Gabriel Moran v. the Screening Pros, LLC ( 2022 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
GABRIEL FELIX MORAN, No. 20-55908
Plaintiff-Appellant,
D.C. No.
v. 2:12-cv-05808-
SVW-AGR
THE SCREENING PROS, LLC, a
California corporation,
Defendant-Appellee. OPINION
Appeal from the United States District Court
for the Central District of California
Stephen V. Wilson, District Judge, Presiding
Argued and Submitted December 10, 2021
Pasadena, California
Filed February 8, 2022
Before: Marsha S. Berzon and Carlos T. Bea, Circuit
Judges, and Richard D. Bennett, * District Judge.
Opinion by Judge Bea
*
The Honorable Richard D. Bennett, United States District Judge
for the District of Maryland, sitting by designation.
2 MORAN V. THE SCREENING PROS
SUMMARY **
Fair Credit Reporting Act
The panel affirmed the district court’s grant of summary
judgment in favor of The Screening Pros, LLC, in an action
brought under the Fair Credit Reporting Act by Gabriel Felix
Moran.
In a prior appeal, the court held that The Screening Pros,
a credit reporting agency, violated 15 U.S.C. § 1681c(a)(5),
which prohibits the disclosure in a credit report of any
adverse item of information that antedates the report by more
than seven years. In 2010, The Screening Pros issued a
tenant screening report that disclosed a criminal charge that
was filed against Moran in 2000 (beyond the seven-year
window) but dismissed in 2004 (within the seven-year
window). On remand, the district court granted summary
judgment to The Screening Pros, holding that Moran failed
to present evidence that The Screening Pros violated the
FCRA willfully or negligently, as required for liability by
§§ 1681n(a) and 1681o(a).
The panel held that to prove a negligent violation of the
FCRA, a plaintiff must show that the defendant acted
pursuant to an objectively unreasonable interpretation of the
statute. A plaintiff can prove a willful violation by showing
a knowing or a reckless violation of a standard.
The panel held that the court’s previous holding, which
did not rely on the text of the statute alone, did not show that
**
This summary constitutes no part of the opinion of the court. It
has been prepared by court staff for the convenience of the reader.
MORAN V. THE SCREENING PROS 3
The Screening Pros’ interpretation of the FCRA was
objectively unreasonable. The panel held that, on the record
here, no reasonable fact finder could conclude that The
Screening Pros’ violation of § 1681c(a)(5) was negligent,
much less willful. The panel explained that the issue
whether The Screening Pros correctly interpreted
§ 1681c(a)(5) was a matter of first impression in the previous
appeal; The Screening Pros presented evidence that its
interpretation was consistent with industry norms; the
Federal Trade Commission’s only guidance on the question
at the time appeared to permit reporting the criminal charge;
the district court changed its ruling on reconsideration; and
the opinion in the previous appeal was not unanimous.
COUNSEL
Devin H. Fok (argued), DHF Law PC, San Marino,
California, for Plaintiff-Appellant.
Michael J. Saltz (argued) and Elana Levine, Jacobson
Russell Saltz Nassim & de la Torre LLP, Los Angeles,
California, for Defendant-Appellee.
4 MORAN V. THE SCREENING PROS
OPINION
BEA, Circuit Judge:
The Fair Credit Reporting Act (“FCRA”) prohibits credit
reporting agencies from disclosing in a credit report “[a]ny
. . . adverse item of information . . . which antedates the
report by more than seven years.” 15 U.S.C. § 1681c(a)(5). 1
Previously, we held that The Screening Pros, LLC
(“Defendant”) violated this provision when it issued a tenant
screening report for Gabriel Felix Moran (“Plaintiff”) in
2010 that disclosed a criminal charge that was filed in 2000
(beyond the seven-year window), but dismissed in 2004
(within the seven-year window). Moran v. Screening Pros,
LLC, 943 F.3d 1175, 1186 (9th Cir. 2019). On remand, the
district court granted summary judgment to Defendant on
Plaintiff’s claims under the FCRA, holding that Plaintiff
failed to present evidence that Defendant violated the FCRA
willfully or negligently, as required for liability by
§§ 1681n(a) and 1681o(a). We have jurisdiction under
28 U.S.C. § 1291 and affirm.
I. BACKGROUND
A. Relevant Facts and Early Procedural History
In February 2010, Plaintiff submitted a housing
application to Maple Square, a low-income housing
development in Fremont, California. Maple Square hired
Defendant, a now defunct credit reporting agency (“CRA”),
to conduct a background check on Plaintiff. The housing
application was denied after Maple Square received the
1
Unless otherwise noted, citations to statutes in this opinion refer to
Title 15 of the United States Code.
