Sandra Cortez v. Trans Union

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 08-2465 & 08-2466

_____________

SANDRA CORTEZ,

Appellant in 08-2465

v.

TRANS UNION, LLC

SANDRA CORTEZ

v.

TRANS UNION, LLC,

Appellant in 08-2466

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(Civ. No. 05-cv-5684)

District Judge: Hon. John P. Fullam

Argued: June 11, 2009

Before: McKEE, Chief Judge, HARDIMAN and VAN

ANTWERPEN,

Circuit Judges

(Opinion filed: August 13, 2010)

____________

James A. Francis (ARGUED)

John Soumilas

Francis & Mailman, P.C.

Land Title Building, 19th Floor

100 South Broad Street

Philadelphia, Pennsylvania 19110

Counsel for Appellant/Cross-Appellee

Mark E. Kogan

Bruce S. Luckman (ARGUED)

Timothy P. Creech

Kogan, Trichion & Wertheimer, P.C.

1818 Market Street, 30th Floor

Philadelphia, Pennsylvania 19103

Counsel for Appellee/Cross-Appellant

_____________

OPINION

2

_____________

McKEE, Chief Judge.

Sandra Cortez appeals the district court’s order remitting

a jury’s punitive damages award of $750,000 to $100,000 on

claims she brought under the Fair Credit Reporting Act

(“FCRA”), codified at 15 U.S.C. §§ 1681-1681x.1 In its cross-

appeal, Trans Union, LLC appeals the district court’s order

denying its motion for judgment as a matter of law and rejecting

Trans Union’s challenge to the jury’s compensatory damages

award of $50,000. For the reasons that follow, we will affirm

the district court’s orders.2

1

Additionally, Cortez appeals the district court’s order

reducing attorney’s fees and costs. “We review the

reasonableness of an award of attorney’s fees for an abuse of

discretion.” Rode v. Dellarciprete, 892 F.2d 1177, 1182 (3d

Cir. 1990). Our review of the record does not support the

conclusion that the district court abused its discretion in

reducing Cortez’s attorney’s fees and costs. Furthermore,

there is nothing in Cortez’s limited discussion of attorney’s

fees and costs to support an abuse of discretion.

2

Both Trans Union’s and Cortez’s notice of appeal

only directly reference the District Court’s Memorandum and

3

Judgment Order (collectively referred to as “May order”)

entered May 1, 2008. However, in their briefs it is clear that

both parties are also appealing the district court’s

Memorandum and Order and Order (collectively referred to as

“September order”) entered September 13, 2007.

It is a requirement of Federal Rule of Appellate

Procedure 3(c)(1)(b) that a notice of appeal “designate the

judgment, order, or part thereof being appealed.” “If an

appeal is taken only from a specified judgment, the court does

not acquire jurisdiction to review other judgments not

specified or fairly inferred by the Notice.” Sulima v.

Tobyhanna Army Depot, 602 F.3d 177, 184 (3d Cir. 2010)

(quotations omitted) (citing Elfman Motors, Inc. v. Chrysler

Corp., 567 F.2d 1252, 1254 (3d Cir. 1977)). We have

previously held that because “only a final judgment or order is

appealable, the appeal from a final judgment draws in

question all prior non-final orders and rulings which produced

the judgment.” Elfman, 567 F.2d at 1253. Additionally, we

have held that we exercise appellate jurisdiction over “orders

that are not specified in the notice of appeal where: (1) there

is a connection between the specified and unspecified orders;

(2) the intention to appeal the unspecified order is apparent;

and (3) the opposing party is not prejudiced and has a full

opportunity to brief the issues.” Polonski v. Trump Taj Mahal

Assocs., 137 F.3d 139, 144 (3d Cir. 1998).

The district court’s September order: (1) denied Trans

Union’s motion for judgment as a matter of law; (2) denied

Trans Union’s motion for a new trial as to liability; (3)

partially granted Cortez’s motion for counsel fees and

expenses; and (4) granted Trans Union’s motion for a new

trial as to damages, unless the Plaintiff accepted a remittitur.

On October 12, 2007, Cortez filed a notice of appeal in which

she appealed the September order. On February 14, 2008, we

dismissed Cortez’s appeal for lack of appellate jurisdiction

4

I. BACKGROUND

A. Factual History

This dispute began when Cortez encountered problems

with a credit report that Trans Union sent to a car dealership

where she was trying to purchase a car. It stemmed from a

Trans Union product called “OFAC Advisor” that confused

Cortez’s identity with the identity of someone with a similar

name who was on a list compiled by the Treasury Department’s

because the September order was not a final judgment. On

May 1, 2008, the district court issued a final judgment. The

May order specifically referenced the September order and

the district court judge stated that the final judgment was

entered as a result of Plaintiff’s acceptance of the remittitur.

The May order entered judgment in favor of Plaintiff and

awarded her remitted damages, counsel fees, and costs.

It is clear from this procedural history that the

September order is “fairly inferred” by both parties’ notice of

appeal. Cortez attempted to appeal the September order, but

because it was not a final order, she was unable to do so. The

final judgment of May 1, 2008 cannot be understood without

the September order and is clearly a product of that order.

Additionally, there is a clear connection between the two

orders; the intention to appeal the September order is apparent

in both parties’ briefs; and neither party has been prejudiced

as evidenced by their in-depth briefing of the issues raised in

the September order. Hence, we have appellate jurisdiction

over both orders.

5

Office of Foreign Assets Control (“OFAC”).

We will discuss the OFAC List and Trans Union’s related

product in greater detail below. We note now that OFAC

administers and enforces economic and trade sanctions based on

U.S. foreign policy and national security goals against threats to

the national security, foreign policy, or economy of the United

States. Those sanctions are aimed at specific regimes,

individuals thought to be terrorists, international narcotics

traffickers, as well as persons involved in activities related to the

proliferation of “w eapons of m ass destruction.”

http://www.treas.gov/offices/enforcement/ofac/ (visited on June

17, 2010).

OFAC maintains and publishes a list:

[a]s part of its enforcement efforts, OFAC

publishes a list of individuals and companies

owned or controlled by, or acting for or on behalf

of, targeted countries. It also lists individuals,

groups, and entities, such as terrorists and

narcotics traffickers designated under programs

that are not country-specific. Collectively, such

individuals and companies are called “Specially

Designated Nationals” or “SDNs.” Their assets

6

are blocked and U.S. persons are generally

prohibited from dealing with them.

http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht

ml#17 (visited on June 17, 2010). The persons and

organizations in OFAC’s Specially Designated Nationals &

Blocked Persons List (“SDN List”) are so designated pursuant

to a patchwork of federal laws, regulations, and executive

orders. See, e.g., 31 C.F.R. §§ 536.101-36.901 (Narcotics

Trafficking Sanctions Regulations) & 594.101-94.901 (Global

Terrorism Sanctions); Exec. Order No. 13,399, 71 Fed. Reg.

25,059 (April 25, 2006) (Blocking Property of Additional

Persons in Connection With the National Emergency With

Respect to Syria). 3 Individuals and businesses in the United

States are generally prohibited from conducting any business

with anyone named on OFAC’s SDN List. See, e.g., 31 C.F.R.

§ 536.201 (“[N]o property or interests in property of a specially

3

See also OFAC Specially Designated Nationals List at 461,

http://www.ustreas.gov/offices/enforcement/ofac/sdn/t11sdn.p

df (visited on June 17, 2010).

7

designated narcotics trafficker that are in the United States . . .

may be transferred, paid, exported, withdrawn or otherwise dealt

in.”).4 Trans Union describes its product, the OFAC Advisor,

which is also discussed in greater detail below, as a “screening

solution that provides credit grantors with a simple, automatic

method for use in complying with new federal regulations as set

forth in the USA PATRIOT Act.” J.A. 808.

Sandra Cortez was born in 1944 in Chicago. She was

living in Colorado when, in March of 2005, she decided to buy

a new car. Before visiting a car dealer, she decided to check

her credit report to learn her credit score. Her score was

approximately 760, which is a very good credit rating. J.A. 80;

see also J.A. 526-27 (listing Cortez’s score as 761 in the credit

report obtained by the dealership);5

4

See also OFAC Frequently Asked Questions and Answers,

http://www.ustreas.gov/offices/enforcement/ofac/faq/index.sh

tml#sdn (then follow “What is an SDN?” hyperlink) (visited

on June 17, 2010).

5

We assume that this is a “FICO” score. Individuals

with FICO scores between 760 and 850 are generally eligible

8

http://www.myfico.com/myfico/CreditCentral/LoanRates.aspx

(visited on June 17, 2010). The credit report that Cortez

downloaded before going to the car dealership was compiled

and furnished by Trans Union, one of the three major companies

providing credit reports in the United States. That report

contained no information about OFAC’s SDN List and did not

suggest that Cortez was a “Specially Designated National” or

SDN, nor did it contain any information that would suggest that

she was suspected of being associated with anyone who was an

SDN.6

for the most favorable interest rates for loans. The Fair Isaacs

Company (“FICO”) is in the business of analyzing credit

factors electronically for the credit industry in general,

including banks and credit card companies. The score that it

calculates is intended to be a numerical indicator that

correlates with the strength of one’s credit history. That score

has come to be known as the “FICO” score after the Fair

Isaacs Company. See In re Nguyen, 235 B.R. 76, 80 (Bankr.

N.D. Cal. 1999). Only about 27 percent of the population

have scores between 750 and 799. See

http://www.myfico.com/CreditEducation/CreditScores.aspx

(visited on June 17, 2010).

6

Trans Union later acknowledged that personal credit

reports, which it provides to consumers, never show any

9

Cortez planned to finance her car purchase through the

dealership. Armed with knowledge of her strong credit score

and a copy of her credit report, Cortez went to John Elway

Subaru a car dealership in Colorado, to purchase a car. She

arrived at the dealership at approximately 1:00 pm and was

ready to proceed with a purchase about thirty minutes later. She

began completing the required paper work and furnishing the

information required to obtain a car loan through the dealership.

The dealership’s finance manager, Tyler Sullivan, used the

information Cortez provided to obtain Cortez’s credit report.

J.A. 468. It was a Trans Union credit report because the

dealership subscribed to Trans Union’s credit reporting services,

including the OFAC Advisor. Unlike the credit report Cortez

had downloaded before going to the dealership, the Trans Union

credit report that the dealership obtained contained what

Sullivan later referred to as an “advisor alert,” which was an

information or alerts from its OFAC Advisor that it provides

to creditors. J.A. 205.

10

alert from the OFAC Advisor. J.A. 471.

This was the first time that Sullivan had ever seen such

an alert. Id. He called the regional finance director to determine

how he should respond. J.A. 472-73. He then went to OFAC’s

SDN List on the Treasury Department’s website “to check

[Cortez’s] name against the actual list.” J.A. 473. In searching

the list, he first “look[ed] for a matching name” and if there was

a match, he planned to check birth dates. J.A. 474.7

Sullivan then returned to Cortez and started asking her

questions including whether she had “always lived in the United

States, if [she] had ever lived outside of the country” and other

“really strange questions.” J.A. 83. He then showed Cortez the

credit report Trans Union had provided to the dealership. When

she looked at it, she saw that “it had all of these OFAC Alerts,

7

The credit report Trans Union sends to creditors who

subscribe to the OFAC Advisor does not contain any further

information about the significance of an OFAC alert, nor does

it provide any information about contacting anyone at the

Treasury Department who handles OFAC alerts. J.A. 187-89.

11

talk alerts.” Id. Cortez was very confused, she explained to

Sullivan that she had “never been out of the country and that

[she] was born in Chicago.” Id. Sullivan responded by telling

Cortez that “he was going to have to check with the FBI . . . [t]o

see if [she] was this person” in the OFAC alert on her credit

report. J.A. 84. As this was occurring, Cortez was waiting in

the salesperson’s office, and the dealership had her car keys. Id.

