Experian ‘negligent,’ judges say
In a rare victory for a consumer fighting to protect his credit score, a three-judge federal appeals panel in Pasadena slammed Experian on Tuesday for such carelessness that it refused to send the case back to the trial court, saying “no rational jury could find that the company wasn’t negligent.”
Even rarer, the appeals panel’s decision was a reversal of a ruling it had made just four months earlier.
Federal law requires Experian and other credit reporting companies -- which, the panel said, traffic “in the reputations of ordinary people” -- to verify the accuracy of information in Americans’ credit files.
Los Angeles resident Jason Dennis, the plaintiff in the case, tried for four years to persuade Experian to erase damaging and erroneous information that its investigators had added to his credit report.
His situation is all too common, said Edmund Mierzwinski, consumer program director of U.S. PIRG, a Boston-based consumer advocacy group. Mierzwinski called the number of complaints about obvious mistakes in credit reports “gigantic.”
A 2004 PIRG survey found that nearly one-third of credit reports contained errors serious enough to cause the denial of credit, employment or insurance.
Dennis, a 32-year-old television production coordinator, said he discovered the mistake when he tried to buy a computer. Denied a loan, he pulled his report and saw that Experian had listed a court judgment entered against him by a former landlord.
Actually, Dennis said and the appeals panel confirmed Tuesday, the landlord had filed a written statement with Los Angeles County Superior Court in late 2002 saying that he would drop a lawsuit he had filed when Dennis fell behind on his rent once Dennis cleared the debt. Dennis had done that by January 2003.
Dennis said he provided Experian with a court form showing the landlord’s suit would be dismissed once the back rent was paid. When Experian stood by its claim that a judgment had been entered, Dennis sued in U.S. District Court in Los Angeles, alleging that the company had violated provisions of federal and state credit reporting laws.
“They made it seem like it was my fault that it was reported erroneously,” Dennis said Tuesday.
That, in fact, was Experian’s argument -- that if anyone was in a position to correct the error in the credit report it was Dennis himself, something the plaintiff said he tried again and again to do.
In June 2004, U.S. District Judge Manuel Real, ruling without comment, granted a summary judgment in favor of Experian. Dennis appealed, and in May a three-judge panel for the U.S. Court of Appeals for the 9th Circuit upheld Real’s ruling by a vote of 3 to 2, with Judge Alex Kozinski dissenting.
Dennis’ attorney, Louis Dell of Los Angeles, filed a motion for a rehearing.
Kozinski wrote Tuesday’s unanimous opinion, using harsh language to say that Experian could have easily caught the error on Dennis’ report simply by looking on the superior court’s publicly available civil register or examining documents in Dennis’ court file.
Instead of sending the case back to the trial court, the panel issued a summary judgment for Dennis and directed the district court to calculate damages and attorney’s fees.
An Experian spokesman said the company didn’t comment on litigation. Experian can ask for another rehearing before the same panel or the entire appeals court.
Dennis called the decision “a vindication.” Dell said it showed the system worked. “That’s what petitions for rehearings are designed to accomplish,” he said, to give a court the opportunity to change its mind after it has recognized “some point that may have been overlooked.”
Dell predicted that “everybody’s going to benefit from this decision.”
“Now Experian and other credit reporting agencies can’t just report what they know to be false information,” he said. “That’s huge.”