MORAN V. THE SCREENING PROS 5
background check (“the Report”) prepared by Defendant.
The Report, dated February 5, 2010, revealed that Plaintiff
had three dismissed criminal charges and a conviction. The
conviction and two of the dismissed charges were filed in
2006, well within the seven-year period. But, importantly,
the oldest dismissed charge (the “2000 Charge”) was filed in
2000 and dismissed in 2004.
Plaintiff claimed, among other things, that the inclusion
of the 2000 Charge in the Report was unlawful. Plaintiff
filed suit in California state court on February 2, 2012,
pleading causes of action under state law. On June 7, 2012,
Plaintiff filed a First Amended Complaint (“FAC”), which
added additional causes of action under the Fair Credit
Reporting Act (“FCRA”). Under the FCRA, a CRA, such as
Defendant, is liable to a consumer, like Plaintiff, for either
the negligent or willful failure to comply with any
requirement under the FCRA with respect to that consumer.
§§ 1681n(a), 1681o(a). Plaintiff alleged Defendant
committed (grossly) negligent and willful violations of
§ 1681c(a) (reporting certain criminal information older than
7 years) (“Count One”); § 1681e (failing to maintain
procedures designed to avoid violating § 1681c and to
ensure the maximum possible accuracy of the information in
the report) (“Count Two”); and § 1681i (failing to conduct a
reasonable reinvestigation after an item in the report is
disputed by the consumer and the consumer notifies the
agency directly of such dispute) (“Count Three”).
On July 5, 2012, Defendant removed the lawsuit to the
district court. Defendant moved to dismiss, and the district
court initially denied Defendant’s motion with regard to
Count One, dismissed Count Two, and dismissed numerous
state law claims. Defendant filed a motion for
reconsideration and a motion for summary judgment. The
6 MORAN V. THE SCREENING PROS
district court ultimately granted the motion for
reconsideration, dismissing both Counts One and Two, and
granted summary judgment to Defendant on Count Three.
B. The Previous Appeal
Plaintiff appealed, challenging the district court’s FCRA
holdings (and the dismissal of Plaintiff’s state law claims,
not at issue now). On that appeal, we considered whether
the 2000 Charge was too old to have been included in the
Report under the FCRA. Section 1681c(a) provides, in
relevant parts:
[N]o consumer reporting agency may
make any consumer report containing any of
the following items of information:
...
(2) Civil suits, civil judgments, and
records of arrest that, from date of entry,
antedate the report by more than seven years
or until the governing statute of limitations
has expired, whichever is the longer period.
...
(5) Any other adverse item of
information, other than records of
convictions of crimes[,] 2 which antedates the
report by more than seven years.
2
We previously corrected a scrivener’s error in the statute by
including “[a] comma . . . to separate the exclusionary clause.” Moran,
943 F.3d at 1183 n.6.
MORAN V. THE SCREENING PROS 7
As we explained in our previous opinion in this case, the
statute was reorganized by 1998 amendments. 3 Moran,
943 F.3d at 1182–83. In 1990, before the amendments, the
Federal Trade Commission (“FTC”), the agency responsible
for enforcing the FCRA, issued a commentary to provide
guidance and interpretations of the FCRA. FTC,
Commentary on the Fair Credit Reporting Act, 55 Fed.