Finally, at about 5:00 pm, Cortez said she had to leave, but

someone asked her to wait.8 J.A. 84-85. When she asked what

the person was going to do, again she was told that the FBI

would be called. At this point, hours had passed and the

dealership was holding Cortez’s down payment on the car. Id.

A short time later, Cortez finally left the dealership. She

called the dealership that same evening and was told that they

had determined that she “probably” was not the person in the

OFAC alert, and that she could pick up the car. J.A. 85. That

8

It is not clear from her testimony who exactly asked

Cortez to wait.

12

evening, she did go back to the dealership and she eventually got

the car.9 Before leaving the dealership with her new car, she

asked for a copy of the credit report that the dealership had

received from Trans Union. The dealership provided a copy,

and pointed out the OFAC and HAWK alerts on the report.10

9

She later testified that while she was sitting at the

dealership, she was “watching people stare at [her] walking

back and forth, and it was pretty humiliating. They all knew

what was going on, and [she] was afraid that they thought

[she] was this person.” J.A. 86.

10

Trans Union’s website describes “HAWK alerts” as

follows:

TransUnion provides creditors with HAWK alert

message [sic] to notify them of potentially

fraudulent information and advises them to check

that information more carefully.

Special messages such as HAWK alert messages

inform creditors that they need to verify specific

information. The message is based on the

personal information used to access your credit

report. It may also be based on the personal

information recorded in your credit report. In

response to special messages, creditors may

request that you verify your personal information

you submitted at the time of application.

http://www.transunion.com/corporate/personal/persona

13

That credit report was a two-page document entitled:

“TRANSUNION CREDIT REPORT.” J.A. 526-27. It

contained identifying information about Cortez including her

name, Social Security number, birth date, current and former

addresses, telephone number, and employer. A number of

sections appeared directly below that information in the same

font and style. The first such section was labeled: “SPECIAL

MESSAGES.” That “SPECIAL MESSAGES” section contained

the OFAC and HAWK alerts. It was followed by: “MODEL

PROFILE,” which contained several numbers including

Cortez’s FICO credit score. The report then contained the

following four sections: “CREDIT SUMMARY”, “TRADES”,

“INQUIRIES”, and “END OF CREDIT REPORT —

l.page (follow “Consumer Support” hyperlink; then

follow “Get answers to your questions” hyperlink

under “Related Topics”; then search “Answers” for

key words “Hawk alert”; then follow “What is a

HAWK alert?” hyperlink) (last visited June 1, 2010).

As the above citation shows, getting information other

than sales information is cumbersome at best on Trans

Union’s website.

14

SERVICED BY.” Id.

The “SPECIAL MESSAGES” section on the first page

stated: “HAWK ALERT: INPUT ISSUED: 1959-60; STATE:

CA; (EST. AGE OBTAINED 00+ TO ) . . . HAWK ALERT:

FILE ISSUED: 1959-60; STATE CA; (EST. AGE OBTAINED

+14 TO +16).” This was followed by eight entries titled:

“OFAC ADVISOR ALERT – INPUT NAME MATCHES

NAME ON THE OFAC DATABASE.” The information in

those eight entries was similar to the information in OFAC’s

SDN List, including the name: “Cortes Quintero, Sandra.” J.A.

526-27.

That report is not visually the same as the report Trans

Union provides to consumers. It also does not have the same

exact content. The report that was sent to the dealership

contained no additional information about the significance of the

OFAC alerts and no information about how to follow up or

contact anyone regarding any OFAC alerts that may appear.

J.A. 187-89.

15

In the aftermath of her visit to the car dealership, Cortez

contacted Trans Union a total of four times in an effort to

correct her credit report. J.A. 199. She first telephoned Trans

Union on March 31, 2005, soon after she purchased the car.

J.A. 93. On that day, she spoke with Trans Union’s customer

service representatives who told Cortez that there were no

OFAC alerts on her credit report. J.A. 207. Cortez responded

by faxing a copy of the report she had obtained from the

dealership along with a letter that summarized her experience

there. J.A. 93. In that letter, she told the customer service

representative that she had spent a total of six and a half hours

in the dealership, that she was told the FBI would have to be

contacted, and that she was asked not to leave while the

dealership looked into the issue. J.A. 94-95; J.A. 533.

On April 6, 2005, not having received any response to her

letter, Cortez sent another letter to Trans Union. J.A. 96; J.A.

219; J.A. 534. In that letter, she again explained that there were

16

“several terrorist alerts” on her credit report and she asked for “a

response from [the] company regarding these alerts.” J.A. 96-

97. Cortez received a generic written response to that letter.

The letter she received was dated April 18, 2005, and was

unsigned. It stated:

After reviewing your correspondence, we were

unable to determine the nature of your request.

To investigate information contained in your

credit report, please list the account name and

number, and specify why you are disputing it (for

example, “this is not my account”, “I have never

paid late”, “I have paid this account in full”, etc.).

Unless you provide us this information, your

request will be considered frivolous under the

federal Fair Credit Reporting Act, and we will be

unable to initiate an investigation.

J.A. 537. By letter dated April 24, 2005, Cortez responded to

Trans Union’s April 18, 2005 letter. J.A. 99. She included

copies of her prior correspondence and explained, “[w]ith this

letter, this makes my fourth request to have this incorrect

information removed from my credit report. If you look at the

credit report enclosed you will notice 10 Hawk and OFAC

Advisor alerts. . . . I am disputing these alerts because they do

17

not belong to me. The name is different, the birthdate is

different and I do not have a passport. I want these alerts

removed from my account.” J.A. 539. Cortez also notified

Trans Union a second time that it had the wrong employer listed

for her. Id. Cortez received a response from Trans Union dated

May 10, 2005. Under the heading “Re: Dispute Status - No

Hawk Alerts or OFAC Advisor Alerts,” the letter stated,

“[b]ased on the information provided to TransUnion, our

records show that the information you disputed does not

currently appear on your TransUnion credit report.” J.A. 545.11

Based on this letter, Cortez believed that Trans Union had

removed the HAWK and OFAC alerts from her credit report.

J.A. 102.

On June 3, 2005, Cortez returned to the dealership and

asked for another credit report in order to confirm that the alerts

had in fact been removed. Despite Trans Union’s representation

11

Trans Union acknowledged that this was a form

letter. J.A. 212.

18

to the contrary, the credit report the dealership furnished to

Cortez still had OFAC alerts. J.A. 103. There were, however,

some changes from the report that had initially been sent to the

dealership the day Cortez went to buy a car. The June 3, 2005

report no longer had the phrase: “HAWK ALERT.” Instead, the

report now stated: “HIGH RISK FRAUD ALERT: CLEAR

FOR ALL SEARCHES PERFORMED.” J.A. 546. It still

stated: “OFAC NAME SCREEN ALERT - INPUT NAME

MATCHES NAME ON THE OFAC DATABASE.” Id. It then

had four entries with information from OFAC’s SDN List (as

opposed to eight in the original credit report furnished by the

dealership).

Cortez next went online to the Treasury Department

website to determine whether her name actually appeared on

OFAC’s SDN List. She discovered a similar name and emailed

the Treasury Department to ask how she might correct the error

and remedy her situation. J.A. 104-05. The Treasury

Department referred her to information on its website, which she

19

later testified stated the following:

If credit bureaus choose to place OFAC

information on their credit reports [sic] they

should consider the following guidelines. The

text on the report should explain that the

individual’s information is similar to the

information of an individual on OFAC’s SDN list.

It should not state . . . that the information

matches, or that the credit applicant is, in fact, the

individual on the SDN list unless the credit

bureau has already verified that the person is

indeed on the SDN [list].

J.A. 106-07.

In June of 2006, a landlord pulled Cortez’s Trans Union

credit report when she tried to rent an apartment. Cortez told

him about the OFAC alerts before he reviewed the credit report,

in an effort to explain and minimize their effect. That credit

report, dated June 12, 2006, was substantially similar to the

second report Cortez had received from the dealership more than

a year earlier. J.A. 549-51. Although it did not contain any

“HAWK ALERT” messages, it still stated, “OFAC NAME

SCREEN ALERT – INPUT NAME MATCHES NAME ON

THE OFAC DATABASE”. Id. It also still had four entries

20

with information from OFAC’s SDN List. Nevertheless, Cortez

was able to rent the apartment. J.A. 112.

From the first day in Elway Subaru, when Cortez learned

about the OFAC alerts on her credit report, Cortez spoke with

her daughter, Anna Marie Schen, about her ordeal. J.A. 141.

The OFAC alerts came up at least once during every

communication between Cortez and Schen after the incident at

Elway Subaru, and subsequent trial testimony established that

the alerts often reduced Cortez to tears. The alerts also caused

Cortez to lose weight and they interfered with her ability to

sleep to such an extent that she resorted to medication. J.A. 142.

According to Schen, the credit report issue “is the number one

stressor in [Cortez’s] life. . . . [T]his is a big stressor over the

past two years.” J.A. 143-44. It has been “very . . .

devastating.” J.A. 146.

B. The Significance of OFAC Alerts and the SDN List

The Uniting and Strengthening America by Providing

Appropriate Tools Required to Intercept and Obstruct Terrorism

21

Act of 2001, better known as the USA PATRIOT Act, further

codified the obligations of financial institutions in their dealings

with individuals on OFAC’s SDN List. 115 Stat. 272 (Oct. 26,

2001). Under the USA PATRIOT Act, the Treasury Department

must “require financial institutions to implement . . . reasonable

procedures for . . . consulting lists of known or suspected

terrorists or terrorist organizations provided to the financial

institution by any government agency to determine whether a

person seeking to open an account appears on any such list.” 31

U.S.C. § 5318(l)(2); see 31 C.F.R. § 103.121(b)(4) (The

Customer Identification Program “must include procedures for

determining whether the customer appears on any list of known

or suspected terrorists or terrorist organizations issued by any

Federal government agency.”). “[T]ransactions are prohibited

. . . if either such transactions are by, or on behalf of, or pursuant

to the direction of any designated foreign country, or any

national thereof.” 31 C.F.R. § 500.201. In most cases, it is

unlawful to extend credit to a person whose name is on OFAC’s

22

2

SDN List. 1

Depending on the applicable law, regulation, or executive

order involved, failure to comply with these restrictions may

result in civil as well as criminal penalties. Willful violations

carry criminal penalties with fines ranging from $50,000 13 to

12

OFAC has procedures to unblock funds in the case of

mistaken identity, 31 C.F.R. § 501.806, and to have a name

removed from designated lists, 31 C.F.R. § 501.807.

13

19 U.S.C. § 3907 (maximum fine for willful violation of

laws governing clean diamond trade).

23

$10,000,000 14 as well as imprisonment ranging from 5 15 , 10 16 to

14

21 U.S.C. § 1906 (maximum fine of $10,000,000 for willful

violation of laws governing international narcotics

trafficking); see also 31 U.S.C. § 5322 (maximum fine of

$250,000 for willful violation of the USA PATRIOT Act,

including 31 U.S.C. § 5318(l)(2), which requires financial

institutions to consult suspected terrorist lists such as OFAC’s

SDN List before transacting with individuals, with the amount

increasing to $500,000 for aggravating circumstances); 50

U.S.C. § 1705(c) (maximum fine of $1,000,000 for willful

violation of the International Emergency Economic Powers

Act and its implementing regulations, which include

regulations governing many OFAC programs, see, e.g., 31

C.F.R. § 536.701 (penalties under Narcotics Trafficking

Sanctions)); 50 App. U.S.C. § 16(a) (maximum fine of

$1,000,000 for willful violations of the Trading with the

Enemy Act of 1917).

15

31 U.S.C. § 5322 (maximum imprisonment term of 5 years

for willful violation of the USA PATRIOT Act, including 31

U.S.C. § 5318(l)(2), which requires financial institutions to

consult suspected terrorist lists such as OFAC’s SDN List

before transacting with individuals with term increasing to 10

years for aggravating circumstances).

