IN THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

No. 00-15946

TOBY NELSON,

Plaintiff-Appellant,

v.

CHASE MANHATTAN MORTGAGE CORPORATION, et al.,

Defendant-Appellees.

ON APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEVADA

BRIEF OF THE FEDERAL TRADE COMMISSION AS AMICUS

CURIAE,

SUPPORTING APPELLANT AND URGING REVERSAL

DEBRA A. VALENTINE

General Counsel

JOHN F. DALY

Assistant General Counsel

Federal Trade Commission

600 Pennsylvania Ave., N.W.

Washington, D.C. 20580

(202) 326-2244

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TABLE OF CONTENTS

PAGE

TABLE OF AUTHORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii

INTEREST OF THE FEDERAL TRADE COMMISSION . . . . . . . . . . . . . . . . 1

ISSUE PRESENTED FOR REVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

STATEMENT OF THE CASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

ARGUMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

I. The Plain Language of the Statute Provides for a

Private Cause of Action to Enforce Section 623(b) . . . . . . . . . . . . . 6

II. Well-Reasoned Case Law Supports Availability of a

Consumer Cause of Action for Section 623(b) Violations . . . . . . . . 8

III. The Statutory Framework, Legislative History, and

Administrative Guidance All Confirm the Availability of a

Private Cause of Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

CONCLUSION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

CERTIFICATE OF COMPLIANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

CERTIFICATE OF SERVICE

ADDENDUM – CITED CASES NOT YET REPORTED

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TABLE OF AUTHORITIES

CASES PAGE

Botosan v. Paul McNally Realty,

__ F.3d __, 2000 WL 781015 (9th Cir. June 20, 2000) . . . . . . . . . . . . . . . 6

Burgert v. The Lokelani Bernice Pauahi Bishop Trust,

200 F.3d 661 (9th Cir. 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Campbell v. Baldwin,

90 F. Supp. 2d 754 (E.D. Tex. 2000) . . . . . . . . . . . . . . . . . . . . . . 5, 9, 10

Carney v. Experian Information Solutions, Inc.,

57 F. Supp. 2d 496 (W.D. Tenn. 1999) . . . . . . . . . . . . . . . . . . 9, 10, 11, 12

Carter v. United States,

120 S. Ct. 2159 (2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Cort v. Ash,

422 U.S. 66 (1975) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10, 11

DiMezza v. First USA Bank, Inc.,

__ F. Supp. 2d __, 2000 WL 708458

(D.N.M. May 1, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5, 8, 9, 13, 14

Dornhecker v. Ameritech Corp.,

99 F. Supp. 2d 918 (N.D. Ill. 2000) . . . . . . . . . . . . . . . . . . . . . . . 5, 10, 13

Gozlon-Peretz v. United States,

498 U.S. 395 (1991) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Hornbeak v. Gold Key Leasing, Inc., IP 98-0795 (S.D. Ind. Mar. 3, 2000),

appeal pending, No. 00-1728 (7th Cir., docketed Mar. 30, 2000) . . . 10, 11

King v. United States Department of Justice,

830 F.2d 210 (D.C. Cir. 1987) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

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McMillan v. Experian Information Servs., Inc.,

No. 3:99cv1481 (D. Conn. July 18, 2000) . . . . . . . . . . . . . . . . . . . . 5, 9, 15

Ollestad v. Kelley,

573 F.2d 1109 (9th Cir. 1978) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Pennsylvania Dep’t of Corrections v. Yeskey,

524 U.S. 206 (1998) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Thomas v. Pierce, Hamilton, and Stern, Inc.,

967 F. Supp. 507 (N.D. Ga. 1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

United States v. Alvarez-Sanchez, 511 U.S. 350 (1994) . . . . . . . . . . . . . . . . . . . 6

United States v. Equifax Credit Information Servs., Inc.,

No. 1:00-CV-0087 (N.D. Ga. Jan. 26, 2000) . . . . . . . . . . . . . . . . . . . . . . . 2

United States v. Experian Information Solutions, Inc.,

No. 3-00CV0056-L (N.D. Tex. Jan. 20, 2000) . . . . . . . . . . . . . . . . . . . . . 2

United States v. Trans Union LLC,

No. 00C 0235 (N.D. Ill. Jan. 24, 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

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FEDERAL STATUTES

Federal Trade Commission Act, 15 U.S.C. §§ 45 et seq.

