Marie Ann Fuges v. Southwest Financial Services

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________

No. 11-4504
_____________

MARIE ANN FUGES,
on behalf of herself and all others similarly situated

v.

SOUTHWEST FINANCIAL SERVICES, LTD.

Marie Ann Fuges,
Appellant
_______________

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 09-cv-00699)
District Judge: Hon. Legrome D. Davis
_______________

Argued
September 25, 2012

Before: McKEE, Chief Judge, JORDAN, and VANASKIE,
Circuit Judges.

(Filed: December 6, 2012)
_______________
James A. Francis [ARGUED]
Erin A. Novak
John Soumilas
Francis & Mailman
100 S. Broad Street – 19th Fl.
Philadelphia, PA 19110
Counsel for Appellant

Darryl J. May [ARGUED]
Mark J. Furletti
Ballard Spahr
1735 Market Street – 51st Fl.
Philadelphia, PA 19103
Counsel for Appellee

Thomas M. Hanson
Dykema Gossett PLLC
1717 Main Street – Ste. 4000
Dallas, TX 75201
Counsel for Not Party Amicus Consumer Data Industry
Association
_______________

OPINION OF THE COURT
_______________

JORDAN, Circuit Judge.

Marie Ann Fuges appeals from an order of the United
States District Court for the Eastern District of Pennsylvania
entering summary judgment in favor of Southwest Financial
Services, Ltd. (“Southwest”) with respect to Fuges‟s claim
that Southwest willfully violated the Fair Credit Reporting

2
Act (“FCRA”), 15 U.S.C. §§ 1681-1681x. Fuges claims that
Southwest willfully violated FCRA when it included
inaccurate information in a report to Fuges‟s lender
concerning potential encumbrances on her home. Southwest
argues in response that it is not a “consumer reporting
agency” (“CRA”) governed by FCRA, and that the statute
does not apply to the report that it provided to Fuges‟s lender.
The District Court held that no reasonable jury could find that
Southwest had willfully violated FCRA, because Southwest
reasonably interpreted the statute as inapplicable to its
activities and so, under the standard set forth in Safeco
Insurance Co. of America v. Burr, 551 U.S. 47 (2007),
Southwest could not be liable as claimed. For the following
reasons, we will affirm.

I. Background

A. Facts

Southwest sells current owner title reports, otherwise
known as property search or limited property reports
(“property reports” or “reports”) to consumer lenders. The
purpose of those reports is to confirm the identity of the
current holder of title to the property and to determine
whether the property is encumbered. All of the information
that Southwest collects is available in public records.

Southwest‟s reports include the name and address of
the property owner, the marital status of the property owner
(if it appears on the deed), the amounts of any outstanding
mortgages, and the amounts of any outstanding liens or

3
judgments against the property.1 The property reports do not
include the owner‟s social security number, payment history,
previous addresses, employment information, date of birth, or
outstanding account balances all of which would typically be
included in a consumer credit report prepared by one of the
“Big Three” credit reporting agencies (Equifax, Experian, and
Trans Union). Another point of distinction is that Southwest
endeavors to include in its property reports only those
judgment liens that remain unsatisfied at the time of the
report, because only those liens encumber the property. A
typical credit report, by contrast, shows judgment liens that
have been satisfied, because they are part of a consumer‟s
payment history.

Marie Ann Fuges had a $35,000 line of credit from
PNC Bank (“PNC”), which she secured with the home she
owned in Philadelphia. In 2008, she applied to PNC for
payment protection insurance that would repay her line of
credit in the event that she died or became disabled. PNC
told Fuges that, in order to obtain the insurance, she needed to
reapply for her line of credit.2 She did so, and, after she

1
Because the purpose of Southwest‟s property reports
is to determine whether property to be used as collateral for a
loan is encumbered, if a consumer seeks to secure a loan with
collateral owned by a third party, the property report would
only include information on that third party, not the
consumer. For approximately 80 percent of Southwest‟s
Pennsylvania property reports, however, the loan applicant is
also the owner of the subject property.
2
Fuges also applied for a $5000 increase in the line of
credit, even though that increase was not required in order for
her to obtain the credit insurance.

4
submitted her loan application, PNC ordered a credit report
generated by a credit reporting agency, as well as a property
report on the home that she owned. Southwest prepared the
latter and provided information concerning the ownership of
the home that Fuges put up as collateral, as well as
information on whether the property was subject to
mortgages, judgment liens, unpaid taxes, or other
encumbrances.

More specifically, that property report contained the
following information: (1) Fuges‟s name and address; (2) a
note concerning her marital status; (3) the amount of her
mortgage ($35,000.00); (4) a reference to a $111.11 property
tax delinquency; and (5) a reference to a $2,923.63 judgment
lien filed by a merchant for a delinquency on the part of her
son, Robert W. Fuges. The report was inaccurate in two
respects. First, Fuges‟s property tax payments were arguably
not delinquent because she had an agreement with the City of
Philadelphia to pay her taxes in monthly installments.
Second, the property report should not have reflected the
judgment lien because inclusion of the lien wrongly assumed
that the debt was owed by Fuges‟s deceased husband, Robert
E. Fuges, who had been an owner of the property at one time.