16

18 U.S.C. § 2332d (maximum imprisonment term of 10

years for engaging in financial transactions with a country

supporting international terrorism); 21 U.S.C. § 1906

(maximum imprisonment of 10 years for willful violation of

laws governing international narcotics trafficking); 50 App.

U.S.C. § 16(a) (maximum imprisonment of 10 years for

willful violations of the Trading with the Enemy Act of

1917); 50 U.S.C. § 1705(c) (maximum imprisonment term of

20 years for willful violation of the International Emergency

24

30 17 years, or even life.18 Civil penalties range from $10,000 to

$1,000,000, or twice the amount of each underlying transaction

per violation.19

Economic Powers Act and its implementing regulations,

which include regulations governing many OFAC programs,

see, e.g., 31 C.F.R. § 536.701 (penalties under narcotics

trafficking sanctions)).

17

21 U.S.C. § 1906 (maximum imprisonment term of 30 years

for any officer, director, or agent of an entity who knowingly

participates in violation of laws governing international

narcotics trafficking).

18

18 U.S.C. § 2339B (maximum imprisonment term of 15

years for providing material support to a foreign terrorist

organization, which term increases to life if the death of any

person results).

19

19 U.S.C. § 3907 (maximum civil penalty of $10,000 for

violation of laws governing clean diamond trade); 31 U.S.C. §

5321 (maximum civil penalty of $100,000 for violation of the

USA PATRIOT Act, including 31 U.S.C. § 5318(l)(2), which

requires financial institutions to consult suspected terrorist

lists such as OFAC’s SDN List before transacting with

individuals); 50 App. U.S.C. § 16(b) (maximum civil penalty

of $50,000 for violations of the Trading with the Enemy Act

of 1917); 18 U.S.C. § 2339B (maximum civil penalty of

$50,000 or twice the amount of the transaction that is the

basis for the violation for providing material support to a

foreign terrorist organization); 50 U.S.C. § 1705(b)

(maximum civil penalty of $250,000 for violation of the

International Emergency Economic Powers Act and its

25

In a “Q&A” section included on its website, OFAC posts

the following question: “What Is This OFAC Information On

My Credit Report?” It then offers the following reply:

Credit bureaus and agencies in particular have

adopted new measures to ensure compliance with

OFAC regulations. Before issuing a credit report,

they use special “interdiction” software developed

by the private sector to determine if a credit

applicant is on the SDN list. This software

matches the credit applicant’s name and other

information to the individuals on the SDN list. If

there is a potential match, the credit bureaus are

placing a “red flag” or alert on the report. This

does not necessarily mean that someone is

illegally using your social security number or that

you have bad credit. It is merely a reminder to the

person checking your credit that he or she should

verify whether you are the individual on the SDN

list by comparing your information to the OFAC

information. If you are not the individual on the

SDN list, the person checking your credit should

disregard the OFAC alert, and there is no need to

contact OFAC. However, if the person checking

your credit believes you are the person on the

SDN list, then he or she should call the OFAC

implementing regulations, which include regulations

governing many OFAC programs, see, e.g., 31 C.F.R. §

536.701 (penalties under Narcotics Trafficking Sanctions));

21 U.S.C. § 1906 (maximum civil penalty of $1,000,000 for

violation of laws governing international narcotics

trafficking).

26

Hotline to verify and report it.

http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht

ml#consumer1 (visited on June 17, 2010). On that same

website, OFAC also answers the question: “How Can I Get The

OFAC Alert Off My Credit Report?” as follows:

A consumer has the right under the Fair Credit

Reporting Act (FCRA), 15 U.S.C. 1681 et seq., to

request the removal of incorrect information on

his/her credit report. To accomplish this,

consumers should contact the credit reporting

agency or bureau that issued the credit report. For

more information on consumers’ rights under the

FCRA, visit the Federal Trade Commission’s

w e b s i t e a t

http://www.ftc.gov/os/statutes/fcrajump.shtm

http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht

ml#consumer2 (visited on June 17, 2010).

C. Trans Union’s OFAC Advisor

OFAC recognizes the need to ensure that its reports do

not mistakenly associate innocent and unsuspecting persons with

persons who are properly labeled “SDN.” Thus, OFAC

cautions: “organizations involved in the credit reporting process

27

. . . . can make an important contribution by identifying

sanctioned individuals in order to block their ability to use the

U.S. financial system and to do business in the United States,

but at the same time they should strive to protect consumers

from erroneous or misleading information appearing on credit

reports.” Department of Treasury, OFAC REGULATIONS FOR

THE CREDIT REPORTING INDUSTRY, Apr. 13, 2004,

http://www.treas.gov/offices/enforcement/ofac/regulations/fac

cr.pdf (visited June 17, 2010).

In September of 2002, Trans Union announced a “new

product for USA Patriot Act Compliance” which it called:

“OFAC Advisor.” Trans Union lauded the product as a

“screening solution that provides credit grantors with a simple,

automatic method for use in complying with new federal

regulations as set forth in the USA PATRIOT Act.” J.A. 808.

Trans Union refers to the SDN information that it reports from

OFAC as an “OFAC Name Screen Alert.” See, e.g., J.A. 549,

28

570.

The OFAC alert on Trans Union credit reports was

developed by a team that included individuals from Trans

Union’s business and systems units, as well as people from the

legal and compliance sections. J.A. 311. In the normal course

of developing any such product, a legal and compliance team do

preliminary reviews to determine whether the product is “going

to require permissible purpose, disclosure, [and/or have]

contractual issues.” J.A. 312. After the product is developed,

another final review is done by a legal team. Id.

The information in Trans Union’s OFAC alert is

provided to purchasers through a third party vendor called

“Accuity.” J.A. 574, 809. Trans Union decided not to include

the underlying information for its OFAC product in Trans

Union’s own database. That database is called “CRONUS.”

Trans Union decided to do that because “the only common

denominator in all the entries [referring to OFAC’s SDN List]

was a name.” J.A. 313. Unlike CRONUS, the entries in the

29

SDN List do not always include birth dates, addresses, or Social

Security numbers that Trans Union routinely stores and relies on

when associating a given consumer with information. Id.

Having decided to use Accuity rather than maintain the

information itself, Trans Union then marketed the OFAC

information as part of a separate product called “OFAC

Advisor.” J.A. 313-14, 808-09.

Trans Union does not sell the OFAC alert information as

a stand alone product; creditors must first purchase a Trans

Union product such as credit report services and the OFAC alert

is added to that product. Purchasers of Trans Union’s credit

reports who wanted to subscribe to the OFAC Advisor were

required to sign an addendum to their agreement with Trans

Union in order to subscribe to the OFAC Advisor.20 Those who

20

That agreement states in relevant part:

TransUnion agrees to make available as an add-on

to consumer reports (including as an exclusion

criteria on an input prescreen list, or an append to

a prescreened list), and as an add-on to certain

ancillary products offered by TransUnion from

30

purchased OFAC Advisor received one credit report from Trans

Union with the OFAC information contained in it. However,

Trans Union created the report from at least two separate

sources: its own CRONUS database and information stored with

Accuity. Trans Union requires creditors to provide at least a

name and address of a consumer to retrieve information from

CRONUS. J.A. 319. However, when retrieving OFAC

information, Trans Union sends only a name to Accuity, even

time to time an indicator whether the consumer’s

name appears on the United States Department of

Treasury Office of Foreign Asset Control File

(“OFAC File”). The service is referred to as

OFAC Advisor. Subscriber may receive the

OFAC Advisor service under the following terms:

. . . . In the event Subscriber obtains OFAC

Advisor services from TransUnion in conjunction

with Consumer Report or as an append to an

ancillary service, Subscriber shall be solely

responsible for taking any action that may be

required by federal law as a result of a match to

the OFAC File, and shall not deny or otherwise

take any adverse action against any consumer

based solely on TransUnion’s OFAC Advisor

Services.

J.A. 568.

31

though Trans Union may have more information about the

person who is the subject of the inquiry. J.A. 318. Trans Union

reports a “match” whenever names are “similar.” J.A. 180.

Trans Union enters the information it receives from

Accuity under the “SPECIAL MESSAGES” section appearing

on its credit reports. Trans Union does no other comparison or

due diligence with the data it receives from Accuity to attempt

to match it to the consumer whose credit report is being

furnished. Thus, Trans Union neither compares the OFAC

information to other information about a given consumer already

in its files, nor does it compare it to any information provided by

the creditor/subscriber. J.A. 179. Moreover, once Trans Union

receives the OFAC information it does not check or confirm its

accuracy; in fact, Trans Union has a policy of never

reinvestigating disputes involving OFAC alerts. J.A. 203-04.

Trans Union merely “report[s] back that the input information

is a match to the OFAC report.” J.A. 204.

In a presentation that Trans Union gives to potential

32

subscribers to the OFAC Advisor, Trans Union states, “The U.S.

Treasury Department requires that all institutions comply to

insure that they are not extending credit or financial services to

customers on the Office of Foreign Assets Control, OFAC list,

of known terrorists, drug traffickers, and money launderers.”

J.A. 155, 570. The presentation represents that Trans Union acts

in “partnership” with Accuity and lauds the advantages of this

product. J.A. 574. Trans Union describes Accuity as

an“[i]ndustry leader in OFAC screening services.” Id. The

slide boasts that the product is “[e]ndorsed” by the American

Bankers Association and that it has “[b]roader and more

comprehensive file coverage.” Id. Trans Union also claims its

database has “[e]ffective matching logic” that will “[r]educe

[the] number of false positives.” J.A. 574-75.

As Cortez discovered, the information in the “SPECIAL

MESSAGES” section of Trans Union’s credit reports is not

included in credit reports that Trans Union sends to consumers

on request. J.A. 157. The credit reports sent to consumers do

33

have a public records section, which contains information such

as tax liens, judgments, or bankruptcies. That information is

retrieved from CRONUS. J.A. 214. If Trans Union receives a

dispute related to information in the public record section of a

report, it investigates the dispute by either checking with its

public record vendor or checking court records containing the

disputed information. J.A. 199-200. Trans Union does not,

however, conduct any investigation in response to disputes

related to OFAC alerts. J.A. 201.

It is not clear what Trans Union’s customer service

representatives tell consumers who dispute OFAC alerts.

According to one of Trans Union’s group managers who

testified at the trial, the company’s policy is to refer consumers

who complain about an OFAC alert to the Treasury Department.

J.A. 205; 211. However, this did not occur in Cortez’s case.

According to Trans Union, when the dealership first

reviewed Cortez’s credit report, Trans Union could not block

OFAC information from being included if Accuity determined

34

that her name matched a name on OFAC’s SDN List. J.A. 182-

83. This continued to be true at least through September of

2006. However, when this case came to trial, Trans Union had

blocked several similar names and any “Sandra Cortez” was

blocked from having an OFAC alert on her credit report. J.A.

183-84.

The Fair Credit Reporting Act will be discussed in detail

below. However, it is helpful at this point to note that the Act

affords certain protections to consumers by regulating the

disclosure and use of “consumer credit reports” as defined by

the Act. Trans Union made an internal determination that the

OFAC Advisor was not governed by the FCRA. According to

Trans Union’s director of solutions and business development,

“[a]fter review by our legal and compliance department they

determined that this was not FCRA data.” J.A. 169.

D. Procedural History

Cortez brought this action under the Fair Credit

Reporting Act after Trans Union failed to correct the problems

with her credit report or respond satisfactorily to her inquiries.

The suit proceeded to verdict. The jury found that Trans Union

35

failed to follow reasonable procedures to assure maximum

possible accuracy in producing Cortez’s credit report and was

negligent in doing so. The jury concluded that Trans Union

willfully failed to reasonably reinvestigate Cortez’s disputes

after she informed the company of the erroneous OFAC alert it

had included on her credit report. The jury also found that Trans

Union willfully failed to note Cortez’s dispute on subsequent

reports and that it willfully failed to provide Cortez all of the

information in her file despite her requests. The jury awarded

Cortez $50,000 in actual damages and $750,000 in punitive

damages.

