action and the standards for asserting a
claim under that section. We join other circuits in recognizing
that under § 1681s-2(b) there is a private cause of action, that
the investigation must be reasonable, that this test is objective,
and that plaintiff bears the burden of proof. We further hold that
a § 1681s-2(b) claim requires plaintiff to show actual inaccuracies
that a furnisher's objectively reasonable investigation would have
been able to discover. However, we reject the defendant's argument
that the restriction in an earlier section of the statute, id.
§ 1681s-2(a)(1)(D), which precludes reliance on a plaintiff's
allegations for the purposes of that subsection, applies to a
plaintiff's own assertions in support of his claim under § 1681s-
2(b).
We affirm summary judgment for Verizon NE on the FCRA
§ 1681s-2(b) claims, because Chiang fails to raise a genuine issue
-3-
of material fact on two issues on which he bears the burden: (1)
that Verizon NE's investigation as a furnisher to CRAs was
unreasonable and (2) that there were actual inaccuracies that
Verizon NE could have detected in a reasonable investigation. We
also affirm entry of summary judgment on Chiang's FDCPA claim
because there is no material dispute of fact that Verizon NE is not
a debt collector.
I.
When reviewing a grant of summary judgment, we draw all
reasonable inferences in favor of the nonmoving party "while
ignoring conclusory allegations, improbable inferences, and
unsupported speculation." Sutliffe v. Epping Sch. Dist., 584 F.3d
314, 325 (1st Cir. 2009) (internal quotation marks omitted).
Chiang's argument is that the court drew the wrong legal
conclusions from the undisputed facts. Accordingly, "[w]e take the
facts largely as described by the district court and from the
record of the district court proceedings." Boston & Me. Corp. v.
Mass. Bay Transp. Auth., 587 F.3d 89, 92 (1st Cir. 2009).
A. Background: Chiang's Disputes with Verizon NE over His
Telephone Service and the State Court Litigation
The merits of Chiang's disagreements with Verizon NE are
not at issue in this case and have already been resolved in state
court litigation. However, we outline these disputes to clarify
the events that triggered the debt collection and credit reporting
practices at issue in this federal case.
-4-
Chiang is the president of a residential construction and
painting company in Massachusetts, which, Chiang says, also engages
in international trade. At various points between 2005 and 2007,
Chiang obtained telephone service on two lines from Verizon NE, a
telecommunications company that conducts business in Massachusetts.
During this period, Chiang had several disputes with Verizon NE
over his service on both accounts. How Verizon NE handled these
disputes is the subject of Chiang's federal litigation.
The first disagreement involved Chiang's assertion that
Verizon NE charged him from July to November 2005 for long distance
service on one line that he says he had not ordered. Chiang
alleged in his affidavit, but provided no documentation, that he
discussed these charges with a Verizon NE representative in
November 2005 but that the company did not follow through on its
promise to correct his bill.
A second conflict arose in early 2006, after Chiang
temporarily switched his telephone service on both lines to another
provider but continued to receive bills from Verizon NE. On May
16, 2006, Chiang sent two demand letters to Verizon NE, noting that
he had switched to a different carrier, effective on February 8 of
that year, and asking the company to adjust his bill accordingly.
Chiang switched his telephone service back to Verizon NE
in the summer of 2006. Although his installation was scheduled for
July 5, 2006, Chiang claims that Verizon NE did not install his
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service until July 13. On July 18, 2006, Chiang filed suit against
Verizon NE in Massachusetts state court, alleging damages stemming
from the delayed installation, as well as from the charges he
continued to accrue after switching his service away from Verizon
NE.
Chiang asserts that Verizon NE overcharged him for
telephone service between July and December 2006, billing him for
calls he did not make and for services he did not order while
failing to credit him for payments he had made on his account. In
August 2006, Chiang stopped paying his telephone bills on both
telephone lines. He believed that he owed Verizon NE nothing and
that the company instead owed him compensation for the amount that
he had been overcharged.1
Chiang's affidavit says he discussed his concerns with a
Verizon NE representative in late August 2006. In September 2006,
Chiang wrote a letter to Verizon NE's attorney, in which he
complained about his experience with Verizon NE customer service
and alleged that the representative had told him his service would
be discontinued if he did not pay his bill. He also threatened
further legal action if Verizon NE continued to "abuse" him.
In December 2006, after providing notice of
discontinuance, Verizon NE suspended Chiang's service for
1
Chiang made at least one partial payment to Verizon NE,
which he explained was meant to cover the fraction of his bill that
he did not dispute.
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delinquent payment. The company later restored limited service to
him. In January 2007, Chiang switched both disputed telephone
lines to another provider. The following month, he filed a second
state court suit against Verizon NE for alleged damages arising out
of the suspension and partial restoration of his account.
The state court suits were consolidated and resolved
primarily for Verizon NE on its motion for summary judgment.2
B. Verizon NE's Debt Collection and Credit Reporting
Practices
Chiang's federal claims are about the debt collection and
credit reporting practices of Verizon NE during and after the
period of his contested service. We describe the evidence on those
practices.
