District Court (Ore.) Says FCRA Provides No Remedy for Commercial Losses

In Boydstun v. U.S. Bank National Association, N.D., 2016 WL 2736104, at *1 (D.Or., 2016), Judge Hernandez precluded Plaintiff’s expert in a FCRA case from testifying about commercial losses because FCRA affords no remedy for them.  Plaintiff Robert Boydstun sought to introduce expert testimony about the economic damages he suffered after a failed attempt to secure financing for a forklift to be used for one of his businesses. Defendants jointly moved to exclude that evidence as irrelevant because, they argued, damages flowing from the use of a credit report for a business or commercial transaction are not recoverable under the FCRA. The Court agreed, and granted Defendants’ motion.

. . .numerous Circuit and District Courts have examined the statutory text, legislative history, and administrative interpretation of the FCRA and concluded that it “does not cover reports used or expected to be used only in connection with commercial business transactions.” Hall v. Phenix Investigations, Inc., No. 15-10533, 2016 WL 1238602, at *3 (5th Cir. Mar. 29, 2016); Mone v. Dranow, 945 F.2d 306, 308 (9th Cir. 1991) (holding that an earlier version of the FCRA did not include in its purview “[r]eports used for business, commercial, or professional purposes [.]”); Ippolito v. WNS, Inc., 864 F.2d 440, 452 (7th Cir. 1988) (same); Matthews v. Worthen Bank & Trust Co., 741 F.2d 217, 219 (8th Cir. 1984) (same); Bacharach, 2015 WL 6442493 at *3 (surveying cases); Grigoryan v. Experian Info. Sols., Inc., 84 F.Supp.3d 1044, 1081–82 (C.D. Cal. 2014) (“It is therefore beyond dispute that any credit report [the plaintiff] may have used to secure financing …, even though nominally a consumer credit report, was for a ‘business purpose,’ i.e., purchasing, improving, and reselling homes. It is therefore not deemed a consumer credit report for purposes of the FCRA [.]”); Wisdom v. Wells Fargo Bank NA, No. CV-10-2400-PHX-GMS, 2012 WL 170900, at *2 (D. Ariz. Jan. 20, 2012) (“[C]ourts have held since [the FCRA’s] initial passage that ‘both the legislative history of the Act and the official administrative interpretation of the statutory terminology involved compel the conclusion that the Act does not extend coverage to a consumer’s business transactions.’ ”) (quoting Sizemore v. Bambi Leasing Co., 360 F. Supp. 252, 254 (N.D. Ga. 1973)); Johnson v. Wells Fargo Home Mortg., Inc., 558 F.Supp.2d 1114, 1121–27 (D. Nev. 2008) (explaining that information in report collected solely for commercial purposes in connection with plaintiff’s business did not qualify as a consumer report); Lewis v. Experian Info. Sols., Inc., No. CIV.A. 04-88, 2006 WL 897198, at *2 (E.D. Ky. Apr. 3, 2006) (holding that plaintiffs could not maintain a FCRA claim against credit reporting agency in connection with failed attempts to “obtain equipment and working capital for their business”); Lucchesi v. Experian Info. Sols., Inc., 226 F.R.D. 172, 173–74 (S.D.N.Y. 2005) (holding that FCRA does not apply to report, even one containing consumer information, created for use in connection with the plaintiff’s business transaction).  After reviewing the above cases and many others, the Court agrees with the conclusion that the FCRA does not apply where a consumer report is used for a business purpose. There can be no dispute that the use of Boydstun’s report in connection with Miranda Homes’s attempt to finance a forklift was for a business, not a consumer, purpose. See 15 U.S.C. 1681a(d)(a) (defining “consumer report” as “[A]ny information … bearing on a consumer’s credit worthiness … which is used or expected to be used … as a factor in establishing the consumer’s eligibility for (A) credit … to be used primarily for personal, family, or household purposes.”). Therefore, Boydstun is excluded from presenting any evidence, from Mr. Mettler or from any other source, about economic damages he suffered in connection with the forklift transaction. Boydstun attempts to avoid this result by relying on a Ninth Circuit case which “held that the plaintiff was entitled to pursue his diminished ability to start a new business as damages resulting from a violation of the FCRA.” Pl. Resp. at 6 (citing Dennis v. BEH-1, LLC, 520 F.3d 1066, 1069–70 (9th Cir. 2008). In Dennis, Experian erroneously reported that a judgment had been entered against the plaintiff. Dennis, 520 F.3d at 1066. The district court granted summary judgment in favor of Experian because, in part, the plaintiff failed to show “actual damages.” Id. at 1069. The Ninth Circuit reversed, finding that the plaintiff was “hop[ing] to start a business” and that the blemish on his report caused “several lenders to decline his applications for credit, dashing his hopes of starting a new business.” Id. In other words, the plaintiff in Dennis had not yet formed a business and did not seek credit on behalf of the business using his own credit report.  Here, by contrast, Miranda Homes was already operating, and Boydstun sought financing for a forklift to be used in that ongoing enterprise. Boydstun’s report, while “nominally a consumer credit report,” was obviously used for a business purpose, i.e., purchasing equipment for Miranda Homes, and thus it was not covered by the FCRA protections. Grigoryan, 84 F.Supp.3d at 1081–82 (“[A]ny credit report [the plaintiff] may have used to secure financing …, even though nominally a consumer credit report, was for a ‘business purpose,’ i.e., purchasing, improving, and reselling homes. It is therefore not deemed a consumer credit report for purposes of the FCRA[.]”).  Finally, Boydstun argues that the persuasive value of the many cases cited above is diminished because those cases relied on Federal Trade Commission (“FTC”) guidance regarding the interpretation of the FCRA that the FTC has since withdrawn. Pl. Resp. at 7–9 (citing Federal Trade Commission, 40 Years of Experience with the Fair Credit Reporting Act: An FTC Staff Report with Summary of Interpretations (July 2011) (“40 Years Report), available at: http://www.ftc.gov/os/2011/07/110720fcrareport.pdf). That argument is unavailing. First, those cases also relied on the text and legislative history of the statute in concluding that reports used for a business purpose were not covered by FCRA. E.g. Bacharach, 2015 WL 6442493, at *3 (“As stated by House representative Sullivan, the FCRA’s sponsor, on the house floor: ‘The purpose of the Fair Credit Reporting Bill is to protect consumers from inaccurate or arbitrary information in a consumer report which is used as a factor in determining an individual’s eligibility for credit, insurance or employment. It does not apply to reports used for business, commercial or professional purposes.’ ”) (quoting 116 Cong. Record 36, 572 (1970) (emphasis added); see also Mone v. Dranow, 945 F.2d 306, 308 (9th Cir. 1991) (relying on the same legislative history to conclude that Congress did not intend for FCRA to extend to reports used for commercial purposes).  Secondly, the FTC interpretation in the 40 Years Report is not binding. Christensen v. Harris Cty., 529 U.S. 576, 587 (2000) (“Interpretations such as those in opinion letters—like interpretations contained in policy statements, agency manuals, and enforcement guidelines, all of which lack the force of law—do not warrant Chevron-style deference.”). And thirdly, the FTC is no longer the administrative agency charged with interpreting the FCRA—that duty passed to the Consumer Financial Protection Bureau in 2010. 40 Years Report at 1–2. In light of the extraordinary weight of case law supporting Defendant’s motion and the clear intent of Congress, the Court declines to follow the FTC’s non-binding interpretation of the FCRA on this point.