Section 5(a), 15 U.S.C. § 45(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 5(b), 15 U.S.C. § 45(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Fair Credit Reporting Act, 15 U.S.C. §§ 1681 et seq. . . . . . . . . . . . . . . . . . passim

Section 602, 15 U.S.C. § 1681 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Section 602(a), 15 U.S.C. § 1681(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 602(b), 15 U.S.C. § 1681(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Section 616, 15 U.S.C. § 1681n . . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Section 617, 15 U.S.C. § 1681o . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Section 621, 15 U.S.C. § 1681s . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 7

Section 621(a)(1), 15 U.S.C. § 1681s(a)(1) . . . . . . . . . . . . . . . . . . . . . . . 2

Section 623, 15 U.S.C. § 1681s-2 . . . . . . . . . . . . . . . . . . . . . . . . . . passim

Section 623(a), 15 U.S.C. § 1681s-2(a) . . . . . . . . . . . . . . 7, 8, 9, 11, 14, 17

Section 623(b), 15 U.S.C. § 1681s-2(b) . . . . . . . . . . . . . . . . . . . . . . passim

Section 623(c), 15 U.S.C. § 1681s-2(c) . . . . . . . . . . . 7, 8, 9, 10, 11, 14, 16

Section 623(d), 15 U.S.C. § 1681s-2(d) . . . . . . . . . . . . . . . . . . . . . . . . . . 7

15 U.S.C. § 1681n (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

15 U.S.C. § 1681o (1994) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Pub. L. No. 90-321, § 502, 82 Stat. 167 (1968), reported as note

following 15 U.S.C. § 1601 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Pub. L. No. 104-208, 110 Stat. 3009 (1996)

Div. A, § 2412, 110 Stat. 3009-446 . . . . . . . . . . . . . . . . . . . . . . . . . 11, 15

Div. A, § 2413, 110 Stat. 3009-447-48 . . . . . . . . . . . . . . . . . . . . . . . . . . 15

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REGULATIONS

16 C.F.R. Part 600 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

16 C.F.R. Part 601, App. A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

62 Fed. Reg. 35586 (1997) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

RULES

Fed. R. App. P. 29(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Fed. R. App. P. 29(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Fed. R. App. P. 32(a)(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

LEGISLATIVE MATERIALS

S. Rep. No. 104-185, 104th Cong., 1st Sess. (1995) . . . . . . . . . . . . . . . . . . . . 16

H.R. Rep. No. 103-486, 103d Cong., 2d Sess. (1994) . . . . . . . . . . . . . . . . . . . 16

INTEREST OF THE FEDERAL TRADE COMMISSION

The Fair Credit Reporting Act (“FCRA” or “the Act”), 15 U.S.C. §§ 1681 et

seq., seeks to ensure the “[a]ccuracy and fairness of credit reporting.” 15

U.S.C. § 1681(a). In recognition of the importance of such accuracy and

fairness to the interests of individual consumers and to the efficient functioning

of the banking system, Congress imposed obligations both on consumer

reporting agencies (CRAs) such as credit bureaus that compile consumer

reports, and on creditors and others who provide information to those agencies.

See, e.g., 15 U.S.C. § 1681(b) (requiring CRAs to “adopt reasonable

procedures” for credit reporting, “in a manner which is fair and equitable to the

consumer, with regard to the confidentiality, accuracy, relevancy, and proper

utilization of such information”); 15 U.S.C. § 1681s-2 (requiring furnishers of

information to provide accurate information and to investigate and report the

results of all disputes regarding such accuracy).

Congress has entrusted the Federal Trade Commission (“FTC” or “the

Commission”) with primary responsibility for governmental enforcement of the

FCRA as it applies to CRAs and those who furnish information to them. 15

U.S.C. § 1681s. The Act states that any violation of the FCRA “shall constitute

an unfair or deceptive act or practice in commerce in violation of section 5(a)

of the Federal Trade Commission Act [15 U.S.C. § 45(a)] and shall be subject

1 Recently, for example, the Commission initiated three actions against the

major consumer reporting agencies, to correct failures to provide adequate consumer

access for inquiries about credit report errors. See United States v. Equifax Credit

Information Servs., Inc., No. 1:00-CV-0087 (N.D. Ga. Jan. 26, 2000); United States

v. Experian Information Solutions, Inc., No. 3-00CV0056-L (N.D. Tex. Jan. 20,

2000); United States v. Trans Union LLC, No. 00C 0235 (N.D. Ill. Jan. 24, 2000).

