In Santos v. Healthcare Revenue Recovery Grp., LLC., No. 22-11187, 2023 WL 7289662, at *1–2 (11th Cir. Nov. 6, 2023), the Court of Appeals for the 11th Circuit reversed the district’s finding that an FCRA class could not be certified due to individual inquiries required for each putative classmember.  The Court of Appeals found that proof of individual damage is not required where the FCRA violation is willful, so the Court of Appeals remanded for further proceedings.

Experian Information Solutions, Inc. is a “consumer reporting agency,” meaning it receives consumers’ credit data from approved furnishers and compiles that information into files summarizing consumers’ credit histories. Experian provides these summaries in the form of “reports,” known as “disclosures” when the reports are sent to the consumer directly, listing every credit and collection account a consumer has incurred. Each account on these reports is known as a “tradeline.”  Healthcare Revenue Recovery Group, LLC is a debt collection company that obtains accounts in default, known as collection accounts, from medical providers. In 2017, Healthcare Revenue began furnishing its collection account data to Experian, but Experian misadjusted a technical setting that affected how it processed Healthcare Revenue’s data. That faulty setting caused all consumer reports featuring Healthcare Revenue accounts to display inaccurate “dates of status” or “payment level dates” on the Healthcare Revenue tradelines. These status date fields are supposed to show the date when an account reached its currently reported status. For collection accounts, like the ones Healthcare Revenue reported to Experian, the status dates should generally reflect the date a consumer’s debt entered collections. The status date usually shouldn’t change because once a debt collector opens a collection account the account’s status remains the same until the debtor makes a payment or the Act requires consumer reporting agencies to stop reporting the account. But, because of Experian’s technical error, the status dates on the Healthcare Revenue tradelines in consumers’ credit reports improperly updated each month to display the current month. This error continued for more than a year and a half before Experian detected and corrected it. When Experian’s employees finally noticed the error, they worried about the impact it would have on credit scores, consumer disputes, and automated Experian reporting products. All told, more than 2.1 million consumers had credit reports with inaccurate Healthcare Revenue status dates sent by Experian to third parties. Among those consumers were Mr. Santos and Ms. Clements. Their July 2017 consumer disclosures list incorrect status dates of July 2017 for their Healthcare Revenue tradelines and state that this credit information was “shared with” their “current and prospective creditors and employers.” Although Mr. Santos’s and Ms. Clements’s credit scores weren’t lowered by these errors, consumers’ creditworthiness can nevertheless be affected by how long an account has been in collection—with more recent collection accounts having a greater negative impact. Mr. Santos and Ms. Clements filed a class action complaint and sought to represent a class of individuals whose Healthcare Revenue tradelines had been wrongly “re-aged” by Experian. They alleged that Experian “willfully” violated its obligation under the Fair Credit Reporting Act to “follow reasonable procedures” to ensure consumer credit reports were prepared with “maximum possible accuracy” when it allowed credit reports to reflect allegedly inaccurate status dates. See 15 U.S.C. §§ 1681e(b), 1681n(a)(1)(A). And they sought “damages of not less than $100 and not more than $1,000” for Experian’s willful violation of the Act. See id. § 1681n(a)(1)(A). Experian eventually moved for summary judgment. It did not dispute that Mr. Santos’s and Ms. Clements’s credit reports listed inaccurate status dates for their Healthcare Revenue tradelines. But it argued that the Act’s damages provision for willful violations—section 1681n(a)(1)(A)—required Mr. Santos and Ms. Clements to prove that they were denied credit, and incurred actual damages, as a result of the re-aged status dates. Because they didn’t show a genuine dispute of any actual damages, Experian argued that it was entitled to summary judgment. Mr. Santos and Ms. Clements responded that section 1681n(a)(1)(A) allowed consumers to recover “damages of not less than $100 and not more than $1,000” without having to prove, as an element of their claim, that they incurred actual damages. The district court, relying on our decision in Cahlin v. General Motors Acceptance Corporation, 936 F.2d 1151 (11th Cir. 1991), concluded that section 1681n(a)(1)(A) required proof of actual damages. But the district court denied Experian’s summary judgment motion because there was some evidence that Mr. Santos and Ms. Clements suffered actual damages. After the close of discovery, Mr. Santos and Ms. Clements moved to certify a class of all consumers “whose Experian credit reports had an account or accounts reported by [Healthcare Revenue] with an inaccurately displayed Date of Status and were viewed by one or more third-parties.” They argued they met the numerosity, commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a) and the predominance and superiority requirements of Rule 23(b). As to the predominance requirement, Mr. Santos and Ms. Clements rehashed their summary judgment argument that, because the class only sought “damages of not less than $100 and not more than $1,000,” they did not have to prove any actual damages caused by Experian’s willful violation of the Act. Thus, “any individualized issues concerning class members’ actual damages” were “irrelevant.” Experian, in response, argued that because section 1681n(a)(1)(A) required that the putative class members prove they were actually injured by a consumer reporting agency’s willful violation of the Act, each class member’s individual proof of damages would predominate over common questions. The magistrate judge agreed with Experian that Mr. Santos and Ms. Clements hadn’t met the predominance requirement in Rule 23(b). That’s because, the magistrate judge explained, the district court had already concluded in its summary judgment order that section 1681n(a)(1)(A) required consumers to prove they incurred actual damages as a result of willful violations of the Act. And because the putative class members would have to prove they incurred actual damages because of the re-aged status dates, the magistrate judge concluded that the district court would be required to engage in “an individual and highly factual determination” as to whether each class member suffered actual damages. With the predominance requirement unmet, the magistrate judge recommended denying Mr. Santos and Ms. Clements’s class certification motion and did not reach the other Rule 23 class certification requirements. The district court adopted the magistrate judge’s recommendation and denied class certification.