Thereafter, Trans Union moved for judgment as a matter

of law or in the alternative a new trial or remittitur of the

damages awards. The district court denied Trans Union’s

motion for judgment as a matter of law. The court concluded

that the OFAC information was part of Cortez’s credit report

and thus, governed by the FCRA. Cortez v. Trans Union, LLC,

Civ. No. 05-5684, 2007 WL 2702945, at **1-2 (E.D. Pa. Sept.

13, 2007). The court also held that there was no basis for

granting defendant a new trial, “except with respect to the

36

alleged excessiveness of the jury’s verdict.” Id. at *2. The court

confirmed the $50,000 compensatory damages award but found

that the $750,000 punitive damages award “exceeded

permissible limits.” Id. The district court concluded that “an

award of punitive damages . . . [of] double the amount of the

compensatory award [was the] maximum which this record

would support.” Id. The court then entered an order which

stated in pertinent part: “Defendant’s motion for a new trial is

GRANTED with respect to damages, unless, within 30 days,

plaintiff accepts a remittitur, limiting the award to $50,000

compensatory damages and $100,000 punitive damages, for a

total award of $150,000.” Id. at *3.

Cortez appealed that order on October 12, 2007. The

same day that she filed her notice of appeal, she conditionally

accepted the district court’s remittitur by appending the

following statement: “In the event that the District Court was

acting properly within its power and jurisdiction in entering its

Order of September 13, 2007, which is a subject of Plaintiff’s

Notice of Appeal . . . Plaintiff hereby accepts the remittitur.”

See E.D. Pa. Docket No. 71.

37

We dismissed Cortez’s appeal for lack of jurisdiction

because the order she appealed was not a final appealable order.

Thereafter, Trans Union moved for final judgment. The district

court granted judgment to Trans Union “[b]ecause [Cortez]

accepted the remittitur.” Cortez v. Trans Union LLC, Civ. No.

05-5684, 2008 WL 1944160, at *1 (E.D. Pa. May 1, 2008). This

appeal and cross-appeal followed. Cortez challenges the

remittitur that reduced her punitive damages award, and Trans

Union challenges the district court’s denial of its motion for

judgment as a matter of law, as well as the damages award that

the court did approve.

II. THE FAIR CREDIT REPORTING ACT

“The . . . FCRA . . . was crafted to protect consumers

from the transmission of inaccurate information about them, and

to establish credit reporting practices that utilize accurate,

relevant, and current information in a confidential and

responsible manner.” Guimond v. Trans Union Credit Info. Co.,

45 F.3d 1329, 1333 (9th Cir. 1995) (citations omitted).

Congress intended to promote efficiency in the nation’s banking

system and to protect consumer privacy. TRW Inc. v. Andrews,

38

534 U.S. 19, 24 (2001) (citing 15 U.S.C. § 1681(a)). Congress

addressed the latter concern by including provisions intended “to

prevent consumers from being unjustly damaged because of

inaccurate or arbitrary information in a credit report.” S. Rep.

No. 91-517, at 1 (1969). Congress also hoped to address a

number of related problems, including “the inability at times of

the consumer to know he is being damaged by an adverse credit

report,” the lack of “access to the information in [his] file,” the

“difficulty in correcting inaccurate information,” and “getting

[his] version of a legitimate dispute recorded in . . . [his] credit

file.”Id. at 3 (1969). “These consumer oriented objectives

support a liberal construction of the FCRA,” and any

interpretation of this remedial statute must reflect those

objectives. Guimond, 45 F.3d at 1333.

In its cross-appeal, Trans Union first argues that its

OFAC alert is not covered by the Fair Credit Reporting Act.

According to Trans Union, the FCRA does not apply to OFAC

information because the “OFAC Screen” is not part of a

“consumer report.” Trans Union Br. at 18. Inasmuch as that

claim goes to the validity of the jury’s verdict, we will first

39

discuss Trans Union’s cross-appeal.21

A. Reasonable Procedures for Maximum Accuracy, 15

U.S.C. § 1681e(b)

15 U.S.C. § 1681e(b) provides in relevant part:

“Whenever a consumer reporting agency prepares a consumer

report it shall follow reasonable procedures to assure maximum

possible accuracy of the information concerning the individual

about whom the report relates.” As noted, the jury concluded

that Trans Union had breached the standard of care required by

§ 1681e(b). However, Trans Union claims that since the OFAC

alert is not covered by § 1681e(b), the district court erred in

denying Trans Union’s motion for judgment as a matter of law.

15 U.S.C. § 1681a(d)(1) defines a consumer report, in

relevant part, as:

any written, oral, or other communication of any

information by a consumer reporting agency

bearing on a consumer’s credit worthiness, credit

standing, credit capacity, character, general

reputation, personal characteristics, or mode of

living which is used or expected to be used or

collected in whole or in part for the purpose of

21

We review the denial of Trans Union’s motion for

judgment as a matter of law de novo, “viewing the evidence in

the light most favorable to the prevailing party.” Acumed

LLC v. Advanced Surgical Servs., Inc., 561 F.3d 199, 211 (3d

Cir. 2009) (quotation omitted).

40

serving as a factor in establishing the consumer’s

eligibility for-- (A) credit or insurance to be used

primarily for personal, family, or household

purposes . . . .22

(emphasis added). Trans Union’s argument that the OFAC alert

somehow manages to avoid the reach of the FCRA ignores the

breadth of the language that Congress used in drafting that

statute. It is not contested that the credit report that Trans Union

sent to Elway Subaru was otherwise subject to the FCRA.

Indeed, such reports are precisely what the FCRA was intended

to cover. In order to conclude that the OFAC alert is not subject

to that remedial statute even though the rest of the report clearly

falls within the definition of “consumer report,” we would have

to conclude that Congress did not mean what it said when it

unequivocally defined “consumer report” to include “any . . .

communication of any information by a consumer reporting

agency.” 23 15 U.S.C. § 1681a(d)(1). Trans Union seeks to

avoid this result by arguing that the OFAC alerts were not “used

22

The statute exempts certain reports or

communications that are not relevant here. See 15 U.S.C. §

1681a(d)(2).

23

We use “consumer report” and “credit report”

interchangeably. The report referred to as “consumer report”

in the statute is more commonly known as a credit report.

41

or expected to be used . . . in establishing the consumer’s

eligibility for . . . credit” because, according to its agreement

with Elway Subaru, the screen was to be used only for USA

PATRIOT Act compliance. Id.; see J.A. 568.

As noted above, businesses in the United States are

generally prohibited from dealing with anyone listed on OFAC’s

SDN List. See, e.g., 31 C.F.R. § 536.201 (“[N]o property or

interests in property of a specially designated narcotics trafficker

that are in the United States . . . may be transferred, paid,

exported, withdrawn or otherwise dealt in.”). Thus, in most

cases, it is unlawful to extend credit to a person on OFAC’s

SDN List.24

Trans Union invites us to conclude that information that

goes to the very legality of a credit transaction is somehow not

“a factor in establishing the consumer’s eligibility . . . for

credit.” 15 U.S.C. § 1681a(d)(1). It is difficult to imagine an

inquiry more central to a consumer’s “eligibility” for credit than

whether federal law prohibits extending credit to that consumer

24

Recall that OFAC has procedures to unblock funds

in the case of mistaken identity, 31 C.F.R. § 501.806, and to

have a name removed from designated lists, 31 C.F.R. §

501.807.

42

in the first instance. The applicability of the FCRA is not

negated merely because the creditor/dealership could have used

the OFAC Screen to comply with the USA PATRIOT Act, as

well as deciding whether it was legal to extend credit to the

consumer.

Trans Union also relies on the subscriber addendum to its

agreements with creditors to argue that its terms establish that

the OFAC alert is not part of credit reports it prepares under the

FCRA. Pursuant to that agreement, the creditor or subscriber

agrees to be “solely responsible for taking any action that may

be required by federal law as a result of a match to the OFAC

File, and shall not deny or otherwise take any adverse action

against any consumer based solely on TransUnion’s OFAC

Advisor services.” J.A. 568. We are not persuaded that Trans

Union’s private contractual arrangements with its clients can

alter the application of federal law, absent a statutory provision

allowing that rather unique result.

As described more fully above, the “SPECIAL

MESSAGES” section of Trans Union’s credit reports that

contain the OFAC alerts is on the first page between the

43

identifying information and the consumer’s credit score and in

the same formatting as that information. Thus, the OFAC alerts

allow the creditor to seamlessly determine a consumer’s

eligibility for a loan even before looking at the consumer’s

credit score.

Trans Union also argues that, even if the OFAC alert is

covered by the FCRA, the jury’s verdict cannot stand because

the evidence did not allow a reasonable fact finder to conclude

that it was negligent in dealing with Cortez, as required for

liability under 15 U.S.C. § 1681e(b). We disagree.

B. Negligence

According to Trans Union, its credit report contained the

most accurate information possible because Trans Union simply

included the information furnished by the government. Hence,

it was not reasonable to expect Trans Union to do anything more

than it did to insure the accuracy of the information it sold in its

credit report. Trans Union argues that it merely informed the

dealership that Cortez was a possible match with someone listed

on OFAC’s SDN List, and it met § 1681e(b)’s requirement of

maximum possible accuracy because “match” connotes

44

“possible match” rather than “exact match.” Negligent

noncompliance with § 1681e(b), consists of the following four

elements: “(1) inaccurate information was included in a

consumer’s credit report; (2) the inaccuracy was due to

defendant’s failure to follow reasonable procedures to assure

maximum possible accuracy; (3) the consumer suffered injury;

and (4) the consumer’s injury was caused by the inclusion of the

inaccurate entry.” Philbin v. Trans Union Corp., 101 F.3d 957,

963 (3d Cir. 1996).

In rejecting Trans Union’s claim and upholding the jury’s

verdict, the district court correctly concluded that Trans Union’s

use of the OFAC alert created the impression that Cortez was

actually the person named on OFAC’s SDN List. While the

word “match” may be ambiguous in some circumstances, the

jury was entitled to view Trans Union’s actions in their proper

context. Trans Union provided the credit report with the OFAC

alerts to the dealership in response to receiving identifying

information about a specific consumer, Cortez. The dealership

relied upon the information about Cortez that Trans Union

provided to determine whether or not to finance her car

45

purchase. The alert on Cortez’s credit report does not state that

the names are “similar” to someone on the SDN List or that a

match is “possible.” It reported a “match” with someone on the

SDN List.

Thus, the jury and district court correctly determined that

Trans Union could have taken reasonable measures to assure

maximum possible accuracy of its credit report with respect to

these alerts. “Reasonable procedures are those that a reasonably

prudent person would undertake under the circumstances.

Judging the reasonableness of a credit reporting agency’s

procedures involves weighing the potential harm from

inaccuracy against the burden of safeguarding against such

inaccuracy.” Philbin, 101 F.3d at 963 (alterations, quotations,

and citations omitted). It is important to note that § 1681e(b)

erects a standard of “maximum possible accuracy.” That

requires more than merely allowing for the possibility of

accuracy.

In Philbin, the plaintiff’s credit report contained a lien

that actually belonged to his father. 101 F.3d at 960. He wrote

to the credit reporting agency, which corrected the error and

46

added a notation to the credit report stating, “Do not confuse

with father James Philbin Sr different address different social

security number.” Id. Two and a half years later, the plaintiff

applied for and was denied credit a number of times. Id. at 960-

61. The plaintiff then requested his credit report from Trans

Union Corp. (“TUC”) and TRW Credentials, Inc. Id. At 961.

The TRW report had no errors. Id. When he finally obtained

the report from TUC, it still noted the tax lien. Id. After filing

suit, the plaintiff was again denied credit and learned that the tax

lien was still on his credit report, along with other erroneous

information. Id.

In reversing the district court’s grant of summary

judgment in favor of TUC on Philbin’s § 1681e(b) claim, we

held that an unspecified “quantum of evidence” beyond a mere

inaccuracy is sufficient for a jury to find negligent failure to

assure maximum possible accuracy unless a credit reporting

agency convinces the jury otherwise. Id. at 965. We also

reiterated that inconsistencies between two different reports

concerning a single consumer are sufficient to meet this

standard. Id. at 964, 966. Cortez’s evidence is even stronger.