Reg. 18,804 (May 4, 1990) (former 16 C.F.R. pt. 600)
(“1990 Commentary”). The 1990 Commentary stated, “if
charges are dismissed at or before trial, or the consumer is
acquitted, the date of such dismissal or acquittal is the date
of disposition.” Id. at 18,818. That commentary was
rescinded in 2011, the year after Defendant issued the Report
that included the 2000 Charge. See Moran, 943 F.3d
3Before Congress’s 1998 amendment to the statute, § 1681c(a) read,
as relevant:
[N]o consumer reporting agency may make any
consumer report containing any of the following items
of information:
...
(2) Suits and judgments which, from date of entry,
antedate the report by more than seven years or until
the governing statute of limitations has expired,
whichever is the longer period.
...
(5) Records of arrest, indictment, or conviction of
crime which, from date of disposition, release, or
parole, antedate the report by more than seven years.
(6) Any other adverse item of information which
antedates the report by more than seven years.
8 MORAN V. THE SCREENING PROS
at 1184; see also FTC, Commentary on the Fair Credit
Reporting Act, 76 Fed. Reg. 44,462 (July 26, 2011).
On appeal, the parties “agree[d] that the 2000 Charge is
classified as an ‘adverse item of information’ and thus falls
under § 1681c(a)(5).” Id. at 1182. The Report was issued
on February 5, 2010, meaning that, under the current version
of the law, the 2000 Charge was too old to be reported as
measured from the date the charge was filed, but recent
enough to be reported as measured from the date of
disposition. § 1681c(a)(5).
We reversed the district court’s dismissal of the FCRA
claims, holding that the “Report’s inclusion of the 2000
Charge fell outside of the permissible seven-year window,
and thus, [Plaintiff] sufficiently stated claims pursuant to the
FCRA.” Moran, 943 F.3d at 1186. The panel majority
acknowledged that in its current form § 1681c(a)(5) “does
not specifically state the date that triggers the reporting
window.” Id. at 1183. The majority reasoned that,
nevertheless, “the plain language of the statute suggests that
for a criminal charge, the date of entry begins the seven-year
window” because “[t]he statute’s use of ‘antedates’ connects
the seven-year window directly to the adverse event itself”
and a “charge is an adverse event upon entry.” Id. at 1183–
84.
The majority found “further support” for its
interpretation in a 2011 staff report that accompanied the
FTC’s rescission of the 1990 Commentary, which stated that
the seven-year reporting window “runs from the date of the
reported event.” Id. at 1184 (internal quotations and citation
omitted). The majority also observed that before the statute
was amended, the cutoff date for reporting “[r]ecords of
arrest, indictment, or conviction of crime” ran “from date of
disposition.” Id. at 1182 (emphasis removed). But this
MORAN V. THE SCREENING PROS 9
language was removed in 1998, and the statute was
substantially reorganized. See id. at 1182–83. The majority
reasoned that the “legislative history” supported its reading
of the statutory language since “Congress’s removal of ‘date
of disposition’ altogether suggest[ed] an intent to keep
records current by starting reporting windows sooner.” Id.
at 1184–85. However, the majority acknowledged that, after
the 1998 amendment, “convictions may be reported
indefinitely,” whereas previously convictions were subject
to a seven-year bar. Id. Finally, the panel majority found
that its reading of the statute was supported by “the purpose
of the FCRA,” which “warrants an interpretation that favors
the consumer.” Id. at 1186.
The majority rejected Defendant’s argument that the
dismissal of a charge is itself an adverse event. 943 F.3d
at 1184. The majority reasoned that a dismissal is itself “an
overall positive—but at least neutral—development,” and is
“only adverse insofar as it discloses the previous adverse
event, i.e., the charge.” Id. Thus, “[e]ven though non-
adverse information is typically not subject to reporting
windows, a dismissal is different” because it “necessarily
references the existence of the adverse event, to which the
reporting window still applies,” and therefore “neither
[event] may be reported after seven years from the . . .
charge.” Id.