Those actions resulted in consent judgments including injunctive relief and the payment

of $2.5 million in civil penalties. Id.; see Press Release, Nation's Big Three Consumer

Reporting Agencies Agree To Pay $2.5 Million To Settle FTC Charges of Violating

F a i r C r e d i t R e p o r t i n g A c t , a v a i l a b l e a t :

http://www.ftc.gov/opa/2000/01/busysignal.htm.

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to enforcement by the Federal Trade Commission under section 5(b) thereof

[15 U.S.C. § 45(b)] * * * .” 15 U.S.C. § 1681s(a)(1). The Commission

regularly brings enforcement actions pursuant to that authority.1 It has issued

interpretive guidance regarding various aspects of the Act’s requirements. 16

C.F.R. Part 600. In light of the Commission’s key role administering the

FCRA, this Court has found it appropriate to defer to the Commission’s

analysis of the Act’s provisions. See Ollestad v. Kelley, 573 F.2d 1109, 1111

(9th Cir. 1978).

The Commission also recognizes, however, the importance of private enforcement

actions as a vital additional means of securing compliance with the

FCRA’s requirements. Congress has provided broad authority for consumers

to seek damages for the violation of the FCRA by “any person.” 15 U.S.C.

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§§ 1681n, 1681o. In the present case, a district court has improperly precluded

consumers from invoking such remedies with respect to any and all FCRA

violations committed by entities that furnish credit information to CRAs,

including failures to correct errors brought to their attention. This holding flies

in the face of clear statutory language, and will, if upheld, seriously weaken the

enforcement of the Act. Especially since the district courts have reached

conflicting decisions on this point, and this Court’s ruling will likely be the first

appellate precedent, the outcome of this case is of great importance to the

Commission.

ISSUE PRESENTED FOR REVIEW

Whether a private right of action, created by Sections 616 and 617 of the

FCRA, 15 U.S.C. §§ 1681n, 1681o, may be based on a violation of the

requirements of Section 623(b) of the Act, 15 U.S.C. § 1681s-2(b).

STATEMENT OF THE CASE

Plaintiff Toby Nelson brought this action against defendant Chase Manhattan

Mortgage Corporation (“Chase”), alleging that Chase violated Section 623(b)

of the Act, 15 U.S.C. § 1681s-2(b), by failing to take appropriate steps to

address Mr. Nelson’s dispute regarding information Chase had furnished to the

major CRAs. See Third Supplemental Complaint (“3d Compl.”), ¶ 24, ER 22-

2 “ER” refers to the Excerpts of Record filed by plaintiff-appellant.

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23.2 As alleged in the complaint, this claim arises out of the following facts. In

1998, plaintiff took out a mortgage with a cosigner who later filed for

bankruptcy. Plaintiff was the primary obligor on the mortgage and made all

payments in full and in a timely manner, even after his cosigner declared

bankruptcy. After having some trouble being approved for credit, plaintiff

obtained a copy of his credit report from Experian, one of the three major

CRAs in the U.S., and discovered that Chase had reported to Experian that his

account was “included in or discharged through bankruptcy chapter 7, 11 or

12.” 3d Compl., Exh. 1, ER 26. After Mr. Nelson disputed the accuracy of

Chase’s reported information by sending a letter to both Chase and Experian,

Chase informed him that its internal operating procedures required this notation

in order “to prevent contact with the party(ies) involved in violation of the

bankruptcy laws.” 3d Compl., ¶ 10 & Exh. 2, ER 20, 27. Chase then slightly

changed the information it reported to Experian, so that the relevant notation

reflected that only one of the parties to the mortgage had filed for bankruptcy.

Plaintiff contends, however, that Chase’s actions did not deal with the problem

adequately, and that he has continued to experience difficulty in obtaining credit.

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3d Compl., ¶¶ 11-14, ER 20-21. Plaintiff further claims that Chase failed to

send corrective notices to another consumer reporting agency. 3d Compl.,

¶¶ 15-17, ER 21. Plaintiff contends that all of these alleged failures constituted

violations of Section 623(b) of the FCRA, 15 U.S.C. § 1681s-2(b). 3d Compl.,

¶ 24, ER 22-23.

