Mohamad and Ahmed Hammoud, father and son, filed Chapter 7 bankruptcy petitions using the same attorney, resulting in a mix-up involving Ahmed's social security number being incorrectly reported on Mohamad's petition. Despite the attorney's prompt correction of the social security number on Mohamad's filing, Experian Information Solutions, Inc. failed to update its records, leading to the erroneous reporting of Mohamad's bankruptcy on Ahmed's credit report for nine years. In 2019, Ahmed sued Experian and Equifax Information Services, Inc. for violating the Fair Credit Reporting Act's requirement for accurate reporting. Although Equifax settled with Ahmed, the district court ultimately ruled in favor of Experian on summary judgment, determining that while Ahmed had standing to sue, he could not prove that Experian's procedures were unreasonable. The court affirmed this decision, noting the procedural history of both bankruptcy filings and the subsequent reporting error caused by the initial mix-up of social security numbers.
Experian updated Mohamad's credit file to reflect his bankruptcy discharge but failed to do the same for Ahmed, resulting in an unresolved bankruptcy on Ahmed’s report for nine years. Ahmed discovered this link to his father’s bankruptcy around 2015-2016 and attempted to correct it through a letter drafted in June 2016, which was never sent due to miscommunication. In May 2019, while applying to refinance his home, Ahmed found two bankruptcies erroneously reported on his credit file, which led him to withdraw his application after being informed that he could not secure automated loan approval. On August 13, 2019, he formally disputed the bankruptcy on his report and sought settlement. Experian removed Mohamad’s bankruptcy from Ahmed's record on August 28, 2019. Ahmed subsequently sued Experian and Equifax in November 2019 for violating the Fair Credit Reporting Act by not ensuring the accuracy of his credit history. Equifax settled, but Experian filed a motion to dismiss for lack of subject matter jurisdiction and later sought summary judgment. Ahmed cross-moved for summary judgment. The district court denied Experian’s dismissal request and Ahmed’s motion but granted Experian’s summary judgment. Ahmed then appealed. Before addressing the merits, the court evaluated Ahmed's Article III standing, requiring him to demonstrate a concrete injury likely caused by the defendant and redressable through judicial relief. The court found that Ahmed met these requirements, noting that inaccurate credit report disclosures to third parties constitute a sufficient injury for standing.
Counsel for Experian acknowledged during oral arguments that inaccurate information regarding Ahmed was reported to a mortgage company. Evidence indicates that Ahmed's credit report included two Chapter 7 bankruptcies within eight years, satisfying the first and third elements of standing. The challenge lies in the second element, which requires proof that Experian's actions caused Ahmed's injury. Although Experian admitted that two other companies accessed Ahmed's credit report, it contended that variations in consumer reports could implicate another agency, such as Equifax, in the disclosure. This uncertainty, Experian argued, should be interpreted against Ahmed, suggesting he did not meet his burden of proof for standing. However, legal precedent mandates that evidence supporting standing evolves throughout litigation. Thus, the court must view the evidence favorably towards Ahmed. The findings indicate that SettlementOne/Mortgage Center was aware of the bankruptcies and that Experian provided a report to them around that time, with the erroneous bankruptcy remaining in Ahmed’s file until after the inquiry. Despite potential alternative conclusions at trial, Ahmed successfully navigated Experian's jurisdictional challenge at the summary judgment stage.
For liability under § 1681e(b), Ahmed must prove: 1) Experian reported inaccurate information, 2) failed to maintain reasonable procedures for accuracy, 3) sustained injury, and 4) Experian's actions were the proximate cause of that injury. The district court granted summary judgment to Experian, determining that Ahmed could not demonstrate that Experian's reporting procedures were unreasonable as a matter of law. Consequently, the court did not assess the other elements. The appellate review of summary judgment is conducted de novo. There is ambiguity regarding what constitutes 'reasonable' verification procedures for credit reporting agencies, with some circuits indicating such determinations are fact-dependent and others suggesting reliance on reputable sources can establish reasonableness as a legal standard.
