Who bears the burden of proof on claims that an agency used unreasonable procedures? It may not matter.
This post contains yet another discussion of 15 USC 1681e(b), which requires consumer reporting agencies to use “reasonable procedures to assure maximum possible accuracy” when they create consumer reports. There’s something of a long-standing circuit split over who has the burden of proof when a plaintiff claims that an agency violated this statute. I say “something of a long-standing split” because the split isn’t as sharp as circuit splits often are. To explain:
If one plucks quotes from various circuit court opinions, you will have what appears to a split between the Fourth and DC Circuits (on the one side) and the Ninth and Eleventh Circuits (on the other) regarding who has the burden of proof on a 1681e(b) claim. Here’s my plucking:
1. ”We hold here that … a plaintiff cannot rest on a showing of mere inaccuracy, shifting to the defendant the burden of proof on the reasonableness of procedures for ensuring accuracy: There is no indication that Congress meant to so shift the nominal plaintiff’s burden of proof as to requisite components of a claim based on a statutory violation.” Stewart v. Credit Bureau, Inc., 734 F.2d 47, 51 (D.C. Cir. 1984) (citing two other FCRA provisions in which Congress had shifted the burden to the defendant, to demonstrate that Congress didn’t do so in 1681e(b)).
2. ”[W]e hold that the plaintiff bears the burden under § 1681e(b) to show that the consumer reporting agency did not follow reasonable procedures.” Dalton v. Capital Assoc. Indus., Inc., 257 F.3d 409, 416 (4th Cir. 2001) (following Stewart).
3. ”[Plaintiff] has made out a prima facie case under § 1681e(b) by showing that there were inaccuracies in her credit report.” Guimond v. Trans Union Info. Co., 45 F.3d 1329, 1334 (9th Cir. 1995).
4. ”In order to make out a prima facie violation of [1681e](b), the Act implicitly requires that a consumer must present evidence tending to show that a credit reporting agency prepared a report containing “inaccurate” information …. The agency can [then] escape liability if it establishes that an inaccurate report was generated by following reasonable procedures.” Cahlin v. General Motors Acceptance Corp., 936 F.2d 1151, 1156 (11th Cir. 1991).
Those quotes show a circuit split. But as I say, the split isn’t all that sharp. One of the two cases which says that a plaintiff cannot rest on a mere inaccuracy and must prove that an agency’s procedures were unreasonable – Stewart – also says that “In certain instances, inaccurate credit reports by themselves can fairly be read as evidencing unreasonable procedures.” 734 F.2d 52. So under Stewart, while a plaintiff technically has to do more than demonstrate an inaccuracy, the inaccuracy may be such that the plaintiff does not have to introduce direct evidence of unreasonable procedures – he or she can simply point to the inaccuracy and ask the court (and then the jury) to infer that it was caused by an unreasonable procedure.
In Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996), the Third Circuit contrasted Stewart with Guimond and Cahlin and found that there wasn’t much of a split between them at all. It suggested that one could derive three possible holdings from those three cases: ”that a plaintiff must produce some evidence beyond a mere inaccuracy in order to demonstrate the failure to follow reasonable procedures; that the jury may infer the failure to follow reasonable procedures from the mere fact of an inaccuracy; or that upon demonstrating an inaccuracy, the burden shifts to the defendant to prove that reasonable procedures were followed.” Id. at 965. But after limning these three possible holdings, the Third Circuit said that “we find it unnecessary to decide among them.” Id.*
Why is it unnecessary to decide among these inconsistent positions? Because in most cases, the result is the same no matter which position one chooses. In the process of demonstrating a real inaccuracy, most – and maybe all – plaintiffs will have to contrast two pieces of evidence – perhaps two reports from the same agency which describe an account in two different ways, or a letter from an agency or creditor saying that a problem has been solved, followed by a report which suggests that it wasn’t. In doing this, plaintiffs will create a fact question regarding whether the procedures that created this problem can in fact be called reasonable. And most of the time, that’s enough to get them past summary judgment.
* Note that Philbin was decided before Dalton. The Dalton panel said that “We express no view as to whether an inaccuracy can be so egregious that it creates a presumption that the agency’s procedures were unreasonable.” 257 F.3d at 416. But by following Stewart – which stated that an inaccuracy could be that egregious – Dalt0n all but agreed to that proposition.