Chase moved to dismiss. Chase argued, inter alia, that Section 623 of the Act

creates a duty “only * * * to the consumer reporting agency,” and that a

consumer therefore cannot assert a cause of action to enforce the requirements

of the section. Chase Motion to Dismiss, Apr. 5, 1999, Dkt. No. 4, at 7.

The district court granted the motion to dismiss, stating that:

[n]either party has cited, and the Court has not been able to locate, any

case which confers a private right of action for alleged violations of

§ 1681s-2(b) by a furnisher of information to a credit reporting agency.

Order, Apr. 14, 2000, at 3, ER 41. Plaintiff moved for reconsideration, citing two

recent district court cases that have recognized the availability of a private right

of action for violations of Section 623(b). See DiMezza v. First USA Bank,

Inc., __ F. Supp. 2d __, 2000 WL 708458 (D.N.M. May 1, 2000); Campbell

v. Baldwin, 90 F. Supp. 2d 754 (E.D. Tex. 2000); see also McMillan v.

3 For the Court’s convenience, we include as an addendum a copy of this case,

as well as another cited case that is not yet reported or available on electronic services.

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Experian Information Servs., Inc., No. 3:99cv1481 (D. Conn. July 18, 2000)3

(not cited below, but reaching same result); Dornhecker v. Ameritech Corp., 99

F. Supp. 2d 918 (N.D. Ill. 2000) (same). Despite these holdings, the court

below denied plaintiff’s motion for reconsideration, stating that “[t]he court

decision in the district of New Mexico does not constitute controlling

authority.” Order, May 16, 2000, ER 43-44.

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ARGUMENT

I. The Plain Language of the Statute Provides for a

Private Cause of Action to Enforce Section 623(b).

The district court’s rationale for rejecting plaintiff’s claim — the lack of

“controlling [judicial] authority” that “confers a private right of action” for

violations of Section 623(b) — not only ignores a number of district court

decisions that have recognized such a right, but neglects the primacy of

statutory language. It is Congress, not the courts, that “confers” a federal

statutory cause of action. As in any matter of statutory interpretation, the

inquiry begins (and often ends) “with the plain meaning of the statute’s

language.” See Botosan v. Paul McNally Realty, __ F.3d __, 2000 WL

781015 at *3 (9th Cir. June 20, 2000) (citing United States v. Alvarez-Sanchez,

511 U.S. 350, 356 (1994)). Where, as here, Congress has clearly and expressly

provided for a private right of action, no prior case law is necessary.

In the present case, the language creating the private cause of action could

hardly be more clear. Sections 616 and 617 of the Act, 15 U.S.C. §§ 1681n,

1681o, expressly create private damage actions for, respectively, willful and

negligent violations of the FCRA. In the parallel language of those sections,

“[a]ny person” who fails “to comply with any requirement imposed under [the

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FCRA] with respect to any consumer is liable to that consumer * * * .”

(Emphasis added.)

Section 623 of the Act, 15 U.S.C. § 1681s-2, imposes two distinct sets of obligations

on persons who (like Chase) furnish information to CRAs. Section

623(a) imposes broad duties on such furnishers to refrain from knowingly

reporting erroneous information, to correct and update furnished information,

and to provide various types of notice. Section 623(b) imposes further

obligations, which are triggered only upon a dispute regarding the completeness

or accuracy of particular information that a person has furnished to a CRA. In

such instances, the furnisher is required to conduct an investigation, review all

relevant information, and report the results of the investigation to CRAs. In the

present case, plaintiff has alleged that Chase failed to fulfill its obligations under

Section 623(b). See 3d Compl., ¶ 24, ER 22-23.

Section 623 does not itself contain language creating private remedies, but

recognizes the facial applicability of Sections 616 and 617 by selectively

limiting their effect. Specifically, Section 623(c), 15 U.S.C. § 1681s-2(c),

provides that Sections 616 and 617 “do not apply to any failure to comply with

subsection (a),” apart from certain state enforcement proceedings not pertinent

here. (Emphasis added.) Section 623(d), 15 U.S.C. § 1681s-2(d), further

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confirms the limitation on enforcement of the provisions of subsection (a), by

stating that it “shall be enforced exclusively under [15 U.S.C. § 1681s] by the

Federal agencies and officials and the State officials identified in that section.”

Neither Section 623(c) nor Section 623(d) contains any words that limit the

availability of Section 616 and 617 private remedies with respect to violations

of subsection (b) of Section 623.

