Amicus Curiae Brief — TRW Inc. v. Andrews

ea w) id té Ce ci | MAY 30 2001

—. 00-1045 : ,

In the Supreme Court of the United States

TRW INC., PETITIONER

2.

ADELAIDE ANDREWS

ON WRIT OF CERTIORARI

TO THE UNITEDSTATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE SUPPORTING RESPONDENT

BARBARA D. UNDERWOOD

Acting Solicitor General

Counsel of Record

JOHN D. GRAUBERT LAWRENCE G. WALLACE

Acting General Counsel Deputy Solicitor General

JOHN F. DALY EDWARD C, DUMONT

Assistant General Counsel Assistant to the Solicitor

LAWRENCE DEMILLE-WAGMAN General

Attorney Department of Justice

Federal Trade Commission Washington, D.C. 20530-0001

Washington, D.C. 20580 (202) 514-2217

QUESTION PRESENTED

Whether the limitation period under the Fair Credit

Reporting Act, 15 U.S.C. 1681 et seq., which allows pri-

vate damage actions “to enforce any liability created

under (the Act]” to be brought “within two years from

the date on which the liability arises,” begins to run at

the time of an alleged violation, even if the potential

plaintiff has no reason to know that she has been

injured.

(I)

TABLE OF CONTENTS

Page

Statement sscseasnes 1

Summary of argument . seremasnmpecaseemetn 6

Argument sesesusasessanens i)

I. The language of the Fair Credit Reporting Act

permits the use of a discovery rule in deter-

ming when the statutory limitation on private

enforcement actions begins to Un ..........ccccceceecereeeeeee 10

: A. Use ofa discovery rule is consistent with

the Act’s provision that the time for suit

runs from the time that “liability arises” ............ 10

B. Inclusion of an express anti-concealment

provision in Section 1681p does not imply

a congressional intention to prohibit use

of a discovery rule .. sicceatecmmmmnennaseanmesremneanesanse 15

Il. Use of a discovery rule best comports with the

history, structure, and purposes of the Fair

Sn IID AIUD, exnrsrscseseneesssnnsscssnesseasensscsmmnesessssssese 24

SOT cccnesecesesenssnnsnsnsnsessnesenssencssnsensssnsssscsecssessennsnsnssssesssee 30

TABLE OF AUTHORITIES

Cases:

Akutowicz v. United States, 859 F.2d 1122 (2d Cir.

EEE) cesscnensesenscnssssentnesssnsessscscecnsscnesssssscenssnscsosessncsscsscenscessesveseees 14

Associated Indem. Corp. v. State Indus. Accident

Comm'n, 12 P.2d 1075 (Cal. Ct. App. 1932), dis-

approved in part on other grounds, 172 P.2d 884

(Cal. 1946) - 12

Basic Inc. v. Levinson, 485 U.S. 224 (1988) .....ccccccccseseseee 2s

Bay Area Laundry & Dry Cleaning Pension Trust

Fund vy. Ferbar Corp., 522 U.S. 192 (1997) ......ccc000 11,14

Burnett v. New York Cent. R.R., 380 U.S. 424 (1965) .... 25

Cada v. Baxter Healthcare Corp., 920 F.2d 446 (7th

Cir. 1990), cert. denied, 501 U.S. 1261 (1991) ........ 18, 19, 20

(IIT)

IV

Cases—Continued: Page

Connors v. Hallmark & Son Coal Co., 935 F.2d 336

(D.C. Cir. 1991) 18, 20, 25, 26

Crown Coat Front Co. v. United States, 386 US.

503 (1967) 9, 24

Englerius v. Veterans Admin., 837 F.2d 895

(9th Cir. 1988) 14

Herget v. Central Nat'l Bank & Trust Co., 324 U.S. 4

(1945) 13

Herman & MacLean v. Huddleston, 459 U.S. 375

(1983) 21

Holmberg v. Armbrecht, 327 U.S. 392 (1946) .... 5, 14, 20, 26

Klehr v. A.O. Smith Corp., 521 U.S. 179 (1997) ......cce0e0 14, 18,

20, 24

Lampf, Pleva, Lipkind, Prupis & Petigrow v.

Gilbertson, 501 U.S. 350 (1991) - 13

Reading Co. v. Koons, 271 U.S. 58 (1926) .......... 7-8, 9, 24, 25

Rotella v. Wood, 528 U.S. 549 (2000) 18, 28, 29

Tijerina v. Walters, 821 F.2d 789 (D.C. Cir. 1987) .......... 14,

22, 26

United States v. Beggerly, 524 U.S. 38 (1998) ........ 13, 20, 27

United States v. Brockamp, 519 U.S. 347 (1997)... 13, 15, 19

United States v. Kubrick, 444 US. 111 (1979) ............. 11, 12,

14, 23, 24, 25, 30

United States v. Lindsay, 346 U.S. 568 (1954) ..........00000 ll

Urie v. Thompson, 337 U.S. 163 (1949) 12, 24, 26

Wolin v. Smith Barney Inc., 83 F.3d 847 (7th Cir.