47

Here, the jury could consider evidence of an inconsistency

between identifying information provided by Trans Union, for

example, Cortez’s birth date, and the information on the SDN

List. The jury could reasonably conclude that Trans Union

could have taken steps to minimize the possibility that it would

erroneously place an OFAC alert on a credit report, such as

checking the birth date of the consumer against the birth date of

the person on the SDN List.

Moreover, the distinction between “accuracy” and

“maximum possible accuracy” is not nearly as subtle as may at

first appear, it is in fact quite dramatic. For example, in Pinner

v. Schmidt, 805 F.2d 1258 (5th Cir. 1986), the Court of Appeals

for the Fifth Circuit described that distinction as the difference

between reporting that “a person was ‘involved’ in a credit card

scam” and reporting that the consumer “was in fact one of the

victims of the scam.” Id. at 1263. The former statement was

undoubtedly true as the consumer had been “involved” in the

scam. It was also woefully misleading because it did not inform

people that she was involved as a victim of the scam, and not as

the perpetrator.

48

Moreover, the reasonableness of a credit reporting

agency’s procedures is “normally a question for trial unless the

reasonableness or unreasonableness of the procedures is beyond

question.” Sarver v. Experian Info. Solutions, 390 F.3d 969,

971 (7th Cir. 2004). In Philbin, we listed three different

approaches that various courts have taken in determining if a

plaintiff has introduced sufficient evidence to reach the jury

under § 1681e(b). Those approaches are: “that a plaintiff must

produce some evidence beyond a mere inaccuracy in order to

demonstrate the failure to follow reasonable procedures; that the

jury may infer the failure to follow reasonable procedures from

the mere fact of an inaccuracy; or that upon demonstrating an

inaccuracy, the burden shifts to the defendant to prove that

reasonable procedures were followed.” Philbin, 101 F.3d at

965. We did not have to decide upon any one approach in

Philbin because the plaintiff had produced evidence sufficient

to meet any of the three standards. Id. at 966. The same is true

here.

Trans Union’s own records showed that Cortez was born

in May of 1944 and her middle name was “Jean.” J.A. 526-527.

49

The person on OFAC’s SDN List was named Sandra Quintero

Cortes and was born in June of 1971. Id. Within Trans Union’s

own records there existed a large discrepancy in regard to

Cortez’s last name, middle name, and even her date of birth.

There were other discrepancies as well, including citizenship.

Despite those distinctions, the credit report Trans Union sent to

the dealership stated: “INPUT NAME MATCHES NAME ON

THE OFAC DATABASE.” Trans Union included that

“warning” even though it had information that should have

made it apparent that the OFAC alert had no place in Cortez’s

credit report.

There are, of course, inherent dangers in including any

information in a credit report that a credit reporting agency

cannot confirm is related to a particular consumer. Such

information is nearly always “used or expected to be used or

collected in whole or in part for the purpose of serving as a

factor in establishing the consumer’s eligibility for . . . credit.”

15 U.S.C. § 1681a(d)(1). Allowing a credit agency to include

misleading information as cavalierly as Trans Union did here

negates the protections Congress was trying to afford consumers

50

and lending institutions involved in credit transactions when it

enacted the FCRA.

Congress surely did not intentionally weave an exception

into the fabric of the FCRA that would destroy its remedial

scheme by allowing a credit reporting agency to escape

responsibility for its carelessness whenever misleading

information finds its way into a credit report through the agency

of a third party. Thus, Trans Union’s argument that it does not

control the accuracy of the SDN List is as misleading as the

information it provided about Cortez. Trans Union does not

know for sure that a consumer has habitually been delinquent in

paying his/her credit cards bills, or that s/he does not promptly

pay obligations to merchants or taxing authorities. Rather, it

collects such information from the primary sources, summarizes

it, and reports it to those who will subsequently rely on the

resulting reports in making consumer credit decisions.

Therefore, the OFAC information is not substantially different

from all other information in a credit report, including

information taken from public records.

Trans Union remains responsible for the accuracy in its

51

reports under the FCRA and it cannot escape that responsibility

as easily as it suggests here. Congress clearly intended to ensure

that credit reporting agencies exercise care when deciding to

associate information with a given consumer, and the record

clearly supports the jury’s determination that Trans Union did

not exercise sufficient care here. See Philbin, 101 F.3d at 966;

see also Stewart v. Credit Bureau, Inc., 734 F.2d 47, 52 (D.C.

Cir. 1984) (“Certainly, inconsistencies within a single file or

report involving an inaccuracy as fundamental as a falsely

reported wage earner plan, as well as inconsistencies between

two files or reports involving less fundamental inaccuracies, can

provide sufficient grounds for inferring that an agency acted

negligently in failing to verify information.”).25

C. Trans Union’s Liability Under 15 U.S.C. § 1681g

15 U.S.C. § 1681g(a) states in relevant part that “[e]very

consumer reporting agency shall, upon request, . . . clearly and

accurately disclose to the consumer: (1) All information in the

25

See also Cousin v. Trans Union Corp., 246 F.3d 359,

368 (5th Cir. 2001) (when a creditor continues to provide a

consumer reporting agency information about a consumer that

the agency has determined to be inaccurate, under § 1681e(b)

“it is incumbent on the consumer reporting agency to

permanently delete and cloak the erroneous information”).

52

consumer’s file at the time of the request.” (emphasis added).

Here, the jury found that Trans Union willfully violated §

1681g, and Trans Union appeals the district court’s denial of its

motion for judgment as a matter of law on Cortez’s § 1681g

claim.

Trans Union concedes that Cortez requested her credit

report on multiple occasions; nevertheless, it failed to provide

her with the HAWK and OFAC alert information on her report.

However, Trans Union again makes an argument similar to that

discussed above. It argues that the OFAC and HAWK

information is not part of the consumer’s “file” under the FCRA

and that, it was not required to disclose the information to

Cortez.

The FCRA defines “file” when used in connection with

information on any consumer, as “all of the information on that

consumer recorded and retained by a consumer reporting agency

regardless of how the information is stored.” 15 U.S.C. §

1681a(g). Trans Union attempts to avoid the obvious reach of

that language by relying on the fact that the SDN List

information was not part of its database; rather, as explained

53

earlier, that information was separately maintained by Accuity.

According to Trans Union, the information should not be

considered part of the consumer’s file for purposes of the

FCRA.26 Not surprisingly, Trans Union cites no cases to support

this argument. The argument requires us to ignore that the

FCRA specifically provides that the duty of disclosure applies

to “information on [a] consumer . . . regardless of how the

information is stored.” 15 U.S.C. § 1681a(g). We do not

believe that Congress intended to allow credit reporting

companies to escape the disclosure requirement in § 1681a(g) by

simply contracting with a third party to store and maintain

information that would otherwise clearly be part of the

consumer’s file and is included in a credit report.

Congress clearly intended the protections of the FCRA to

apply to all information furnished or that might be furnished in

a consumer report.27 Gillespie v. Trans Union Corp., 482 F.3d

26

Cortez argues that Trans Union failed to make this

argument in the district court and that it is therefore waived.

However, based upon our review of the record, we believe the

argument was adequately presented to the district court.

27

We express no opinion on whether the term “file” is

limited to the information a credit reporting agency includes

in the credit report. We note, however, that the term

54

907, 909 (7th Cir. 2007). Moreover, as the court in Gillespie

noted, “‘file’ denotes all information on the consumer that is

recorded and retained by a consumer reporting agency that

might be furnished, or has been furnished, in a consumer report

on that consumer.” Id. (quoting 16 C.F.R. pt. 600, app. § 603).28

In Gillespie, the court considered whether a credit

reporting agency was obligated to furnish the date of

delinquency of a credit account to a consumer who makes a

request under § 1681g. Congress sought to prohibit consumers

from being hounded by stale information by limiting the amount

of time old debts can be reported under the FCRA. 29 Creditors,

therefore, have to include a “date of delinquency or purge date”

when reporting account information to a credit agency.

Gillespie, 482 F.3d at 908. The credit reporting agency uses that

“consumer report” is also defined in § 1681a and it is, thus,

unlikely that Congress intended the two terms to mean exactly

the same thing. See Nunnally v. Equifax Info. Servs., LLC,

451 F.3d 768, 772-73 (11th Cir. 2006).

28

Commentary does not have the force of a regulation

and is not binding, and we do not regard it as such.

29

In general, a credit reporting agency cannot report

negative information for longer than seven years under 15

U.S.C. § 1681c.

55

date for internal purposes to determine when the information

should be purged from the data that will appear on the

consumer’s credit report. Id. However, credit reporting

agencies do not usually include that date on the credit reports

provided to potential creditors or to consumers. Id. The

plaintiffs in Gillespie argued that the “file” they received from

Trans Union violated the disclosure requirements of the FCRA

because it did not include the “purge date.” Id. They claimed

that the delinquency date was included in the definition of “file”

contained in 15 U.S.C. § 1681a(g).

In rejecting that claim, the court reasoned that “Congress

wanted consumers to receive exactly what [the plaintiffs] got

from Trans Union— complete copies of their consumer reports,

not their entire files in whatever form maintained by the [credit

reporting agency].” Id. at 909. Since the purge date was an

internal record-keeping item, used only to determine when

transactions in a consumer’s history should no longer be

reported to those requesting credit reports, the court held that

Congress did not intend to include it within the definition of

“file.” Id. at 910. That is not the situation here because the

56

OFAC alerts were far more than a mere internal record-keeping

mechanism.30

We hold that information relating to the OFAC alert is

part of the consumer’s “file” as defined in the FCRA.

Accordingly, we affirm the district court’s order denying Trans

Union’s motion for judgment as a matter of law on Cortez’s

claim under 15 U.S.C. § 1681g based upon Trans Union’s

contention that the OFAC alert is not part of a consumer’s file

and not subject to the reporting requirements of the FCRA.

D. Reinvestigation, 15 U.S.C. § 1681i

1. Reasonable Reinvestigation, 15 U.S.C. § 1681i(a)

Under 15 U.S.C. § 1681i(a)(1)(A), credit reporting

agencies must promptly reinvestigate any information in a

consumer’s file that is disputed by a consumer and either record

30

Gillespie also cited the Senate Committee Report

discussing the 1996 amendments to the FCRA, which

changed the requirement in § 1681g(a)(1) from providing the

“nature and substance” of the information in a credit reporting

agency’s file to “all of the information” in the file. See

Gillespie, 482 F.3d at 909. According to the Report, “The

Committee intend[ed] this language to ensure that a consumer

will receive a copy of that consumer’s report, rather than a

summary of the information contained therein.” S. Rep. No.

104-185, at 41 (1995).

57

the current status of the information in dispute or delete it.31 In

order for Cortez to establish that Trans Union is liable for failing

to reinvestigate a dispute under that provision, she must

establish that Trans Union had a duty to do so, and that it would

have discovered a discrepancy had it undertaken a reasonable

investigation. Therefore, we must determine whether the jury

could reasonably have concluded that Trans Union would have

discovered the inaccuracy in Cortez’s report – i.e., the OFAC

alert – “if it had reasonably investigated the matter.” Cushman

v. Trans Union Corp., 115 F.3d 220, 226 (3d Cir. 1997).

Although the parameters of a reasonable investigation

will often depend on the circumstances of a particular dispute,

31

15 U.S.C. § 1681i(a)(1)(A) states, in relevant part:

[I]f the completeness or accuracy of any item of

information contained in a consumer’s file at a

consumer reporting agency is disputed by the

consumer and the consumer notifies the agency .

. . of such dispute, the agency shall, free of

charge, conduct a reasonable reinvestigation to

determine whether the disputed information is

inaccurate and record the current status of the

disputed information, or delete the item from the

file in accordance with paragraph (5), before the

end of the 30-day period beginning on the date on

which the agency receives the notice of the

dispute from the consumer or reseller.