Application of these provisions clearly shows that the district court erred in

failing to recognize the availability of a private right of action based on violations

of Section 623(b). As an acknowledged furnisher of information to CRAs,

Chase plainly qualifies as “any person” under Sections 616 and 617, and just

as plainly has statutory duties under Section 623. In the present case, Mr.

Nelson is a “consumer” who alleges that Chase has willfully or negligently failed

to comply with its Section 623(b) obligations, “with respect to” his complaint.

If these allegations are sustained, Sections 616 and 617 expressly make Chase

liable in damages “to that consumer,” unless some other provision of the Act

limits their application. And while Section 623(c) carves out the general duties

of Section 623(a) from private damage liability, it does nothing to foreclose the

application of Sections 616 and 617, according to their express terms, to

violations of the specific dictates of Section 623(b).

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II. Well-Reasoned Case Law Supports Availability of a

Consumer Cause of Action for Section 623(b) Violations.

The better-reasoned district court decisions have adopted the foregoing

analysis. For example, in DiMezza v. First USA Bank, Inc., supra, a victim of

identity theft brought an action against a furnisher of information that had

allegedly failed to fulfill its obligations, under Section 623(b), to investigate and

correct disputed items. The court, analyzing the pertinent statutory language,

stated:

[a]bsent any explicit limitation, the plain language of [Sections 616, 617,

623(b) and (c)] provide a private right of action for a consumer against

furnishers of information who have willfully or negligently failed to

perform their duties upon notice of a dispute. * * * Accordingly, the

plain language of the Fair Credit Reporting Act compels the conclusion

that there is a private right of action for consumers to enforce the

investigation and reporting duties imposed on furnishers of information.

DiMezza, 2000 WL 708458 at *3. The court expressly recognized that the limiting

language of Section 623(c), on its face, “only applied to subsection (a),” and

observed that another court’s “extension of the limitation to subsection (b) is

baffling.” Id. at *4 (citing Carney v. Experian Information Solutions, Inc., 57

F. Supp. 2d 496 (W.D. Tenn. 1999)). Similarly, the district court in Campbell

v. Baldwin, supra, recognized that, although Sections 616 and 617 “do not

apply ‘to any failure to comply with subsection (a) of’ [§ 623,] * * * individuals

4 Another case that reached the same result — albeit on the basis of reasoning

we do not entirely endorse — is Dornhecker, supra. The Dornhecker court began

by acknowledging the textual analysis of Campbell, but then addressed the issue as

“whether an implied right of action exists,” under the standards of Cort v. Ash, 422

U.S. 66 (1975). See 99 F. Supp. 2d at 926. To be sure, we agree with the

Dornhecker court’s assessment of the Cort factors, since Congress plainly intended

to protect consumer interests and the recognition of this cause of action comports

with the statutory scheme. However, resort to the Cort framework is unnecessary

where, as here, the plain language of the statute affords an express private right of

action. See, e.g., Burgert v. The Lokelani Bernice Pauahi Bishop Trust, 200 F.3d

661, 663-64 (9th Cir. 2000) (turning to a Cort analysis “[b]ecause neither [relevant

statute] contains an express private right of action”).

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who violate subsection (b) of [§ 623] are not exempted from civil liability.” 90

F. Supp. 2d at 756.

Most recently — indeed, subsequent to the filing of appellant’s opening brief

in this appeal — another district court has recognized that the plain language of

the FCRA provides a private right of action for violations of Section 623(b).

See McMillan v. Experian Information Servs., Inc., supra, slip op. 7-8. That

court relied both on the precision of the limiting language in Section 623(c), and

on the fact that, at the same time Congress enacted Section 623, it also

broadened the language of Sections 616 and 617 to cover FCRA violations by

“any person.” Id.4

By contrast, two other district courts that have found that there can be no

private right based on violations of Section 623(b) have simply ignored the plain

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language of the statute. See Carney v. Experian Information Solutions, Inc.,