1996) 7 16, 17, 18, 19, 20, 22

Zenith Radio Corp. v. Hazeltine Research, Inc.,

401 U.S. 321 (1971) 11

Statutes:

Fair Credit Reporting Act, 15 U.S.C. 1681 et seq. ............+. 3

15 U.S.C. 1681b 3, 4,6

15 U.S.C. 1681b (1994 & Supp. V 1999) 27

15 U.S.C. 1681e(a) 3, 5, 6, 27, 29

15 U.S.C, 168le(a)-(b) 9

Statutes—Continued: Page

15 U.S.C. 1681e(b) 3, 5, 27, 29

15 U.S.C. 1681g-1681i (1994 & Supp. V 1999) 0... 27

15 U.S.C. 1681i(a) 3,5

15 U.S.C. 1681n (1994 & Supp. V 1999) , 1

15 U.S.C. 1681n-16810 (1994 & Supp. V 1999) ............00 9, 27

15 U.S.C. 16810 (1994 & Supp. V 1999) 1

15 U.S.C. 1681p (§ 618) ..... passim

15 U.S.C. 1681s (1994 & Supp. V 1999) 28

15 U.S.C. 1681s(a)-(b) (1994 & Supp. V 1999) ..........c000 1

Federal Employers’ Liability Act, 45 U.S.C. 56... 12

Federal Torts Claims Act, 28 U.S.C. 2401(b) ... 11

Privacy Act of 1974, 5 U.S.C. 552a (1994 & Supp. V

1999) 6

5 U.S.C. 552a(g)(5) 7, 13, 15

26 U.S.C. 6511 15

29 U.S.C. 1113(a) 17

Miscellaneous:

2 C. Corman, Limitation of Actions (1991 & Supp.

1993) 16, 19-20

Note, Developments in the Law: Statutes of Limita-

tions, 63 Harv. L. Rev. 1177 (1950) ... 11

4C. Wright & A. Miller, Federal Practice and Proce-

dure (2d ed.):

1987 & Supp. 1996 16

16, 18

Supp. 2001

)

Jn the Supreme Court of the Anited States

No. 00-1045

TRW INC., PETITIONER

v.

ADELAIDE ANDREWS

ON WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

BRIEF FOR THE UNITED STATES

AND THE FEDERAL TRADE COMMISSION

AS AMICI CURIAE SUPPORTING RESPONDENT

INTEREST OF THE UNITED STATES AND THE

FEDERAL TRADE COMMISSION

The Fair Credit Reporting Act confers public en-

forcement authority on the Federal Trade Commission

with respect to most consumer reporting agencies and

others subject to the Act, and on other federal agencies

or officers with respect to certain financial institutions

and other specified parties. 15 U.S.C. 1681s(a)-(b) (1994

& Supp. V 1999). Private suits under 15 U.S.C. 1681n

and 1681lo (1994 & Supp. V 1999) supplement public

enforcement efforts.

STATEMENT

1. In June 1993, respondent Adelaide Andrews saw

a doctor in Santa Monica, California. In connection with

the appointment she provided the doctor’s office with

personal information, including her date of birth and

(1)

2

social security number. A receptionist named Andrea

Andrews processed that information. Pet. App. 16a.

In 1994 Andrea Andrews moved to Las Vegas.

There she rented an apartment under the name “Ade-

laide (Andrea) Andrews,” using respondent’s social se-

curity number and driver’s license number, and

obtained telephone and electric service in respondent’s

name. Pet. App. 16a. She arranged for television ser-

vice from Prime Cable of Las Vegas, using respondent’s

social security number. /d. at 3a, 17a. She also applied

for credit at Dillard’s and Express Department Stores

and through companies called FCNB Preferred Charge

and Commercial Credit, in each case using respondent’s

social security number, and in one case using respon-

dent’s date of birth as well. Jd. at 2a-3a, 16a-17a.

The companies all requested credit reports on their

prospective customer—in four cases from petitioner

TRW, and in one case from former defendant Trans

Union Corporation, Inc. Pet. App. 16a-17a. Petitioner

or Trans Union matched the information supplied to

them to the social security number, last name, and first

initial associated with credit files they maintained

concerning respondent, and provided the requesters

with information from those files. Jd. at 17a. They also

noted the requests and disclosures in the files they

maintained on respondent. Jd. at 3a, 19a. Dillard’s

Department Store then extended credit to Andrea

Andrews, and Prime Cable provided her with service.

Id. at 3a, 17a-18a. Andrea eventually failed to pay what

she owed to Dillard’s, to Prime Cable, and to her

landlord. Jd. at 17a; Pet. Br. 6.

In May 1995 respondent inquired about refinancing

the mortgage on her home, and the bank requested a

credit report on her. The report combined information

from petitioner’s and Trans Union’s files, and showed a

3

delinquent Dillard’s account in Las Vegas. Pet. App.