After PNC received the Fuges property report, it
informed Fuges that it could not approve her loan application
without proof that she had paid her property taxes. Later,
however, PNC provided Fuges with the credit insurance,
leaving her existing line of credit in place.3

3
It is unclear from the record when PNC changed its
mind about the credit insurance, or for what reason. Fuges
testified that she found out “by accident” (App. at 427) that

5
 B. Procedural History

On February 18, 2009, Fuges filed a putative class
action against Southwest, alleging that Southwest failed to
comply with FCRA in preparing the property report that it
had provided to PNC in connection with her credit
application. She initially claimed damages for both willful
and negligent violations of the statute under 15 U.S.C.
§§ 1681n and 1681o, respectively.

On April 22, 2009, Southwest filed a motion to dismiss
for failure to state a claim, arguing that Fuges had failed to
take certain actions required under FCRA (such as contacting
Southwest and asking for a copy of her property report) and
also arguing that Fuges could not prove that the report caused
PNC to deny her credit application. On July 15, 2009, the
District Court dismissed most of Fuges‟s claims because she
had failed to take actions required by FCRA, but the Court
granted Fuges leave to amend her complaint. She then filed
an amended complaint, and Southwest again filed a motion to
dismiss, which the District Court denied.

On August 1, 2011, Southwest moved for summary
judgment. It argued that its reports are not subject to FCRA,
and that, even if they were, it was not liable because it did not
willfully violate FCRA under the standard articulated in
Safeco, 551 U.S. at 69-70.4 Southwest also asserted that it

the bank had provided the credit insurance when she read her
banking statement several months after she submitted her
credit application, and PNC never notified her of its decision.
PNC did not approve the increase in the line of credit.
4
In Safeco, the Supreme Court held that “a company

6
could not be held liable for any negligent violation of FCRA
because PNC ultimately gave Fuges the credit insurance for
which she had applied, and she did not suffer any injury as a
result of Southwest‟s conduct.5

On November 21, 2011, the District Court issued an
opinion and order granting the motion for summary judgment.
The Court did not address whether Southwest‟s conduct fell
within the scope of FCRA, or whether there was evidence of
FCRA violations. Rather, it determined that no reasonable
jury could find that Southwest had acted willfully because
Southwest‟s reading of FCRA as not being applicable to its

subject to FCRA does not act in reckless disregard of it unless
the action is not only a violation under a reasonable reading
of the statute‟s terms, but shows that the company ran a risk
of violating the law substantially greater than the risk
associated with a reading that was merely careless.” 551 U.S.
at 69. See infra Part II.B.
5
Fuges testified that, initially, all she wanted from
PNC was the credit insurance, but that “since [she] was
reapplying, [she] just asked for the increase” in the credit line.
(App. at 428.) According to the statement of undisputed facts
that Southwest submitted in support of its motion for
summary judgment, because “[s]he obtained this insurance
even though her [credit] application was denied[,] ... [s]he
explicitly testified that she suffered no damage other than the
allegedly inaccurate information reported to PNC.” (App. at
257.) In her brief in opposition to Southwest‟s motion for
summary judgment, Fuges elected to pursue only her claim
for willful violations and not to press her claim for negligent
violations of FCRA.

7
business was not unreasonable. In particular, the Court said,
“a reasonable jury could not conclude that Southwest
willfully, i.e., knowingly or recklessly, violated ... FCRA,
because Southwest reasonably interpreted its activities to fall
outside the scope of the Act, in light of the less-than-clear
statutory text and absence of meaningful judicial or FTC
guidance.” 6 (App. at 13.) In reaching that conclusion, the
District Court reasoned that Southwest‟s interpretation of
FCRA was “objectively reasonable” because the Fuges
property report contained four sections – deeds, mortgages,
parcel number and taxes, and lien information – that “more
closely relate to a particular parcel of property than to a
particular consumer.” (App. at 10.) The Court also
considered it significant that Southwest‟s report did not
contain “Fuges‟[s] social security number, payment history
on various debts, or previous addresses, all of which one
might expect to see on a typical credit report from a CRA.” 7

6
The Federal Trade Commission (“FTC”) has
enforcement responsibility for certain FCRA provisions. See
Safeco, 551 U.S. at 70.
7
The District Court, like other courts, appears to have
equated the term “consumer report,” which is defined in
FCRA, see 15 U.S.C. § 1681a(d)(1), with a “credit report,” a
term that is commonly understood to refer to a report like
those prepared by one of the nationally recognized CRAs.
See also Cortez v. Trans Union, LLC, 617 F.3d 688, 707 n.23
(3d Cir. 2010) (“We use „consumer report‟ and „credit report‟
interchangeably. The report referred to as a „consumer
report‟ in the statute is more commonly known as a „credit
report.‟”). We note, however, that the two are not necessarily
the same, as demonstrated by the fact that a report may
constitute a “consumer report” when its purpose is not the

8
(Id.) Thus, it determined that “Southwest‟s reading of
FCRA‟s CRA definition, i.e., that Southwest‟s reports are „on
properties‟ not „on consumers,‟ and therefore Southwest is
not a CRA, has a foundation in the statutory text, which
suggests that Southwest acted reasonably, not recklessly, with
respect to FCRA.” (Id.)