Judge Kleinfeld dissented from the FCRA holding,
reasoning that a record of dismissal is an “adverse item of
information” under § 1681c(a)(5), and because the dismissal
of the 2000 Charge did not antedate the Report by more than
seven years, the Report’s disclosure of the dismissal was
timely. Id. at 1187, 1189–90. Judge Kleinfeld also reasoned
that the fact that the 1998 amendment to the statute expanded
reporting of convictions from a seven-year window to
10 MORAN V. THE SCREENING PROS
indefinitely showed that “Congress concluded that . . .
landlords . . . needed to know more about convictions.” Id.
at 1191–92. Moreover, Judge Kleinfeld reasoned that some
deference was due to “long established commercial norms,”
and observed that the statute “ha[d] been interpreted for
decades to permit” reporting charges that had been dismissed
within seven years of a report. Id. at 1193–94 (internal
quotations omitted).
C. The Decision Below
On remand, Plaintiff filed a motion for summary
judgment on his causes of action under §§ 1681c(a) and
1681e (and some of the state law claims). The district court
informed Plaintiff that it was considering granting summary
judgment for Defendant on certain causes of action pursuant
to Fed R. Civ. P. 56(f), and gave Plaintiff an opportunity to
present additional evidence in response to arguments raised
by Defendants. It then granted summary judgment to
Defendant on all of Plaintiff’s FCRA claims and, declining
to exercise supplemental jurisdiction over the remaining
state law claims, remanded the case to California state court.
The district court held that Defendant’s violation of
§ 1681c(a) was neither willful nor negligent. The district
court reasoned that this court previously stated that the
statutory interpretation was a matter of first impression, that
none of the information included by Defendant was
inaccurate, and that at the time of the reporting the FTC’s
only guidance (admittedly discussing the statute before the
1998 amendment) asserted that the seven-year reporting
period ran from the date of disposition. Moreover, Judge
Kleinfeld’s partial dissent, an amicus brief submitted to this
court, and a declaration submitted by Defendant’s expert
tended to prove that the statute had been interpreted for
decades to permit the report of a dismissal of charges
MORAN V. THE SCREENING PROS 11
occurring within seven years of the report. And Defendant’s
president testified that he was repeatedly informed in
training sessions that criminal cases may be reported for
seven years after dismissal. 4 Further, the district court
observed that this court “resolved the [statutory
interpretation] question in part through reference to FTC
guidance and amicus briefs.” Finally, the district court
observed that it had previously found the statute to be
sufficiently ambiguous to reverse its prior ruling on
reconsideration. 5
Plaintiff now appeals the district court’s grant of
summary judgment to Defendant, contending that
Defendant’s violation of § 1681c(a) was “likely willful and,
at a minimum negligent.” 6
4
The district court acknowledged that statements made to the
company’s president would be inadmissible hearsay, but stated that it
was not offered to prove the truth of the matter asserted but was relevant
to whether Defendant was negligent in interpreting the statute as he was
advised during the training sessions.
5
The district court also granted summary judgment on Plaintiff’s
FCRA claims under § 1681e and § 1681i, and articulated an alternative
ground for summary judgment on all of Plaintiff’s FCRA claims: that
Plaintiff did not suffer any damages due to the alleged FCRA violations.
6
On appeal, Plaintiff has waived any challenge to the district court’s
grant of summary judgment to Defendant on Plaintiff’s claims under
§§ 1681i and 1681e. See Clark v. Time Warner Cable, 523 F.3d 1110,
1116 (9th Cir. 2008) (“This court ‘will not ordinarily consider matters
on appeal that are not specifically and distinctly argued in appellant’s
opening brief.’”); In re Riverside-Linden Inv. Co., 945 F.2d 320, 324–25
(9th Cir. 1991). Plaintiff’s opening brief refers to claims under § 1681i
as among the issues on appeal and cites the statute once in defending his
argument that he suffered actual damages and again as the basis of
distinguishing a case, but does not refer to § 1681i claims in the summary
12 MORAN V. THE SCREENING PROS
II. STANDARD OF REVIEW
“We review the district court’s grant of summary
judgment de novo.” Marino v. Ocwen Loan Servicing LLC,
978 F.3d 669, 673 (9th Cir. 2020). “Summary judgment is
appropriate when, based on the evidence in the record, no
reasonable fact finder could return a verdict” for the party
against whom summary judgment is granted. See id.; Fed.
R. Civ. P. 56. “We may affirm on any basis supported by
the record, whether or not relied upon by the district court.”