18a. Respondent then contacted petitioner and Trans

Union to obtain copies of the files they maintained on

her. When she saw that petitioner’s file showed the

Dillard’s account and requests for credit reports by

other businesses in Las Vegas, she contacted peti-

tioner, Dillard’s, and the Las Vegas police. Pet. Br. 7.

At respondent’s request, petitioner deleted from her

file all entries that had arisen from Andrea Andrews’

activities. Pet. App. 3a.

2. In October 1996 respondent sued petitioner and

Trans Union under the Fair Credit Reporting Act

(FCRA), 15 U.S.C. 1681 et seg. See Pet. App. 3a. She

alleged that petitioner had violated 15 U.S.C. 1681b and

168le(a) by providing reports on her “without rea-

sonable grounds for believing that the * * * reports

were to be used in connection with a credit transaction

involving [respondent].” J.A. 15 (Compl. 4 23). She

also alleged that petitioner had violated Section

1681e(b) by “fail[ing] to maintain and follow ‘reasonable

procedures to assure maximum possible accuracy of the

information concerning’ [respondent]” in their files.

J.A. 16 (Compl. 4 28). She sought actual and punitive

damages and an injunction requiring petitioner to com-

ply with the FCRA “by ‘requiring a sufficient number

of corresponding points of reference’ before dissemi-

nating an individual’s credit history or attributing infor-

mation to an individual’s credit file.” Pet. App. 4a

(quoting Compl. 4 42(a), reprinted at J.A. 19).

' The complaint also alleged that Trans Union had violated

15 U.S.C. 1681i(a) by failing to respond appropriately when respon-

dent notified it that the information in its files was inaccurate (J.A.

17), and that the defendants’ violations of the FCRA justified

equitable relief under California law (J.A. 18-19).

4

The district court granted partial summary judgment

in favor of petitioner, based in part on the statute of

limitations that applies to private actions under the

FCRA. Pet. App. 22a-25a. The court concluded (id. at

25a) that the limitation period, which is generally “two

years from the date on which the liability arises,” 15

U.S.C. 1681p, began to run on the date that petitioner

made each challenged disclosure of information about —

respondent. Respondent thus could not pursue any

claim based on petitioner’s disclosures of information to

FCNB and Prime Cable, because each of those dis-

closures was made more than two years before respon-

dent filed her complaint. Pet. App. 23a, 25a.

The court rejected respondent’s contention that the

Act should be construed to include a “discovery rule,”

under which the limitation period would not begin to

run until respondent learned or should have learned

that a disclosure had been made, and under which all of

respondent’s claims would have been timely. Pet. App.

23a-25a. The court pointed out that the FCRA limita-

tion provision includes a “specific exception” (id. at 23a)

for situations in which a defendant has “materially and

willfully misrepresented” information that the Act

requires it to disclose to a potential plaintiff and that is

material to establishing the defendant’s liability. See

15 U.S.C. 1681p. The court held that “the discovery

rule does not apply to the FCRA except in the one

* * * circumstance” set out in the Act. Pet. App. 23a,

25a.

The district court made various other pre-trial rul-

ings, including that disclosure of information in connec-

tion with a credit application by someone impersonating

a consumer does not violate 15 U.S.C. 1681b (Pet. App.

25a-29a), and that petitioner’s general procedures for

deciding what files to disclose in response to requests

5

for credit reports, and its disclosure of respondent’s

files in this case, were “reasonable as a matter of law”

(id. at 34a n.15), and did not violate 15 U.S.C. 1681e(a).

See Pet. App. 29a-34a.° Trans Union then settled with

respondent. See J.A. 5. Respondent’s remaining claims

against petitioner were tried to a jury, which found for

petitioner. Pet. App. 5a.

3. The court of appeals reversed in part and

remanded for trial on respondent’s remaining claims.

Pet. App. la-9a. The court rejected the district court’s

conclusion that the FCRA’s limitation period began to

run from the date of each disclosure of information

about respondent, without regard to when respondent

knew or should have known of the désclosure. /d. at 5a-

6a. The court held that construc‘ #n of the limitation

provision was governed instead by “[t]he general

federal rule * * * that a federal statute of limitations

begins to run when a party knows or has reason to

know that she was injured,” because “unless Congress

has expressly legislated otherwise, the equitable doc-

trine of discovery ‘is read into every federal statute of

limitations.” Jbid. (quoting Holmberg v. Armbrecht,

327 U.S. 392, 397 (1946)). The court noted (id. at 6a)

2 The district court also held that there were issues of fact with

respect to respondent’s claims against Trans Union under 15

U.S.C. 1681e(b) and 1681i(a) (Pet. App. 35a-45a, 45a-48a); that peti-

tioner was entitled to judgment that the report it furnished to the

bank when petitioner was considering refinancing her home had

not caused her any economic damage (id. at 48a-5la); that peti-

tioner was entitled to summary judgment on respondent’s claim

for punitive damages, but Trans Union was not (id. at 53a-57a); and

that respondent was potentially entitled to disgorgement of profits

under state law (id. at 52a-53a), and to injunctive relief against

Trans Union but not against petitioner, which was no longer

engaged in the credit reporting business (id. at 57a-64a).