Fuges filed a timely notice of appeal.

securing of credit or other financial services. See 15 U.S.C.
§ 1681a(d)(1)(B), (C) (providing that purpose may be
eligibility for employment or other purposes set forth in
§ 1681b). Information other than credit data may also render
a report a “consumer report” covered by FCRA. See 15
U.S.C. § 1681a(d)(1) (providing that “any information ...
bearing on a consumer‟s credit worthiness, credit standing,
credit capacity, character, general reputation, personal
characteristics, or mode of living” constitutes a consumer
report (emphasis added)).

9
II. Discussion8

A. FCRA

FCRA “require[s] that consumer reporting agencies
adopt reasonable procedures for meeting the needs of
commerce for consumer credit, personnel, insurance, and
other information ... with regard to the confidentiality,
accuracy, relevancy, and proper utilization of such
information.” 15 U.S.C. § 1681(b).9 The statute imposes

8
The District Court had jurisdiction pursuant to 28
U.S.C. § 1331 and 15 U.S.C. § 1681p. We have jurisdiction
under 28 U.S.C. § 1291. “We exercise plenary review over
the [D]istrict [C]ourt‟s grant of summary judgment, applying
the same standard ... .” Howley v. Mellon Fin. Corp., 625
F.3d 788, 792 (3d Cir. 2010). “[S]ummary judgment is
proper if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving person is entitled to a
judgment as a matter of law.” Celotex v. Catrett, 477 U.S.
317, 322 (1986) (internal quotation marks omitted). A factual
dispute is genuine “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
9
The “reasonable procedures” required by FCRA
include maintaining a system to provide fraud alerts to the
consumer (15 U.S.C. § 1681c-1); maintaining an internal
compliance system to ensure the accuracy of consumer
information (id. § 1681e); providing disclosure of all
information in a consumer‟s file on demand by the consumer
(id. §§ 1681g, 1681h); and maintaining procedures to allow a

10
civil liability on “[a]ny person who ... fails to comply with
any requirement imposed” by the statute. See id. §§ 1681n,
1681o. A person who negligently fails to comply is liable to
the affected consumer for actual damages. Id. § 1681o(a)(1).
A person who willfully fails to comply is liable to the affected
consumer for actual damages, or statutory damages ranging
from $100 to $1,000, as well as punitive damages and
attorney‟s fees. Id. § 1681n(a).

The enactment of FCRA “was prompted by
congressional concern over abuses in the credit reporting
industry.” Philbin v. Trans Union Corp., 101 F.3d 957, 962
(3d Cir. 1996) (internal quotation marks omitted). Congress
wanted “to ensure fair and accurate credit reporting, promote
efficiency in the banking system, and protect consumer
privacy.” Safeco, 551 U.S. at 52. In support of FCRA,
Congress found that

[a]n elaborate mechanism [had] been developed
for investigating and evaluating the credit
worthiness, credit standing, credit capacity,
character, and general reputation of
consumers[;] [] [that] [c]onsumer reporting
agencies [had] assumed a vital role in
assembling and evaluating consumer credit and
other information on consumers; [and that] []
[t]here [was] 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.

consumer to dispute and to correct inaccurate information (id.
§ 1681i).

11
15 U.S.C. §1681(a).

FCRA only applies to CRAs. The statute defines a
“consumer reporting agency” as “any person which, for
monetary fees, dues, or on a cooperative nonprofit basis,
regularly engages in whole or in part in the practice of
assembling or evaluating consumer[10] credit information or
other information on consumers for the purpose of furnishing
consumer reports to third parties … .” Id. § 1681a(f).

Moreover, for a report to be covered by FCRA, it must
be a “consumer report,” defined as

any written, oral, or other communication of
any information by a consumer reporting
agency bearing on a consumer‟s credit
worthiness, credit standing, credit capacity,
character, general reputation, personal
characteristics, or mode of living which is used
or expected to be used or collected in whole or
in part for the purpose of serving as a factor in
establishing the consumer‟s eligibility for –

(A) credit or insurance to be used
primarily for personal, family, or
household purposes;
(B) employment purposes; or
(C) any other purpose authorized under
section 1681b of this title.

10
FCRA defines “consumer” as “an individual.” 15
U.S.C. § 1681a(c).

12
Id. § 1681a(d)(1).11

Taken together, these definitions establish statutory
markers against which the reasonableness of any reading of
the applicability of FCRA must be measured. One marker is
that, for the preparer of a report to qualify as a CRA, the
preparer must regularly engage in gathering information “on
consumers” with the purpose of preparing and furnishing
“consumer reports.” Another marker is that, for a report to be
subject to FCRA, it must both be a “consumer report” and
have been prepared by a “consumer reporting agency,” as
those terms are defined in the statute.