Hall v. N. Am. Van Lines, Inc., 476 F.3d 683, 686 (9th Cir.
2007).
III. ANALYSIS
The FCRA prohibits CRAs from reporting “[a]ny . . .
adverse item of information, other than records of
convictions of crimes[,] which antedates the report by more
than seven years.” § 1681c(a)(5). The FCRA imposes
liability for negligent or willful violations of its terms.
§§ 1681n(a), 1681o. At issue is whether Defendant was
negligent or willful in adopting an interpretation of
§ 1681c(a)(5), which we subsequently held was erroneous,
that permitted the reporting of a dismissal of a charge that
had been filed more than seven years from the date of the
of his argument or advance a specific and distinct argument that
Defendant willfully or negligently violated that statute. Plaintiff’s
opening brief does not cite § 1681e. Plaintiff does not argue that
Defendant’s report was inaccurate. Cf. § 1681e(b). And, while his
opening brief refers to Defendant’s compliance procedures, Plaintiff uses
that discussion to argue that Defendant’s violation of § 1681c(a) was
willful, not to challenge the district court’s holding as to § 1681e(a).
MORAN V. THE SCREENING PROS 13
report, where the dismissal occurred within seven years of
the report. 7
“To prove a negligent violation [of the FCRA], a plaintiff
must show that the defendant acted pursuant to an
objectively unreasonable interpretation of the statute.”
Marino, 978 F.3d at 673–74 (citing Syed v. M-I LLC,
853 F.3d 492, 505 (9th Cir. 2017)). A plaintiff can prove a
willful violation by showing a knowing or a reckless
violation of a standard. Safeco Ins. Co. of Am. v. Burr,
551 U.S. 47, 57 (2007). To prove a willful violation in the
absence of knowing disregard, “a plaintiff must show not
only that the defendant’s interpretation was objectively
unreasonable, but also that the defendant ran a risk of
violating the statute that was substantially greater than the
risk associated with a reading that was merely careless.”
Marino, 978 F.3d at 673 (citing Safeco, 551 U.S. at 69).
Where a statute “is not subject to a range of plausible
interpretations” and its text “unambiguously forecloses” the
defendant’s interpretation, the defendant runs “an
‘unjustifiably high risk of violating the statute’” sufficient
for willful liability. Syed, 853 F.3d at 505–06.
7
Various headings in Plaintiff’s briefing assert that Defendant
violated § 1681c(a)(2), as well as § 1681c(a)(5). The district court
dismissed Plaintiff’s § 1681c(a)(2) claims. Moran v. Screening Pros,
LLC, No. 2:12-CV-05808-SVW-AGR, 2012 WL 10655745, at *4–5
(C.D. Cal. Nov. 20, 2012). Subsequently, on Plaintiff’s previous appeal,
Plaintiff “agree[d] that the 2000 Charge is classified as an ‘adverse item
of information’ and thus falls under § 1681c(a)(5).” Moran, 943 F.3d at
1182. Plaintiff does not now provide a clear argument that Defendant
violated § 1681c(a)(2). We note that the Report makes no reference to
any “[c]ivil suits, civil judgments, [or] records of arrest,” § 1681c(a)(2).
We therefore limit our discussion to § 1681(c)(a)(5), since Plaintiff has
waived any argument regarding § 1681c(a)(2). See Clark, 523 F.3d
at 1116; In re Riverside-Linden Inv. Co., 945 F.2d at 324–25.
