Credit Reporting Agency Trans Union Selling Inaccurate OFAC Public Record

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

SANDRA CORTEZ )

)

Appellant/ )

 

Cross-Appellee

)   Nos. 08-2465, 08-2466

vs. )

)

TRANS UNION, LLC )

)

 

Appellee/ )

Cross-Appellant )

)

APPELLANT/CROSS-APPELLEE SANDRA CORTEZ’S

RESPONSE AND REPLY BRIEF

In this third step brief, Appellant/Cross-Appellee Sandra Cortez (“Cortez”) hereby responds to Appellee/Cross-Appellant’s Trans Union, LLC’s (“TU”) opening brief and also replies to TU’s response to her opening brief.

As more fully set forth below, with respect to Ms. Cortez’s appeal, this Court should vacate the District Court’s order of September 13, 2007, which conditionally granted a new trial and should further reinstate the jury’s verdict.

With respect to TU’s appeal, this Court should affirm the District Court’s other rulings and find that TU is not entitled to judgment as a matter of law, a new trial, or a reduction in the jury’s punitive damages award.

I. TU’S APPEAL LACKS MERIT

A. Introduction

A reading of TU’s appellate arguments leaves one with the impression that TU had almost nothing to do with this case.  TU strains to portray the case as centering upon an isolated and brief visit by Ms. Cortez to the John Elway car dealership in which TU had virtually no involvement.  The factual record reveals that the case turns upon numerous events and communications between TU and Ms. Cortez and her creditors over a two year time frame, and TU’s repeated and deliberate refusal to correct a serious problem with Ms. Cortez’s credit report that it alone created.

The trial record demonstrates that TU chose to sell for profit certain government criminal history (the OFAC Alert) about Ms. Cortez and include it on her credit reports, just as it does with other government records, such as tax liens, judgments and criminal convictions.  TU mixed the OFAC history of a Columbian narcotics trafficker, Sandra Cortes Quintero, with Ms. Cortez’s consumer file.  Contrary to what it argues, this error was TU’s alone, as Ms. Cortez’s name neither appears on nor matches any name on the government’s OFAC list.  Quintero, along with her much different date of birth and Columbian nationality, is on the list; Ms. Cortez is not.  A cursory glance at the OFAC list and Ms. Cortez’s credit report reveals this plain fact.  TU was the only one who represented to Elway Subaru, and others, that Ms. Cortez was a “match” (not a “possible match”) to Quintero over a period of approximately two years.

TU not only caused this gross and reckless error by failing to employ any reasonable procedures which would have differentiated Ms. Cortez from Quintero, it perpetuated the problem by deliberately failing to respond to Ms. Cortez’s repeated disputes and requests for the information it was reporting about her.   The record is undisputed that TU simply chose not to comply with the FCRA.

The damage suffered by Ms. Cortez was substantial, sufficiently proven at trial and mirrored the precise type of damage that the FCRA recognizes as compensable.  Ms. Cortez was detained at the Elway Subaru car dealership for hours, and thereafter suffered two years of humiliation, anxiety and fear.  TU would falsely inform Ms. Cortez that it was not publishing any OFAC Alerts about her, and then later, only report such information when she would apply for credit, creating an ongoing demeaning, embarrassing and distressing situation for Ms. Cortez over which she was powerless.

Contrary to its portrayal of itself as a passive observer that was merely observing its duties in a post 9-11 world, TU bears sole responsibility for the unfortunate and unnecessary events which befell Ms.  Cortez.

As discussed in detail below, TU offers no valid basis for appeal.

B. TU Violated FCRA Section 1681e(b) By Mixing The Information Of Narcotics Trafficker Quintero Into Ms. Cortez’s Credit Report

TU’s first argues that it is entitled to judgment as a matter of law on Ms. Cortez’s FCRA section 1681e(b) claim.  (TU Br. at 1, 16).  FCRA section 1681e(b) requires CRAs like TU to prepare reports by following procedures that assure “maximum possible accuracy.” TU followed no procedures that assured any level of accuracy here.  Indeed, according to Ms. Cortez’s expert, TU’s OFAC Alert matching system “guarantee[ed] inaccuracy.”  (A 233).  Nevertheless, TU argues that it is not liable under FCRA section 1681e(b) because it allegedly did not sell a “consumer report”; could not have assured “maximum possible accuracy” here since it does not control the OFAC list; and did not sell any reports “concern[ing] the individual about whom the report relates” (i.e., concerning Ms. Cortez)  (TU Br. at 17).  These arguments fail.

1. TU Sold Ms. Cortez’s “Consumer Report” With OFAC Alerts On It

TU’s argument that it did not sell any “consumer reports” about Ms. Cortez belies all applicable authority.

The best authority for the FCRA’s applicability and meaning is the face of the statute itself.  See United States v. Ron Pair Enterprises, Inc., 489 U.S. 235 (1989) (where statute’s language is plain, court’s function is to enforce it according to its terms); United States v. Cheryl Schneider, 14 F.3d 876, 879 (3d Cir. 1994). The plain language of the FCRA makes it clear that, when sold to potential creditors, landlords and others, information concerning a consumer’s criminal history squarely constitutes a “consumer report,” requiring the CRA selling the information to comply with all applicable requirements under the FCRA, including section 1681e(b).

The FCRA defines “consumer report” to include:

[A]ny communication of any information by a consumer reporting agency bearing on a consumer’s credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living which is used or expected to be used or collected in whole or in part for the purpose of serving as a factor in establishing the consumer’s eligibility for – –

(A) credit [employment, insurance, or other permissible business purposes] . . . .

 

15 U.S.C. § 1681a(d)(1) (emphasis added).

It is well-settled that government public records that are sold in connection with credit-eligibility, employment, rental, insurance and other transactions are covered under the FCRA as consumer reports.  See Philbin v. Trans Union Corp., 101 F.3d 957 (3d Cir. 1996) (involving government tax lien reported on Trans Union credit report); see also Dennis v. BEH-1, LLC, 520 F.3d 1066 (9th Cir. 2007) (judgment from court record on credit report can be basis for FCRA section 1681e(b) liability); Henson v. CSC Credit Servs., 29 F.3d 280 (7th Cir. 1994) (civil judgment sold on credit report to third party can be basis for FCRA liability).

Moreover, both federal courts and the FTC have held that companies that sell criminal background information are covered by the FCRA.  See Lewis v. Ohio Professional Electronic Network LLC, 190 F. Supp.2d 1049 (S.D. Ohio 2002) (company that sold criminal background reports subject to FCRA as CRA selling consumer reports); Serrano v. Sterling Testing Systems, Inc., 557 F.Supp. 688 (E.D. Pa. 2008)(CRA’s sale of arrest records covered under FCRA);( Sum FTC Staff Opinion 9-15-99 (firm that researches criminal records of job applicants for its clients is covered by the FCRA, selling consumer reports); Leathers FTC Staff Opinion 9-9-98 (company that provides background information to fast food employers over telephone regarding prospective employees is covered by the FCRA, selling consumer reports); LeBlanc FTC Staff Opinion 6-9-98 (company that gathers criminal records for third parties is covered by FCRA, selling consumer reports).  (FTC Staff Opinion letters are available, inter alia, on the FTC Website at http://www.ftc.gov/os/statutes/fcra/index.shtm).

Most germane to this case, the U.S. Treasury Department (“DOT”) has issued regulatory guidance specifically addressing OFAC listings on credit reports. See Foreign Asset Control Regulations at  http://www.treas.gov/offices/enforcement/ofac/regulations/t11faccr.pdf.  (4-13-04). According to this regulatory guidance, CRAs are not required to sell OFAC information; compliance is centered upon credit grantors.  If a CRA chooses to sell OFAC information, however, it must, in addition to otherwise complying with the FCRA:

(1) accept consumer disputes and remove inaccurate information from the consumer’s report;

(2) explain to recipients of credit reports with OFAC Alerts on them that the individual’s information is similar to the information on the OFAC list, but should not state that the information “matches” or that the applicant is in fact the individual on the OFAC list unless the consumer reporting agency verified that the person is on the list; and

(3) direct the recipients of credit reports with OFAC Alerts on them to the Website of the U.S. Department of the Treasury’s Office of Foreign Asset Control.

Id.  TU was fully aware of these guidelines in addition to the FCRA.  In its sales materials to its customers and potential customers, it refers to the DOT’s compliance procedures and “due diligence” requirements.  (A 570, 578).  TU ignores the very same regulations that it urges its customers to follow.

The OFAC Alert criminal history sold by TU to Elway Subaru, Xtreme Tenant Screening and other third parties in this case is simply another form of criminal history or a background check concerning a consumer.  When presented on a credit report, the OFAC Alert is no different from another government public record, such as a tax lien, judgment, eviction or record of conviction or arrest.  See 15 U.S.C. § 1681c(a)(1) – (5)  (proscribing how long public record and criminal background information can remain on a credit report).  The U.S. DOT’s regulatory guidance recognizes this fact, which is embedded in the statute, case law, and related FTC commentary.  Thus CRAs such as TU must comply with FCRA section 1681e(b) duties when selling OFAC data because such data constitutes a “consumer report.”

TU argues that it did not sell a “consumer report” about Ms. Cortez because OFAC Alert information is not “used” or “expected to be used” or even “collected” in whole or in part for the purposes of serving as a factor in establishing a consumer’s eligibility for credit, insurance, employment or for any other permissible business purpose.  (TU Br. 18-19).  This argument is demonstrably wrong for the plain and simple reason that the purpose of OFAC Information is to prevent the extension of credit to people on the list.