58

it is clear that a reasonable reinvestigation must mean more than

simply including public documents in a consumer report or

making only a cursory investigation into the reliability of

information that is reported to potential creditors. Id. at 225.

Rather, if the agency determines that the information is

inaccurate, incomplete, or cannot be verified, it must delete or

modify the information and notify the provider of the

information that the information has been modified or deleted

from the consumer’s file. 15 U.S.C. § 1681i(a)(5)(A). Congress

thought this protection so vital to the statutory scheme of the

FCRA that it included a specific provision requiring credit

reporting agencies to maintain procedures to prevent the

reappearance of information that is deleted because it is

misleading or inaccurate. 15 U.S.C. § 1681i(a)(5)(c).

Trans Union first argues that it should not have been

liable under § 1681i because the OFAC alert is not part of

Cortez’s “file.” We have already explained why that contention

must be rejected.

Trans Union admits that it performed no reinvestigation

to determine whether Cortez was the person named in OFAC’s

59

SDN List. Trans Union concedes that it did not look beyond the

name on that List before reporting a “match” on Cortez’s

consumer report. However, it attempts to escape liability by

arguing that even if § 1681i does apply, any reinvestigation

would have been meaningless because it cannot change OFAC’s

SDN List. See Trans Union Br. at 27. That argument is

disingenuous at best. Trans Union controls the information it

places on a consumer’s credit report. Cortez did not ask Trans

Union to alter OFAC’s SDN List. Rather, she merely asked

Trans Union not to associate that information with her and

informed the company that she was not the person the OFAC

alert referred to. She made that request four times - once by

telephone and three times in writing. Trans Union responded by

denying that the information was on her credit report.

Furthermore, one of Trans Union’s customer service managers

testified at trial that it is Trans Union’s policy never to

investigate OFAC alerts, at least not until forced to do so by the

consumer bringing a law suit. Cortez, 2007 WL 2702945 at *

2; see also J.A. 203. That is what happened here. After Cortez

sued, Trans Union blocked the OFAC Alert from appearing on

60

her credit report. J.A. 183-84.

Similarly, Trans Union argues that it should not be liable

under the FCRA because the responsibility for USA PATRIOT

Act compliance falls on potential creditors and not credit

reporting agencies. We are well aware that anyone involved in

financial transactions has significant responsibilities under the

USA PATRIOT Act, as noted above. However, nothing in the

USA PATRIOT Act suggests that Congress intended the

obligations arising under that Act to immunize credit reporting

agencies from duties they would otherwise have under the

FCRA. Once Cortez disputed the accuracy of the information

in Trans Union’s credit report, Trans Union was obligated to

reinvestigate that information. The car dealer’s responsibilities

under the USA PATRIOT Act are simply irrelevant to Trans

Union’s duty under the FCRA; the district court recognized that

when it denied Trans Union’s motion for judgment as a matter

of law.

2. Failure to Note Dispute, 15 U.S.C. §§ 1681i(b) and (c).

15 U.S.C. § 1681i sets forth a fairly specific process for

disputing information in a credit report. As discussed above, a

61

consumer must first inform the credit agency that s/he disputes

the information. 15 U.S.C. § 1681i(a)(1). The credit reporting

agency must reinvestigate promptly based on that dispute. The

agency must then appropriately respond to the dispute based on

the results of its reinvestigation. This includes deleting or

modifying disputed information when appropriate. Id. §

1681i(a)(5).32 The credit reporting agency must also notify the

consumer promptly of the results of the reinvestigation in

writing. Id. § 1681i(a)(6). The minimum contents of that

notice are prescribed by the statute. As relevant here, the notice

must include: “(i) a statement that the reinvestigation is

completed; (ii) a consumer report that is based upon the

consumer’s file as that file is revised as a result of the

reinvestigation; [and] . . . (iv) a notice that the consumer has the

right to add a statement to the consumer’s file disputing the

accuracy or completeness of the information . . . .” Id. §

1681i(a)(6)(B).

“If the reinvestigation does not resolve the dispute,” the

32

The credit reporting agency may also determine that

the dispute is frivolous or irrelevant under 15 U.S.C. §

1681i(a)(3), but that procedure is not relevant here.

62

consumer may file a statement of his or her dispute with the

credit reporting agency. Id. § 1681i(b). “Whenever a statement

of dispute is filed,” the credit reporting agency “in any

subsequent consumer report containing the information in

question, [must] clearly note that it is disputed by the consumer

and provide either the consumer’s statement or a clear and

accurate codification or summary thereof.” Id. § 1681i(c). This

allows “potential creditors [to] have both sides of the story [so

that they] can reach an independent determination of how to

treat . . . specific, disputed” information. Cahlin v. Gen. Motors

Acceptance Corp., 936 F.2d 1151, 1160 n.23 (11th Cir. 1991).

Cortez claims that Trans Union was obligated to include

notice of her dispute about the OFAC alerts in her credit report

under § 1681i(c). As noted earlier, in a letter dated May 10,

2005, Trans Union told Cortez, “[O]ur records show that the

information you disputed does not currently appear on your

TransUnion credit report.” J.A. 545. Thereafter, Trans Union

tw ice issued C o r te z ’s c r e d it report w ith the

misleading/erroneous OFAC alerts and without noting that

Cortez was disputing those alerts. Trans Union does not deny

63

this. Its only argument is that Cortez never explicitly filed a

statement of dispute under § 1681i(b) and thus, it had no

obligation to include a statement in those subsequent credit

reports under § 1681i(c). The argument once again is

unconvincing.

In Guimond, the court explained that a § 1681i(c) claim

requires a showing that (1) the plaintiff disputed an item in her

file; (2) any reinvestigation conducted by the consumer

reporting agency did not resolve the dispute; (3) the plaintiff

filed a statement of dispute; and (4) the statement was not

included with subsequent copies of her credit report. 45 F.3d at

1335. The court ultimately held that Guimond’s § 1681i(c)

claim failed because, although she met the first two elements of

the claim, she failed to present evidence that she filed a

statement of dispute. Id.33

Though we do not disagree with the above standard, this

case is distinguishable and frankly, extraordinary. Trans Union

33

Congress did not require that consumers submit

disputes on specific forms, and any such technical

requirement seems inconsistent with the remedial focus of the

FCRA. See Sullivan v. Greenwood Credit Union, 520 F.3d 70,

73 (1st Cir. 2008); see also Cushman, 115 F.3d at 223.

64

admits not only that it never reinvestigated Cortez’s dispute, it

concedes that it never intended to do so because of its fixed

policy regarding OFAC alerts. Moreover, after Cortez had

submitted one verbal and two written requests, Trans Union

responded to her with a letter that stated, “After reviewing your

correspondence, we were unable to determine the nature of your

request.” After Cortez wrote to Trans Union a third time, Trans

Union responded to her that “the information you disputed does

not currently appear on your Trans Union credit report.” This

final response by Trans Union to Cortez was patently false.

Trans Union thwarted Cortez’s ability to request that a statement

of dispute be included in subsequent credit reports by telling

Cortez that the disputed information was not in her report in the

first place. Still, Cortez persisted. She restated her dispute even

after she was falsely told that information was removed from her

credit report, i.e., even after the reinvestigation was complete

and she was misinformed by the credit reporting agency that the

issue she had raised was resolved. Given that evidence, it was

reasonable for the jury to conclude that Cortez had adequately

informed Trans Union that its reinvestigation did not resolve her

65

dispute and that Trans Union failed to note that on her credit

report, as required by the FCRA.34 Accordingly, we affirm the

district court’s decision denying Trans Union’s motion for

judgment as a matter of law on Cortez’s § 1681i(c) claim.

Having concluded that the district court did not err in

denying Trans Union’s motions for judgment as a matter of law,

and thus affirming the district court’s refusal to overturn the

jury’s liability determination, we turn to Cortez’s claim that the

district court erred in reducing her punitive damage award.

Although, as we will explain, we conclude that we must affirm

that reduction, we are nevertheless troubled by it.

III. DAMAGES

In her appeal, Cortez argues that she is entitled to

reinstatement of the jury’s punitive damages award because the

district court did not have the authority to order the conditional

remittitur, which she accepted under protest. In its cross-appeal,

Trans Union argues that the punitive damages should not have

34

Even though Cortez’s claim is supported by

numerous requests to the credit reporting agency, we do not

suggest that a consumer must make more than one request to

have notice of a dispute included in a credit report under 15

U.S.C. § 1681i(b) and (c).

66

been submitted to the jury, that the district court should have

reduced the compensatory damages, and that the punitive

damages are excessive even after the district court’s remittitur.

A. Remittitur

“[T]he remittitur is well established as a device employed

when the trial judge finds that a decision of the jury is clearly

unsupported and/or excessive.” Spence v. Bd. of Educ. of

Christina Sch. Dist., 806 F.2d 1198, 1201 (3d Cir. 1986). While

courts often use the term “remittitur” to refer to any reduction in

a damages award, including one which is imposed to satisfy

constitutional due process concerns, the term is actually far more

specific. In Johansen v. Combustion Engineering, Inc., 170

F.3d 1320 (11th Cir. 1999), the Court of Appeals for the

Eleventh Circuit explained the difference between a

constitutionally reduced verdict and a remittitur:

A constitutionally reduced verdict . . . is really not

a remittitur at all. A remittitur is a substitution of

the court’s judgment for that of the jury regarding

the appropriate award of damages. The court

orders a remittitur when it believes the jury’s

award is unreasonable on the facts. A

constitutional reduction, on the other hand, is a

determination that the law does not permit the

award. Unlike a remittitur, which is discretionary

with the court . . . a court has a mandatory duty to

67

correct an unconstitutionally excessive verdict so

that it conforms to the requirements of the due

process clause.

Id. at 1331 (footnote and citation omitted); see also Ross v.

Kansas City Power & Light Co., 293 F.3d 1041, 1049-50 (8th

Cir. 2002).

Despite the differences between a constitutionally

reduced verdict and a remittitur, it is misleading to suggest that

a constitutionally required reduction in an award “is really not

a remittitur at all” because numerous courts, including the

Supreme Court, refer to it as such. See, e.g., BMW of N. Am.,

Inc. v. Gore, 517 U.S. 559, 583 (1996) (“In most cases, the ratio

will be within a constitutionally acceptable range, and remittitur

will not be justified on this basis.”); see also Ash v. Georgia-

Pacific Corp., 957 F.2d 432, 438 (7th Cir. 1992) (“Perhaps [ the

plaintiff] has been misled by the dual meanings of ‘remittitur’.

Courts sometimes use this word to refer to an option between a

reduced award and a new trial; at other times courts speak of any

reduction as a remittitur.”). The distinction is relevant here.

The remedies available to a court when reducing a jury

award based upon due process concerns are not necessarily the

68

same as those available when a court exercises its discretion

because it believes the amount of the award is inconsistent with

the evidence in a case. The latter is conditional, and the court

must offer a new trial as an alternative to a reduction in the

award in order to avoid depriving the plaintiff of his/her Seventh

Amendment right to a jury trial. See Hetzel v. Prince William

Cnty., 523 U.S. 208, 211 (1998) (per curiam).

In Hetzel, the Court explained that when a trial court

determines that the evidence does not support the jury’s general

damages award, it “has no authority . . . to enter an absolute

judgment for any other sum than that assessed by the jury . . . .

without allowing petitioner the option of a new trial.” Id.

(quotation omitted). Thus, a court must afford a plaintiff the

option of a new trial when it attempts to reduce a jury award

because it believes the amount of the verdict is not supported by

the evidence. These reductions are frequently referred to as

conditional remittiturs. The same is not true when a court must

reduce a damages award to avoid a denial of due process. In

that case, the award is reduced as a matter of law and there is no

interference with the Seventh Amendment right to have a jury

69

make findings of fact. Gore, 517 U.S. at 585-86. We review

discretionary reductions in jury awards for abuse of discretion,

see Evans v. Port Auth. of N.Y. & N.J., 273 F.3d 346, 354 (3d

Cir. 2001), but we conduct de novo review of a trial court’s

constitutionally required reduction of damages. See Cooper

Indus., Inc. v. Leatherman Tool Grp., Inc., 532 U.S. 424, 431

(2001).