1. FDCPA Claim
We first review facts related to Chiang's claim that
Verizon NE is liable under the FDCPA. Chiang alleges that Verizon
NE was a debt collector, its debt collection practices were
abusive, and it attempted to collect its own debts under a name
2
The state court granted summary judgment in Verizon NE's
favor on Chiang's claims for emotional distress and violations of
the Massachusetts Consumer Protection Act, Mass. Gen. Laws ch. 93A.
It also found that Chiang's failure to show willful misconduct or
gross negligence meant Massachusetts telecommunications tariffs
controlled and limited damages on his remaining claims. Since
Verizon NE had expressed its willingness to compensate Chiang for
days when he was without service under these tariffs, the court
entered summary judgment in Chiang's favor "on th[e] limited issue"
of his "entitlement to the proportion of service charges he paid
during the days he was without service."
-7-
that suggested the debts were being collected by a third party. In
August 2006, Chiang began to receive letters and telephone calls
from debt collection agencies seeking to collect on his delinquent
accounts with Verizon NE, which totaled just over $200.3 Chiang
says that at least one of the collection agencies used profane,
abusive language and called repeatedly, despite his request that he
not be contacted by telephone.
The collection letters identified Chiang's creditor by a
variety of names, including "Verizon-North," "Verizon North NE
(MASS R)," and "Verizon New England Inc." Chiang also claims to
have received notice from a collection agency and his "credit alert
company" that "Verizon Massachusetts, Inc.," based in Columbus,
Ohio, was seeking payment on his delinquent account. At the time,
he believed that "Verizon Massachusetts, Inc." was an independent
corporation that collected debts for Verizon NE.
2. FCRA Claim
Turning to facts pertinent to Chiang's FCRA claim, in
addition to letters from debt collection agencies, Chiang received
communications from CRAs, including Equifax and TransUnion,
reflecting his delinquent Verizon NE accounts. Chiang responded to
these credit reports with demand letters to the CRAs, in which he
3
Although the precise amount owed varied in the collection
letters, the majority of the letters requested payment on Chiang's
two accounts, which were delinquent in the amounts of $119.20 and
$100, respectively.
-8-
requested that the CRAs remove this information from his account or
list it as disputed. Eight of Chiang's demand letters to the CRAs
were in evidence before the district court.4 While those letters
provide background, the FCRA claim against Verizon NE is not and
cannot be based on what Chiang told the CRAs. The claim is instead
based on the communications from the CRAs to Verizon NE and Verizon
NE's response.
The evidence about the CRAs' communication with Verizon
NE about Chiang's assertions and Verizon NE's response did not come
from Chiang, but from Verizon NE. Verizon NE's undisputed evidence
is that its corporate affiliate, Verizon Services Corp. (Verizon),
contracts with the Columbus, Ohio-based company Credit Bureau
Collection Services, Inc. (CBCS) for all consumer-reporting related
activities. Verizon NE has conceded that, under agency law,
Verizon NE is liable if CBCS violates the FCRA while acting within
the scope of its contractual duties. So we review both the actions
of CBCS and of Verizon NE.
CBCS, Verizon NE's agent, is responsible for initially
transmitting consumer credit information to the CRAs. Verizon
sends CBCS information about delinquent accounts every month. CBCS
4
Of these eight demand letters, three were addressed to
Equifax, dated November 24, 2006, April 25, 2007, and May 15, 2007;
three were addressed to TransUnion, dated November 30, 2006,
December 4, 2006, and December 16, 2006; and two were addressed to
Experian, dated November 30, 2006, and December 4, 2006. Only one
of these letters had been mailed when Chiang initiated his federal
lawsuit on November 29, 2006.
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separates out accounts whose balances exceed $50 and have not been
paid after sixty days and converts data for these accounts into the
digital format used by CRAs. It then transmits this information to
the CRAs.
The CRAs also notify CBCS, through an online reporting
system, when a consumer disputes his credit information. These
reports of disputes trigger the protections of 15 U.S.C. § 1681s-
2(b), the statute at issue here. CBCS then investigates consumer
disputes by going electronically into Verizon NE's account and
billing records (to which Verizon has given CBCS access), in order
to determine the accuracy of information provided to CRAs. CBCS
contacts Verizon employees when CBCS is unable to verify the
accuracy or completeness of a particular consumer's credit
information based on the available records alone. Verizon
designates at least one employee to monitor CBCS's credit reporting
activities.
The evidence, provided by Verizon NE, is that CBCS
received twelve inquiries from CRAs, over about six months between
late 2006 and 2007, about the accuracy of Chiang's reported credit
information through its online reporting system. The record
contains twelve summary reports, recovered from the CBCS system,
that relate to CRA inquiries about Chiang's account.5 These one-
5
Each of the twelve summary reports contains information
about a particular dispute reported to CBCS by a CRA. Information
presented in each report includes: the name and address of the CRA
-10-
page reports indicate that Chiang's disputes were described by the
CRAs variously as "[c]laims inaccurate information," "[c]laims paid
the original creditor before collection status or paid before
charge-off," "consumer disputes the balance of this account and
states account is in [state and federal lawsuits]," "claims that
this account was never paid late," and "[a]ccount involved in
litigation." Chiang does not dispute these are the CRA inquiries
at issue, although none of them had been made when he first filed
his federal lawsuit. Verizon has no record of its personnel having
been contacted by CBCS with any additional inquiries regarding
Chiang's disputes. After completing its investigation of Chiang's
reported complaints, CBCS notified the CRAs in each instance that
the information reported on Chiang's account was accurate.