Persons on the OFAC list are credit-ineligible as a matter of law.  See 31 C.F.R. § 500.201 (enumerating prohibited transactions for OFAC list individuals including all “transactions of credit”); see also Department of Treasury’s regulations dated April 13, 2004, http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11faccr.pdf. (providing that all persons are “responsible for ensuring that they do not undertake a business dealing with any individual or entity” on the OFAC list); see also 31 C.F.R. § 500.701.

Moreover, TU included OFAC information in the middle of credit reports that are expressly and exclusively used for credit, employment and insurance decisions. 15 U.S.C. § 1681a(d). (A 322-23).   TU’s own marketing materials regarding OFAC Alerts advise its potential customers and subscribers that they must ensure that they “are not extending credit or financial services” to consumers on the OFAC list.  (A 570) (emphasis added).  In the case of Ms. Cortez, the OFAC Alerts proved to be a major impediment to her obtaining credit at a car dealership and lease an apartment.

TU’s argument that the OFAC Alerts are not “used” for credit-eligibility determination is also belied by the testimony of both Plaintiff and Elway Subaru’s Tyler Sullivan in this case, both of whom testified that Plaintiff was not going to be able to obtain a loan or a car if, in fact, she was on the OFAC list.   (A 84-85, 489).

Reading the FCRA to cover the sale of OFAC data also does justice to the statute because such data clearly has a direct bearing upon an individual’s “credit standing,” “character,” “general reputation,” “personal characteristics,” or “mode of living.”   15 U.S.C. § 1681a(d).  Indeed, the sale of potentially highly damaging and sensitive data about a consumer is exactly the type of transaction that the FCRA was meant to regulate.

Also erroneous is TU’s notion that the information is not “collected” by TU (even in part) for the purpose of assisting others in making credit eligibility determinations.  To the contrary, that is precisely the reason why TU customers pay TU money for these reports.  Perhaps the DOT collects the information for other reasons, but not TU.  Indeed, TU does not even get its OFAC list information from the U.S. government.  It employs a private vendor and collects the information from that source for the purpose of selling it to its customers — who (should) use consumer reports only for FCRA permissible purposes, such as making credit, employment and insurance eligibility decisions.  See 15 U.S.C. § 1681b.   Thus, the OFAC data is both collected and used by TU and its customers for credit eligibility reasons, and other business reasons for which the sale of consumer reports are permitted.   (A 322-23).

Moreover, TU’s own promotional documents provided to its customers sell the OFAC Alert “product” as an “add-on to a Credit Report” and advise its customers that any “business that extends credit” must purchase this tool in order to comply with the Department of the Treasury’s regulations (with which TU itself does not comply, as discussed above) of “not extending credit or financial services” to a person on the OFAC list.  (A 569-79, 806-07) (emphasis added).

The FCRA’s definitions were broadly drafted to encompass all types of “information” that is sold in the marketplace about people.  OFAC Alerts on credit reports are not to be treated any differently under the FCRA than other government records or criminal background information.

The FCRA’s legislative history contradicts TU’s argument as well. Congress enacted the FCRA to protect consumers against “the trend toward . . . the establishment of all sorts of computerized data banks [that placed a consumer] in great danger of having his life and character reduced to impersonal ‘blips’ and key punch holes in a stolid and unthinking machine which can literally ruin his reputation without cause, and make him unemployable.”  Dalton v. Capital Associated Industries, Inc., 257 F.3d 409 (4th Cir. 2000) (citing 116 Cong. Rec. 36570).  There is no evidence of any congressional intent to exclude the sale of OFAC data from the FCRA when it is sold in connection with credit, employment, insurance and other ordinary business transactions.

TU does nothing to comply with the FCRA when it comes to the sale of OFAC Alerts.   Thus, while it profits from the sale of such data, it simultaneously abandons all responsibility to ensure the accuracy of such data.  TU has failed to identify what part of the law sanctions such indulgent conduct by a CRA.

2. TU Could Have Employed Reasonable Procedures To Avoid The Mix

TU next argues that it should not be subject to FCRA section 1681e(b) because “no ‘reasonable procedure’ employed by Trans Union could have assured the accuracy of the OFAC list.”  (TU Br. at 19).  This argument is a red herring for the simple reason that there is no indication that the government’s OFAC List is inaccurate, at least as far as Ms. Cortez is concerned.

The relevant issue is whether TU could have applied some procedure which would have prevented the error that it made.   The trial record answers this question clearly. TU’s own representative, Colleen Gill, testified that on the eve of trial TU put a “block” on its computer system that prevented the OFAC Alert for Quintero from appearing on the TU credit reports for Ms. Cortez.  (A 182-84).  That type of a “blocking” procedure surely would have been a “reasonable procedure” designed to assure “maximum possible accuracy” that TU could have employed much earlier.

Further, Ms. Cortez offered expert evidence at trial that “cross-matching” procedures (which assure a match in available personal identifiers, such as names and dates of birth) could have been employed by TU in this context to avoid or correct the mix-up between Quintero and Ms. Cortez.   (A 229-37).  Such cross-matching procedures are used by CRAs to avoid mix-ups between family members or strangers with similar names.  (A226-30).

TU’s argument that it does not control the government’s OFAC list rings hollow, as the same can be true of any public record.  For example, TU does not control court bankruptcy records, state criminal records or federal tax lien records when it reports bankruptcies, felonies and tax liens on its reports.  Such an argument might have merit if the error at issue resided in the government’s record, but that is not the case here.  Ms. Cortez’s name does not match any name on the OFAC list.  TU is the only one who has ever reported such a gross error.

3. TU Attributed The OFAC Alert To Ms. Cortez

TU’s final argument with respect to Ms. Cortez’s 1681e(b) claim is that the OFAC Alerts that TU repeatedly placed on Ms. Cortez’s reports was not information “concerning the individual about whom the report related.”  (TU Br. at 21).  This argument is belied a simple look at the report TU sold about Ms. Cortez.

The OFAC Alert was right in the middle of the first page of several of Ms. Cortez’s TU “credit reports.” (A 526-27, 546-48, and 549-51).  The Alerts begin by stating that the “INPUT NAME MATCHES NAME ON THE OFAC DATABASE.”  (A 526, 546, 549); (see also TU Br. at 22).  The evidence indisputably established that the “input name” was that of Ms. Cortez and that the TU reports were in response to applications by Ms. Cortez for a car loan and an apartment.  (A 156-57, 161-63, 165, 171-77, 526, 549).   These facts plainly show that TU attributed the OFAC Alert information to Ms. Cortez.

TU also argues that it did not attribute the OFAC Alert to Ms. Cortez allegedly because it only reported a “near” or “possible” match (TU Br. at 23), but this statement is false.  The language on TU’s reports does not state “near” or “possible” match.  It states that the input name (Ms. Cortez’s name) is a “match” to a name on the OFAC list.  But a look at the OFAC list proves this is incorrect.  TU’s report identified Ms. Cortez as Quintero, whose name does appear on the list.

Even if the report stated a “possible match,” the OFAC Alert for Quintero simply does not belong on Ms. Cortez’s TU report.  If TU had mixed the public record bankruptcy of a stranger named “Susan Cortez,” for example, onto Ms. Cortez’s report but stated that Ms. Cortez had a “possible bankruptcy” that would not give TU a defense to an FCRA section 1681e(b) claim.

TU sold consumer reports where it attributed the OFAC criminal history of Quintero to Ms. Cortez, when reasonable procedures would have avoided the error.  Thus, TU is not entitled to judgment as a matter of law on Ms. Cortez’s proper FCRA section 1681e(b) claim.

C. TU Violated FCRA Sections 1681g & 1681i Because It Failed To Disclose The True Information It Was Reporting About Ms. Cortez And Failed To Investigate Her Disputes

Next, TU argues that it had no duties here under FCRA sections 1681i (the duty to reinvestigate disputes) and 1681g (the duty to provide complete and truthful disclosures to consumers) because it did not have any OFAC Alert information on Ms. Cortez’s “file.”  (TU Br. at 24).  TU does not argue that it either reasonably investigated or that it, in fact, disclosed to Ms. Cortez the OFAC information that it was selling about her to third parties on its credit reports.  It simply argues that it did not have a “file” on Ms. Cortez because it had not “recorded and retained” the OFAC Alerts it was publishing on her reports.  (TU Br. at 25) (citing 15 U.S.C. § 1681a(g)). This argument fails.

First, it is unclear what error TU believes the District Court made on this score, but it is irrelevant in any event. TU did not raise its lack of a file argument in its Rule 50 motion in the middle of trial (A 293-301), did not submit any jury charge on that point (E.D. Pa. Docket No. 34, 38), and did not raise it in its post-trial motions (see E.D. Pa. Docket No. 58).  Thus, TU has waived this argument.  See The Medical Protective Co. v. Watkins, 198 F.3d 100, 105 n. 3 (3d Cir. 1999) (finding that one of defendants’ arguments was waived for failure to raise issue in district court).

