Fourth Circuit Reverses FCRA Class Certification Decision for Lack of Typicality
On December 3, 2012, the Fourth Circuit reversed a District Court’s decision to certify a class action under the Fair Credit Reporting Act because the named plaintiff’s claims were atypical of the class she sought to represent. Importantly, the Fourth Circuit also held that assessing a class claim for statutory damages under the FCRA requiresan individualized inquiry into the specific facts of the individual class members, which counsels against class certification.
In Soutter v. Equifax Information Services, LLC, the named plaintiff brought a class action against a consumer reporting agency, alleging that the CRA violated the FCRA by inaccurately reporting a court judgment on her credit report and failing to follow reasonable procedures to ensure the accuracy of reports like hers. Although the named plaintiff claimed that class certification was proper because of the CRA’s uniform failure to follow reasonable procedures, the Fourth Circuit did not agree that the case could be decided with such a broad brush. Rather, in determining whether the named plaintiff was a “typical” class member for certification purposes, the Fourth Circuit held in its unpublished decision that it must evaluate the facts supporting the named plaintiff’s “prima facie case” and “‘the extent’ to which those facts ‘would also prove the claims of the absent class members.’”
Although the Fourth Circuit found that the facts pertaining to the named plaintiff were common to the class at an “‘unacceptably general level’” the Court concluded that on “‘a more directly relevant level’ her claim has ‘meaningful differences’ from the class she seeks to represent.” For example, when assessing whether the CRA followed reasonable procedures with respect to gathering court judgments, the Court found that it must look beneath the general policies of the CRA and evaluate the specific procedures used by the third-party contractor the CRA hired. Because the specific procedures pertaining to the plaintiff’s credit report would not advance the claims of class members whose credit reports were prepared through different means, the Fourth Circuit found that the named plaintiff’s claims were atypical. Simply alleging, on behalf of a class, “a violation of the same legal provision by the same defendant” was insufficient for class certification.
The named plaintiff also sought statutory damages, claiming the CRA’s violations were willful. The Fourth Circuit concluded, however, that a class claim for statutory damages requires an individualized inquiry into the facts of “‘particular class members’” because “statutory damages are intended to address harms that are small or difficult to quantify.’” This holding is significant because plaintiffs often seek statutory damages under the FCRA in an attempt to avoid the individualized inquiries that necessarily come with a claim for actual damages.