57 F. Supp. 2d 496 (W.D. Tenn. 1999); Hornbeak v. Gold Key Leasing, Inc.,

IP 98-0795 (S.D. Ind. Mar. 3, 2000), appeal pending, No. 00-1728 (7th Cir.,

docketed Mar. 30, 2000). The Carney court committed a number of errors in

its analysis. To begin with, that court incorrectly stated that Sections 616 and

617 of the FCRA, 15 U.S.C. §§ 1681n, 1681o, create liability only for

“consumer reporting agencies and users of consumer reports,” and observed

that creditors who furnish information to CRAs do not fall within either of those

two categories. 57 F. Supp. 2d at 500-01. That observation is beside the point,

however, since Congress amended Sections 616 and 617 in 1996 to expand

their reach from “consumer reporting agencies and users of consumer reports”

to the present “any person.” See Pub. L. No. 104-208, Div. A, § 2412, 110

Stat. 3009, 3009-446 (1996). The Carney court also asserted that “the

provisions for civil liability set forth in [Sections 616 and 617] do not apply to

any violation of [Section 623].” 57 F. Supp. 2d at 502. The court cited Section

623(c) for this proposition, ignoring the fact that it refers solely to claims based

on Section 623(a), not those based on Section 623(b).

Apart from thus misreading of the statutory language, the Carney court opined

that the obligations imposed by Section 623(b) “appear to exist solely for the

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benefit of consumer reporting agencies which face liability under the remainder

of the FCRA to the consumer for erroneous and inaccurate reporting.” 57 F.

Supp. 2d at 502; see also Hornbeak, slip op. 2 (following Carney on this point

without further analysis). This reasoning is doubly flawed. First, any notion of

the intended statutory “beneficiary” is irrelevant to the interpretive issue at hand.

Whether a particular plaintiff is “one of the class for whose especial benefit the

statute was enacted” is pertinent in determining whether a private cause of action

may be implied, in the absence of express statutory authority. Cort v. Ash, 422

U.S. at 78. Such considerations are irrelevant where, as here, Congress has

provided an express cause of action. See note 4, supra. Sections 616 and 617

do not limit the causes of action they create based on a standard of whom

Congress intended to benefit. On the contrary, they expressly make “any

person” who fails to comply with a FCRA requirement “with respect to any

consumer” liable “to that consumer.”

Furthermore, even if the sort of analysis that the Carney court engaged in were

appropriate, its proper application would only reinforce the availability of a

consumer cause of action here. Congress made abundantly clear that one of the

overarching purposes of the FCRA was to require practices that ensure fairness

and equity to consumers. See 15 U.S.C. § 1681. Although the practices

5 In the court below, Chase suggested that the caption of Section 623 —

referring to “responsibilities of furnishers of information to consumer reporting

agencies” — evinces a duty owed “only to” CRAs. Chase Motion to Dismiss, Apr.

5, 1999, Dkt. No. 4, at 7. This argument is erroneous, for at least three reasons. First,

the language of the caption is at best grammatically ambiguous. While Chase

presumes that the prepositional phrase “to consumer reporting agencies” modifies

“responsibilities,” it is at least equally plausible that it modifies “furnishers” — i.e.,

the caption simply refers to the duties owed by “furnishers of information to consumer

reporting agencies,” without specifying to whom those duties are owed. Second, as

the DiMezza court recognized, Congress expressly indicated that, in the interpretation

of the FCRA and related statutes, “[c]aptions and catchlines are intended solely as

aids to convenient reference,” and are not to be used to draw interpretive inferences.

See Pub. L. No. 90-321, § 502, 82 Stat. 167 (1968), reported as note following 15

U.S.C. § 1601; DiMezza, 2000 WL 708458 at *3. Finally, even without such clear

congressional guidance, the general rule is that a statutory caption “‘[is] of use only

when [it] shed[s] light on some ambiguous word or phrase’ in the statute itself.”

Carter v. United States, 120 S. Ct. 2159, 2168 (2000) (quoting Pennsylvania Dep’t

of Corrections v. Yeskey, 524 U.S. 206, 212 (1998)). Here the only ambiguity is in the

caption, and that ambiguity certainly cannot trump the clear language of the statute.

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addressed by the Act initially focused on CRAs and users, the addition of

Section 623 to the Act in 1996 expressly extended its reach to certain furnisher

practices, and there is no reason to doubt that Congress intended these

expanded protections also to inure to the benefit of consumers.5 Indeed, as

another district court that thoroughly surveyed the policies and legislative

history of the FCRA concluded, “it is apparent that [consumers] are members

of the class of people sought to be protected by the enactment of the FCRA.”

See Dornhecker, supra, 99 F. Supp. 2d at 926; cf. note 4, supra.

