The Court of Appeals for the Second Circuit issued the Sessa decision last week: Sessa v. TRANS UNION, LLC, Court of Appeals, 2nd Circuit 2023.   This line of cases, following the 9th Circuit’s Gross decision, continues to wrestle with the distinction between a legal and factual dispute under the FCRA, which is also complicated by evolving standards applicable to furnishers versus the consumer reporting agencies. In short, the Court of Appeals for the Second Circuit followed its earlier Mader decision, and remanded to the District Court for consideration in light of Mader.

We hold, in accordance with Mader, that allegedly inaccurate information reported on a consumer’s credit report must be objectively and readily verifiable to be actionable under section 1681e(b). We contribute to the law as stated by Mader to clarify that there is no threshold inquiry under the FCRA as to whether any purportedly inaccurate information is legal or factual in nature. Indeed, the accuracy of the information reported, and whether that information is objectively and readily verifiable, are not the only inquiries under section 1681e(b). Section 1681e(b) is violated only when a CRA has failed to “follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates.” 15 U.S.C. §1681e(b); see also Podell v. Citicorp Diners Club, Inc., 112 F.3d 98, 105 (2d Cir. 1997) (affirming grant of summary judgment in favor of a CRA on a section 1681e(b) claim where the CRA reported inaccurate information, but had followed reasonable procedures to assure accuracy). The District Court never addressed that question. We therefore remand to permit the District Court to conduct the analysis in the first instance.)

Sessa was not a furnisher case, but involved the standards applicable to the Consumer Reporting Agencies. In June, the Court of Appeals for the 11th Circuit issued the Milgram decision, which was a furnisher decision – but the outcome is less than dispositive on the legal versus factual dispute issue. The CFPB filed an amicus in 11th Circuit saying that a furnisher “must” investigate “legal” disputes, oral argument was heard April 27, 2023, and the decision is here: Milgram — 11th Cir Decision. In Milgram, the Court of Appeals skirted the legal versus factual distinction, stating:

To obtain reversal, Milgram must show both (1) that the error in her credit report—that she owed Chase money for the charges on the credit card—is a cognizable inaccuracy under the FCRA and (2) that Chase’s investigation into her dispute was unreasonable. Our analysis assumes without deciding that legal inaccuracies can be so clearly erroneous as to raise a claim under the FCRA. But because Milgram cannot show that Chase’s investigation was unreasonable, she cannot prevail, even with this assumption. So we do not consider whether, in fact, legal inaccuracies can, under certain circumstances, raise a claim under the FCRA. . . . Indeed, Chase was already aware of the criminal investigation into Williams. Chase “gave . . . consideration” to the fact that Williams didn’t have actual authority to incur those charges but decided that the lack of actual authority didn’t affect the apparent authority that Milgram’s omissions had vested in Williams. Given this earlier determination, Williams’s criminal conviction isn’t relevant to Chase’s conclusion. As a result, Chase didn’t need to keep investigating. Nor has Milgram explained what Chase should have done differently: whom it should have talked to or what documents it should have considered that might have affected its apparent-authority analysis. That omission dooms Milgram’s claim because “a plaintiff cannot demonstrate that a reasonable investigation would have resulted in the furnisher concluding that the information was inaccurate or incomplete without identifying some facts the furnisher could have uncovered that establish that the reported information was, in fact, inaccurate or incomplete.” Felts, 893 F.3d at 1313.

Milgram has filed a Petition for Rehearing en banc, here:Milgram – Petition for Rehearing