C. District Court Proceedings
On November 29, 2006, Chiang filed suit in the federal
district court of Massachusetts, alleging, inter alia, violations
that reported the dispute at issue; the dates on which the
notification was received and CBCS's response was sent; the
disputed account's balance and payment information; a brief
description of "FCRA Relevant Information," that is, the basis for
Chiang's complaint; and the response sent to the CRA. All twelve
reports indicate that CBCS responded to the various CRAs, "Account
information accurate as of date reported." The earliest report is
dated December 6, 2006--more than a week after Chiang filed his
federal lawsuit--and the last is dated May 25, 2007. Five reports
are from December 2006, three from March 2007, and the remaining
four from May 2007.
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of the FCRA and FDCPA and seeking damages.6 We describe specific
claims below. On January 13, 2009, the district court granted
Verizon NE's motion for summary judgment. Chiang, 2009 WL 102707,
at *12.
In the course of its reasoning on the FCRA claim, the
court held that Chiang had the burden to "identify affirmatively
information that a furnisher of credit information could have
uncovered through a reasonable investigation." Id. at *9-10. The
court noted that this circuit has recently announced a similar rule
in the context of CRAs' duty under the FCRA to reinvestigate
information disputed by consumers. Id. at *10 (citing DeAndrade v.
Trans Union LLC, 523 F.3d 61, 67 (1st Cir. 2008)). The district
court also ruled that, "absent any corroborating evidence," a
plaintiff's allegations of inaccuracies were insufficient to
demonstrate information that might have been uncovered. Id. at
*10. For this reason, it said, it declined to consider Chiang's
deposition testimony, affidavits, or demand letters when deciding
whether he had demonstrated actual inaccuracies that Verizon NE
could have discovered. Id. at *11.
6
Chiang claims that the negative credit information
related to his Verizon NE accounts prevented him from securing a
$500,000 loan. Although Chiang has never earned more than $59,000
in a year, he alleges that his failure to secure this loan
prevented him from participating in an international business deal
with a total contract value of more than $200 million. Chiang has
variously estimated his lost profits from this missed opportunity
at $500,000, $8 million, $27.5 million, and $80 million.
-12-
This appeal followed.
II.
Chiang's claims under the FCRA and the FDCPA present
several pure questions of law, including issues of statutory
interpretation. The district court resolved the case on summary
judgment. Both because these are issues of law and because the
case is before us on summary judgment, our review is de novo. See
Bristol W. Ins. Co. v. Wawanesa Mut. Ins. Co., 570 F.3d 461, 463
(1st Cir. 2009). We may affirm the district court on any basis
apparent in the record. Sutliffe, 584 F.3d at 325.
Although it is true that "the standards for summary
judgment are highly favorable to the nonmoving party, the nonmovant
. . . still has a burden to produce evidence sufficient for a
reasonable juror to find in his favor." Hinchey v. NYNEX Corp, 144
F.3d 134, 146 (1st Cir. 1998); see also 10A Charles A. Wright et
al., Federal Practice and Procedure § 2727, at 490 (2d ed. 1998)
(noting that although "[t]he burden on the nonmoving party is not
a heavy one," the party is "required to show specific facts . . .
that present a genuine issue worthy of trial"). To defeat a
summary judgment motion, a party "must do more than simply show
that there is some metaphysical doubt as to the material facts."
Matushita Elec. Indus. Co. Ltd. v. Zenith Radio Corp., 475 U.S.
574, 586 (1986). Similarly, our "indulg[ence of] all reasonable
inferences" in the nonmoving party's favor is bounded by that
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party's obligation to support the alleged factual controversy with
evidence that is neither "conjectural [n]or problematic." Nat'l
Amusements, Inc. v. Town of Dedham, 43 F.3d 731, 735 (1st Cir.
1995) (internal quotation marks omitted).
A. The FCRA Claim
1. There Is a Private Cause of Action against
Furnishers under the FCRA, 15 U.S.C. §§ 1681n-o,
1681s-2(b), and the Alleged Breach of the Duty to
Investigate Is Evaluated under an Objective
Reasonableness Standard
As a preliminary matter, we dispose quickly of the
question of whether there is a private cause of action under 15
U.S.C. § 1681s-2(b), as the question is related to our
jurisdiction. See, e.g., United States v. Hilario, 218 F.3d 19, 22
(1st Cir. 2000) ("Jurisdictional issues have primacy of place in
appellate review . . . ."). We also address the meaning of the
term "investigation" in that section, a more recent addition to the
FCRA.
Congress, recognizing abuses in the burgeoning credit
reporting industry, originally "enacted FCRA in 1970 to ensure fair
and accurate credit reporting, promote efficiency in the banking
system, and protect consumer privacy." Safeco Ins. Co. of Am. v.