6

that it had “followed this approach in interpreting an

analogous statute,” the Privacy Act of 1974, 5 U.S.C.

552a (1994 & Supp. V 1999). Applying the discovery

rule, none of respondent’s claims was time-barred. Pet.

App. 6a.

The court also held that petitioner’s disclosures of

respondent’s information in response to requests gener-

ated by Andrea Andrews’ activities violated Section

1681b, and that the jury should have been allowed to

consider whether petitioner’s procedures for deciding

to make such disclosures were nonetheless reasonable

enough to insulate petitioner from liability under Sec-

tion 168le(a). See Pet. App. 6a-8a. The court affirmed

the judgment entered for petitioner on those claims

that had been tried, and remanded the case for trial of

respondent’s remaining claims. /d. at 8a-9a.

SUMMARY OF ARGUMENT

A credit reporting agency may become subject to

private civil liability under the FCRA by failing to

follow reasonable procedures to assure that the infor-

mation it maintains is accurate, and that information is

disclosed to third parties only as permitted by the Act.

When a report containing inaccurate information is re-

leased, however, or information concerning a consumer

is inappropriately disclosed, considerable time often

elapses before the affected consumer has any reason to

learn of the violation. The issue is whether, in light of

this circumstance, the Act’s two-year statute of limita-

tions should begin to run only once the potential

plaintiff knows or should know that she has been

harmed.

The first question to be addressed is whether the

language of the Act will bear that construction. Under

15 U.S.C. 1681p, a private action must be brought

7

“within two years from the date on which the liability

arises.” This Court has endorsed the use of a “dis-

covery rule,” under otherwise appropriate circum-

stances, when a limitation period runs from the time a

“claim” or “cause of action” “accrues.” Courts of ap-

peals have also applied the rule under the very similar

limitation provision in the Privacy Act, which requires

that an action “to enforce any liability created under”

that Act be brought “within two years from the date on

which the cause of action arises.” 5 U.S.C. 552a(g)(5).

The “liability arises” language of Section 1681p does not

differ from the language in those other provisions in

any way that precludes the use of a discovery rule.

That conclusion does not change because Section

1681p—like the Privacy Act—includes an express anti-

concealment provision. That provision is not, as peti-

tioner contends, simply a “limited discovery rule.” It

incorporates a version of the judicial doctrine of “equit-

able estoppel,” which is distinct both from the discovery

rule and from the related doctrine of equitable tolling.

Because each principle has its own domain, and because

the circumstances under which FCRA claims typically

arise strongly support the use of a discovery rule, Con-

gress’s inclusion of an express version of one principle

does not compei the conclusion that it intended to

exclude application of the others. Nor would the use of

a discovery rule render the express provision “superflu-

ous.”

Because the text of the Act neither requires nor

precludes use of a discovery rule, the question becomes

how the limitation provision is best interpreted, “in the

light of the general purposes of the statute and of its

other provisions, and with due regard to those practical

ends which are to be served by any limitation of the

time within which an action must be brought.” Reading

8

Co. v. Koons, 271 U.S. 58, 62 (1926). A primary purpose

of limitations—to encourage the prompt presentation of

claims—is not implicated until events may fairly be

expected to put a potential plaintiff on notice of the

need for diligence in discovering and presenting the

claim. Accordingly, this Court has applied the discov-

ery rule to cases involving medical malpractice and

latent occupational injuries—cases in which potential

plaintiffs often will not learn of their injuries until some

time after they have been inflicted. The FCRA, like

the Privacy Act, fits that model.

That conclusion is consistent with Congress’s selec-

tion of a relatively short limitation period, and with the

history and structure of the Act. Although Congress

expected potential plaintiffs to be diligent in pursuing

suspected claims, there is no reason to think that it

intended to impose a limitation period that would begin

to run against claims that even a diligent consumer had

no reason to suspect. Moreover, because enforcement

of the Act’s provisions relies to a significant extent on

private litigation, use of a discovery rule serves the

public interest, as well as the interests of private liti-

gants. Such a rule strikes the proper balance between

potential defendants’ legitimate interest in repose, and

the private and public interests in ensuring that

potential plaintiffs have a fair opportunity to discover

and present claims under the Act.

ARGUMENT.

The Fair Credit Reporting Act requires, among

other things, that credit reporting agencies maintain

reasonable procedures both to assure “maximum possi-

ble accuracy” of the information in their consumer

credit files and to avoid releasing that information to

any third party except as specifically permitted by the

Act. 15 U.S.C. 168le(a)-(b). Those obligations are

enforced in large part through private damage suits

under the Act. 15 U.S.C. 1681n-1681o0 (1994 & Supp. V

1999). The Act operates in a context, however, in which

an individual will frequently have no immediate reason

to know if a credit report containing inaccurate infor-

mation has been released, or if a report is released to an

unauthorized person or for an unauthorized purpose.