11
The defined term “consumer report” is subject to a
number of statutory exclusions. These include: reports
containing information relating solely to transactions or
experiences between the consumer and the person making the
report or communications between commonly-controlled or
affiliated parties, 15 U.S.C. § 1681a(d)(2)(A); notifications of
the extension of credit by credit card companies, id.
§ 1681a(d)(2)(B); and reports containing the decision of a
person who has been requested by a third party to extend
credit to a consumer, provided that the consumer is informed
of the request for the report, id. §1681a(d)(2)(C).
Communications relating to prospective employment,
including investigative reports, are also excluded. Id.
§ 1681a(d)(2)(D), 1681a(o), 1681a(y). FCRA does not
specifically except “property reports” or any similar reports
from the definition of “consumer reports,” and we neither
express nor imply any opinion on whether property reports of
the kind at issue here are covered by FCRA.

13
 B. Liability Standard Under Safeco

The Supreme Court‟s landmark decision in Safeco
Insurance Co. of America v. Burr, 551 U.S. 47 (2007), set the
framework that the District Court here relied on in granting
summary judgment to Southwest. Safeco involved insurance
companies that relied in part on credit scores to set auto
insurance premiums. Because of unfavorable credit scores,
some new applicants were quoted insurance rates that were
higher than the best rates available. The applicants argued
that they had been subjected to an “increase” in rates (even
though they had not previously enjoyed the lower rates) and
so had suffered “adverse action” based on their credit reports,
which required notice under § 1681m(a) of FCRA. Id. at 54-
55. The insurance companies argued that they did not have to
comply with FCRA‟s notice requirement because the failure
to offer the preferred rates to new customers could not
constitute an “increase” in rates in the absence of prior
dealing. See id. at 69. The plaintiffs sought statutory and
punitive damages, which required that they prove that the
failure to give notice was “willful.” The Supreme Court held
that it was not. Although the Court disagreed with the
insurance companies‟ interpretation of “increase,” it
concluded that the interpretation was “not objectively
unreasonable, and so falls well short of raising the
„unjustifiably high risk‟ of violating the statute necessary for
reckless liability.” Id. at 70 (emphasis added). The Court
thus established a safe harbor against liability for willfulness.
A company cannot be said to have willfully violated FCRA if
the company acted on a reasonable interpretation of FCRA‟s
coverage.

14
 The Court derived this “reasonable interpretation” test
by deconstructing the word “willfully.” FCRA imposes civil
liability where the defendant “willfully fails to comply” with
the statute. 15 U.S.C. § 1681n(a).12 The Court noted,
however, that “„willfully‟ is a word of many meanings” and
that “where willfulness is a statutory condition of civil
liability, we have generally taken it to cover not only knowing
violations of a standard, but reckless ones as well.” Safeco,
551 U.S. at 57 (citations and internal quotation marks
omitted). Drawing on the “essence of recklessness at
common law,” the Court said that “a company subject to
FCRA does not act in reckless disregard of it unless the action
is not only a violation under a reasonable reading of the
statute‟s terms, but shows that the company ran a risk of
violating the law substantially greater than the risk associated
with a reading that was merely careless.” Safeco, 551 U.S. at
69 (internal quotation marks omitted). A defendant‟s conduct
is reckless only if it was “objectively unreasonable” in light
of “legal rules that were „clearly established‟ at the time.” Id.
at 69-70 (citing Saucier v. Katz, 533 U.S. 194, 202 (2001)).
Thus, even when a court disagrees with a party‟s reading of
FCRA, it may not impose liability for a reckless, and
therefore willful, violation of the statute unless that party‟s
reading is “objectively unreasonable.” See id. at 69 (noting
that the Court did not agree with Safeco‟s analysis and that its
reading of FCRA was “erroneous”).13

12
FCRA also imposes liability for negligent violations.
15 U.S.C. § 1681o. However, Fuges elected to pursue only
her claim for willful violations and not to press her
negligence claim.
13
Although the analysis that yielded the Safeco
“reasonable interpretation” test followed from the common

15
 In short, the Safeco test is one of “objective
reasonableness,” and the Court explicitly rejected the
argument that subjective bad faith must be taken into account
in determining whether a defendant has acted recklessly, and
therefore willfully, under FCRA. In deciding that subjective
bad faith is irrelevant, the Court said that, “[w]here … the
statutory text and relevant court and agency guidance allow
for more than one reasonable interpretation, it would defy
history and current thinking to treat a defendant who merely
adopts one such interpretation as a knowing or reckless
violator.” Safeco, 551 U.S. at 70 n.20.