It would be unreasonable to require credit reporting agencies to have a trained individual review every bankruptcy dismissal due to the substantial burden this would impose. However, when a consumer raises concerns about the accuracy of their information, the agency's investigative burden lessens, as it only needs to reinvestigate the specific disputed information. In this context, Ahmed cannot prove that Experian's procedures were legally unreasonable. He critiques Experian's reliance on LexisNexis data without directly evaluating court documents and claims that Experian failed to implement adequate procedures to verify bankruptcy statuses. However, Ahmed lacks sufficient authority to support these arguments, and reliance on information from reputable sources like LexisNexis is generally acceptable, provided the data is not known to be unreliable. Experian has safeguards, including audits, to ensure the accuracy of the information it receives. Regarding Ahmed's second point, he suggests that Experian should have been aware of changes in bankruptcy proceedings from publicly available information. However, the specific document he references was not publicly accessible, and determining its relevance would have required specialized legal knowledge and further investigation, which is not mandated under Section 1681e(b) until a consumer points out an inaccuracy. The volume of data managed by credit agencies means consumers are typically better positioned to identify errors. After Ahmed alerted Experian about the error, the agency promptly investigated and corrected the issue, fulfilling its obligations.
Ahmed sent a letter to Experian on August 13, 2019, which led to the removal of Mohamad’s bankruptcy from his credit report by August 28, 2019. This quick action by Experian indicates that the company implemented reasonable procedures to maintain the accuracy of Ahmed’s credit report in compliance with 15 U.S.C. § 1681e(b). The court noted that Experian's procedures effectively balance the need for accuracy with avoiding excessive burdens on credit reporting agencies, thereby concluding that Ahmed could not demonstrate that Experian's procedures were unreasonable as a matter of law, resulting in the failure of his claim under § 1681e(b). The district court's grant of summary judgment to Experian was affirmed.
In the concurrence, Judge Nalbandian addressed standing, emphasizing the need for a plaintiff to show an injury traceable to the defendant that could be remedied by judicial relief, referencing the case TransUnion LLC v. Ramirez. The concurrence highlighted agreement on the injury and redressability elements but focused on traceability. It discussed the complexity of establishing traceability, which intertwines with tort causation concepts, noting that courts sometimes equate traceability with proximate cause. The opinion indicated that while the causation standard for standing is related to tort analysis, it is less stringent than the standard for proving tort causation. Additionally, it stressed that the question of standing is separate from the merits of the case, determining whether the litigant is entitled to have the court decide on the dispute.
A plaintiff can establish the traceability element of standing by demonstrating a 'substantial likelihood' that the defendant caused their injury, rather than needing to prove this with absolute certainty. The term 'substantial likelihood' is interpreted as being less than a 50% chance but more than an insignificant chance, as referenced in case law. The Supreme Court has consistently used this standard in relation to traceability, indicating that petitioners must allege facts suggesting a substantial probability that their harm would not have occurred but for the defendant's conduct.
At the summary judgment stage, the requirement for traceability complicates matters because standing elements must be supported by evidence at all stages of litigation. Although only a substantial likelihood is needed for traceability, a plaintiff must show by a preponderance of the evidence that it is more likely than not that the defendant caused their injury or that material factual disputes exist regarding this question. The lack of a clear definition for 'substantial likelihood' creates ambiguity in its relationship to the preponderance of the evidence standard, raising questions about where on the probability spectrum a court should grant standing.
In United States v. Loughner, the Ninth Circuit defined "substantial probability" as "any probability worth taking seriously," which does not equate to "more likely than not." Conflicting definitions exist, with some courts interpreting it as higher than a preponderance of the evidence standard, while others see it as less than a preponderance but more than a mere possibility. At the summary judgment stage, a reasonable jury must find a substantial likelihood that the defendant caused the plaintiff's injury.
The analysis of standing is crucial, as it serves as a threshold jurisdictional determinant before addressing the merits of a case. Article III standing must be assessed prior to reaching substantive issues. The traceability aspect of standing is better suited for cases with indirect causation rather than determining if the correct defendant is sued. By the summary judgment phase, the plaintiff must demonstrate disputed material facts that would support a victory, including causation.
In Hammoud’s case against Experian, the company contended that Hammoud failed to demonstrate traceability, arguing he needed to provide specific evidence showing Experian's disclosures contained his father's bankruptcy information. However, the court highlighted the distinction between standing and merits analysis, stating that Hammoud's burden for traceability is not identical to that for causation on the merits. Hammoud only needed to show a "substantial likelihood" that Experian caused his injury, which he did by presenting evidence that erroneous bankruptcy information existed in his credit file and was reported to creditors, leading to adverse actions.
Ultimately, Hammoud met this traceability standard, as the evidence suggested a 50% probability that Experian, rather than another agency, released his credit report. Although this level of causation may not suffice for a merits analysis, it is adequate for establishing standing. Therefore, Experian's challenge to Hammoud's standing, particularly regarding traceability, was unsuccessful. The conclusion reached concurs with the majority opinion.