Second, and as a practical matter, the fact that TU made a corporate decision some years ago to use an outside vendor for the OFAC list information, instead of permanently merging it into its CRONUS database, does not mean that it does not have a “file” for FCRA  purposes.  A file as used in FCRA sections 1681g and 1681i is simply “information on that consumer that is recorded and retained by a consumer reporting agency regardless of how the information is stored.” 15 U.S.C. § 1681a(g) (emphasis added).  Thus there is no requirement that the information be stored within the consumer reporting agency’s database.  If that was the case, CRAs such as TU could shirk their disclosure and investigation duties under the FCRA simply by using “creative” off-site data storage.   In this case, TU corporate representative readily admitted that “Anything that is under the heading Trans Union Credit Report comes from our database.”  (A 173).  That is the case even for information that may be recorded or retained off site. This is precisely the information that TU copied and sold again and again, and that Ms. Cortez sought to inspect and dispute.  (See A 529, 546, 549) (TU credit reports).

TU should not be heard on this argument for another reason. Contrary to the position it takes here, last year before the Seventh Circuit TU argued that a “file” for FCRA purposes means the information “included in a consumer’s credit report.”  Gillespie v. Trans Union, 482 F.3d 907, 908 (7th Cir. 2007) (stating TU’s position).  In Gillespie the Seventh Circuit agreed with TU and held that “‘file’ means information included in a consumer report.”  Id. at 910.  There is no doubt in this case that TU sold credit reports (i.e., consumer reports) about Ms. Cortez that included the OFAC Alerts on them.  (A 526-27, 546-48, 549-551).  Since this data was included on “reports” sold to third parties, it is also included in TU’s “file” for Ms. Cortez.  Id. at 910. (See A 173, “Anything that is under the heading Trans Union Credit Report comes from our database”).   TU’s failure to disclose Gillespie impugns the credibility of its argument.

As established at trial, TU violated FCRA section 1681g by failing to disclose to Ms. Cortez the true contents of her file and also violated FCRA section 1681i by failing to reinvestigate Ms. Cortez’s disputes of information in her file.  No reversible error occurred.

D. TU’s “No Practical Consequences” Argument Is Factually And Legally Mistaken

Next TU argues that it is entitled to judgment as a matter of law on Ms. Cortez’s FCRA section 1681i claim (the duty to reinvestigate disputes) because, according to TU, “there would be no practical consequence to reinvestigating her dispute.”  (TU Br. at 27).

The practical consequence is what happened on the eve of trial:  TU fixed the problem and stopped reporting that Ms. Cortez was a match to Quintero on the OFAC list.  It inserted a “block” onto its computer system which prevented the OFAC Alert of Quintero from appearing on Ms. Cortez’s TU report.  (A 182-83). That is what it should have done from the beginning in response to her disputes.

Moreover, TU is mistaken legally in asserting that it has no duty to investigate consumer disputes under FCRA section 1681i unless there is a “practical consequence.”  Neither the FCRA nor case law recognizes such an exception.   Nor does TU offer any valid basis for this Court to invent a “practical consequences” requirement.

TU is also mistaken in arguing that the “entire responsibility” for OFAC compliance is placed on creditors.  (TU Br. at 27).  The DOT squarely places certain responsibilities upon CRAs that sell OFAC data.  See Foreign Asset Control Regulations of the Credit Reporting Industry at http://www.treas.gov/offices/enforcement/ofac/regulations/t11faccr.pdf. (4-13-04). Moreover, the FCRA responsibilities of TU were not suspended or affected by the Patriot Act.

E.    TU Further Violated FCRA Section 1681i By Failing To

Note Ms. Cortez’s Dispute In Subsequent Reports

Next, TU argues the District Court improperly charged the jury that TU had to note Ms. Cortez’s dispute on subsequent consumer reports.  (TU Br. at 28).  This argument also fails.

Perpetuating its theme of unaccountability, TU argues that “only furnishers” of credit information have a duty under the FCRA to note a dispute on credit reports.  (TU Br. at 28).  It is true, as the Fourth Circuit recently found, that credit furnishers must note a consumer’s meritorious dispute on data that it furnishes to a CRA.  See Saunders v. Branch Banking & Trust Co., 526 F.3d 142, 146, 148-51 (4th Cir. 2008) (interpreting FCRA section 1681s-2(b)).  Credit furnishers, however, are not the only actors with that type of duty.

Ms. Cortez here pled a claim under FCRA section 1681i(c), which governs the conduct of CRAs, such as TU, not of credit furnishers.  FCRA section 1681i(c) provides as follows:

Whenever a statement of a dispute is filed, unless there is reasonable grounds to believe that it is frivolous or irrelevant, the consumer reporting agency shall, in any subsequent consumer report containing the information in question, clearly note that it is disputed by the consumer and provide either the consumer’s statement or a clear and accurate codification or summary thereof.

15 U.S.C. § 1681i(c) (emphasis added).  The duty is clearly placed upon the CRA. TU failed to meet it despite several disputes by Ms. Cortez.

The evidence at trial established that Ms. Cortez first made an oral dispute to TU on March 31, 2005.  Ms. Cortez followed that up with a letter of the same date. (A 528-31).  Since her disputes went unanswered, Ms. Cortez wrote and submitted to TU an additional letter on April 6, 2005.  (A 532-36).  TU provided a form-letter response regarding “policy and credit limits,” “explanation of different items on your credit report,” and “dispute status.”  (A 537-38).

Again unsatisfied with TU, Ms. Cortez wrote another follow-up letter stating, in part, that she had “reviewed [TU’s] letter regarding her dispute” and that because she was unable to be more specific she will “repeat [her] request.”   (Trial Exhibit P-6) (A 539-44).   Ms. Cortez clearly stated:  “I am disputing these alerts because they do not belong to me.”   (Id.).  TU wrote another letter back to Ms. Cortez falsely stating next to “dispute status” — “No Hawk Alerts or OFAC Advisor Alerts.”  (A 545).  TU further falsely responded that “our records show that the information you disputed does not currently appear on your Trans Union credit report.”  (Id.).  In fact, it was there all along.

TU acknowledges receipt of all four of these disputes.  (A 199).    Yet TU’s credit reports created after all of Plaintiff’s disputes — on June 3, 2005 (approximately one month later) and June 10, 2006 (more than a year later)  – continued to include the OFAC Alerts and did not note Plaintiff’s dispute in any way.  (See Trial Exhibits 9 and 10) (subsequent reports) (A 546-48, 549-51).  Thus, Plaintiff established a section 1681i(c) claim, and the District Court made no error in allowing that claim to go to the jury.

In challenging Ms. Cortez’s section 1681i(c) claim, TU wishes to create a new hurdle for consumers.  According to TU, it is not sufficient for a consumer to dispute the accuracy of her credit report over and over again.  Rather, TU contends that Ms. Cortez was required to specifically tell TU that she wanted TU to include her “request for consumer statement” on her report.  (TU Br. at 29 & n.7).  But the statute does not impose any magic words or exacting language that consumers must use in order to invoke their rights, who routinely make disputes of errors without knowing the statutory text of the FCRA.

The statute at section 1681i(c) simply provides that whenever a non-frivolous “statement of a dispute” is filed, the CRA “shall, in any subsequent consumer report containing the information in question, [1] clearly note that it is disputed by the consumer and [2] provide either the consumer’s statement or a clear and accurate codification or summary thereof.”  15 U.S.C. § 1681i(c).  There is no reason why a letter such as Trial Exhibit P-6 (A 539) cannot constitute such a “statement of a dispute.”  Ms. Cortez stated in that letter that she is repeating her previous “request” (which TU identified as a “dispute” in Trial Exhibits 5 and 7) (A 537, 545) and that she was “disputing these [OFAC] alerts.”  (See Trial Exhibit P-6) (A 539).  This written statement of a follow-up dispute should have been noted on the subsequent June 3, 2005 and June 12, 2006 reports which contained the OFAC Alerts.

At the District Court level, but not in its opening brief to this Court, TU cited several cases in support of its argument for not having to note Ms. Cortez’s dispute in subsequent reports.  None of the cases that TU previously relied upon provide that a follow-up dispute letter cannot trigger the requirements of FCRA section 1681i(c) to note a disputed item as “disputed” in subsequent reports.  Nor do any of those cases hold, or even suggest, that the consumer must use any magic words, or any particular form other than a simple letter, in order to file a “statement of a dispute” for purposes of FCRA section 1681i(c).

In order to more fully appreciate the requirement of CRAs to note disputed information as disputed on credit reports per FCRA section 1681i(c), it is useful to consider other consumer statutory provisions under the Consumer Credit Protection Act (“CCPA”) that impose similar requirements upon other types of businesses.   For example, debt collectors who report collection accounts on credit reports must report disputed debts as “disputed” under the Fair Debt Collection Practices Act, 15 U.S.C. §  1692e(8).  Creditors who report credit information to any third party (i.e., the CRAs) must report as “disputed” any information that is the subject of a disputed bill under the Fair Credit Billing Act, 15 U.S.C. §  1666a(b).  Even under the FCRA, any credit furnisher who reports a disputed debt to a CRA cannot report the debt “without notice that such information is disputed by the consumer,” 15 U.S.C. § 1681s-2(a)(3).

These dispute provisions under other parts of the CCPA have essentially the same effect as FCRA section 1681i(c) has for CRAs — to “note” that certain information on a credit report is disputed by the consumer.   No magic words in a statement of dispute are required under any of these CCPA provisions.

As the statutory scheme covering all types of businesses that report credit suggests, “noting” information as “disputed” on credit reports is not insignificant.  For one thing, the consumer would have the benefit of the doubt from the outset in the case of a face-to-face credit, employment or insurance application, instead of having to explain that derogatory or harmful information is in dispute after the credit user has reviewed the report and not seen any item noted as disputed.  Second, in many cases, the consumer would never have the opportunity to otherwise note or explain the dispute because many credit transactions today are over the Internet or otherwise not in person.  Finally, disputed items typically do not count against the consumer on most credit scoring models.