Burr, 551 U.S. 47, 52 (2007); see also 7 Kenneth M. Lapine et al.,
Banking Law § 153.02, at 153-5 to -7(2009 ed.). The FCRA imposes
obligations on CRAs and users of consumer information and provides
for enforcement by various federal agencies. See, e.g., 15 U.S.C.
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§ 1681s. The act also expressly creates a private cause of action,
enabling consumer suits for willful or negligent noncompliance with
its requirements. Id. § 1681n-o. See generally Lapine et al.,
supra § 153.03, at 153-11 to -12; id. § 153.09, at 153-128.
Plaintiffs may recover actual damages for negligent violations, 15
U.S.C. § 1681o(a)(1), and actual or statutory and punitive damages
for willful ones, id. § 1681n(a)(1)-(2); Safeco, 551 U.S. at 53.
There is no basis for any claim of willful violations on this
record, so only actual damages are at issue.
In 1996, Congress substantially amended the FCRA, and
those amendments are involved here. See, e.g., H.R. Rep. No. 108-
396, at 1753-54 (2003) (Conf. Rep.). Among the changes adopted was
a new section governing the responsibilities of so-called
"furnishers"7 of information to CRAs. Consumer Credit Reporting
Reform Act of 1996, Pub. L. No. 104-208, ch. 1, sec. 2413, § 623,
110 Stat. 3009-426, 3009-447 to -449 (codified as amended at 15
U.S.C. § 1681s-2). This addition was intended to close an
identified "gap in the FCRA's coverage," whereby even dutiful
investigations of consumer disputes by CRAs could be frustrated by
furnishers' irresponsible verification of inaccurate information,
7
Any person with relevant data about a consumer's
financial activity may voluntarily provide it to a CRA, but "[t]he
most common . . . furnishers of information are credit card
issuers, auto dealers, department and grocery stores, lenders,
utilities, insurers, collection agencies, and government agencies."
H.R. Rep. 108-263, at 24 (2003).
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without legal consequence to the furnishers. S. Rep. No. 103-209,
at 6 (1993). Verizon NE is sued here as a furnisher of information
under that section.
Under § 1681s-2, furnishers may not provide inaccurate
information to consumer reporting agencies, 15 U.S.C. § 1681s-
2(a)(1), and also have specific duties in the event of a dispute
over furnished information, id. § 1681s-2(b). Only the second of
these duties is subject to a private cause of action. Chiang's
appeal concerns the latter obligation–-Verizon NE's investigation
into disputed information. To understand his argument, we outline
both provisions of the statute.
Section 1681s-2(a) prohibits any person from
"furnish[ing] 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." Id. § 1681s-
2(a)(1)(A). Congress expressly limited furnishers' liability under
§ 1681s-2(a) by prohibiting private suits for violations of that
portion of the statute. Id. 1681s-2(c)(1).
Section 1681s-2(b), the provision at issue in this case,
outlines a furnisher's duties when a consumer disputes the
completeness or accuracy of information in their credit report.
Under the FCRA, consumers generally notify CRAs of such disputes.
See id. § 1681i(a)(1). Although a consumer may dispute credit
information directly to a furnisher, as Chiang has done, the
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consumer has no private right of action if the furnisher does not
reasonably investigate the consumer's claim after direct
notification.8
When a customer disputes credit information to a CRA, the
CRA must advise the furnisher of that data that a dispute exists
and provide the furnisher with "all relevant information regarding
the dispute that the agency has received from the consumer." Id.
§ 1681i(a)(2)(A). Once notified by a CRA, a furnisher must
(A) conduct an investigation with respect to the
disputed information;
(B) review all relevant information provided by the
consumer reporting agency . . . .;
(C) report the results of the investigation to the
consumer reporting agency;
(D) if the investigation finds that the information
is incomplete or inaccurate, report those results
to all other consumer reporting agencies to which
the person furnished the information and that
compile and maintain files on consumers on a
nationwide basis; and
(E) if an item of information disputed by a
consumer is found to be inaccurate or incomplete or
cannot be verified after any reinvestigation . . .,
for purposes of reporting to a consumer reporting
agency only, as appropriate, based on the results
8
The FCRA was recently amended to allow consumers to
notify furnishers of disputes directly. See § 1681s-2(a)(8);
Lapine et al., supra § 153.06, at 153-95. However, there is no
private cause of action for failure to properly investigate such a
dispute, 15 U.S.C. § 1681s-2(c)(1), and Chiang has not asserted
that he complied with the procedures for direct notification. A
notice of disputed information provided directly by the consumer to
a furnisher does not trigger a furnisher's duties under
§ 1681s-2(b). See, e.g., Gorman v. Wolpoff & Abramson, LLP, 584
F.3d 1147, 1154 (9th Cir. 2009). On the facts of this case, we
need not address how, if at all, a consumer's direct notification
to a furnisher would impact a furnisher's later investigation
triggered by CRA notification under § 1681s-2(b).
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of the reinvestigation promptly--(i) modify that
item of information; (ii) delete that item of
information; or (iii) permanently block the
reporting of that item of information.