The Supreme Court has further limited our review of

conditional remittiturs like the one we have here. As we have

just noted, the choice between a reduced award and a new trial

is required by the Seventh Amendment, and a court cannot

reduce an award without affording the plaintiff the option of a

new trial. See Hetzel, 523 U.S. at 211. In Donovan v. Penn

Shipping Co., Inc., 429 U.S. 648 (1977) (per curiam), the

Supreme Court held that “a plaintiff in federal court . . . may

not appeal from a remittitur order he has accepted” even where

the plaintiff accepted the remitted award under protest. Id. at

650. Cortez argues for an exception to this rule under our

decision in Demeretz v. Daniels Motor Freight, Inc., 307 F.2d

469 (3d Cir. 1962).

70

In Demeretz, the district court gave the plaintiff twenty

days to either submit to a new trial on damages or to agree to a

reduction in the jury’s verdict. 307 F.2d at 471. The plaintiff

did not respond within twenty days, and the court entered a

judgment in the amount of the reduced award. Id. The plaintiff

appealed, arguing that it is “beyond the court’s power,” once the

explicit time limitation in Rule 59(d) of the Federal Rules of

Civil Procedure has expired, to order a new trial on a ground

that the defendant did not raise in its motion for a new trial. Id.

at 472.35 Though the appeal of an order granting a new trial

normally would be interlocutory, we held that under the

Supreme Court’s decision in Phillips v. Negley, 117 U.S. 665

(1886), the order was reviewable as a final judgment because the

plaintiff was challenging the court’s authority to act. Demeretz,

307 F.2d at 472. We held that the court did not have the

authority to reduce the jury’s award sua sponte because the

order had not been entered within the time limit established

under Rule 59(d). Rule 60 of the Federal Rules of Civil

35

When Demeretz was decided, a district court could

not order a new trial under Rule 59 either sua sponte or for a

reason not stated in a party’s motion ten days after the entry of

judgment. 307 F.2d at 472.

71

Procedure did not contain a similar limitation, but that Rule did

not apply because the district court was not attempting to correct

a clerical order or mistake. Id. at 473.

Cortez attempts to argue that since she conditioned her

acceptance of the remittitur upon the court’s legal authority to

impose it, Donovan does not apply and she should be able to

challenge the merits of the reduction in her punitive damages

under Demeretz. She argues that, otherwise, “[she] would

never, as a practical matter, be able to have her case decided by

a jury or be able to have meaningful appellate review of any trial

court errors.” Cortez Reply Br. at 51.36

Cortez may be correct in claiming that she was on the

horns of a dilemma and that the practical result of dismissing her

challenge to the court’s remittitur will be to place it beyond

appellate review. Nevertheless, the Court held in Donovan that

a plaintiff cannot challenge a remittitur s/he has agreed to, even

36

Cortez also argues that the constitutionality of

conditional remittiturs is questionable. Since conditional

remittiturs have been recognized by the Supreme Court as

early as 1886 without concerns being raised about their

propriety, see N. Pac. R. Co. v. Herbert, 116 U.S. 642, 646-47

(1886), we can safely disregard that argument. See also

Johansen, 170 F.3d at 1328-29.

72

if the plaintiff has only agreed under protest or pursuant to a

purported reservation of rights. It is therefore clear that Cortez’s

challenge to the remittitur must be rejected notwithstanding the

dilemma she found herself in. Her only course of action would

have been to reject the remittitur and proceed to a second trial

which could have been limited to the issue of damages. She

would then be in the unenviable position of risking no punitive

award at all.

The district court clearly had the authority to enter the

September 13, 2007 conditional remittitur and Cortez’s attempt

to avoid the Supreme Court’s decision in Donovan is meritless.

She cannot now contest the merits of the district court’s order

reducing the jury’s award of punitive damages.37 Accordingly,

37

Because Cortez accepted the conditional remittitur,

we do not need to reach the issue of whether the district court

abused its discretion in reducing the punitive damages award

from $750,000 to $100,000. We do note, however, that we

are troubled by the court’s reasoning in reducing the punitive

damages. There is certainly nothing wrong with a jury

focusing on a “defendant’s seeming insensitivity” in deciding

how much to award as punitive damages. Id. “Punitive

damages awards are ‘the product of numerous, and sometimes

intangible, factors . . . .’” CGB Occupational Therapy, Inc. v.

RHA Health Servs., Inc., 499 F.3d 184, 195 (3d Cir. 2007)

(quoting TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S.

443, 457 (1993) (plurality opinion) (ellipsis in original)).

By their very definition, punitive damages are intended

73

we will affirm the district court’s entry of judgment for

$100,000 in punitive damages.

B. Compensatory Damages

Unlike punitive damages that are intended to punish and

deter, “[c]ompensatory damages are intended to redress the

concrete loss that the plaintiff has suffered by reason of the

defendant’s wrongful conduct.” State Farm Mut. Auto. Ins. Co.

v. Campbell, 538 U.S. 408, 416 (3d Cir. 2003) (quotations

omitted).

A jury can award actual damages for negligent violations

to punish a defendant; they are not intended to compensate the

plaintiff. “[P]unitive damages serve a broader function; they

are aimed at deterrence and retribution.” State Farm Mut.

Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (3d Cir. 2003).

A jury can consider the relative wealth of a defendant in

deciding what amount is sufficient to inflict the intended

punishment. See Restatement (Second) of Torts § 908(2)

(1979) (listing wealth as a factor which “can” be considered

in determining punitive damages).

Common sense suggests that a corner “mom and pop”

store should not be subject to the same punitive level of

damages as a company worth close to a billion dollars. The

latter would simply not be deterred by an award that might be

large enough to put the former out of business. Moreover, the

record certainly supports a jury becoming “incensed” over

Trans Union’s “insensitivity” to Cortez’s claim, and we are

hard pressed to understand the district court’s reliance on that

possible reaction to what Trans Union did, and/or

considerations of Trans Union’s fiscal wealth as reasons to

reduce the punitive award.

74

of the FCRA and both actual and punitive damages for willful

violations. 15 U.S.C. §§ 1681o, 1681n. “A jury’s damages

award will not be upset so long as there exists sufficient

evidence on the record, which if accepted by the jury, would

sustain the award.” Thabault v. Chait, 541 F.3d 512, 532 (3d

Cir. 2008). We reverse a district court’s decision on

compensatory damages and grant a new trial only if the verdict

is “so grossly excessive as to shock the judicial conscience.”

Rivera v. V.I. Housing Auth., 854 F.2d 24, 27 (3d Cir. 1988)

(quotation omitted). Although our review of a damage award is

“exceedingly narrow,” we have a “responsibility to review a

damage award to determine if it is rationally based.” Williams

v. Martin Marietta Alumina, Inc., 817 F.2d 1030, 1038 (3d Cir.

1987). In doing so, we must view the facts in the light most

favorable to Cortez. Rivera, 854 F.2d at 25.

We have already explained why this record supports the

jury’s determination of Trans Union’s liability under: §

1681e(b), for failing to follow reasonable procedures that

assured maximum possible accuracy in preparing Cortez’s credit

report; § 1681i, for failing to reasonably reinvestigate Cortez’s

75

disputes and not indicating her dispute in her subsequent credit

reports; and § 1681g, for failing to provide Cortez all of the

information in her file when she made her request. Trans Union

argues that the evidence Cortez presented was insufficient as a

matter of law to support the compensatory damages award of

$50,000 and, thus, the district court abused its discretion in

failing to remit that award. We do not agree.

Cortez testified that she suffered severe anxiety, fear,

distress, and embarrassment as a result of the erroneous OFAC

alert and Trans Union’s refusal to give her a corrected copy of

her report. The anxiety caused her to feel compelled to warn a

would-be creditor about the alert, which led to additional stress

and embarrassment. There is also evidence that she suffered

sleeplessness that required medication. She cried frequently

because of the frustration from Trans Union’s failure to

acknowledge the issue. Cortez’s daughter testified that Cortez

was under extreme stress, that Cortez cried often and lost weight

due to the stress regarding her credit report over the two-year

ordeal, and that Cortez discussed her concerns about her credit

report every time they spoke.

76

The psychological and stress-related suffering that Cortez

had to endure is the very kind of injury that would be expected

to result from erroneously associating a consumer with a

“Specially Designated National.” In allowing suits for damages,

Congress certainly intended to allow compensation for the very

kind of harm that the FCRA was intended to prevent. This is

not legislation mandating a safety standard to prevent physical

injury. It is legislation designed to facilitate banking and the

extension of credit while protecting consumers from the kind of

injury that will almost certainly result when erroneous

information is inserted into a credit report. Thus, damages for

violations of the FCRA allow recovery for humiliation and

embarrassment or mental distress even if the plaintiff has

suffered no out-of-pocket losses. Philbin, 101 F.3d at 963 n.3.

Moreover, a consumer may be awarded actual damages even if

she is able to obtain credit after explanation of the inaccuracy.

See Morris v. Credit Bureau of Cincinnati, Inc., 563 F. Supp.

962, 969 (S.D. Ohio 1983). Time spent trying to resolve

problems with the credit reporting agency may also be taken into

account. Stevenson v. TRW Inc., 987 F.2d 288, 297 (5th Cir.

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1993).

The district court found that a compensatory award of

$50,000 was “exceedingly generous” but concluded that it did

not justify judicial interference. Cortez, 2007 WL 2702945 at

*2. As stated above, the scope of our review here is exceedingly

narrow. We agree with the district court that there is sufficient

evidence in the record to support the jury’s compensatory award.

Trans Union cites to Cousin v. Trans Union Corp., 246

F.3d 359 (5th Cir. 2001) and Casella v. Equifax Credit Info.

Servs., 56 F.3d 469 (2d Cir. 1995) to argue that evidence similar

to that proffered by Cortez was rejected by the Courts of

Appeals for the Fifth and Second Circuits, respectively, as

insufficient to support compensatory damage awards. Trans

Union Br. at 36, 38-39. We are not persuaded.

First, Trans Union neglects the fact that in both of those

cases, the plaintiffs failed to show that the defendants’ credit

reports were the cause of the plaintiffs’ emotional distress. See

Cousin, 246 F.3d at 370 (holding that the plaintiff failed to show

that Trans Union’s credit report was the cause of emotional

distress where there were reports from multiple agencies at

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play); Casella, 56 F.3d at 474-75 (holding that the plaintiff

failed to show that the defendants’ credit reports as opposed to

the city of San Diego, which was wrongly reporting that

defendant owed child support, were the cause of the plaintiff’s

emotional distress). That is not the situation here.

Second, we have not adopted, and now refuse to adopt,

the Fifth Circuit’s standard requiring “a degree of specificity

which may include corroborating testimony or medical or

psychological evidence in support of the damage award.”

Cousin, 246 F.3d at 371 (quotation omitted). Such

corroboration goes only to the weight of evidence of injury, not

the existence of it. If a jury accepts testimony of a plaintiff that

establishes an injury without corroboration, the plaintiff should

be allowed to recover under the FCRA. The fact that the

plaintiff’s injuries relate to the stress and anxiety caused by the

defendant’s conduct does not change that. This is precisely the

kind of injury that Congress must have known would result from

violations of the FCRA.

Furthermore, our review of other awards reinforces our

belief that the award here was not excessive, and that the district

79

court did not abuse its discretion in deciding not to reduce the

compensatory award. See Robinson v. Equifax Info. Servs.,

LLC, 560 F.3d 235, 243 (4th Cir. 2009) (affirming jury award of

$200,000 for economic and emotional damages based on loss of

economic opportunity in the home mortgage market, emotional

distress, and loss of income for approximately 300 hours spent

addressing errors in the plaintiff’s credit report); Sloane v.