The Fourth Circuit recently reaffirmed this principle in a case involving a meritorious set of disputes, like the ones here, by a consumer to a credit furnisher.   See Saunders v. Branch Banking & Trust Co., 526 F.3d 142, 146, 148-51 (4th Cir. 2008).  In Saunders, the Fourth Circuit noted the importance that credit information must be both accurate and “complete.”  Failing to note the consumer’s meritorious dispute would make the furnisher’s reporting incomplete per FCRA section 1681s-2(b).  The same concept applies here for CRAs such as TU under FCRA section 1681i(c).  Compare 15 U.S.C. § 1681i to 15 U.S.C. § 1681s-2(b) (both requiring accuracy and completeness).

Reporting disputed information as “disputed” on credit reports is both simple and important.  TU offers no valid reason for even failing to note Ms. Cortez’s dispute on subsequent reports.

F.   Ms. Cortez Presented Overwhelming Evidence That TU Willfully Violated The FCRA

Next, TU argues that it is entitled to judgment as a matter of law on Ms. Cortez’s willfulness claims because it alleges that even if it violated the FCRA here, its violations could not have been “willful” under FCRA section 1681n.  (TU Br. at 30).  An FCRA defendant may be liable for punitive damages in the case of willful violation of the Act.  Compare 15 U.S.C. §1681n to §1681o.  Here, the District Court properly permitted Ms. Cortez to present her willfulness claims to the jury based upon the evidence of record.

The standard to be met for proving a willful violation of the FCRA is well-settled, our Circuit having helped established it years ago.  Approximately six weeks after the conclusion of trial, the U.S. Supreme Court had occasion for the first time to address the willful violation standard under the FCRA.  See Safeco Ins. Co.  of  Am. v. Burr, 127 S. Ct. 2201 (U.S. June 4, 2007).  In Safeco, the Supreme Court found that “reckless disregard” (and not a knowing violation of the law, as the credit industry urged) is all that is minimally required in order for a consumer to establish a willful violation of the FCRA.  Id. at 2208-2210.  Of course a knowing violation can also be willful.  Id.  “Reckless disregard” is precisely the FCRA willfulness standard that has been used in this Circuit for many years, and the standard that the District Court used in charging the jury.  See Cushman v. Trans Union Corp., 115 F. 3d 220, 227 (3d. Cir. 1997).

As courts in this Circuit have properly explained (in many cases involving TU itself), in order to show “willfulness” under the FCRA, a consumer-plaintiff need only show that the defendant acted “in reckless disregard for whether [a] policy contravenes [consumer] rights” or that the defendant “knowingly and intentionally committed an act in conscious disregard for the rights of others.”  See Cushman, 115 F. 3d at  227 (emphasis added).  This is a lower standard than the standard for punitive damages in most common law torts.  The case law has further held that neither malice nor evil motive need be established for a finding of a willful violation. Id.; see also Stevenson v. TRW, Inc., 987 F.2d 288, 294 (5th Cir. 1993) (citing Fischl v. General Motors Acceptance Corp., 708 F.2d 143, 151 (5th Cir. 1983)).

The reckless disregard standard was properly applied in this case.  There is no doubt that TU was put on notice repeatedly of a serious and harmful error on Ms. Cortez’s credit report and failed to take any corrective measure.  This conduct was knowing, conscious and deliberate.  The jury was certainly within its province to reasonably find that TU “knowingly and intentionally committed an act in conscious disregard for the rights of others.”  See Cushman, 115 F.3d at  227.

Moreover, there is no doubt in this case that the violations were a result of corporate-wide policies and practices that showed a “reckless disregard” for consumer rights.  TU admitted that it never discloses to consumers that OFAC Alerts are on their credit reports. (A 11, 157).   Importantly, TU admitted that, as a matter of policy and practice, it never reinvestigates consumer disputes concerning OFAC Alerts, not even in the way it reinvestigates disputes about other government or public records errors on consumer credit reports.  (A 203-05).

TU’s own admissions, combined with Ms. Cortez’s testimony and the testimony of Ms. Cortez’s expert Mr. Hendricks gave the jury more than enough evidence to find that defendant acted knowingly or in reckless disregard for the rights of consumers such as Ms. Cortez.  See Cushman, 115 F.3d at  227.  (emphasis added).  Indeed, Mr. Hendricks offered unrebutted expert testimony that TU’s failures to cross-match personal identifiers, investigate Ms. Cortez’s disputes, and disclose a true and complete report to Ms. Cortez was willful.

It bears noting that the basic conduct at issue here (mixing consumers’ credit files and repeatedly failing to investigate disputes) is not at all new to TU.  TU has been the subject of numerous jury verdicts where it was found to have willfully violated the FCRA and liable for substantial punitive damage awards based upon the similar conduct here.  (See Cousins, Thomas, Soghamonian, discussed infra).  Thus, TU cannot seriously argue ignorance of these duties.   Moreover, in this case, TU had ample legal and factual notice that it was violating the FCRA in placing the OFAC Alerts on Ms. Cortez’s credit reports, but it showed a “reckless disregard” for her consumer rights.

A conclusion that, as a matter of law, no reasonable jury could find any willful violation is simply not possible with such a factual record.  See Nicini v. Morra, 212 F.3d 798, 817 (3d Cir. 2000) (Rendell, J., dissenting) (quoting Thomas v. Newton Int’l Enters., 42 F.3d 1266, 1270 (9th Cir. 1994) (expert opinion alone can create issue of fact making judgment as a matter of law inappropriate).

TU’s reliance upon the High Court’s recent Safeco decision is misplaced, and not helpful to TU in any event.   (TU Br. at 32-33) (citing See Safeco Ins. Co.  of  Am. v. Burr, 127 S. Ct. 2201, (U.S. 2007)).  Safeco reinforces the “reckless disregard” standard for willfulness claims that has been applied for years in this Circuit, although not in all circuits.  Id. at 2208-09.   That is the extent of Safeco’s relevance to this case.

Safeco does not hold anything regarding the claims at issue here — namely, FCRA sections 1681e, 1681g, and 1681i.  Safeco was concerned with the reading of FCRA section 1681m.  Indeed, Safeco does not even involve a CRA such as TU, and does not conclude anything concerning the duties of companies like TU. Rather, it involves certain FCRA requirements for insurance companies that are “users” of credit reports in their determinations to “increase” any charge for insurance coverage.  Id. at 2210-11.  The High Court held that an “increase” in insurance charges can occur even when no prior relationship or prior charge of any kind exists between an insurance applicant and an insurance company, but that Safeco was not objectively unreasonable in believing that an “increase” must have been an additional charge to an already existing insurance premium because the particular FCRA section at issue was “less than pellucid.”  Id. at 2011.

While its reckless disregard standard certainly applies, the facts of Safeco are inapposite to this case and provide TU with no assistance.  TU has not identified any statutory section or definition that it found “less than pellucid” as Safeco did regarding the definition of adverse action.  Moreover, given the FCRA’s broad definition of consumer report, the abundant authority finding that the sale of criminal history is covered by the FCRA, and the DOT’s advisory materials regarding CRA compliance with OFAC, there was overwhelming evidence for the jury to find that TU’s conduct was “objectively unreasonable” and willful under Safeco.

TU cannot credibly argue that it was unaware that the FCRA regulated OFAC Alerts on credit reports.  TU has been one of the three major CRAs for years and is fully aware of the main statute which regulates it.  FCRA section 1681i(a) requires a CRA to investigate “any item of information.”  In addition, the Third Circuit, and many other courts, have recognized this duty for government and public records, and other disputed information, on TU credit reports.  See Philbin v. Trans Union Corp., 101 F.3d 957 (3d. Cir. 1996) (tax lien case); Cushman v. Trans Union Corp., 115 F.3d 220 (3d Cir. 1997) (fraud case).

Moreover, the Federal Trade Commission (“FTC”), by whom TU is tightly regulated, requires companies that sell all types of criminal background information to comply with the FCRA’s requirements for consumer reporting agencies.  See Sum FTC Staff Opinion 9-15-99, LeBlanc FTC Staff Opinion 6-9-98, supra.

Even more to the point, as early as 2004 the U.S. Department of the Treasury issued regulatory guidance expressly requiring CRAs such as TU to comply with the FCRA when OFAC Alerts are included within credit reports, including the duty to investigate disputes concerning OFAC Alerts.   See Foreign Asset Control Regulations of the Credit Reporting Industry http://www.ustreas.gov/offices/enforcement/ofac/regulations/t11faccr.pdf. (Dep. Treas. April 13, 2004).

TU’s claim that the FTC has not specifically opined that OFAC is covered by the FCRA is deceptive.  (TU Br. at 34).  First, the FTC stopped issuing opinion letters before TU began placing OFAC criminal histories on credit reports in 2002.  Second, there is no reason why TU should not abide by the DOT’s regulations, and instead should limit its focus on the FTC.  Finally, neither Congress, nor the FTC, nor any other agency, needs to specifically warn TU every time it chooses to place some public record or new item of criminal history on consumer credit reports.

The evidence presented to the jury established that that TU’s conduct was informed, deliberate and reckless.  That is precisely why the jury found three willful violations of the FCRA.