Id. § 1681s-2(b)(1); see also Lapine et al., supra § 153.06, at
153-96 to -97. Although a furnisher may choose to contact a
consumer directly about a dispute reported to the furnisher by a
CRA, "requiring a furnisher to automatically contact every consumer
who disputes a debt would be terribly inefficient and such action
is not mandated by the FCRA." Westra v. Credit Control of
Pinellas, 409 F.3d 825, 827 (7th Cir. 2005).
The question before us is whether the act as amended
creates a private cause of action for violations of § 1681s-2(b).
The issue, given the exclusion of a private right of action in
subsection 2(a), is whether to read a similar exclusion into
§ 1681s-2(b), despite the fact that the original statute created a
private cause of action in consumers generally. 15 U.S.C. § 1681n-
o. The statute, in our view, creates a private right of action in
§ 1681s-2(b).
In contrast to the express limitations on private causes
of action under § 1681s-2(a), Congress included no such restriction
on violations of § 1681s-2(b). Moreover, when it amended the FCRA
to include responsibilities for furnishers, Congress expanded the
statute's private cause of action from allowing suits against CRAs
and users of consumer information to creating a cause of action
against "any person" who violated the statute. See Nelson v. Chase
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Manhattan Mortgage Corp., 282 F.3d 1057, 1060 (9th Cir. 2002)
("[W]ho else except furnishers could Congress have had in mind when
it introduced 'any person' into the statute?"). Furnishers are
persons who could violate § 1681s-2(b).
We join the vast majority of courts to have considered
this issue in holding that a plain reading of the FCRA's text
indicates that a private cause of action exists for individuals
seeking remedies for furnishers' violations of § 1681s-2(b). See,
e.g., Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142,
149 (4th Cir. 2008); Westra, 409 F.3d at 826-27; Nelson, 282 F.3d
at 1060; Gordon v. Greenpoint Credit, 266 F. Supp. 2d 1007, 1010-11
(S.D. Iowa 2003) (collecting cases); see also Lapine et al., supra
§ 153.06, at 153-98 & n.23 (collecting cases). But see Carney v.
Experian Info. Solutions, Inc., 57 F. Supp. 2d 496, 502 (W.D. Tenn.
1999).
This leaves the question of the extent of a furnisher's
investigation obligation under § 1681s-2(b). The statute does not
define the term "investigation" and is apparently intended to give
the furnisher some flexibility. We know that the investigation is
meant to determine if the disputed information is "incomplete or
inaccurate." Mere incompleteness, however, is not enough; the
incompleteness must be such as to make the furnished information
misleading in a material sense. See Saunders, 526 F.3d at 148
(holding that a furnisher may be held liable under § 1681s-2(b) for
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failure to report information as disputed when the omission is
"misleading in such a way and to such an extent that it can be
expected to [have an] adverse[] effect") (alteration in original)
(internal quotation marks omitted).9 We agree generally with the
Fourth Circuit's observation that "[i]t would make little sense to
conclude that, in creating a system intended to give consumers a
means to dispute–-and ultimately, correct–-inaccurate information
on their credit reports, Congress used the term 'investigation' to
include superficial, un reasonable [sic] inquiries by creditors."
Johnson v. MBNA Am. Bank, NA, 357 F.3d 426, 430-31 (4th Cir. 2004)
(citing cases interpreting CRAs' analogous duty to investigate as
requiring reasonable investigations); see also Gorman, 584 F.3d at
1156-57.
We also hold that the reasonableness of the investigation
is to be determined by an objective standard. See Gorman, 584 F.3d
at 1156-57. The burden of showing the investigation was
unreasonable is on the plaintiff. See Gorman, 584 F.3d at 1157;
Westra, 409 F.3d at 827; Johnson, 357 F.3d at 429-31.
There is more to a plaintiff's burden of proof. We
recently considered what a plaintiff must show in order to carry
his burden in a related context under the FCRA. In DeAndrade, we
9
Here, any claim of incompleteness would be unavailing.
On this record, Verizon NE's failure to report Chiang's disputes
would not have been "misleading in a material sense." See
Saunders, 526 F.3d at 148.
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addressed a plaintiff's suit against a CRA, not a furnisher, for
the CRA's alleged failure, upon being notified of a consumer
dispute, to "conduct a reasonable reinvestigation to determine
whether the disputed information [wa]s inaccurate." 523 F.3d at 65
(quoting 15 U.S.C. § 1681i(a)) (emphasis added). We concluded
that, absent a showing of actual inaccuracy on a reinvestigation,
a plaintiff's claim against a CRA fails as a matter of law. Id. at
67-68. In other words, to carry his burden, the plaintiff had to
demonstrate some causal relationship between the CRA's allegedly
unreasonable reinvestigation and the failure to discover
inaccuracies in his account. We hold that plaintiffs suing
furnishers under § 1681s-2(b) must make the same showing, for
several reasons.