The question presented here is whether, in that unusual

statutory context, the Act’s two-year statute of limita-

tions on private enforcement actions should begin to

run only once the potential plaintiff becomes (or should

become) aware that she has suffered some injury.

In answering that question, the first inquiry is

whether the language of the Act will permit such a

construction. If it will, then the question becomes

whether that is the best interpretation of the Act, “in

the light of the general purposes of the statute and of

its other provisions, and with due regard to those

practical ends which are to be served by any limitation

of the time within which an action must be brought.”

Crown Coat Front Co. v. United States, 386 U.S. 503,

517 (1967) (quoting Reading Co. v. Koons, 271 U.S. 58,

62 (1926)).

10

I. THE LANGUAGE OF THE FAIR CREDIT REPORT-

ING ACT PERMITS THE USE OF A DISCOVERY

RULE IN DETERMINING WHEN THE STATUTORY

LIMITATION ON PRIVATE ENFORCEMENT AC-

TIONS BEGINS TO RUN

A. Use Of A Discovery Rule Is Consistent With The

Act’s Provision That The Time For Suit Runs From

The Time That “Liability Arises”

Section 618 of the Act, 15 U.S.C. 1681p, provides

that:

An action to enforce any liability created under this

[Act] may be brought * * * within two years from

the date on which the liability arises, except that

where a defendant has materially and willfully

misrepresented any information required under this

subchapter to be disclosed to an individual and the

information so misrepresented is material to the

establishment of the defendant’s liability to that

individual under this subchapter, the action may be

brought at any time within two years after dis-

covery by the individual of the misrepresentation.

That language does not foreclose the use of a discovery

rule, under which a “liability” under the Act would first

“arise[],” so as to start the running of the limitation

period, when a potential plaintiff first learns (or with

due diligence should learn) that she has been injured by

the conduct of a potential defendant.

This Court has not previously interpreted a statute

of limitations that uses the particular “liability arises”

language that is found in Section 1681p. The Court has,

however, held that where it is otherwise appropriate, a

discovery rule is compatible with similar language

under which a limitation period begins to run when a

11

” 6

“claim” or a “cause of action” “accrues.” In United

States v. Kubrick, 444 U.S. 111, 113, 119-122 (1979), the

Court rejected the argument that a “claim” for medical

malpractice under the Federal Tort Claims Act

“accrue(d],” under the applicable statute of limitations,

28 U.S.C. 2401(b), only when the plaintiff learned that

he might be entitled to legal relief for his injury. The

Court concluded that such a generous rule would

unduly undermine the purposes of the Act’s limitation

provision. 444 U.S. at 123. The Court endorsed, how-

ever, the rule that a malpractice “claim ‘accrues’ within

the meaning of the [FTCA] when the plaintiff knows

both the existence and the cause of his injury.” /d. at

113; see id. at 122. Thus, the statute of limitations on

Kubrick’s claim began to run when he learned that his

loss of hearing was probably caused by earlier treat-

ment with an antibiotic—neither earlier, at the time of

the treatment itself, nor later, when Kubrick was first

told that the treatment had been improper. /d. at 113-

114, 118-123. That rule, the Court concluded, properly

balanced the interests in fairness and repose in the

malpractice context.”

In first interpreting the FTCA’s limitation provision

to include a discovery rule for malpractice cases, lower

3 By contrast, the “standard rule” in most circumstances is that

“the limitations period commences when the plaintiff has ‘a com-

plete and present cause of action,” Bay Area Laundry & Dry

Cleaning Pension Trust Fund v. Ferbar Corp., 522 U.S. 192, 201

(1997), which normally occurs once all the elements giving rise to

the cause of action have come into existence, see Note, Develop-

ments in the Law: Statutes of Limitations, 63 Harv. L. Rev. 1177,

1200-1201 (1950). See also Zenith Radio Corp. v. Hazeltine Re-

search, Inc., 401 U.S. 321, 338-342 (1971); United States v. Lindsay,

346 U.S. 568, 569 (1954) (“In common parlance a right accrues

when it comes into existence{.]”).

12

federal courts relied on this Court’s decision in Urie v.

Thompson, 337 U.S. 163, 168-171 (1949). See Kubrick,

444 U.S. at 120 n.7. Urie involved an action under the

Federal Employers’ Liability Act by a plaintiff who

sought compensation for the disabling effects of long-

term exposure to silica dust at work. 337 U.S. at 165-

166. The Court held that the employee’s “cause of

action” did not “accrue[]” for purposes of the FELA’s

limitation provision, 45 U.S.C. 56, until he became dis-

abled and was diagnosed with silicosis. 337 U.S. at 168-

171.