G.       The Jury’s Actual Damages Award Was Proper

TU next incorrectly argues that there was insufficient evidence to support the jury’s $50,000 actual (or compensatory) damages award.  (TU Br. at 34).

In assessing the sufficiency of the evidence, this Court must give the non-moving party, Ms. Cortez, “as [the] verdict winner, the benefit of all logical inferences that could be drawn from the evidence presented, resolve all conflicts in the evidence in [her] favor, and in general, view the record in the light most favorable to [her].”  Williamson v. Consol. Rail Corp., 926 F.2d 1344, 1348 (3d Cir.1991).  This Court may not determine the credibility of the witnesses nor “substitute its choice for that of the jury between conflicting elements of the evidence.” Id.

Here, the jury’s actual damages award of $50,000 was based on detailed and corroborated trial testimony.   Ms. Cortez was detained at the Elway Subaru car dealership for hours (not for 90 minutes as TU suggests)  because of the false information that TU was spreading about her.  She was lied to by TU when she was repeatedly told that the OFAC Alerts were not actually on her credit report.  That false sense of confidence only led to additional embarrassment for her later, including when she needed to rent a new apartment in June 2006.  TU ignored or rebuffed Ms. Cortez’s attempt to correct this gross error on multiple occasion.

For two years, TU failed to provide Ms. Cortez with a corrected copy of her report, defamed her, held her credit hostage, caused her to cry, lose weight, and was the foundation for unwarranted sleeplessness (and the need to take Ambien to help her sleep), distress, fear, humiliation and anxiety.  (A 92-98, 112, 116-117, 141-44).  As Anna Schen’s testimony explained, this was the number one source of stress in Ms. Cortez’s life.  (A 144).  These are precisely the type of non-economic actual damages that should be awarded in an FCRA case.

Nor is the actual damages award excessive or out-of-line with other emotional distress awards in recent FCRA cases.  Indeed, it is a lower award than many cases with arguably less egregious facts.  See Sloan v. Equifax  Info. Servs., LLC, Civ. No. 1:05-CV-1272 (E.D. Va. 2006) ($351,000 jury verdict against CRA; $106,000 in economic damages and $245,000 in emotional distress damages); Kirkpatrick v. Equifax Info. Servs., LLC, Civ. No. 3:03-cv-00199-MO (D. Or. 2005) ($210,000 jury verdict in identify theft FCRA case claiming emotional distress); Johnson v. MBNA, 357 F.3d 426 (4th Cir. 2004) (affirming judgment with jury verdict of $90,300 for emotional distress and damage to reputation for negligent FCRA investigation of consumer’s dispute); Soghomonian v. US  and Trans Union, 99-CV-5773 (E.D. Cal. 2003) ($614,900 actual damages jury verdict against Trans Union for FCRA violations); Boris v. Choicepoint Services, Inc., 249 F. Supp. 2d 851, 2003 WL 1255891 (W.D. Ky. 2003) ($100,000 for humiliation, emotional distress and embarrassment); Zotta v. Nations Credit (E.D. Mo. 2003) (jury verdict of $87,500 for negligent FCRA investigation made of emotional distress only); Thomas v. Trans Union, C.A. No. 00-1150 (D. Or. 2002) (jury verdict of $5.3 million, remitted to $1 million; $300,000 in compensatory damages for emotional distress damages); Jorgenson v. TRW, Inc., C.A. No. 96-286 (D. Or. 1998) (jury verdict of  $600,000 for compensatory damages for credit rating damage and emotional distress).

Finally, there is no basis to accept TU’s suggestion that the actual damages award was truly one for punitive damages.  (See TU Br. at 43).  The jury charge was proper (and not objected to by TU), the verdict form was unambiguous (and not objected to by TU), counsel’s arguments clearly demarcated between compensation and punishment (A 430-31), and there is no evidence that the jury did anything other than determine the proper actual or compensatory damages verdict for this case, separate from its finding that punitive damages were appropriate.  TU’s request to eliminate or reduce Ms. Cortez’s compensatory damages award due to allegedly insufficient evidence must therefore be rejected.

H. The Jury’s Actual and Punitive Damages Awards Were Proper And The Punitive Damages Award Should Not Have Been Reduced

Finally, TU argues that both the actual and the punitive damages awards should be reduced or reduced even further in the case of the punitive damages award.  (TU Br. at 40).

The jury’s punitive damages verdict of $750,000 — which the District Court already reduced by $650,000 — was less than one-tenth (1/10) of 1% of TU’s net worth of over $939,000,000 for 2005.  (A 439, 352-53).   Given the reprehensibility and broad reach of TU’s ongoing and multiple willful violations of the FCRA (the jury found willful violations on 3 of 4 counts), and the harm to Ms. Cortez, the punitive damages award was appropriate.  Further, the actual damages award of $50,000 was appropriate as discussed in the previous section of this brief and as further discussed infra.

1. The Jury’s Actual Damages Award Was Proper

TU urges this Court to reduce the jury’s $50,000 actual damages award, which the District Court upheld.  TU states that other than a “short delay” in taking delivery of a car at Elway Subaru there is “no other evidence upon which an award of compensatory damages could be based.”  (TU Br. at 41-42).  TU is mistaken.

First, the jury did not credit TU’s argument that Ms. Cortez simply experienced a “short delay” at Elway Subaru, and for good reason.  TU here states that the short delay was 90 minutes.  (TU Br. at 41-42).  At trial TU argued that it was “more likely six and a half minutes.”  (A 387).  The credited facts are that it was an ordeal lasting approximately six and a half hours where Ms Cortez was being asked accusatory questions, had her keys taken from her, was told the FBI was called, and was not free to leave.

Ms. Cortez testified to the same in detail at trial, consistent with her deposition.  (A 81-85).  Also, she memorialized the same in 2005 in a letter to TU written the day after the ordeal happed.  (A 528).  Although one credit report admitted into evidence has a 5:21 p.m. date stamp (in military time), other credit reports in evidence show that Elway Subaru purchased four separate reports from TU the day of the incident (3/30/05) as it was shopping around for a loan for Ms. Cortez at various banks, including Chase, WFS Financial and Compass Bank.  (A 55-59, 168, 548).  Thus the 5:21 p.m. report was almost certainly not the first report that alerted Elway Subaru of the problem that afternoon.  Moreover, the 5:21 p.m. time may very well have been generated in the Eastern Time zone, a two hour difference from the Mountain Time zone where Elway Subaru is located.  In short, TU’s “short delay” theory failed at trial because of credible evidence to the contrary.

TU is further off the mark in arguing that the Elway Subaru incident was the “only evidence” of damages.  This was a case spanning more than two years, not only one afternoon.  Indeed, Ms. Cortez could not have had damages for TU’s failed investigations until after she disputed (four times), which was after the Elway Subaru ordeal.  The same is true for Ms. Cortez’s claims that TU failed to disclose her true file to her. The evidence reveals Ms. Cortez’s fear and embarrassment over a period of two years, and humiliation at an apartment complex.  TU even told the jury:  “She could go to the airport and be detained.  She was concerned that the FBI were to come.  We understand that.”  (A 443-44).  Now TU argues that only the “90 minute” Elway Subaru ordeal may be considered.

In sum, TU is factually mistaken as to what evidence could have, and in fact, supported the jury’s actual damages award.  There was no cogent argument here that the award was clearly unsupported or excessive.  Williams v. Martin Marietta Alumina, Inc., 817 F.2d 1030, 1038 (3d Cir. 1987).  Moreover, as set forth in the previous section, this jury’s award was in line with comparable FCRA cases.  No reversible error occurred here and the actual damages award of $50,000 should be upheld.

2. The Jury’s Punitive Damages Award Was Proper

TU also seeks to reduce the jury’s punitive damages award even further on constitutional grounds.  (See TU Br. at 40, 43-44) (citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996)).  Even after a due process constitutional analysis, there is no valid basis to remit the jury’s punitive damages verdict, and certainly no basis to reduce it further.

As the U.S. Supreme Court has held, there is no mathematical formula or “bright line ratio that a punitive damages award cannot exceed.”  State Farm Mut. Auto. Ins. Co., 538 U.S. at 425.  The Court has provided three “guideposts” in assessing punitive damages:  (1) the reasonableness of the punitive damages in relation to the reprehensibility of defendant’s actions; (2) the disparity between the punitive damages awarded and the compensatory damages awarded (the “ratio”), and (3) the difference between the punitive damages awarded by the jury and civil penalties authorized in comparative cases.  Id. at 418 (citing Gore, 517 U.S. at 575).   Those guideposts, when properly applied to the case at bar, result in the conclusion that the punitive damages verdict was constitutionally appropriate.

a. The Punitive Damages Verdict Is Reasonably Related To The  Reprehensibility Of TU’s Conduct

As far as fair credit reporting cases are concerned, TU’s conduct here was highly reprehensible, long-lasting and far-reaching.  TU falsely reported that Ms. Cortez was on the OFAC list of known terrorists, money launderers, drug-traffickers, and other criminals.  Ms. Cortez was detained for hours at Elway Subaru because of this lie, told that the F.B.I. would be coming for her, and suffered additional and on-going embarrassment, anxiety, humiliation and fear.  To add insult to injury, TU repeatedly lied to Ms. Cortez about the false information it was selling about her, and refused to handle her repeated disputes, or provide her with a corrected credit report for over two years, even through trial.

Importantly, evidence at trial established that Ms. Cortez is not the only one misbranded as a criminal.  Every other “Sandra Cortez” in the United States is similarly misbranded by TU due to its reckless practices.  The real criminal, Sandra Cortes Quintero, probably does not even have a TU credit report, because she is in Columbia, not the United States.