The Court of Appeals found that a willful violation does not require individualized proof of actual damages by each putative classmember.

We read the statute the same way Mr. Santos and Ms. Clements do—consumers may seek statutory damages under the second option of section 1681n(a)(1)(A) without showing actual damages. . . .First, we look to the different language used in the first and second options. The first option, for example, allows consumers to recover “actual damages,” see 15 U.S.C. § 1681n(a)(1)(A), which are defined as damages that “compensate for a proven injury or loss.” Actual Damages, Black’s Law Dictionary (7th ed. 1999) (emphasis added). The first option then emphasizes that the “actual damages” must be “sustained by the consumer” before the consumer can recover them. 15 U.S.C. § 1681n(a)(1)(A). And the first option has a causal element that links the consumer’s actual damages to the consumer reporting agency’s conduct. The consumer can only recover damages “sustained … as a result” of the consumer reporting agency’s willful violation of the Act. Id. (emphasis added).  But the second option doesn’t have any of these requirements. The second option allows consumers to recover “damages” even if their damages are not “actual damages,” see id. (emphasis added), that is, even if they do not “compensate for a proven injury or loss,” Actual Damages, Black’s Law Dictionary (7th ed. 1999). Consumers can recover “damages” even if they are not “sustained by the consumer.” See 15 U.S.C. § 1681n(a)(1)(A). And there is no causal element like in the first option. Id.  . . . Reading the second option as allowing for statutory damages without proof of actual damages gives the two options “separate meanings.” The first option allows the consumer to recover for his actual damages. And the second option allows the consumer to recover a minimum amount of “damages of not less than $100 and not more than $1,000” for willful violations, even without actual damages.  Third, we compare the language in section 1681n(a)(1)(A) to the rest of the Act. Like for willful violations, the Act provides a cause of action for negligent violations. 15 U.S.C. § 1681o(a). But the negligent-violation provision “exclude[s] the statutory-damages option” found in section 1681n(a)(1)(A). Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 706 (6th Cir. 2009). Instead, for negligent violations, a consumer can only recover “any actual damages sustained by the consumer as a result of the failure.” 15 U.S.C. § 1681o(a)(1). This difference between the negligent- and willful-violation provisions “buttresses the point” that the Act allows for statutory damages without proof of actual damages where the consumer reporting agency commits more serious willful violations. See Beaudry, 579 F.3d at 705–06. But for less serious negligent violations, the Act requires proof of actual damages to recover damages. . . Our Fair Credit Reporting Act caselaw is consistent with our conclusion that the second option does not require a consumer to prove he suffered actual damages. In Levine v. World Financial Network National Bank, the plaintiff sued a consumer reporting agency for willfully violating the Act. 437 F.3d 1118, 1123 (11th Cir. 2006). The district court dismissed the suit because the plaintiff’s complaint hadn’t sought damages under the second option and his claimed injuries were “too amorphous” to recover actual damages under the first option. Id. at 1120 (quotation omitted). We reversed, determining that, contrary to the district court’s