Fuges argues in this appeal that Southwest is not
entitled to the Safeco “reasonable interpretation” defense,
both because Southwest had not actually interpreted FCRA

law definition of recklessness, knowing noncompliance also,
of course, constitutes a willful FCRA violation. See Safeco,
551 U.S. at 57; see also Cushman v. Trans Union Corp., 115
F.3d 220, 227 (3d Cir. 1997) (acknowledging that an
investigative policy could constitute a willful FCRA violation
if adopted either “knowing that policy to be in contravention
of the rights possessed by consumers pursuant to ... FCRA or
in reckless disregard of whether the policy contravened those
rights”). Fuges suggests that this may represent an alternative
basis on which we may find willful violations on the part of
Southwest. (See Appellant‟s Opening Br. at 26 (noting that
“recklessness is not the only way for a plaintiff to prove an
[sic] FCRA violation was willful” and that “knowing
noncompliance may also constitute a willful FCRA
violation”).) However, the record contains no evidence that
Southwest knew that it was in violation of FCRA, and Fuges
did not make that argument in the District Court.

16
before concluding the statute did not apply to its activities and
because Southwest‟s interpretation of FCRA was not
objectively reasonable.14 We take each of those arguments in
turn.

C. Safeco’s Applicability Absent a “Reading” of
FCRA

Fuges contends that the District Court erred by
extending the “reasonable reading” defense articulated in
Safeco to Southwest‟s conduct even though Southwest failed

14
Fuges also argues that the District Court erred at the
summary judgment stage by failing to consider evidence that
Southwest‟s activities come within the ambit of FCRA, and
that the District Court was required to consider evidence of
willful violations prior to concluding that Southwest was,
under Safeco, free from liability for such violations. We
disagree. Evidence of knowing violations of FCRA is
relevant to a claim of willfulness, see supra note 13, but then
Safeco‟s recklessness analysis would not apply. See Safeco,
551 U.S. at 56-57 (noting that knowing violations of FCRA
are willful by definition.) When a plaintiff does not allege
knowing violations of FCRA, however, the claim must be
based on recklessness and Safeco‟s “reasonable
interpretation” test applies. In those “recklessness” cases,
whether a defendant has actually violated FCRA is simply not
the issue. See id. at 68 (noting that, even “if Safeco did
violate the statute, the company was not reckless in falling
down in its duty”); id. at 69 (noting that “Safeco‟s reading of
the statute, albeit erroneous, was not objectively
unreasonable”); id. at 70 (“Safeco‟s misreading of the statute
was not reckless.”).

17
to read or interpret FCRA in the first instance. The District
Court focused its analysis on the interpretation of the terms
“consumer reporting agency” and “consumer report.” (See
App. at 9 (discussing components of the CRA definition in 15
U.S.C. § 1681a(f)).) The Court did not specifically address
the question of whether Southwest had adopted a particular
interpretation of those terms prior to preparing the Fuges
property report or prior to the commencement of this lawsuit.

The timing, however, is not dispositive. In Long v.
Tommy Hilfiger U.S.A., 671 F.3d 371 (3d Cir. 2012), we
expressly rejected the argument that a defendant is required to
have a pre-litigation “reading” of FCRA to avail itself of the
Safeco “reasonable interpretation” defense. 671 F.3d at 377.
Long involved the interpretation of the phrase “expiration
date” in a FCRA provision governing the disclosure of credit
card information. Like Fuges, the plaintiff in Long argued
that the defendant “did not actually rely on any interpretation
of [FCRA] and instead disregarded the statute altogether and
is only now seizing upon a post hoc „objectively reasonable‟
interpretation in order to shield itself from liability.” Id.
(citation and internal quotation marks omitted). That
argument struck us as being, in essence, an assertion about
the defendant‟s intent or subjective bad faith, and, as such, it
was “expressly foreclosed by Safeco,” because such evidence
“is irrelevant when there is an objectively reasonable
interpretation of the statute that would allow the conduct in
question.” Id. (citing Safeco, 551 U.S. at 70 n.20).

Fuges argues that Long and other cases in which
defendants were found to have relied on a reasonable
interpretation of FCRA may be distinguished from two post-
Safeco cases in which there was “no evidence whatsoever of a

18
[FCRA] „reading‟ by the defendant,” and in which the Safeco
defense did not apply. (See Appellant‟s Opening Br. at 40
(citing Birmingham v. Experian Info. Solutions, Inc., 633 F.3d
1006 (10th Cir. 2011); Saunders v. Branch Banking & Trust
Co. of Va., 526 F.3d 142 (4th Cir. 2008)).) However, in
neither of those cases was the interpretation of specific FCRA
terms at issue.15

Fuges also notes that in most of the post-Safeco cases,
such as Long, Shlatichman v. 1-800-Contacts, Inc., 615 F.3d
794 (7th Cir. 2010), and Levine v. World Financial Network
National Bank, 554 F.3d 1314 (11th Cir. 2009), the
“defendants acknowledged ... FCRA‟s regulatory existence,
and attempted to comply with it on some level.” (Appellant‟s
Opening Br. at 40.) However, in each of those cases, the
defendant also acknowledged that it was subject to FCRA,
and the only disputed issue was the interpretation or

15
The dispute in Birmingham was whether a CRA had
willfully violated 15 U.S.C. § 1681e(b) by failing to follow
reasonable procedures to assure the accuracy of its consumer
reports, and whether it had violated 15 U.S.C. § 1681i(a)
because it did not adequately address a consumer‟s concerns
about the accuracy of his credit file. See Birmingham, 633
F.3d at 1009. However, the defendant‟s reading of the
relevant FCRA provisions was not at issue. The Saunders
court did not apply the Safeco “reasonable interpretation” test
because a jury had already found willful FCRA violations
based on a pre-Safeco instruction that the defendant had to
have acted “knowingly and intentionally.” See Saunders, 526
F.3d at 151 & n.4 (noting that the jury instruction had placed
a greater burden on the plaintiff than the Safeco test, and that
he had met that burden).