Testimony further established that TU’s practices (particularly the “name-only match” practice) misbrands many people with names similar to those on the OFAC list as terrorists, money launderers and drug-traffickers, even though those people are not on the government’s OFAC list.  In that connection, TU misleads all of these misbranded innocent American consumers.  As a matter of corporate practice, it hides that it is reporting OFAC Alerts on their reports.  Ironically, the actual foreign criminals know that they are wanted — because the OFAC list is publicly accessible.  It is only the “secret files,” as Mr. Hendricks called them, which TU keeps on innocent Americans that are sold only to third parties for profit but never shown to the consumers on whose credit reports they appear — despite the FCRA’s disclosure requirements at section 1681g.

This conduct satisfies the U.S. Supreme Court’s “reprehensibility” standard, and the punitive damages award is certainly reasonable in that light.  If this punishment of less than 1/10 of 1% of TU’s net worth for 2005 is considered unreasonable in relation to TU’s reprehensible conduct, then it is difficult to imagine what credit reporting agency conduct is reprehensible.  It would also be scary to imagine, without proper punishment, what false information TU would sell about people in order to sell an extra “product” and increase its revenues and net worth.

The circumstances of State Farm, a bad faith insurance claim matter stemming from a fatal car accident, led the Court to discuss five factors as to “reprehensibility” (the first guidepost) that are not a meaningful match for FCRA consumer cases.  See Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142 (4th Cir. 2008) (discussing State Farm in FCRA punitive damages case, refusing to remit 80:1 ratio of punitive to compensatory damages, and explaining why reprehensibility factors are not a good guide for FCRA cases).  Specifically, the first two of the State Farm reprehensibility factors should be given less weight in consumer actions since FCRA actions typically will not involve physical injury of the type in State Farm.  Id.  See also Kemp v. American Telephone & Telegraph Co., 393 F.3d 1354, 1363 (11th Cir. 2004) (upholding district court’s finding that first two factors of State Farm reprehensibility analysis did not apply to consumer overcharging case).

Additionally, the final factor can also be discounted since malice is not necessary in FCRA cases to recover punitive damages. See Saunders, supra. See also Cushman v. Trans Union Corp., 115 F. 3d 220, 227 (3d. Cir. 1997); Stevenson v. TRW, Inc., 987 F.2d 288, 294 (5th Cir. 1993); Dalton v. Capital Associated Indus., Inc., 257 F.3d 409, 418 (4th Cir. 2001); Cousin v. Trans Union Corp., 246 F.3d 359, 372 (5th Cir. 2001) (“Malice or evil motive need not be established for a punitive damages award [in FCRA cases], but the violation must have been willful”) (citation omitted).

Moreover, the U.S. Supreme Court stated that the reprehensibility considerations are not a mandatory checklist that must be satisfied in full, but that the absence of all five factors renders a punitive damages award “suspect,” although not necessarily unconstitutional.  State Farm Mut. Auto. Ins. Co., 538 U.S. at 418.  Nevertheless, the evidence of record clearly satisfies the factors applicable to the case at bar.

First, the harm here was neither purely “economic” nor “physical” (other than physical manifestation of stress and anxiety, such as crying and sleeplessness) — but rather reputational and emotional in nature.  If a choice had to be made between economic and physical, the harm would be more physical in nature.  Second, this was not a case that involved the “health or safety of others.”  Third, Ms. Cortez was “financially vulnerable.”  She is a single person in her 60s who rents an apartment and lives by herself, far away from her children.   She relies on credit for ordinary transactions, such as purchasing a car or renting an apartment.  By labeling her an OFAC criminal on her credit reports, TU held Ms. Cortez’s good credit hostage for approximately two years.  TU fully well knew about Ms. Cortez’s problem after March 31, 2005, yet it refused to help her despite her vulnerability and TU’s own substantial power and resources.  Fourth, Ms. Cortez’s problem is not an isolated instance.  As discussed above, TU’s reckless procedures affect every “Sandra Cortez” in the country, as well as hundreds of other innocent Americans whose names may be similar to the names of criminals on the OFAC list.  Finally, TU’s conduct was clearly malicious and deceitful, hiding its “secret files” from the view of innocent Americans and refusing to handle their disputes as a matter of policy.  It should be noted, however, that “malice” and “deceit” are not elements of an FCRA punitive damages claim, where only a “reckless disregard” for consumer rights is necessary.  See Saunders v. Equifax Info. Servs., L.L.C., 469 F.Supp. 343, 351 (E.D. Va. 2007) (citing cases); see also Cushman v. Trans Union Corp., 115 F.3d 220, 227 (3d Cir. 1997).

The reprehensibility guidepost is satisfied.

b.   The Ratio Here Was Constitutionally Appropriate

The ratio between punitive and actual (or compensatory) damages here was constitutionally appropriate, and not a significant penalty given TU’s net worth of approximately $1 billion in 2005.

Multiple cases decided after Gore have upheld ratios much greater than 15:1.  Indeed, in a recent FCRA case, the Fourth Circuit upheld a punitive-compensatory damage ratio of 80:1 in a comprehensive and well-reasoned decision, following defendant’s motion for a reduction, just like TU’s present motion here.  See Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142 (4th Cir. 2008).   But that is only one example, out of many:

• 75:1 ratio proper.  Willow Inn, Inc. v. Public Service Mut. Ins. Co., 399 F.3d 224, 233-37 (3d Cir. 2005) (upholding punitive damage award of $150,000 in insurer’s bad faith case involving property damage where compensatory damages were $2,000; and finding that attorney’s fees and costs of $135,447 is appropriately part of Gore “ratio” guidepost, which would make a ratio of almost one-to-one a non-issue for purposes of constitutional analysis ).

• 172:1 ratio proper.  Kemp v. American Telephone & Telegraph Co., 393 F.3d 1354, 1363-65 (11th Cir. 2004)  (consumer action involving excessive telephone charges; noting that lesser punitive damages award “would utterly fail to serve the traditional purposes underlying an award of punitive damages, which are to punish and deter”).

• 37:1 ratio proper.  Mathias v. Accor Economy Lodging, Inc., 347 F.3d 672, 672-77 (7th Cir. 2003) (Posner, J) (unsatisfied hotel patrons bit by bedbugs).

• 87:1 ratio proper.  Parrott v. Carr Chevrolet, Inc., 17 P.3d 473, 487 (Or. 2001) (consumer unfair trade practices case).

• 99:1 ratio proper. Grabinski v. Blue Springs Ford Sales, Inc., 203 F.3d 1024 (8th Cir. 2000) (27:1 collective ratio against five defendants also appropriate and upheld).

• 100:1 ratio proper.  Johansen v. Combustion Engineering, Inc., 170 F.3d 1320 (11th Cir. 1999).

• 27:1 ratio proper.  Krysa v. Payne, 176 S.W.3d 150, 2005 WL 3038853 (Mo. App. W.D. 2005) (warranty/consumer fraud case).

By contrast, the only two cases where the U.S. Supreme Court overturned punitive damage awards because of their size are materially different.  Gore had a verdict of $4,000 in compensatory damages and $2,000,0000 in punitive damages, and State Farm had a verdict of $2.6 million in compensatory damages and $145 million in punitive damages.  Thus the ratios of punitive to compensatory damages in both of those cases, which the U.S. Supreme Court found to be offensive, were 500:1 and 145:1, respectively.  See Saunders v. Equifax Info. Servs., L.L.C., 469 F. Supp. 343, 349 n.7 (E.D. Va. 2007).   Here, the punitive to compensatory damages ratio is much closer to the single-digit (less than 10:1) ratio found to be widely acceptable.

It should also be noted, however, that in a case decided only a few years prior to Gore, the Supreme Court affirmed a punitive damages award “526 times greater than the actual damages awarded by the jury.”  See TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 453 (1993) ($10 million in punitive damages in case where compensatory damages were $19,000).  See also State Farm Mut. Auto. Ins. Co., 538 U.S. at 425 (higher ratio may be appropriate where a “particularly egregious act has resulted in only a small amount of economic damages”)  (internal quotation marks omitted).

Finally, this Court may appropriately consider an alternative way of assessing the ratio.  In Willow Inn, the Third Circuit found that in a case involving mandatory attorney’s fees and costs, such fees and costs could be considered in relation to the punitive damages award for purposes of the ratio analysis.  Willow Inn, Inc. v. Public Service Mut. Ins. Co., 399 F.3d 224, 235 (3d Cir. 2005) (“we conclude that the attorney fees and costs awarded as part of the § 8371 [statutory bad faith] claim is the proper term to compare to the punitive damages award for ratio purposes”; noting that compensatory damages of $2,000 were the result of a contract claim and not the main thrust of the statutory bad faith claim).