First, a primary component of CRAs' reinvestigation
requirement, at issue in DeAndrade, is CRAs' obligation to promptly
notify a furnisher of challenged information of the consumer's
dispute so that the furnisher can conduct an investigation pursuant
to § 1681s-2(b). See 15 U.S.C. § 1681i(a)(2)(A); see also Gorman,
584 F.3d at 1156 ("[T]he CRA's 'reasonable reinvestigation'
consists largely of triggering the investigation by the
furnisher."). Given the considerable overlap between a CRA's
responsibility to reinvestigate and a furnisher's duties under
§ 1681s-2(b), it would be inconsistent for plaintiffs to bear a
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weightier burden in suits against a CRA under § 1681i(a) than in
suits against furnishers under § 1681s-2(b).
The text and purpose of the statute support our
interpretation. Section 1681i(a) mandates that a CRA reinvestigate
reported information to determine whether the disputed data is
"inaccurate." Section 1681s-2(b) imposes essentially the same
obligation on furnishers of information, requiring them to
determine if furnished information is "incomplete or inaccurate."
"The FCRA is intended to protect consumers against the compilation
and dissemination of inaccurate credit information." DeAndrade,
523 F.3d at 67. In light of the parallel obligations imposed on
CRAs and furnishers--and the narrow purpose of the amendments to
the FCRA--that same rationale supports requiring a showing of
actual inaccuracy in suits against furnishers.
Practical considerations also point to our conclusion.
As in DeAndrade, it is "difficult to see how a plaintiff could
prevail on a claim for damages" based on an unreasonable
investigation of disputed data "without a showing that the disputed
information . . . was, in fact, inaccurate." Id.
We emphasize that, just as in suits against CRAs, a
plaintiff's required showing is factual inaccuracy, rather than the
existence of disputed legal questions. Id. at 68. Like CRAs,
furnishers are "neither qualified nor obligated to resolve" matters
-22-
that "turn[] on questions that can only be resolved by a court of
law." Id.
Finally, what is a reasonable investigation by a
furnisher may vary depending on the circumstances. For instance,
a more limited investigation may be appropriate when CRAs provide
the furnisher with vague or cursory information about a consumer's
dispute. The statute is clear that the investigation is directed
to the information provided by the CRA. A CRA's notice informs a
furnisher of "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." Gorman, 584 F.3d at 1157; see also 15 U.S.C.
§ 1681s-2(b)(1)(B) (requiring a furnisher to review "all relevant
information" provided to it by a CRA). Accordingly, the central
inquiry when assessing a consumer's claim under § 1681s-2(b) is
"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." Gorman, 584 F.3d at
1157; see also Westra, 409 F.3d at 827.
If a CRA fails to provide "all relevant information" to
a furnisher, then the consumer has a private cause of action
against the CRA, 15 U.S.C. §§ 1681i(a)(2)(A), 1681n-o, but not
against the furnisher.
We measure this case against these standards.
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2. Summary Judgment Was Appropriate on Chiang's FCRA
Claim for Two Independently Sufficient Reasons
Against this backdrop, we hold that summary judgment was
appropriate on Chiang's FCRA claim, since Chiang failed to raise a
genuine issue of material fact that the investigation was
unreasonable and also, independently, because he failed to show any
actual inaccuracies that Verizon NE could have found through a
reasonable investigation. Chiang has presented no evidence that
the procedures employed by Verizon NE to investigate the reported
disputes were unreasonable. Indeed, Chiang neither sought
discovery on nor produced any evidence whatsoever about the
procedures Verizon NE, through its agent CBCS, used. The only
evidence on this point consists of a Verizon employee's uncontested
affidavit detailing the procedures followed by Verizon NE's agent,
CBCS, procedures which are, on their face, not unreasonable.10
Chiang's failure to demonstrate actual inaccuracies in the
furnished information that a reasonable investigation could have
discovered is a separate, sufficient basis for summary judgment.
As an initial matter, we reject Verizon NE's argument
that we should categorically exclude Chiang's affidavit, testimony,
and letters from consideration when deciding whether his claim
should survive summary judgment. Verizon NE relies on language in
§ 1681s-2(a)(1), which prohibits furnishers from knowingly
10
The parties do not dispute that CBCS followed its
standard procedures when investigating Chiang's claims.
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reporting inaccurate information to CRAs in the first instance.
That language, "[f]or purposes of subparagraph (A) [of § 1681s-
2(a)(1)]," defined a furnisher's "reasonable cause to believe that
[furnished] information is inaccurate" as "having specific
knowledge, other than solely allegations by the consumer." 15
U.S.C. § 1681s-2(a)(1)(D) (emphasis added).
To start, the statute's plain language restricts this
provision to subparagraph (A) of § 1681s-2(a)(1), which reads in
part: "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." Id. § 1681s-2(a)(1)(A). It does not refer to the
section of the FCRA of concern to us. Even more, the section of
concern to us, § 1681s-2(b), does not mention a furnisher's
"reasonable cause to believe," nor did Congress otherwise add
language about a special evidentiary rule to subsection (b).
