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Miller v. Equifax Information Services, LLC

United States District Court, D. Oregon

May 20, 2014

JULIE MILLER, Plaintiff,
v.
EQUIFAX INFORMATION SERVICES, LLC., Defendant.

MICHAEL C. BAXTER, JUSTIN M. BAXTER, KACHELLE A. BAXTER, Baxter & Baxter, LLP, Portland, OR, MAUREEN LEONARD Portland, OR, Attorneys for Plaintiffs.

IAN E. SMITH, LEWIS P. PERLING, PHYLLIS B. SUMNER, King & Spalding LLP, Atlanta, GA, JEFFERY M. EDELSON, Markowitz Herbold Glade & Mehlhaf, PC, Portland, OR, Attorneys for Defendant.

AMENDED OPINION AND ORDER

ANNA J. BROWN, District Judge.

This matter comes before the Court on Defendant Equifax Information Services, LLC's Motion (#91) for Reduction of Punitive Damages.

For the reasons that follow, the Court GRANTS Equifax's Motion (#91) for Reduction of Punitive Damages as herein specified and REDUCES the jury's punitive-damages award from $18, 400, 000 to $1, 620, 000, which produces a 9-to-1 ratio between the amount of punitive damages the Court finds constitutionally permissible on this record and the $180, 000 of compensatory damages the jury awarded.

BACKGROUND

Plaintiff Julie Miller brought this action for actual damages and punitive damages pursuant to the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681, et seq. Miller alleged Equifax negligently violated FCRA by (1) failing to follow reasonable procedures to assure the maximum possible accuracy of the information contained in her credit report; (2) failing to conduct a reasonable reinvestigation of disputed information in Miller's credit file after she notified Equifax of the disputed information; (3) failing to disclose to Miller the entire contents of her credit file upon her request; and (4) furnishing Miller's consumer credit report to persons or businesses who did not have a permissible purpose to receive her credit report.

In particular, Miller sought "actual damages" damages under § 1681n to compensate her for emotional distress, including humiliation, mental anguish, loss of reputation, invasion of privacy, and fear of lost credit opportunities that she alleged she sustained as a result of Equifax's FCRA violations. Miller also contended Equifax acted willfully in violating her rights under FCRA, and, accordingly, Miller sought an award of punitive damages under § 1681n.

During the three-day jury trial beginning July 24, 2013, it was undisputed that Equifax merged Miller's credit file with the file of a different person who had the same name and a similar Social Security number as Miller but who lived in a different state and who had a negative credit record and a significantly different credit record than Miller had. According to Margaret Leslie, Vice President of Equifax's Technology Area, this kind of file-merger was a "reasonable combination" that occurs with "regularity." Trial Transcript (Tr.) 583.

When Miller learned about the erroneous merger of her file, she reported the problem to Equifax and began a two-year saga to resolve it. Despite Miller's repeated notices to Equifax and Equifax's numerous reports to Miller that it had investigated her complaints, Equifax did not correct the problem. Tr. 152-53. In fact, Equifax did not take steps to correct the information in Miller's file until she filed this action after her two years of efforts proved fruitless. Nevertheless, Equifax argued to the jury that taking corrective steps only after a civil action is filed complied with its "policy." Tr. 530.

During the two years that Miller attempted to get Equifax to fix her file, she was frustrated, overwhelmed, angry, depressed, humiliated, fearful about misuse of her identity, and concerned that her reputation would be damaged as a result of Equifax's conduct. Tr. 152-54, 156-58. Miller did not, however, seek medical or mental-health services for these issues.

The jury had the benefit of two expert witnesses to assist them in assessing Equifax's alleged FCRA violations: Evan Hendricks, Miller's expert, testified about other mixed-file cases in which juries had found Equifax violated FCRA, and Anne Fortney, Equifax's expert, testified that "only" one-to-two percent of consumer files contain inaccurate information, which means approximately two-to-four million Americans have inaccurate information in their credit reports because of mixed files. Tr. 306-07, 384.

The jury returned a verdict in favor of Miller and found Equifax had negligently and willfully violated FCRA in one or more of the ways Miller alleged. The jury awarded Miller $180, 000 in compensatory damages and $18, 400, 000 in punitive damages.

During oral argument on Equifax's Motion for Reduction of Punitive Damages on December 20, 2013, Equifax took issue with the "extra-record" evidence that Miller submitted in support of her Opposition (#93) to the Motion, which included copies of judgments in a number of FCRA cases and a declaration from a plaintiff's attorneys in one of those cases. To ensure both parties had the same opportunity to complete the record on this Motion, the Court granted Equifax leave to file a Supplemental Brief limited to arguments the Court should consider as to the appropriate punitive-damages ratio and the third Gore guidepost. BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 574 (1996). Equifax filed its Supplemental Brief (#103) on January 3, 2014, but Miller filed a Motion (#104) to Strike that submission on January 9, 2014, on the grounds that it exceeded the scope of the Court's instructions and prejudiced Miller.

In its Supplemental Brief, Equifax cites a number of FCRA cases to support its argument that the Court should adopt a 1:1 ratio of punitive to compensatory damages. In support of its position that the available civil penalties do not support the jury's punitive-damages award, Equifax also submitted a December 2004 Federal Trade Commission (FTC) report regarding the FTC's approval of Equifax's process for matching consumers to credit reports.

The Court has considered Equifax's supplemental arguments and materials and concludes they do not exceed the scope of the Court's instructions. In any event, the Court notes Miller has not been prejudiced by Equifax's supplemental filing in light of the Court's conclusion that a ratio significantly greater than 1:1 is warranted and that, as explained below, the Court concludes the third Gore guidepost is not helpful in the context of this case.

Accordingly, the Court DENIES Plaintiff's Motion (#104) to Strike.

STANDARDS

A punitive-damages award that is grossly excessive violates "[e]lementary notions of fairness enshrined in our constitutional jurisprudence." Gore, 517 U.S. at 574. In Gore the Supreme Court set forth three "guideposts" for determining excessiveness of a punitive-damages award: (1) "the degree of reprehensibility of the defendant's conduct"; (2) the "ratio to the actual harm inflicted on the plaintiff"; and (3) the "civil or criminal penalties that could be imposed for comparable misconduct." Id. at 575-83. Although these guideposts provide an analytical framework, they must be viewed in the context of the case and need not be "rigidly or exclusively applied." In re Exxon Valdez, 472 F.3d 600, 613 (9th Cir. 2006).

DISCUSSION

In its Motion for Reduction of Punitive Damages, Equifax moves the Court to reduce the jury's punitive-damages award "to within constitutional limits as a matter of law." Thus, the Court turns first to the Gore Guideposts.

I. The First Gore Guidepost: Reprehensibility

It is well-established that the most important of the three Gore guideposts is the reprehensibility of the defendant's conduct. Gore, 517 U.S. at 575 ("Perhaps the most important indicium of the reasonableness of a punitive damages award is the degree of reprehensibility of the defendant's conduct."). When determining the reprehensibility of a defendant's conduct for purposes of evaluating the constitutionality of a punitive-damages award, courts should consider whether

(1) the harm caused was physical as opposed to economic;
(2) the tortious conduct evinced an indifference to or a reckless disregard of the health or safety of others;
(3) the target of the conduct had financial vulnerability;
> (4) the conduct involved repeated actions or was an ...

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