19
applicability of a particular provision of FCRA. In the
present case, based on its interpretation of the definitions of
“consumer report” and “consumer reporting agency,”
Southwest has urged that it is not subject to FCRA at all.

In summary, Southwest does not lose the potential
protection of the “reasonable interpretation” defense, even if
it never actually interpreted FCRA prior to the
commencement of this lawsuit. Safeco requires only that “the
company‟s reading of the statute is objectively reasonable,”
Safeco, 551 U.S. at 70 n.20 (emphasis added), and that the
interpretation that would allow the conduct in question is “an
interpretation that could reasonably have found support in the
courts,” id. Safeco does not require that the defendant
actually have made such an interpretation at any particular
point in time.

D. Southwest’s Liability Under the Safeco Test

Fuges argues in the alternative that, even if Southwest
is potentially entitled to shelter in Safeco‟s safe harbor, the
District Court erred in holding that no reasonable jury could
find that Southwest had acted recklessly, and therefore
willfully, in treating FCRA as inapplicable.16 Fuges contends

16
At the outset of her treatment of this issue, Fuges
suggests that “no court has ever found that it is jury question
whether a defendant had an objectively reasonable reading of
FCRA statutory text” because “[j]uries focus on facts, not
[on] the interpretation of statutory text, particularly
ambiguous statutory text.” (Appellant‟s Opening Br. at 50.)
However, Fuges misapprehends the District Court in this
regard. The District Court held only that a reasonable jury

20
that neither Southwest nor the District Court specifically
identified any ambiguity in the statutory text,17 and that any
reading of FCRA as being inapplicable must be reckless.

could not find that Southwest had acted recklessly, and
therefore willfully, based on the Court‟s own determination
that the FCRA definitions of “consumer reporting agency”
and “consumer report” were ambiguous, and that Southwest‟s
interpretation was not objectively unreasonable. (See App. at
13 (emphasizing the “narrow scope of [the Court‟s]
decision”).) After Safeco, a jury may be called on to
determine whether violations of FCRA were willful or
negligent, based on the facts surrounding defendants‟
adoption of a particular reading of the statute. See Cortez,
617 F.3d at 722 (considering the “jury‟s reasoned
determination” that the defendant was “not merely careless”
in determining that FCRA did not apply); see also id. (noting
that “the verdict of this lay jury reveals an understanding of
the distinction between negligent and willful”); id. at 723
(speculating that “[t]he jury may well have concluded” that
the defendant deliberately risked violating FCRA because the
offending consumer information “was a separate product that
could be sold to customers at an additional cost”).
17
Fuges‟s argument misses the mark. She takes pains
to demonstrate that the text of the specific FCRA provisions
for which she alleges violations (15 U.S.C. §§ 1681e(a), (b),
(c), (d), 1681h(c)) is unambiguous, and that courts of appeals
(including this Court) have already construed those
provisions. However, it was only the definitions of
“consumer report” and “consumer reporting agency” in 15
U.S.C. § 1681a(d), (f) that the District Court concluded were
unclear. (See App. at 12-13 (noting that these definitions add

21
 To understand why Fuges is mistaken, it is helpful to
consider why the “reasonable interpretation” test was met in
Safeco. We noted in Long that there were three bases for the
Supreme Court‟s decision in Safeco. First, FCRA gave no
clear guidance on whether the auto insurers were required to
view an initial rate offer as an “increase” in rates that would
constitute adverse action and trigger a consumer notification
requirement. Long, 671 F.3d at 376 (citing Safeco, 551 U.S.
at 69-70).18 Second, the insurers‟ proposed interpretation that
their quotes were not an adverse action “had a „foundation in
the statutory text ... and a sufficiently convincing justification
to have persuaded the District Court to adopt it.‟” Id.
(quoting Safeco, 551 U.S. at 69-70) (omission in original).
And third, the insurers were interpreting the statute in the
absence of any contrary authority on the meaning of
“increase” because “„no court of appeals had spoken on the
issue, and no authoritative guidance has yet come from the
FTC.‟” Id. (quoting Safeco, 551 U.S. at 70).

The District Court here was satisfied that conditions
similar to those that had rendered Safeco‟s reading of FCRA
“not objectively unreasonable” were present in this case.
First, the Court decided that the statutory definitions of
“consumer reporting agency” and “consumer report” were
ambiguous as applied to “a company like Southwest that sells
so-called „current owner reports.‟” (App. at 10.) Second, the
Court determined that Southwest‟s reading of FCRA‟s CRA

“an additional layer of interpretive complexity,” as applied to
Southwest, not found in other FCRA cases).)
18
The Safeco Court characterized the statutory text as
“less-than-pellucid.” Safeco, 551 U.S. at 70.