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III. The Statutory Framework, Legislative History, and Administrative

Guidance All Confirm the Availability of a Private Cause of Action.

In analyzing a statute, a court may consider not only the language Congress

used, but also what it omitted. In one case involving a different part of the

FCRA, for example, the court stated that, “‘[w]here Congress includes

particular language in one section of a statute but omits it in another section of

the same Act, it is generally presumed that Congress acts intentionally and

purposely in the disparate inclusion [or] exclusion.’” Thomas v. Pierce,

Hamilton, and Stern, Inc., 967 F. Supp. 507, 510 (N.D. Ga. 1997) (quoting

Gozlon-Peretz v. United States, 498 U.S. 395, 404 (1991)). This principle is

directly pertinent in here: the language of Section 623(c) that limits the

availability of consumer causes of action expressly refers to actions for

violations of Section 623(a), but pointedly omits any reference to Section

623(b). The implication of this omission is clear: by intentionally restricting the

Section 623(c) limitation to one type of violation, Congress itself recognized the

availability of a private cause of action for violations of the omitted Section

623(b).

This distinction also comports with the structure of the obligations imposed on

credit information furnishers. Sections 623(a) and 623(b) impose two distinct

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sets of duties. Section 623(a) obligations are generally broader in scope,

applying in some degree to all consumers. Section 623(b) obligations, by

contrast, are more focused, and are triggered only in those instances where a

consumer has disputed a specific entry in his consumer report. In those

instances, moreover, the stakes may be substantial for the consumer, who may

face the identity theft problem asserted by the plaintiff in DiMezza, or otherwise

may have reason to believe that his credit report is in error. Congress’s

allowance of a private right of action in the latter circumstance but not the

former simply reflects part of the balance struck between consumer and creditor

interests. See DiMezza, 2000 WL 708458 at *3. The district court’s ruling in

the present case distorts that balance, by failing to give effect to the consumer

rights Congress expressly granted.

In light of the foregoing textual analysis, there is no need here for the Court to

resort to other guides to statutory construction. Still, as one district court

recently noted, “[i]t is, nonetheless, reassuring to observe that the Court’s

reading of the statute’s plain meaning is consistent with both the legislative

history and the Federal Trade Commission’s interpretation * * * .” McMillan,

supra, slip op. 8-9. Perhaps the most salient aspect of the legislative history of

the 1996 FCRA amendments is the simple fact that they included both the

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addition of Section 623 and the alteration of Sections 616 and 617. Before

those amendments, the FCRA imposed no specific duties on furnishers of

information; Congress filled that gap by adding Section 623, which imposes the

substantive obligations described above. See Pub. L. No. 104-208, Div. A,

§ 2413, 110 Stat. 3009, 3009-447-48 (1996). Within the same enactment,

Congress altered the language of Sections 616 and 617, which previously

created private causes of action only against “[a]ny consumer reporting agency

or user of information.” 110 Stat. at 3009-446; cf. 15 U.S.C. §§ 1681n, 1681o

(1994). By expanding that language to provide a private cause of action against

“any person” who violated FCRA requirements, Congress recognized that other

classes of persons could incur such liability. That change, made in tandem with

the express addition of substantive requirements applicable only to furnishers,

clearly evinces a congressional intent to make furnishers liable to consumers for

specified FCRA violations.

The reports of the pertinent congressional committees similarly reflect

Congress’s understanding that enactment of Section 623 would result in

furnisher liability to consumers in some instances. The Senate Banking

Committee, for example, stated that “[S]ection 623(c), as added by the bill, bars

private citizens from bringing suit against furnishers of information for violations

6 The 1996 FCRA amendments were enacted as part of an omnibus bill and

created little direct legislative history to shed light on their meaning. The cited reports

pertained to predecessor bills that Congress had failed to enact, but which contained

proposed language very similar to that enacted in 1996. Courts have found this sort

of legislative history to provide helpful guidance in analogous circumstances. See,

e.g., King v. United States Dep’t of Justice, 830 F.2d 210, 229 n.141 (D.C. Cir. 1987)

(using history of predecessor bills in interpreting 1986 FOIA amendments).

7 Pursuant to the Commission’s standard practice with respect to the filing of

amicus briefs in the U.S. courts of appeals, the entire Commission has considered and

voted unanimously to approve the filing of the present brief.