The Court rejected the argument that because Urie

“must unwittingly have contracted silicosis long before”

it disabled him, his cause of action must have “accrued”

at that time. 337 U.S. at 169. The Court concluded that

in framing a “humane legislative plan” such as the

FELA, Congress would not have “intended such conse-

quences to attach to blameless ignorance.” Jd. at 170.

Moreover, a holding that the limitation period began to

run before the employee had any reason to know he had

been injured would be inconsistent with “the traditional

purposes of statutes of limitations, which convention-

ally require the assertion of claims within a specified

period of time after notice of the invasion of legal

rights.” /bid. (emphasis added). Instead, the Court

agreed with the statutory construction adopted by a

state court in an analogous workers’ compensation case,

under which “the afflicted employee can be held to be

‘injured’ only when the accumulated effects of the dele-

terious substance manifest themselves.” /bid. (quoting

Associated Indemnity Corp. v. State Indus. Accident

Comm’n, 12 P.2d 1075, 1076 (Cal. Ct. App. 1932), dis-

approved in part on other grounds, Colonial Ins. Co. v.

Industrial Accident Comm’n, 172 P.2d 884 (Cal. 1946)).

13

Although the “liability arises” language used in

Section 1681p is not the same as that construed in Urie

and Kubrick, it does not differ in any way that pre-

cludes the use of a discovery rule.‘ To the contrary,

because the legal rights that may be vindicated through

litigation are inversely related to legal duties subject to

judicial enforcement, one would normally expect a

potential defendant’s legal “liability” to “arise,” at least

for purposes of a statute of limitations, at the same time

that the potential plaintiff’s “claim” or “cause of action”

“accrues.” That expectation is reenforced in this case

by the first phrase of Section 1681p, which refers to the

plaintiff’s potential action not as a “claim” or a “cause of

action,” but as “[aJn action to enforce any liability

created under” the Act. Similarly, the Section’s ex-

press anti-concealment provision applies, by its terms,

when misrepresented information is “material to the

establishment of the defendant’s liability” to a potential

plaintiff. Thus, in drafting Section 1681p, Congress

simply spoke consistently in terms of legal “liability”

rather than in terms of a legal “claim” or “cause of

action.”

It is instructive to compare the language of Section

1681p with the very similar limitation provision in the

Privacy Act of 1974, 5 U.S.C. 552a(g)(5). That provision

4 There are some statutes whose language in context leaves

little doubt about when a limitation period begins to run, or that

the only applicable discovery rule is one expressed in the text. See

United States v. Beggerly, 524 U.S. 38, 48 (1998); United States v.

Brockamp, 519 U.S. 347, 350-352 (1997) (“unusually emphatic” and

detailed language concerning date tax return was filed or tax was

paid excluded even equitable tolling); Lampf, Pleva, Lipkind,

Prupis & Petigrow v. Gilbertson, 501 U.S. 350, 360 & n.6, 362 n.8,

363 (1991); Herget v. Central Nat'l Bank & Trust Co., 324 U.S. 4

(1945). This is not such a case.

14

also refers to actions “to enforce any liability created

under” the Act, and includes a concealment provision

that refers to establishment of the defendant’s “liabil-

ity.” While the limitation period under the Privacy Act

runs from the date on which the cause of action arises,

rather than the date on which the liability arises, as in

the FCRA, there is no reason to suspect that Congress

attached significance to that difference in phraseology.

To the contrary, the use of the different phrases in

otherwise directly comparable provisions strongly sug-

gests that Congress viewed the terms as interchange-

able. Cf. Bay Area Laundry & Dry Cleaning Pension

Trust Fund v. Ferbar Corp., 522 U.S. 192, 201 (1997)

(construing statute that speaks in terms of when a

“cause of action” “arose”); Holmberg v. Armbrecht, 327

U.S. 392, 397 (1946) (not reaching question “[wJhen the

liability, if any, accrued in this case”). As the court

below in this case noted (Pet. App. 6a), courts of

appeals have uniformly construed the Privacy Act

limitation provision to incorporate a discovery rule.

See Englerius v. Veterans Admin., 837 F.2d 895, 898

(9th Cir. 1988) (citing cases); Tijerina v. Walters, 821

F.2d 789, 797-798 (D.C. Cir. 1987); see also Akutowicz v.

United States, 859 F.2d 1122, 1126 (2d Cir. 1988). The

United States has long acquisced in that holding.

Thus, under this Court’s cases, the language of Sec-

tion 1681p neither compels nor precludes a determina-

tion that liability does not “arise[],” or the limitation

period begin to run, “until the plaintiff has discovered

both [her] injury and its cause.” Kubrick, 444 U.S. at

120; cf. Klehr v. A.O. Smith Corp., 521 U.S. 179, 192-193

(1997) (noting that language of a borrowed limitation

provision “does not necessarily provide all the an-

swers,” and deferring consideration of “various [possi-

ble] discovery accrual rules”). Although every statute

15

must be considered on its own terms, appellate deci-

sions construing the Privacy Act confirm that such an

interpretation of the language is permissible, and sug-

gest that it would be appropriate here as well.