22
definition as not covering Southwest “has a foundation in the
statutory text.”19 (Id.) Third, the Court found “an absolute
dearth of judicial or agency guidance regarding whether ...
FCRA” covers the activities of Southwest. (Id. at 11.) The
District Court thus concluded that Southwest did not act
recklessly with respect to FCRA.

We agree with the District Court‟s analysis. First, the
FCRA definitions of “consumer reporting agency” and
“consumer report” are ambiguous as they relate to Southwest.
The source of this ambiguity is the phrase “information on
consumers” in the CRA definition, and the phrase “bearing on
a consumer[ ]” in the definition of consumer report. Fuges
argues, in essence, that any information in the Southwest
property report that relates to her is information “on” or
“bearing on” her as a consumer. But to take this argument to
its limits, virtually any information gathered in connection
with a consumer lending transaction can be characterized as
information on, or bearing on, the individual applicant
because it says something related to the applicant. Thus, the
unbounded nature of these definitions renders them
ambiguous when one tries to figure out just how broadly a
sensible definition should reach.

19
The District Court focused on the requirement that
an entity “assemble or evaluate „consumer credit information
or other information on consumers‟” to be covered by the
FCRA definition of “consumer reporting agency.” (App. at 9
(quoting 15 U.S.C. § 1681a(f)).) The Court concluded that
Southwest‟s reading of that language to exclude it from
coverage as a CRA, “because it reports on properties, not
consumers,” id., was not objectively unreasonable.

23
 Second, Southwest‟s reading of the applicable
provisions of FCRA has some foundation in the statutory text,
and was therefore not objectively unreasonable. The
definition of a CRA requires that a company “engage[ ] in
whole or in part in the practice of assembling or evaluating
consumer credit information or other information on
consumers.” 15 U.S.C. § 1681a(f). Southwest could
reasonably interpret that provision to exclude information that
it assembles with regard to a subject property, because such
information is not “on consumers.” Likewise, the definition
of “consumer report” encompasses only reports that contain
“information [assembled] by a [CRA] bearing on a
consumer‟s credit worthiness, credit standing, credit capacity,
character, general reputation, personal characteristics, or
mode of living.” 15 U.S.C. § 1681a(d)(1). Southwest could
reasonably interpret that provision to exclude its property
reports, both because it interpreted the CRA definition to
exclude itself,20 and because the information on property

20
This case differs from other post-Safeco cases where
the defendants claimed the Safeco defense for alleged willful
violations of FCRA. In those cases, the defendant was
indisputably a CRA, and the issue was whether the
challenged conduct constituted a willful violation of a
particular FCRA provision because the defendant had
unreasonably interpreted that provision. See, e.g.,
Birmingham, 633 F.3d at 1009 (considering whether a CRA
had “reasonable procedures” to assure accuracy as required
by 15 U.S.C. § 1681e(b)); Levine, 554 F.3d at 1318-19
(considering whether a CRA had complied with requirement
for sale of consumer report for “account review” pursuant to
15 U.S.C. § 1681b(a)(3)); Shannon v. Equifax Info. Servs.,
LLC, 764 F. Supp. 2d 714 (E.D. Pa. 2011) (considering

24
encumbrances does not necessarily “bear on” any of the
characteristics of an individual consumer‟s personal
creditworthiness listed in that provision.

Third, there is no judicial or agency guidance that
would suggest that Southwest‟s reading of FCRA is contrary
to the intended meaning of the provisions in question.21
Under Safeco, the inquiry is whether “the company ran a risk
of violating the law substantially greater than the risk
associated with a reading that was merely careless.” 551 U.S.
at 69; see also Cortez v. Trans Union, LLC, 617 F.3d 688,
723 (3d Cir. 2010) (finding recklessness where defendant
“substantially risked acting in violation of [FCRA]”). The
District Court correctly determined that Southwest was not

whether a CRA had “reasonable procedures” and conducted
an investigation of allegedly inaccurate information as
required by 15 U.S.C. §§ 1681e(b), 1681i(a), respectively).
In this case, as the District Court noted, “Southwest disputed
not only that its current owner reports fall within ... FCRA‟s
definition of „consumer reports,‟ but also that it even qualifies
as a „consumer reporting agency‟ in the first place.” (App. at
A12 (noting that “[t]his adds an additional layer of
interpretive complexity”).)
21
While the absence of contrary authority to a
particular FCRA interpretation is persuasive as to the
reasonableness of the adoption of that interpretation, it is not
dispositive. “It merely establishes that the issue has not been
presented to a court of appeals before. The credit agency
whose conduct is first examined under that section of the
[FCRA] should not receive a pass because the issue has never
been decided.” Cortez, 617 F.3d at 722.