reading, the plaintiff’s complaint had sought “damages of not less than $100 and not more than $1,000.” Id. at 1123–25. And because the plaintiff stated a prima facie claim under section 1681n(a)(1)(A) and sought damages under the second option, there was no need for us to examine the plaintiff’s alleged injuries since the plaintiff’s allegation of willful noncompliance with the Act was itself an injury that section 1681n “clearly recognize[d] as compensable.” Id. at 1124–25; see also Mexican Specialty, 564 F.3d at 1309 (explaining that the Act allows the “recovery of statutory damages [by] those individuals who did not suffer actual damages”). . . Finally, our reading is consistent with how the other circuits have read section 1681n(a)(1)(A). Every circuit to address the same issue agrees that “the plain language of the provision permits recovery of statutory damages in the absence of actual damages.” Hammer v. Sam’s E., Inc., 754 F.3d 492, 499–500 (8th Cir. 2014) (“[W]e cannot locate a single case that interprets the [Act’s] liability provision as requiring something more than a statutory violation in order to recover ‘damages of not less than $100 and not more than $1,000.’ ”), abrogation on other grounds recognized by Golan v., Inc., 930 F.3d 950, 957 (8th Cir. 2019); see also Beaudry, 579 F.3d at 705–06 (“[B]ecause the statute permits a recovery when there are no identifiable or measurable actual damages … a claimant need not suffer (or allege) consequential damages to file a claim.”); Murray v. GMAC Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006) (“[T]he Fair Credit Reporting Act provide[s] for modest damages without proof of injury.”); Robins v. Spokeo, Inc., 867 F.3d 1108, 1110–11 (9th Cir. 2017) (“The statute gives consumers … the right to sue (and to recover statutory damages) for willful violations even if the consumer cannot show that the violation caused him to sustain any actual damages.”); Birmingham v. Experian Info. Sols., Inc., 633 F.3d 1006, 1009 (10th Cir. 2011) (“Under [section] 1681n(a), however, the consumer need not prove actual damages if the violation is willful, but may recover … statutory damages ranging from $100 to $1,000.”). We join the other circuits and hold that the second option of section 1681n(a)(1)(A) does not require proof of actual damages.

Accordingly, the Court of Appeals summarized its holding as follows:

The denial of Mr. Santos and Ms. Clements’s motion for class certification was an abuse of discretion because the district court’s analysis of Rule 23(b)(3)’s predominance requirement was based on its contrary interpretation of the second option in section 1681n(a)(1)(A). Properly understood, a consumer alleging a willful violation of the Act doesn’t need to prove actual damages to recover “damages of not less than $100 and not more than $1,000.” While the parties raise other issues that may ultimately affect whether the class should be certified, the district court’s order denying class certification only relied on its interpretation of section 1681n(a)(1)(A) and didn’t address these other arguments. We think it best to allow the district court to address these arguments in the first instance on remand along with the remaining Rule 23 requirements. See Prado-Steiman ex rel. Prado v. Bush, 221 F.3d 1266, 1274 (11th Cir. 2000) (“[W]e should err, if at all, on the side of allowing the district court an opportunity to fine-tune its class certification order rather than opening the door too widely to interlocutory appellate review.” (citation omitted)).