14 MORAN V. THE SCREENING PROS
Plaintiff argues that Defendant was at least negligent
because “this Court found Defendant’s interpretation [of
§ 1681c(a)] to be in direct conflict with the plain language
of the statute” and “confirmed that the statutory text is
unambiguous that the reporting period began from the date
of entry.” However, our previous holding does not show that
Defendant’s interpretation of the statute was objectively
unreasonable. To be sure, we stated “the plain language of
the statute suggests that for a criminal charge, the date of
entry begins the seven-year window.” Moran, 943 F.3d at
1183–84. But that sentence began with the observation that
Ҥ 1681c(a)(5) does not specifically state the date that
triggers the reporting window.” Id. at 1183. Moreover, the
panel majority did not rely on the text of the statute alone to
reach its interpretation. The majority remarked that if
“language is ambiguous, we look to . . . legislative history,
and the statute’s overall purpose to illuminate Congress’s
intent,” id. at 1183 (internal quotation marks omitted), and
then supported its holding with numerous extra-textual
sources: “the FTC’s interpretation of the statute” in a 2011
staff report, the “FCRA’s legislative history,” an amicus
brief filed by the Consumer Financial Protection Bureau and
the FTC, and the panel’s assessment of “the purpose of the
FCRA.” Id. at 1184–86. In fact, the only panel member who
stated that “there is no ambiguity in the statute” was Judge
Kleinfeld in partial dissent, who argued that the majority’s
interpretation lacked “support in the text of the statute.” Id.
at 1187, 1194.
Plaintiff also argues that because the 1998 amendment
removed the phrase “the date of disposition” from what was
previously § 1681c(a)(5), “anybody reading the statute
should know [that] Congress no longer wished to calculate
the reporting period [from the date of disposition] when it
intentionally deleted the word ‘disposition’ from the
MORAN V. THE SCREENING PROS 15
statutory language.” But although Congress removed “the
date of disposition” as the reference date, it did not replace
that phrase with another reference date in § 1681c(a)(5),
even though a different provision of the statute,
§ 1681c(a)(2), explicitly measures a reporting window
“from the date of entry.” And when we held that the seven-
year reporting window in § 1681c(a)(5) regarding a
dismissal of a charge is measured from the date the criminal
charge was filed, not when it was dismissed, the panel was
not unanimous.
Finally, Plaintiff argues that “[i]t was reckless for
Defendant to rely on [the] outdated 1990 commentary.”
While the 1990 Commentary necessarily addressed the law
as it was written before the 1998 amendment, it was the only
guidance from the FTC on this issue in 2010 when
Defendant issued the Report, and it indicated that the seven-
year reporting period ran from the date of disposition of a
criminal charge. That guidance was rescinded only after
Defendant issued the disputed report. And Defendant
introduced evidence that the statute had “been interpreted for
decades to permit” CRAs to report the dismissal of a charge
where the dismissal occurred within seven years from the
report. 8
8
In the operative complaint, Plaintiff brought state law claims under
California’s Investigative Consumer Reporting Agencies Act and
California’s Unfair Competition Law. In briefing, Plaintiff suggests that
Defendant’s reporting of dismissed charges violated California’s
Consumer Credit Reporting Agencies Act (“CCRAA”). These state law
allegations are not the subject of this appeal, and we do not reach them.
We also reject Plaintiff’s argument that Defendant’s violation of
§ 1681c(a) was somehow willful because Defendant had a written policy
designed to comply with the CCRAA. Even if Defendant willfully
violated the CCRAA, or its own policy designed to comply with
16 MORAN V. THE SCREENING PROS
Whether Defendant correctly interpreted § 1681c(a)(5)
to permit the reporting of a criminal charge that was filed
outside of, but dismissed within, the statute’s seven-year
window arose as a matter of first impression during this
lawsuit. Defendant introduced evidence that its
interpretation was consistent with industry norms. The
FTC’s only guidance on the question at the time (although
discussing the statute before the 1998 amendment) appeared
to permit reporting the charge. The district court initially
held that Defendant misread § 1681c(a)(5), but then reversed
that holding on reconsideration. On appeal, the panel
majority held that the district court got it right the first time,
but one of our colleagues dissented, finding that the
majority’s view lacked “support in the text of the statute,”
Moran, 943 F.3d at 1187 (Kleinfeld, J., concurring in part
and dissenting in part). We cannot say, nor could any other
reasonable fact finder, that on this record Defendant’s
violation of § 1681c(a)(5) was negligent, much less willful.
IV. CONCLUSION
For the reasons stated above, the district court’s grant of
summary judgment to Defendant on Plaintiff’s claims under
the FCRA is AFFIRMED.
California law, it does not follow that Defendant’s violation of the FTCA
was willful. Here, Defendant has shown that its conduct resulted from
an erroneous but reasonable misreading of the language of the FTCA.