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of certain duties imposed on them * * * .” S. Rep. No. 104-185, Senate

Committee on Banking, Housing and Urban Affairs, 104th Cong., 1st Sess. 53

(1995) (emphasis added); see also H. Rep. No. 103-486, House Committee on

Banking, Finance and Urban Affairs, 103d Cong., 2d Sess. 53 (1994)

(containing similar language).6

Furthermore, although the FTC has not previously had occasion to take a

formal position on this interpretive question,7 its prior pronouncements have

consistently assumed the existence of such a private right of action. In a 1997

Federal Register notice announcing a statutorily-mandated notification of rights

and responsibilities under the FCRA, the Commission noted that “credit card

issuers [had] advocated adding a section spelling out the limitations [in Section

623] on consumers’ ability to sue furnishers * * * .” 62 Fed. Reg. 35586,

35588 (1997). Although the Commission found it inappropriate to add such a

8 The staff of the Commission’s Bureau of Consumer Protection has expressly

taken the position, in an interpretive letter made publicly available, that “Section 623(b)

* * * allows consumers to sue violators of this subsection to obtain damages (which

may be punitive if the consumer shows willful violation) and attorney fees.” See Letter

from Clarke W. Brinckerhoff to Wainwright S. Watkins, June 24, 1999, available at:

www.ftc.gov/os/statutes/fcra/watkins.htm.

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section to the notice, this statement reflects the contemporaneous understanding

of the Commission (and at least some furnishers) that consumers had the

“ability to sue” to enforce some parts of the recently-enacted Section 623.

Similarly, the FTC’s form entitled “A Summary of Your Rights Under the Fair

Credit Reporting Act,” published in the Code of Federal Regulations, informs

consumers that they “may seek damages from violators. If a CRA, a user or

(in some cases) a provider of CRA data, violates the FCRA, you may sue them

in state or federal court.” 16 C.F.R. Part 601, App. A (emphasis added).8

These indications of the Commission’s understanding of the FCRA simply

reinforce the language of the statute itself, which draws a clear line between

violations of Section 623(a) and 623(b), and plainly allows consumers to sue for

violations of the latter. The district court’s refusal to apply the statute as written

deprives consumers of important rights Congress expressly provided for, and

undermines the dual public-private enforcement scheme that Congress carefully

devised.

* The Commission wishes to acknowledge the substantial contribution to the

preparation of this brief made by Julia M. Fromholz, a law clerk in the Office of the

General Counsel.

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CONCLUSION

For the foregoing reasons, the Commission respectfully urges this Court to

reverse the district court’s order of dismissal, and remand the case for further

proceedings on the merits of plaintiff’s claims.

Respectfully submitted,

DEBRA A. VALENTINE

General Counsel

JOHN F. DALY

Assistant General Counsel

Federal Trade Commission*

600 Pennsylvania Ave., N.W.

Washington, D.C. 20580

(202) 326-2244

July 21, 2000

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CERTIFICATE OF COMPLIANCE

I certify that this brief complies with Fed. R. App. P. 29(c), 29(d), and 32(a)(7).

The brief is proportionately spaced using Times New Roman 14-point type.

The brief contains 4,509 words.

_______________________

John F. Daly

CERTIFICATE OF SERVICE

I hereby certify that, on July 21, 2000, I dispatched the requisite number of

copies of the foregoing Brief of the Federal Trade Commission as Amicus

Curiae to the Clerk of this Court, by overnight courier.

On the same date and by the same manner of delivery, I served two copies of

the Brief on each of the following counsel:

Gerald D. Waite, Esq.

Kummer, Kaempfer, Bonner & Renshaw

3800 Howard Hughes Parkway, 7th Floor

Las Vegas, Nevada 89109

Richard J. Rubin, Esq.

1300 Canyon Road

Santa Fe, New Mexico 87501

Mitchell D. Gliner, Esq.

3017 West Charleston Blvd.

Suite 95

Las Vegas, Nevada 89102

_______________________

John F. Daly

ADDENDUM

Cited Cases Not Yet Reported

(1) McMillan v. Experian Information Servs., Inc.,

No. 3:99cv1481 (D. Conn. July 18, 2000)

(2) Hornbeak v. Gold Key Leasing, Inc.,

IP 98-0795 (S.D. Ind. Mar. 3, 2000),

appeal pending, No. 00-1728

(7th Cir., docketed Mar. 30, 2000)