25
reckless because Southwest did not run a “substantial risk” in
adopting its interpretation of FCRA, in the absence of
authority contrary to that interpretation. As the District Court
noted, there does not appear to be any judicial or agency
guidance as to whether FCRA covers companies like
Southwest. Cases concerning the CRA status of companies
that are not credit bureaus but that still assemble “information
on consumers” have typically addressed employee
background investigatory reports that have little in common
with the property reports at issue here. See, e.g., Poore v.
Sterling Testing Sys., 410 F. Supp. 2d 557 (E.D. Ky. 2006)
(holding that a company that reports on criminal records of
job applicants is a CRA); Lewis v. Ohio Prof’l Elec.
Network, LLC, 190 F. Supp. 2d 1049 (S.D. Ohio 2002)
(same). Moreover, those companies qualify as CRAs under
part of the FCRA “consumer report” definition that
specifically addresses employment eligibility reports. See 15
U.S.C. § 1681a(d)(1)(B). Unlike Southwest, companies that
assemble such reports indisputably assemble “information on
consumers,” namely the employment candidates who are the
subject of the reports.22

22
FTC guidance on FCRA coverage is similarly scant.
FTC guidance letters, like the judicial opinions noted above,
are largely limited to employment eligibility reports. See,
e.g., FTC Staff Opinion 9-15-99 (addressing CRA status of
law firm that researches criminal records of job applicants for
its clients); FTC Staff Opinion 9-9-98 (addressing CRA
status of company that provides information on prospective
employees to fast food companies). See also Letter from
Federal Trade Commission to Richard LeBlanc, Due
Diligence, Inc. (June 9, 1998), available at
http://www.ftc.gov/os/ statutes/fcra/ leblanc.shtm (confirming

26
 The District Court‟s ably stated conclusion that
Southwest cannot be held liable for willful violations of
FCRA is consistent with our holding in Long and finds
support in numerous other cases in which courts have applied
Safeco and declined to hold defendants liable absent evidence
of a reckless approach to FCRA compliance. See, e.g., Long,
671 F.3d at 377-78 (finding no liability for willful FCRA
violations despite the fact that the court rejected the
defendant‟s interpretation of the statute); Birmingham, 633
F.3d at 1009 (finding no liability “because of the absence of
evidence of intentional or reckless misconduct”); Levine, 554
F.3d at 1318-19 (finding no liability where defendant
reasonably interpreted “account” as including a “closed
account”). 23

that company that performs background checks and
assembles and sells reports containing the information is a
CRA). Even if there were FTC staff letters that address the
applicability of FCRA to companies like Southwest, “the
Supreme Court has expressly declined to describe such letters
as „authoritative guidance.‟” Levine, 554 F.3d at 1319 (citing
Safeco, 551 U.S. at 70 n.19).
23
Fuges principally relies on Cortez, supra, in support
of her argument that Southwest acted recklessly in adopting
its interpretation of FCRA. Cortez is, however, readily
distinguishable from the present case in that the defendant‟s
interpretation there was in direct opposition to published
authority on the applicability of FCRA. In Cortez, the
offending information was an erroneous notation in a
consumer report that the plaintiff was on a Treasury
Department list of terrorists and drug traffickers ineligible for
credit. See Cortez, 617 F.3d at 704-05. The defendant
claimed that the information did not “bear on” the consumer‟s

27
 In summary, Southwest‟s interpretation of the FCRA
definitions of “consumer reporting agency” and “consumer
report” is not unreasonable, and Southwest “did not run „a
risk of violating the law substantially greater than the risk
associated with a reading that was merely careless.‟” Long,
671 F.3d at 378 (quoting Safeco, 551 U.S. at 69). Fuges
therefore has not stated a claim for a willful violation of
FCRA.24

creditworthiness, and that it was therefore not subject to
FCRA. However, Treasury Department regulations explicitly
stated that information regarding a consumer‟s inclusion on
the terrorist watch list was governed by FCRA when included
in a consumer report. Id. at 722. Moreover, a Treasury
Department website notified consumers that both FCRA and
FTC regulations provided them with a remedy against a CRA
that furnished incorrect information about their presence on
the watch list. Id. Given this explicit contrary guidance, we
concluded that the defendant “substantially risked acting in
violation of the law,” as it adopted an interpretation of FCRA
that was objectively unreasonable. Id. at 723; see also id. at
721 (“[T]he fact that [a defendant‟s] actions rest upon a legal
conclusion does not immunize it from liability for reckless
conduct under ... FCRA.”) In the absence of the sort of
contrary guidance present in Cortez, we cannot say that
Southwest was similarly reckless in believing that its
activities are not covered by FCRA.
24
Like the District Court, we “need not, and do not,
decide whether Southwest‟s business model, including its ...
report on Fuges, falls within ... FCRA‟s sphere.” (App. at
13.) Because we have concluded that Southwest did not
willfully violate FCRA, and because Fuges chose not to
pursue her claim for negligent violations of the statute, see

28
III. Conclusion

For the reasons stated above, we will affirm the
judgment of the District Court.

supra note 5, there is no sound reason to answer in this case
whether Southwest negligently violated FCRA.

29