Here, the FCRA, like the Pennsylvania insurance bad faith statute in Willow Inn carries with it mandatory attorneys’ fees and costs for “any successful action to enforce any liability.”  15 U.S.C. § 1681n(a)(3) & 1681o(a)(2), compare 42 Pa. C.S. § 8371.  Ms. Cortez certainly enforced liability under the FCRA in this action by winning the liability phase of trial.  (See E.D. Pa. Docket No. 40) (bifurcated verdict as to liability for Ms. Cortez and against TU).  Part of her recovery for such a successful claim would be attorneys’ fees and costs.  15 U.S.C. § 1681n(a)(3) & 1681o(a)(2).  The District Court awarded Ms. Cortez reduced fees and costs of $132,000.  When fees and costs are taken into consideration, the jury’s punitive damages ratio is closer to 3:1 and the remitted punitive damages ratio is well less than 1:1.  Such ratios must be upheld under any analysis.

c.    Civil Penalties Comparison Not Germane

The final Gore guidepost calls for a comparison of the difference between the punitive damages awarded by the jury and civil penalties authorized in comparative cases.  State Farm Mut. Auto. Ins. Co., 538 U.S. at 418 (citing Gore, 517 U.S. at 575).  For FCRA cases brought by private citizens, the third guidepost offers little help to this Court’s punitive damages analysis. See Saunders v. Branch Banking & Trust Co. of Va., 526 F.3d 142 (4th Cir. 2008). Even TU agreed at the District Court level that there is no truly “comparable” civil penalty that this Court could be guided by.   (See E.D. Pa. Docket No. 58 at ___).

This Court may wish to note that where a company’s unfair credit-related trade practices have gone on for a substantial period of time, and have a far reach, such as TU’s practices in placing OFAC Alerts on consumer credit reports in this case, the FTC has obtained very significant civil fines and penalties:

• See http://www.ftc.gov/opa/2006/01/choicepoint.shtm, 1-26-06 (“Consumer data broker ChoicePoint, Inc., . . . will pay $10 million in civil penalties and $5 million in consumer redress to settle Federal Trade Commission charges that its security and record-handling procedures violated consumers’ privacy rights and federal laws . . . . The FTC charged that ChoicePoint violated the Fair Credit Reporting Act (FCRA) by furnishing consumer reports – credit histories – to subscribers who did not have a permissible purpose to obtain them, and by failing to maintain reasonable procedures to verify both their identities and how they intended to use the information”).

• See http://www.ftc.gov/opa/2004/09/sprintatt.shtm, 9-10-04 (“Sprint Corporation and AT&T Corp. will pay $1.125 million and $365,000, respectively, to settle Federal Trade Commission charges that they failed to notify certain applicants for telephone service of their rights under federal credit laws”).

• See http://www.ftc.gov/opa/2004/05/ncogroup.shtm, 5-13-04, (“One of the nation’s largest debt-collection firms will pay $1.5 million to settle Federal Trade Commission charges that it violated the Fair Credit Reporting Act (FCRA) by reporting inaccurate information about consumer accounts to credit bureaus . . . .The proposed consent decree orders the defendants to pay civil penalties of $1.5 million and permanently bars them from reporting later-than-actual delinquency dates to credit bureaus in the future”).

• See http://www.ftc.gov/opa/2000/01/busysignal.shtm, 1-13-00 (“Three national consumer reporting agencies, Equifax Credit Information Services, Inc., (Equifax), Trans Union LLC (Trans Union), and Experian Information Solutions, Inc. (Experian), have agreed to a total of $2.5 million in payments as part of settlements negotiated by the Federal Trade Commission to resolve charges that they each violated provisions of the Fair Credit Reporting Act (FCRA) by failing to maintain a toll-free telephone number at which personnel are accessible to consumers during normal business hours”).

In determining the size of the punitive damages award here, the jury was certainly within its province to consider the reach of TU’s conduct beyond Ms. Cortez.  Although the jury could not, and did not, compensate non-parties, it could certainly punish TU in a fashion so as to deter future harm to others by the same reckless conduct.  See Philip Morris USA v. Williams, 127 S.Ct. 1057, 1065 (2007).  In that sense, the jury’s verdict was comparable to the FTC fines and penalties cited above.  TU offers no authority for the proposition that, given the opportunity, the FTC would impose a lighter penalty than the jury’s punitive damages award for the egregious conduct at issue in this case.

In sum, the jury’s actual and punitive damages verdict was appropriate, and TU offers no valid reason to reduce them, or to reduce the punitive damages verdict even further.

II.

TU’S ARGUMENTS AGAINST MS. CORTEZ’S APPEAL ARE UNAVAILING AND THE DISTRICT COURT’S NEW TRIAL/ REMITTITUR ORDER SHOULD VACATED

 

A. Introduction

With respect to Ms. Cortez’s appeal, TU argues: (1) Ms. Cortez cannot appeal the new trial/remittitur order of September 13, 2007 because  she accepted the remittitur and the District Court did not abuse its discretion in granting a new trial/remittitur in any event; and (2) Ms. Cortez waived her appeal of the attorney’s fees reduction, which was proper in any event, in TU’s eyes.  (TU Br. at 46-58).

Ms. Cortez disagrees with TU’s arguments as to the attorney’s fees reduction issues, but nevertheless she elects and moves per Federal Rule of Appellate Procedure 42(b) to voluntarily dismiss only that claim from the present appeal.

Ms. Cortez also disagrees with TU on the new trial/remittitur issue.  That issue is discussed below.  The District Court here abused its discretion in ordering a conditional new trial on a basis which TU did not seek and in an unnecessary manner which prejudiced Ms. Cortez’s rights.  The District Court’s September 13, 2007 trial/remittitur order should be vacated.

B. This Court Should Vacate The District Court’s New Trial/Remittitur And Should Not Bind Ms. Cortez To It

1. Ms. Cortez May Challenge On Appeal The District Court’s Improper Order Granting A New Trial/Remittitur

TU argues that Ms. Cortez cannot appeal here because she agreed to the District Court’s September 13, 2008 remittitur order.  (TU Br. at 46).  TU cites to the U.S. Supreme Court’s per curium decision in Donovan v. Penn Shipping, which ruled that a plaintiff may not appeal a remittitur that he or she has accepted even under protest.  429 U.S. 648, 649-50 (1977).  But that rule should not bar Ms. Cortez’s appeal here.

First, unlike the plaintiff in Donovan, Ms. Cortez in this case does not seek to challenge on appeal the merits of the remitted amount itself.   She does not, for example, seek to argue that a different remitted account is more proper, like the plaintiff in Donovan did.  Rather, Ms. Cortez seeks to challenge the District Court’s power to order a new trial on improper grounds and in a manner that violated her rights, like the plaintiff in Demeretz v. Daniels Motor Freight, Inc., 307 F.2d 469, 471 (3d Cir. 1962) (relying upon Phillips v. Negley, 1886, 117 U.S. 665, 6 S.Ct. 901, 29 L.Ed. 1013 (1886)).  Donovan does not state that a party accepting a remittitur gives up his/her right to appeal any and all issues, regardless of the basis.

Several appellate courts have recognized this type of exception to the Dovovan rule.  See, e.g., Denholm v. Houghton Mifflin Co., 912 F.2d 357, 360 (9th Cir. 1990) (appeal of party who accepted remitter was proper where appellate issue was separate and distinct); Aaro, Inc. v. Daewoo Int’l (Am.) Corp., 755 F.2d 1398, 1401 (11th Cir. 1985) (plaintiffs who consented to remittitur can nevertheless appeal parts of final judgment); Ohio-Sealy Mattress Mfg. Co. v. Sealy, Inc., 585 F.2d 821, 847 (7th Cir. 1978) (approving appeal of plaintiff who accepted remittitur).  The Second Circuit put the concept in the following terms:

Now that we have adjudicated Sea-Land’s appeal and agreed with appellant that the District Judge lacked the power to condition the new trial order on a remittitur adjusting the contributory negligence percentage, the first step in ordering relief with respect to the appeal is, as Sea-Land requests, to vacate the judgment entered upon the reduced award on the ground that its entry was erroneous. Once we do that, it is conceptually difficult and practically unfair to think of the plaintiff as having waived a cross-appeal by consenting to a judgment that no longer exists.

Akermanis v. Sea-Land Service, Inc., 688 F.2d 898, 903-04 (2d Cir. 1982) (emphasis added).  By the same principle, if the District Court’s conditional new trial order of September 13, 2007 in this case was improper, and should be vacated, as Appellant Cross-Appellee urges, then Ms. Cortez should not be bound by it.

Under the circumstances here, this Court should take the opportunity to discuss the limitations of Donovan.  Ms. Cortez urges this Court to find that a plaintiff is not automatically barred by Donovan from taking any type of appeal after she has accepted a remittitur under protest.  This Court should further find that, in this case, a broad exception is appropriate, because without such an exception Ms. Cortez would never, as a practical matter, be able to have her case decided by a jury or be able to have meaningful appellate review of any trial court errors.

 

This concern is not hypothetical, and it has constitutional ramifications under the Seventh Amendment to the U.S. Constitution.   In this case, the District Court ruled that that $100,000 in punitive damages was the “maximum” which this record would support.  (A 827).  A new trial, which would be on the same record, should, under the District Court’s logic, have the same “maximum.”  If a second jury came back with a higher award, nothing would prevent the District Court from ordering a third trial, and so forth.    That practice cannot be condoned.

 

Although theoretically a plaintiff can have trial after trial, as a practical matter that it not possible and is not done.   Both courts and commentators have discussed the coercive powers of remittitur, which force a plaintiff’s hand.

In a case like the one at bar, a plaintiff would have to be outright irrational to choose a new trial when she already knows the “maximum” recovery.  It cannot be said that Ms. Cortez’s Seventh Amendment right to a trial by jury can be truly realized under those circumstances.  In fact, Ms. Cortez would have her right to a jury trial deprived if a court sets a “maximum” recovery in a unliquidated damages case like the one at bar, and one involving punitive damages.

