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Crazy FCRA case in NJ illustrates some common themes

September 2, 2016 Leave a comment

The District of New Jersey just resolved two FCRA cases that, in my view, combine all of the best (or worst) features of FCRA litigation:  they involve a confusing issue on a credit report; a threat of sanctions; a judge that didn’t get the facts she needed when she needed them; and parties and lawyers who had better things to do than get, or really think about, those facts.  Grab a drink, and I’ll tell you all about them.

Glenn and Lorissa Williams each filed a separate FCRA lawsuit against Experian. (Why two lawsuits?  It’s hard to say; in a world where just filing one lawsuit can cost $450+, you’d think the plaintiffs would’ve tried to sue just once, and to save the second fee).  The Williamses’ lawyer alleged that someone had filed for bankruptcy on the Williamses’ behalf but without their knowledge or consent; that Experian reported these bankruptcies as having been filed by the Williameses; that the Wililamses eventually noticed the bankruptcies on their credit reports and brought them to Experian’s attention; and that Experian failed to respond properly to their disputes.   See Williams v. Experian, No. 14-cv-8115, No. 14-cv-8116 (D.N.J. 2016) (full citations below).

The court and the parties learned the facts gradually, but having read the opinions, I think I can tell the story chronologically.  The Williamses were facing foreclosure and asked a credit counselor named Andrew Bartok for assistance.  Mr. Bartok specialized in helping people avoid foreclosure, and he did this by filing for bankruptcy on their behalf without telling them much about it.  He likely filed for bankruptcy on the Williamses’ behalf, which involved his paying filing fees, his submitting signed documents that contained their correct dates of birth and social security numbers, and the bankruptcy court’s sending various documents to the Williamses at their home.  Through all of this, the Williamses did not read their mail from the court, so they never had any idea that Mr. Bartok had filed for bankruptcy on their behalf.

Later on, the Williamses obtained copies of their Experian credit reports, which stated that they had filed for bankruptcy.  The Williamses asked Experian to delete the bankruptcies from their credit reports, without success.  They eventually turned to a lawyer , Brent Vullings, for help.  Mr. Vullings discovered that Andrew Bartok had helped a number of people delay foreclosure by filing false bankruptcy petitions on their behalf; that he’d eventually been indicted for this; and that he may well have done the same thing to the Williamses.  So he sued Experian on their behalf.

When litigation moved into the discovery and dispositive motions phase, counsel took a strangely passive approach.  He doesn’t seem to have conducted much if any discovery, and when Experian filed for summary judgment (on the basis that the bankruptcy petitions matched the Williamses’ names, dates of birth, social security numbers, home address, etc., which made it reasonable to assume that the bankruptcies were theirs and to report them as such), he didn’t tell the court about Mr. Bartok or provide the court with the information that led him to sue Experian in the first place.

The court – faced with facts which showed that the Williamses were disputing bankruptcies which really did appear to be theirs – granted summary judgment to Experian, and threatened to sanction Mr. Vullings for filing suit without a reasonable basis.  Williams v. Experian, No. 14-cv-8115, 8116, 2016 U.S. Dist. LEXIS 80383 (D.N.J. June 21, 2016).  In response to that threat, Mr. Vullings finally told the court about what Mr. Bartok had done to other people, why he thought Bartok might’ve done it to the Williamses, and why Experian should therefore reinvestigate whether the Williamses’ bankruptcies should appear on their credit reports.  The court decided that this was enough to hold off on imposing sanctions.   Williams v. Experian, No. 14-cv-8115, 8116, 2016 U.S. Dist. LEXIS 112105 (D.N.J. Aug. 23, 2016).

What common themes do these events illustrate?  Here are a few:

  1.  As the court stated in both opinions, “Federal Courts are often presented with strange or seemingly incredible factual predicates, and some of those predicates are ultimately supported by the factual record.”  Sometimes truth is stranger than fiction.  In FCRA litigation, it often is.
  2. Both Experian and the Court thought that plaintiffs’ counsel had failed to undertake any kind of investigation before filing suit – to them, it looked like the Williamses noticed some bankruptcies on their credit reports which they hadn’t remembered filing,  and that the plaintiffs’ lawyer filed suit on that basis without more.  As a defense lawyer, this sort of thing happens to me all the time – I’ll get a case in which the allegations don’t seem to add up, and I’ll start to suspect that the lawyer on the other side took his client’s word and filed suit without doing any more diligence.
  3. The plaintiffs themselves had apparently not paid much attention to their financial advisor (Mr. Bartok) or their lawyer (Mr. Vullings).  In the summary judgment opinion, the court said that it was “incredulous” by the allegation that someone had gone to the trouble to file for bankruptcy on the plaintiffs’ behalf (as that costs money and takes effort) and just as incredulous by the fact that “Plaintiffs would continually receive notices of a bankruptcy proceeding being litigated on his or her behalf by a supposed impostor, yet do nothing.”  I have had any number of cases in which the plaintiff, while ably represented by a lawyer who knew what he or she was doing, had not done a very good job of staying on top of his or her financial affairs, and had done an even less good job of reading his or her mail.  The Williams cases are an extreme example of this.
  4. Deciding what should ultimately appear on the post-lawsuit credit reports was difficult.  In its second opinion (the one that declined to sanction plaintiffs’ counsel), the court stated that it “feels compelled to point out that it hopes Experian will reevaluate whether it can continue to report these bankruptcies as legitimately belonging to Plaintiffs,” because at the end of the day, it really seemed as though Bartok had filed for bankruptcy on their behalf but without their consent.  But this begs the question of how Experian should report the bankruptcies.  If the plaintiffs’ debts were discharged, shouldn’t the bankrupcties be reported unless and until the plaintiffs come forward and ask the bankruptcy court to undo that, so that they can start paying on their debts?  If the plaintiffs actually did that, would the bankruptcy court have any way of unringing the bell / unfiling the bankruptcy?
  5. The whole process took two years to complete.  Plaintiffs filed suit in 2014, but the court didn’t decide the summary judgment and sanctions issues until 2016.  The wheels of justice grind slowly.

This has been a longer post than usual, but it didn’t take long to write.  The issues that the Williams cases presents are, as I say, common themes in FCRA litigation.  They may suggest to readers both why FCRA litigation exists, why I like handling it, and why courts and defendants do not.

 

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