Absent such clear direction from the statutory text, we
see no reason to adopt a per se rule excluding a plaintiff's
affidavits, testimony, or letters when considering summary judgment
on a claim under § 1681s-2(b). See Fed. R. Civ. P. 56(c)(2)
(specifying that summary judgment is appropriate only when "the
pleadings, the discovery and disclosure materials on file, and any
affidavits show that there is no genuine issue as to any material
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fact") (emphasis added).11 As the Supreme Court recently noted in
a different context, it is not "necessary or desirable for courts
to create special burden-of-proof rules, or other special
procedural or evidentiary rules." Metro. Life Ins. Co. v. Glenn,
128 S. Ct. 2343, 2351 (2008).
To say that plaintiffs' own allegations are not per se
excluded does not excuse them from having to meet the normal
evidentiary requirements that they be relevant and competent. The
assertions made in Chiang's affidavit and letters are largely
irrelevant to the FCRA claim at issue. And even accepting these
materials at face value, Chiang's unsupported allegations and
unlikely inference raise no genuine issues of material fact. See,
e.g., Hoyos v. Telecorp Commc'n, Inc., 488 F.3d 1, 9 (1st Cir.
2007).
We go back to the relevant evidence. Chiang relies
solely on his own statements that Verizon NE was inaccurate in
reporting he had not paid bills due and owing and his assertions
that he had discussed his disputes with Verizon NE representatives,
and he urges us to infer that, as a result, a reasonable
investigation would have revealed Verizon NE's purported awareness
11
There are, of course, limits on what may be asserted in
an affidavit at the summary judgment stage. See, e.g., Nieves-
Luciano v. Hernández-Torres, 397 F.3d 1, 5 (1st Cir. 2005) ("For
purposes of summary judgment, an allegation in an affidavit must be
based on personal knowledge and show affirmatively that the affiant
is competent to testify to the matters stated therein.").
-26-
of inaccuracies in his account. In particular, Chiang cites his
affidavit, in which he details alleged overcharges to his account
and conversations with Verizon NE representatives regarding these
charges that he says took place in November 2005 and August 2006.
Chiang also relies on several letters he sent to Verizon NE. Two
of these letters are chapter 93A demand letters, dated May 16,
2006–-before Chiang's first state court lawsuit–-threatening
litigation if alleged errors in billing on his two accounts were
not corrected. The third, dated September 15, 2006, was sent to
Verizon NE's attorney in the midst of Chiang's first state court
suit and also threatened legal action if Verizon NE did not correct
alleged overcharges.
At most, Chiang's proffered evidence would have shown
that Verizon NE was aware he disputed the claimed amount and that,
as of July 2006, the dispute was in state court. Chiang's
allegations are consistent with Verizon NE having reviewed his
account and billing history and confirmed that the factual
information, while disputed, was nonetheless accurate. Cf. Gorman,
584 F.3d at 1159-60. Despite ample opportunity over two years of
pretrial proceedings, Chiang neither requested nor produced any
evidence inconsistent with this information being accurate.
Also significant is that CBCS received only cursory
notices from the CRAs, which were generalized and vague about the
nature of Chiang's disputes. The summary reports in CBCS's online
-27-
filing system indicate that the information reported largely
consisted of broad, non-specific statements. We take them in turn.
Two reports said that Chiang "claims that this account
was never paid late." However, Chiang has conceded that, beginning
in August 2006, he did not pay any part of at least some of his
disputed bills–-so that cannot be the basis for an inaccuracy.
Nor, for the same reason, can two other reports, which indicated
that Chiang claimed to have "paid the original creditor before
collection status or paid before charge-off."
Five reports said that Chiang "[c]laims inaccurate
information," which was not in the least bit specific as to what
information was disputed. Finally, several reports essentially
said that the consumer disputed the account and the account was
involved in litigation, which was true, was not challenged by
Verizon NE, and again, provided no guidance as to either the
specific information that was disputed or the basis for the
dispute.
None of these reports alerted CBCS to which of the
allegedly erroneous charges underlying Chiang's dispute was
inaccurate. Nor did they evidence that a more searching inquiry
may have been necessary. See Westra, 409 F.3d at 827 (holding that
a furnisher was entitled to summary judgment on § 1681s-2(b) claim
because merely verifying that account information was accurate as
reported was reasonable, given "scant information" received from
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the CRA); see also Gorman, 584 F.3d at 1157-58. We repeat that an
investigation under § 1681s-2(b) is geared to the information
provided by the CRA to the furnisher; if the CRA fails in its
obligation to provide "all relevant information regarding the
dispute," 15 U.S.C. § 1681i(a)(2)(A), then there is a claim against
the CRA but not the furnisher.
Plaintiff's behavior in refusing to engage in discovery
or provide any information about the reasonableness of Verizon NE's
investigation procedures cannot be a shortcut to trial on the
merits. The fact that Chiang put on evidence that he told Verizon
NE he disputed various bills does not itself raise a reasonable
inference that Verizon NE, through CBCS, conducted an unreasonable
investigation or that the furnished information was not accurate.
That evidence is not enough. See, e.g., Nat'l Amusements, Inc., 43
F.3d at 735.12
12
The district court cited the Fourth Circuit's decision in
Johnson in support of its determination that a reasonable jury
might conclude that Verizon's procedures were unreasonable.
Chiang, 2009 WL 102707, at *9. But several distinguishing factors
suggest that Johnson cannot support the weight the district court
placed upon it. First, in Johnson, the court noted that the
furnisher's limited investigation could be deemed unreasonable in
part because the furnisher's inquiry occurred after it had been
notified by the CRA "of the specific nature of Johnson's dispute."