TU would have this Court find that Ms. Cortez’s opinion on choosing to conditionally accept the remittitur (and avoid the new trial treadmill) should deprive her of any appellate review.  In the same breath, TU argues that it should be able to appeal the District Court’s rulings, including the remittitur ruling, and to have the jury’s punitive damages award reduced even further.  Such a result in this case would not only violate Ms. Cortez’s Seventh Amendment rights, it would even undermine the utility of the remittitur rule, which is often quoted as a judicial-efficiency rule that supposedly puts an end to litigation.  That is certainly not the case here, for TU has appealed the remittitur issue.

In sum, this Court should not broadly apply the Donovan rule as a bar to Ms. Cortez’s appeal under the circumstances of this case.

2. Remittitur Has Boundaries In Cases Like This One, Where No Trial Error Is Found But Where The Verdict Is Thought To Have Exceeded The Limits Of  Due Process

TU further argues that the District Court did not abuse its discretion in ordering a new trial.  (TU Br. at 43-45).  TU does not, and cannot, argue that the District Court granted a new trial on either of the two specific bases that TU actually raised in support of its motion for a new trial.  Rather, TU argues that the District Court had no choice but to order a new trial with respect to TU’s remittitur argument, which it made in the alterative, because that is the only way that an unconstitutionally excessive punitive damages verdict can be reduced.  (Id.).  But that is not so.

Usually new trials are granted because some error occurred during the first trial that prejudiced the jury’s ability to render a fair and impartial verdict.  Jury misconduct, improper argument by counsel, and admission of inadmissible and inflammatory evidence have all been traditional reasons for new trials.  See Johnson, supra, at 158-59.  When this type of a trial error occurs, a court cannot correct it after the trial.

In this case, however, there was no such error.  TU argued that there was such an error (when it argued below that counsel made an inflammatory “unit of time” argument to the jury), but the District Court rejected this argument and TU did not appeal that issue.

Instead, in this case, TU argues, as it argued below in the alternative, that the punitive damages verdict offended due process and was thus unconstitutionally excessive, citing State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003) and BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), as it does before this Court.  (See TU Br. at 43-44).  Assuming, arguendo, that the verdict below was proper except for its unconstitutional excessiveness, a new trial would not cure that error or prevent it from happening again. Only a court, not a jury, could decide the due process limits of punitive damages.  See Gore and Campbell, supra.

The situation is different when a verdict is excessive and a new trial is ordered because of an evidentiary error or because of an inflammatory argument at trial.  Presumably the District Court can prevent such errors during the second trial.  But even in an error-free second trial, a jury can still return an unconstitutionally excessive verdict that will be subject to court review.  In that scenario, the new trial would have been pointless.

That is the scenario here.  And that is precisely the reason why the remittitur concept must have its boundaries, and why a defendant’s request to reduce an allegedly excessive punitive damages award will not always result in a new trial.  A plaintiff such as Ms. Cortez should not be forced to go through a pointless second trial before requesting an appellate court to review the due process excessiveness reduction of a punitive damages award.  For that matter, neither should a defendant like TU be forced to go through a second trial, especially when it did not specifically request a new trial due to the alleged unconstitutional excessiveness of the verdict.

When Donovan was decided in 1977, the U.S. Supreme Court obviously had not articulated the due process limitations to punitive damages that it later articulated in Gore and Campbell.   In cases decided since Gore and Campbell many courts, including this Court, have reduced punitive damages awards as unconstitutionally excessive, without ordering a new trial. See, e.g., CGB Occupational Therapy, Inc. v. RHA Health Services, 499 F.3d 184, 195 (3d Cir. 2007) (finding 18:1 punitive to compensatory damages ratio to be unconstitutionally excessive, and reducing award from $2,000,0000 to “maximum” of $750,000, which is approximately a 7:1 ratio).   If it were the case that the parties must have trial after trial until the jury gets a constitutionally appropriate punitive damages verdict, the trial process could go on forever.

Where, as here, the only issue is whether a punitive damages verdict was unconstitutionally excessive, the remittitur concept does not, and should not, force the District Court to order a new trial, as TU now suggests.  The District Court can simply mold the verdict to the constitutional maximum, reduce it to a final judgment, and thus allow both plaintiff and defendant to appeal if either deems the reduction to have been inappropriate, one way or the other.  See Ross v. Kansas City Power & Light Co., 293 F.3d 1041, 1049-1050 (8th Cir. 2002); Johansen v. Combustion Eng’g, Inc., 170 F.3d 1320, 1331-32 (11th Cir. 1999).   By the same token, a plaintiff should not be forced to give up her appellate rights on that reduction decision by being placed in the intolerable position of having to select a pointless and unnecessary new trial.

This is, therefore, where the District Court in this case abused its discretion. It found that the jury $750,000 punitive damages verdict “exceeded permissible limits” and that the “maximum” punitive verdict had to be $100,000.  (A  827).  Inappropriately, the District Court found that the jury’s verdict was excessive because it considered TU’s “seeming insensitivity to the harm that it was causing plaintiff” and TU $1 billion “net worth.”  (Id.).  But these are exactly the type of factors — reprehensibility of the conduct and the wealth of the defendant — that a jury may consider in awarding punitive damages.

The District Court then ordered a conditional new trial, on a basis other than the liability issues actually raised by TU in its motion for a new trial, and without giving Ms. Cortez notice and an opportunity to argue that a new trial for alleged unconstitutional excessiveness was not necessary or appropriate under the circumstances here. That new trial order also improperly forced Ms. Cortez’s hand in accepting the remittitur under protest, thus putting her in a very unenviable position.  Her options were having an unnecessary new trial or not being able to appeal the propriety of the punitive damages reduction itself, but having to nevertheless defend TU’s appeal on that exact same point.  This was a Hobson’s choice was not requested by TU, not necessary, and not proper.

For all these reasons, as well as the reasons set forth in Ms. Cortez’s opening brief, the District Court abused its discretion and its order of September 13, 2007 should be vacated.

III. CONCLUSION

For the reasons discussed above, with respect to Ms. Cortez’s appeal, this Court should vacate the District Court’s order of September 13, 2007, which conditionally granted a new trial.  This Court should further reinstate the jury’s verdict.  With respect to TU’s appeal, this Court should affirm the District Court’s other rulings and find that TU is not entitled to judgment as a matter of law, a new trial, or a reduction of the jury’s punitive damages award.

Respectfully submitted,

FRANCIS & MAILMAN, P.C.

BY: /s/ John Soumilas

JAMES A. FRANCIS

JOHN SOUMILAS

Land Title Building, 19th Floor

100 South Broad Street

Philadelphia, PA 19110

Date: December 22, 2008                    (215) 735-8600

CERTIFICATION OF BAR MEMBERSHIP

I, John Soumilas, Esquire hereby certify that I am a member in good standing of the bar of the United States Court of Appeals for the Third Circuit.

/s/ John Soumilas

JOHN SOUMILAS

 

Attorney for Appellant / Cross-

Appellee

Dated:  December 22, 2008

CERTIFICATION OF BAR MEMBERSHIP

I, James A. Francis, Esquire hereby certify that I am a member in good standing of the bar of the United States Court of Appeals for the Third Circuit.

 

/s/ James A. Francis

JAMES A. FRANCIS

 

Attorney for Appellant / Cross- Appellee

Dated:  December 22, 2008

CERTIFICATE OF COMPLIANCE WITH FED. R. APP. P. 32

1. This brief complies with the type-volume limitations of Fed. R. App. 32(a)(7)(B) because this brief contains 6,823 words, excluding those parts of the brief excluded by Fed. R. App. P. 32(a)(7)(B)(iii).

2. This brief complies with the typeface requirements of Fed. R. App. 32(a)(5) and the type-style requirements of Fed. R. App. P. 32(a)(6) because this brief has been prepared in a proportionally spaced typeface using Microsoft Word Times New Roman 14.

/s/ John Soumilas

JOHN SOUMILAS

Attorney for Appellant / Cross- Appellee

Dated:   December 22, 2008

CERTIFICATE OF SERVICE

I, John Soumilas, Esquire, hereby certify that on this date a true and correct copy of the foregoing BRIEF OF APPELLANT / CROSS-APPELLEE was electronically filed with the Court, ten (10) copies were served by Express Mail, postage pre-paid, to the Court, and two (2) copies were served by first class Express Mail, postage pre-paid, on the following counsel:

Timothy P. Creech, Esquire

Mark E. Kogan, Esquire

Bruce S. Luckman, Esquire

Kogan, Trichon & Wertheimer, P.C.

1818 Market Street, 30th Floor

Philadelphia, PA  19103-3699

 

/s/ John Soumilas

JOHN SOUMILAS

Attorney for Appellant / Cross- Appellee

Dated:  December 22, 2008

CERTIFICATE OF BRIEF TEXT

I, John Soumilas, Esquire, hereby certify that the text of the E-Brief and Hard Copies of the foregoing BRIEF OF APPELLANT / CROSS-APPELLEE are identical.

/s/ John Soumilas

JOHN SOUMILAS

Attorney for Appellant / Cross- Appellee

Dated:  December 22, 2008

CERTIFICATION OF VIRUS CHECK

I, John Soumilas, Esquire, hereby certify that a virus check was performed on the PDF file of the foregoing BRIEF OF APPELLANT / CROSS-APPELLEE prior to electronic filing using Symantec AntiVirus 2005.

/s/ John Soumilas

JOHN SOUMILAS

Attorney for Appellant / Cross- Appellee

Dated:  December 22, 2008