Equifax Info. Servs., LLC, 510 F.3d 495, 505 (4th Cir. 2007) (“A

survey of the other, more recent FCRA cases that involve

requests for remittitur of emotional distress awards suggests that

approved awards more typically range between $20,000 and

$75,000.”); Stevenson, 987 F.2d at 298 (affirming “award of

$30,000 in actual damages based upon the finding of mental

anguish,” which is the equivalent of over $45,000 in 2010).38

The jury obviously found the testimony of Cortez and her

daughter credible and accepted their evidence that Cortez

suffered considerable anxiety, emotional distress, and

humiliation as a result of being associated with a government

38

Equivalent value calculated using the Inflation

Calculator of the Department of Labor’s Bureau of Statistics.

See http://data.bls.gov/cgi-bin/cpicalc.pl (visited on May 3,

2010).

80

list that includes people who are identified as terrorists. Indeed,

in the post-9/11 world, neither that conclusion nor the emotional

impact of being associated with a list that may well contain

terrorists should come as any surprise. Viewing the facts in the

light most favorable to Cortez, as we must, we conclude that the

jury could reasonably have attributed significant emotional

distress to the Kafkaesque world in which Cortez found herself

when she tried to dispute the OFAC alert and Trans Union

refused to acknowledge that the information even existed.

Accordingly, we affirm the district court’s decision denying

Trans Union’s motion to remit the $50,000 compensatory

damage award.

C. Trans Union’s Challenge to the Punitive Damages

We have already explained why Cortez’s appeal of the

reduction of the punitive damages is meritless. Trans Union

appeals the award of any punitive damages. Its challenge is also

meritless.

Trans Union argues that is was entitled to judgment as a

matter of law on Cortez’s willfulness claims because Trans

Union’s determination that the OFAC information was not

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governed by the FCRA, even if it were erroneous, was neither

objectively unreasonable nor reckless. Trans Union also argues

that the punitive damages award, even as remitted, is

unconstitutional. As previously noted, we review the decision

by district courts to remit damage awards for abuse of

discretion. Evans, 273 F.3d at 354. We review de novo a trial

court’s determination regarding the constitutionality of a

punitive damages award. Campbell, 538 U.S. at 418.

In Safeco Insurance Co. of America v. Burr, the Supreme

Court held that willful violations of the FCRA are assessed for

“reckless disregard.” 551 U.S. 47, 60, 69 (2007); see Gelman v.

State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 192 n.8 (3d Cir.

2009).39 According to the Court:

39

The Supreme Court’s decision in Safeco defined the

standard for all willful violations of the FCRA. Levine v.

World Fin. Network Nat’l Bank, 554 F.3d 1314, 1318 (11th

Cir. 2009) (“To prove a willful violation, a consumer must

prove that a consumer reporting agency either knowingly or

recklessly violated the requirements of the [Fair Credit

Reporting] Act.”) (citing Safeco, 127 S. Ct. at 2208); Poehl v.

Countrywide Home Loans, Inc., 528 F.3d 1093, 1096 (8th Cir.

2008) (applying Safeco willful standard to violations of the

FCRA by creditors); Murray v. New Cingular Wireless Servs.,

Inc., 523 F.3d 719, 725-26 (7th Cir. 2008) (“[S]tatutory

damages are available only for willful violations of the Act,

and the Supreme Court held in Safeco Insurance Co. v. Burr,

551 U.S. 47 (2007), that this means recklessness – something

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[A] company subject to FCRA does not act in

reckless disregard of it unless the action is not

only a violation under a reasonable reading of the

statute’s terms, but shows that the company ran a

risk of violating the law substantially greater than

the risk associated with a reading that was merely

careless.

Safeco, 551 U.S. at 69. The fact that Trans Union’s actions rest

upon a legal conclusion does not immunize it from liability for

reckless conduct under the FCRA. A credit reporting agency

may act in reckless disregard of a statute’s requirements by

adopting an objectively unreasonable interpretation of the law.

Id. Although the Supreme Court has suggested that a dearth of

authoritative guidance may hinder a party’s efforts to interpret

the law reasonably, id. at 70, Cortez correctly notes that the lack

of definitive authority does not, as a matter of law, immunize

more than negligence but less than knowledge of the law’s

requirements.”). In Perez v. Trans Union, LLC, 526 F. Supp.

2d 504 (E.D. Pa. 2007), the district court wrongly applied our

prior standard, under which a plaintiff alleging a willful

violation of § 1681e(b) was required to show that defendant

“knowingly and intentionally committed an act in conscious

disregard for the rights of others.” Id. at 510 (quoting

Philbin, 101 F.3d at 970). The district court applied that

standard holding that the Supreme Court’s decision in Safeco

was limited to the section of the FCRA at issue in that case.

We clarify here that Safeco’s standard defining willful applies

to all violations of the FCRA.

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Trans Union from potential liability.

A credit reporting agency may also willfully violate the

FCRA by adopting a policy with reckless disregard of whether

it contravenes a plaintiff’s rights under the FCRA. Here,

notwithstanding the conclusion of Trans Union’s lawyers, the

breadth and scope of the FCRA is both evident and

extraordinary. As we explained at the outset, it refers to “all”

information, wherever it may be stored, that is intended to be

used or that may be used in extending credit. Moreover, it is

undeniably a remedial statute that must be read in a liberal

manner in order to effectuate the congressional intent underlying

it. See Sullivan, 520 F.3d at 73; see also Cushman, 115 F.3d at

223. We have no trouble concluding that, given the totality of

circumstances surrounding the OFAC alert, Trans Union “ran a

risk of violating the law substantially greater than the risk

associated with a reading that was merely careless.” Safeco, 551

U.S. at 69.

Trans Union correctly reminds us that we are the first

court of appeals to address whether the FCRA applies to

information from OFAC’s SDN List in the form of an alert

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reported by a credit reporting agency. This does not, however,

result in a borderline case of liability as Trans Union suggests.

It merely establishes that the issue has not been presented to a

court of appeals before. The credit agency whose conduct is

first examined under that section of the Act should not receive

a pass because the issue has never been decided. The statute is

far too clear to support any such license.

Furthermore, the verdict of this lay jury reveals an

understanding of the distinction between negligent and willful.

The jury found Trans Union negligent in its violation of §

1681e(b) for failing to have reasonable procedures to assure

maximum accuracy of the information in Cortez’s report. In

other words, in its initial preparation of the credit report with the

OFAC alert, where Trans Union relied on Accuity’s matching

technology, the jury found that Trans Union did not act with

reckless disregard to Cortez’s rights. See, e.g., Casella, 56 F.2d

at 475 (holding that where San Diego re-reported false child

support liability, credit reporting agencies did not willfully

violate § 1681e(b) when they reported that liability on the

plaintiff’s credit report). However, the jury found that Trans

85

Union willfully violated §§ 1681g and 1681i in its responses to

Cortez’s request for a copy of her complete credit report and her

request for reinvestigation. Trans Union categorically denied

that the OFAC alert information was on Cortez’s report, even

though it continued to report that information to potential

creditors and failed to include any statement in the report that

Cortez disputed the OFAC information. The record clearly

supports the jury’s reasoned determination that Trans Union was

not “merely careless” in failing to recognize that the FCRA

governed the OFAC information it was reporting.

In attempting to overturn the punitive damages award,

Trans Union repeats its argument that the OFAC information

was not part of the consumer’s “file.” We have already disposed

of that argument, and need not discuss it again. We do think it

is worth reiterating that the OFAC regulations and the Treasury

Department’s website both indicate that OFAC information in

a credit report is in fact governed by the FCRA. That website

goes as far as to mention that the FCRA and the FTC provide

consumers with a remedy when an invalid OFAC Alert is on

t h e i r c r e d i t r e p o r t s . S e e

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http://www.treas.gov/offices/enforcement/ofac/faq/answer.sht

ml#consumer2 (visited June 17, 2010) (“How Can I Get The

OFAC Alert Off My Credit Report? A consumer has the right

under the Fair Credit Reporting Act (FCRA), 15 U.S.C. 1681 et

seq., to request the removal of incorrect information on his/her

credit report. To accomplish this, consumers should contact the

credit reporting agency or bureau that issued the credit report.”).

Even a cursory look at that website should have informed Trans

Union of the perils of its approach to OFAC alerts.

Trans Union argues that because the FTC, and not the

Treasury Department, is the agency authorized to enforce the

FCRA, the Treasury Department’s conclusions about the FCRA

are not relevant. That argument only bolsters our belief that the

jury acted reasonably in concluding that Trans Union’s actions

were not “merely careless” but were with reckless disregard to

the law. The jury may well have concluded that Trans Union

made a strategic decision to include OFAC information in the

manner it did because the OFAC alert was a separate product

that could be sold to customers at additional cost.

When considered together with our analysis in support of

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the jury’s finding of liability, we easily conclude that Trans

Union substantially risked acting in violation of the law when it

made the policy decision to exclude OFAC information from its

FCRA compliance. Although such a finding cannot be made

lightly, especially in a case of first impression, it is imperative

that we do not allow “a company that traffics in the reputations

of ordinary people” a free pass to ignore the requirements of the

FCRA each time it creatively incorporates a new piece of

personal consumer information in its reports. Dennis v. BEH-1,

LLC, 520 F.3d 1066, 1071 (9th Cir. 2008).

Finally, Trans Union argues that the remitted punitive

damages award violates its due process rights under the 14th

Amendment. We review the award de novo to determine

whether the award of punitive damages is “grossly excessive or

arbitrary.” Campbell, 538 U.S. at 416. In Campbell, the

Supreme Court summarized the three guideposts a court

reviewing punitive damages should consider: “(1) the degree of

reprehensibility of the defendant’s misconduct; (2) the disparity

between the actual or potential harm suffered by the plaintiff

and the punitive damages award; and (3) the difference between

88

the punitive damages award by the jury and the civil penalties

authorized or imposed in comparable cases.” Id. at 418 (citing

Gore, 517 U.S. at 575).

The district court’s remitted award of $100,000 does not

even begin to approach the outer limit of punitive damages

“aimed at deterrence and retribution” allowed by the

Constitution. Id. at 416.

In terms of reprehensibility, the first guidepost, Trans

Union ignored “the overwhelming likelihood of liability” and

contorted its policies to avoid its responsibilities under the

FCRA. Id. at 419. Trans Union also repeatedly failed to

acknowledge to Cortez that the OFAC Alert was in her credit

report when it knew that the information was being reported to

its subscribers. Inter Med. Supplies, Ltd. v. EBI Med. Sys., Inc.,

181 F.3d 446, 467 (3d Cir. 1999) (the degree of reprehensibility

of a defendant’s conduct includes whether the conduct “involves

deliberate false statements rather than omissions”). Moreover,

although Cortez did not suffer severe physical harm, the gravity

of harm that could result from Trans Union’s “match” of Cortez

with an individual on a “terrorist” list cannot be over stated.

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This is especially true because Trans Union’s subscribers rely on

the accuracy of the detailed personal information Trans Union

provides. Given the severe potential consequences of such an

association, Trans Union’s failure to take the utmost care in

ensuring the information’s accuracy – at the very least,

comparing birth dates when they are available – is reprehensible.

The damages award also survives scrutiny under the

second guidepost. An award that is twice the compensatory

damages award falls well within the Supreme Court’s standard

for ordinary cases of a single-digit ratio. Campbell, 538 U.S. at

425.

Finally, we agree with the parties that the third guidepost

is not useful in the analysis of punitive damages here as there is

no “truly comparable” civil penalty to a FCRA punitive damages

award. Cortez Reply Br. at 46; Trans Union Reply Br. at 23-26.

Accordingly, we affirm the district court’s remitted

punitive damages award of $100,000.

IV. CONCLUSION

In summary, we affirm the district court’s orders denying

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Trans Union’s motion for judgment as a matter of law and

entering a remitted judgment, including $50,000 in

compensatory damages and $100,000 in punitive damages,

against Trans Union.

91