Johnson, 357 F.3d at 431. Verizon NE had no such notice.
It is true the court emphasized that the defendant furnisher's
investigation generally extended no further than its own
computerized Customer Information System (CIS), but unlike CBCS's
procedures, it apparently never provided for more searching review.
Id. That was pertinent because the furnisher artificially
restricted the review of its own computerized records.
Investigators needed only to confirm "two out of four pieces of
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Independently, we agree with the district court's
application of our holding in DeAndrade to conclude that Chiang was
required to present evidence of actual inaccuracies in his account
that an alternative investigation might have uncovered. He has not
done so.
Chiang's affidavit and letters show that he had several
disagreements with Verizon NE over his billing, which extended into
state court litigation; Verizon NE does not dispute this. Chiang
has not, however, demonstrated that any of his substantive disputes
with Verizon NE involved actual, factual inaccuracies in his
billing that a reasonable investigation could have detected. To
the extent that his argument reduces to the claim that any
investigation that did not accept his allegations as accurate was
by definition unreasonable, it fails. For this reason, too,
summary judgment was appropriate on Chiang's FCRA claim.
B. Summary Judgment Was Appropriate on Chiang's FDCPA Claim
Summary judgment was also appropriate on Chiang's FDCPA
claim. We agree with the district court's determination that
Verizon NE does not qualify as a "debt collector" under the
information contained in the CIS--name, address, social security
number, and date of birth--in order to verify [a consumer's]
identity." Id. at 431 n.3. This truncated inquiry was how the
furnisher confirmed to CRAs that their information was accurate.
Id. at 431. As there is no evidence of similarly restricted
investigation here, or anything else that might raise a genuine
issue of material fact as to the reasonableness of Verizon NE's
investigation, summary judgment was appropriate.
-30-
statute. Chiang's assertions to the contrary are either wholly
unsupported by the record or waived.
The FDCPA was enacted to protect debtors from abusive
debt collection practices. 15 U.S.C. § 1692(e); see also Lapine et
al., supra § 155.02, at 155-6. To that end, it regulates debt
collectors' tactics and, inter alia, creates a private cause of
action for victims of "oppressive or offensive collection agency
behavior." Lapine et al., supra § 155.02, at 155-6. The statute
defines "debt collector" as any individual in a business whose
"principal purpose . . . is the collection of any debts, or who
regularly collects or attempts to collect . . . debts owed or due
or asserted to be owed or due to another." 15 U.S.C. § 1692a(6).
Creditors collecting on their own accounts are generally
excluded from the statute's reach. Id. § 1692a(6)(F)(ii); cf.
Arruda v. Sears, Roebuck & Co., 310 F.3d 13, 22 n.4 (1st Cir.
2002). There is, however, a limited exception for "any creditor
who, in the process of collecting his own debts, uses any name
other than his own which would indicate that a third person is
collecting or attempting to collect such debts." Id. § 1692a(6).
The exception was designed to combat "flat-rating," whereby
creditors attempt to intimidate debtors by creating the false
impression that a third party is participating in the debt
collection process. See White v. Goodman, 200 F.3d 1016, 1017 (7th
Cir. 2000).
-31-
Chiang claims that Verizon NE violated several provisions
of the FDCPA, including its proscription of "conduct the natural
consequence of which is to harass, oppress, or abuse any person in
connection with the collection of a debt." 15 U.S.C. § 1692d.
Although Verizon NE is not a debt collector, Chiang urges that it
falls within the exception for creditors because the company
attempted to collect its own debt from him under the allegedly
deceptive name "Verizon Massachusetts." Chiang does not claim that
Verizon NE was directly collecting its own debts, but instead
asserts that debt collectors were instructed by Verizon NE to use
the name "Verizon Massachusetts." Chiang's argument fails.
Assuming, dubitante, that the alleged practice would
render Verizon NE a "debt collector" under the FDCPA, we
nonetheless agree with the district court that Chiang's argument
should be rejected as a mere conclusory allegation, utterly
unsupported by the record. E.g., Estate of Bennett v. Wainwright,
548 F.3d 155, 177-78 (1st Cir. 2008). On appeal, Chiang insists,
without further explanation or citation to caselaw, that the
district court's failure to draw the inference that debt collectors
received the name "Verizon Massachusetts" from Verizon NE was
erroneous. His declaration does not make it so.
Absent any evidence that Verizon NE was collecting its
own debts we need not reach Chiang's argument that the use of the
name "Verizon Massachusetts" would deceive consumers,
-32-
unsophisticated or otherwise. Cf. Maguire v. Citicorp Retail
Servs., Inc., 147 F.3d 232, 236 (2d Cir. 1998) (describing the
"least sophisticated consumer" standard). We also do not address
Chiang's argument that CBCS's communications with him on behalf of
Verizon NE make Verizon NE a debt collector. This claim was not
raised before the district court and is waived. E.g., In re New
Motor Vehicles Canadian Exp. Antitrust Litig., 533 F.3d 1, 5-6 &
n.3 (1st Cir. 2008).
III.
The district court's grant of summary judgment is
affirmed.
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