B. Inclusion Of An Express Anti-Concealment Provision

In Section 1681p Does Not Imply A Congressional

Intention To Prohibit Use Of A Discovery Rule

The foregoing conclusion does not change because

Section 168lp—like Section 552a(g)(5)—includes an

express anti-concealment provision. That provision is

not, as petitioner contends (Br. 20-21), simply a “limited

discovery rule.” It incorporates, instead, a version of

the judicial doctrine of equitable estoppel. That doc-

trine is distinct both from the discovery rule and from

the related doctrine of equitable tolling. Congress’s

decision to include an express version of one principle in

the text of the Act does not compel the conclusion that

- it intended to exclude application of the others—at

least here, where the particular circumstances under

which FCRA actions typically arise otherwise support

the use of a discovery rule. See pp. 24-30, infra. Nor

would the use of a discovery rule render the anti-

concealment provision “superfluous” (Pet. Br. 23).

1. In United States v. Brockamp, 519 U.S. 347, 348-

349 (1997), two taxpayers claimed that they suffered

from disabilities (senility or alcoholism) that had pre-

vented them from complying with the statutory dead-

line for filing tax refund claims under 26 U.S.C. 6511,

and that their time for filing suit should be extended

under principles of “equitable tolling.” The Court

concluded that such tolling would be inconsistent with

the structure and purpose of the relevant tax laws. See

519 U.S. at 350-354. The Court’s opinion does not itself

define “equitable tolling.” The Court instead relied, for

16_

that purpose, on citations to two authorities: 4 C.

Wright & A. Miller, Federal Practice and Procedure

§ 1056 (2d ed. 1987 & Supp. 1996) (Wright & Miller), and

Judge Posner’s opinion for the Seventh Circuit in Wolin

v. Smith Barney Inc., 83 F.3d 847, 852 (1996).

Both those authorities draw a distinction, important

here, between the doctrines of “equitable tolling” and

“equitable estoppel.” See Wright & Miller § 1056, at 48-

58 nn.25.1-25.3 (Supp. 2001); Wolin, 83 F.3d at 852-853;

see also 2 C. Corman, Limitation of Actions, chs. 8-10

(discussing tolling), 11 (discussing discovery rule) (1991

& Supp. 1993). Wolin explains that “[e]quitable tolling

is invoked when the prospective plaintiff simply does

not have and cannot with due diligence obtain infor-

mation essential to bringing a suit,” whereas “[e}quit-

able estoppel * * * is invoked when the prospective

defendant * * * make[s}] * * * a special effort to

cover up [a] fraud or does something else to prevent the

prospective plaintiff from suing in time, such as

promising not to plead the statute of limitations as a

defense,” 83 F.3d at 852, or actively “concealling] his

identity or other facts that the plaintiff needed in order

to be able to file suit” (id. at 850). The two doctrines

differ critically in scope in the following respect:

when the plea is equitable tolling rather than equi-

table estoppel, the defendant is innocent of the delay

(though not of course of the original wrong), so the

plaintiff must use due diligence to be allowed to toll

the statute of limitations; if he does not, he has no

equitable claim to avoid the time bar. In the case of

equitable estoppel, which requires active miscon-

duct by the defendant, the plaintiff is not required

to be diligent.

17

Id. at 852. The particular form of “active misconduct”

in which a defendant conceals its identity or other facts

critical to the plaintiffs ability to bring suit is a “part of

[the equitable estoppel doctrine] that goes by the name

‘fraudulent concealment.’” /d. at 850; see also id. at 855

(fraudulent concealment “is not a synonym for equitable

estoppel, though it overlaps with it”).

From this discussion, it is clear that the anti-con-

cealment provision that Congress included in Section

1681p addresses issues of equitable estoppel, and in

particular of fraudulent concealment. Cf. Wolin, 83

F.3d at 850 (discussing analogous provision in 29 U.S.C.

1113(a)); 83 F.3d at 855 (noting possible effect of inclu-

sion of express statutory provision concerning conceal-

ment on continued applicability of other aspects of

equitable estoppel doctrine). The provision does not

apply unless the defendant has “willfully misrepre-

sented” to the plaintiff information that it had a duty to

disclose under the FCRA, and that is “material to the

establishment of the defendant’s liability”’—and, ac-

cordingly, of the plaintiff’s right to sue—under the Act.

15 U-S.C. 1681p. When it does apply, the limitation

period runs from “discovery by the [plaintiff] of the

misrepresentation”—without regard to the plaintiff's

diligence in uncovering the defendant’s misconduct. In_ -

enacting those provisions, Congress may well inave

“modifie[d] and supplant[ed] the judge-made doctrine”

of equitable estoppel. Cf. Wolin, 83 F.3d at 850 (dis-

cussing analogous provision). There is, however, no

reason to conclude in this case that in addressing

fraudulent concealment, Congress meant to preclude

use of the discovery rule in construing or applying

Section 1681p.

