Appeals Court Rules No FCRA Violation: Defendant’s Interpretation Was “Objectively Reasonable” under Safeco
On January 24, 2012, the Court of Appeals for the Third Circuit issued a significant decision endorsing a pro-defendant interpretation of “willfulness” for FCRA violations. In Long v. Tommy Hilfiger U.S.A., Inc., the court ruled that a defendant cannot be held liable in a civil action for willfully violating a statute if its interpretation of the statute is “objectively reasonable” under the Supreme Court’s opinion in Safeco Ins. Co. of Am. v. Burr.
Long involved the printing of expiration dates on credit card receipts. The Third Circuit held that a merchant was liable – but not willfully so – for violating the Fair and Accurate Credit Transaction Act’s (FACTA) receipt-truncation provision by printing only part of a customer’s credit card expiration date on a receipt. FACTA had previously amended the FCRA to prohibit merchants from printing the date on a customer’s receipt. Citing Safeco, the court noted that “there was no guidance from the federal courts of appeal on this issue” and that the handful of district court opinions addressing similar FACTA violations were “not directly on-point because they involve[d] merchants who, unlike here, printed the entire expiration date.” Additionally, the court found that the defendant’s interpretation was not “objectively unreasonable” since: (1) it maintained some foundation in the statutory text; (2) no FCRA definition contradicting the phrase’s plain meaning existed; and (3) the reading was “at least sufficiently persuasive to convince the District Court to adopt it.” Finally, the court held that “Long’s allegation about Hilfiger’s actual knowledge or intent as to FACTA’s requirements is immaterial to the objective reasonableness analysis.”
The Long decision is important in its affirmation that courts should apply an objective standard to the “willfulness” inquiry for FCRA claims and reject a plaintiff’s attempt to introduce evidence of subjective bad faith or intent. The decision spells some relief for FCRA class-action defendants faced with the risk of devastating damages under the FCRA. The ruling will make it harder to certify a class of statutory-damages claims, which, under the FCRA and class action jurisprudence, necessarily hinge on a finding of “willfulness.” The ruling also renders unnecessary any factual analysis and discovery into the defendant’s decision-making process. Finally, Long is significant in that it confirmed that any determination of a defendant’s “willful” activity should be made by the court, as a matter of law, and not left to the uncertainty of a jury result.
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