That rule is “another judge-made doctrine of statute

of limitations law generally applicable in federal cases

18

(unless of course modified by statute * * *),” and it

“must be distinguished from” both equitable estoppel

and equitable tolling. Wolin, 83 F.3d at 852; see also

Connors v. Hallmark & Son Coal Co., 935 F.2d 336,

340-341 (D.C. Cir. 1991) (R.B. Ginsburg, J.) (deciding

case on discovery-rule grounds and therefore not reach-

ing issues of fraudlent concealment); Wright & Miller

§ 1056, at 46-48 n.1.2 (Supp. 2001). Wolin relies, in turn,

on the discussion of the different doctrines in Cada v.

Baxter Healthcare Corp., 920 F.2d 446, 450-453 (7th

Cir. 1990) (Posner, J.), cert. denied, 501 U.S. 1261

(1991). This Court too has noted the distinction. See

Klehr, 521 U.S. at 192 (citing Cada for its “descri[ption

of the] differences among various discovery rules and

doctrines of ‘equitable tolling’ and ‘equitable estop-

pel’”); ef. Rotella v. Wood, 528 U.S. 549, 554 n.2 (2000)

(reserving applicability of discovery rule in private

suits under Racketeer Influenced and Corrupt Organi-

zations Act); id. at 561 (citing Klehr as noting “distinc-

tions between different equitable devices” that might

also apply).

Wolin explains that under the discovery rule, “the

statute of limitations does not even begin to run until

the prospective plaintiff learns or should learn that he

has been injured.” 83 F.3d at 852. Equitable tolling

and estoppel, by contrast, normally operate “[a]fter the

statute of limitations starts running,” and define certain

circumstances under which running of the period may

be “arrested.” Jbid. Cada elaborates that where some-

thing about the original wrongful conduct (such as a

fraud) “prevent(s] the plaintiff from discovering that he

is a victim” of the wrong (i.e., that he has been injured),

the effect of that conduct is “within the domain of the

discovery rule”; if that rule applies, the circumstances

will “postpone the date of accrual” of a claim and the

19

beginning of the limitation period. 920 F.2d at 451. In

the case of equitable tolling or estoppel, by contrast,

“the plaintiff is assumed to know that he has been

injured, so that the statute of limitations has begun to

run; but he cannot obtain information necessary to

decide whether the injury is due to wrongdoing and, if

so, wrongdoing by the defendant.” /bid.

Thus, these doctrines differ from the discovery rule

in the following respects. First, because the discovery

rule governs the time when the limitation period begins

to run, a plaintiff is, by definition, entitled to the benefit

of the entire limitation period after the time she learns

(or should learn) that the defendant’s conduct has

injured her. Under equitable estoppel as a judicial doc-

trine, the plaintiff would be entitled to the full statutory

limitation period, plus any time during which the

defendant succeeded in actively concealing some fact

material to the plaintiff’s right or decision to sue.

Cada, 920 F.2d at 452. Under equitable tolling, how-

ever, where the plaintiff lacks critical information but

the defendant has not actively concealed that infor-

mation, the plaintiff is, under Cada, entitled only to

whatever extension of the statutory period (if any) is

reasonably necessary to allow her time to sue. /d. at

453. The plaintiff must, in other words, “bring suit

within a reasonable time after [s]he has obtained, or by

due diligence could have obtained, the necessary infor-

mation.” /bid.; see also Wolin, 83 I°.3d at 852-853.

Second, equitable tolling is often claimed on the basis

of some sort of special disability—such as minority,

illness, or absence of the plaintiff or defendant from the

jurisdiction—that prevented the potential plaintiff

from suing in the time ordinarily allowed. See, e.g.,

Brockamp, 519 U.S. at 348 (senility and alcoholism

claimed as extenuating disabilities); 2 Corman, supra,

20

chs. 9-10. The analysis therefore focuses on the actual

circumstances of a particular plaintiff. Equitable estop-

pel focuses on whether, and for how long, special con-

duct by a particular defendant wrongfully prevented

the plaintiff from suing that defendant to seek redress

for a known injury. See Wolin, 83 F.3d at 850, 852. In

contrast to each of those doctrines, the discovery rule

asks when a potential plaintiff knew, or when a rea-

sonable person in her position should have known, that

she had been injured by the defendant’s conduct. See 2

Corman, supra, § 11.4 & n.2; see also id. §§ 11.5.6 &

n.51, 11.5.8. It is therefore most appropriately em-

ployed where the very fact of injury may not ordinarily

be apparent to the person injured. See Connors, 935

F.2d at 342-343.

The discovery rule and the doctrines of tolling and

estoppel are, of course, closely related, and Cada points

out that they are “frequently confused.” 920 F.2d at

451; see also, e.g., Wolin, 83 F.3d at 852; cf. Klehr, 521

U.S. at 192 (reserving judgment on related issues and

noting that “(t]he legal questions involved may be

subtle and difficult.”). Our point here does not depend

on any comprehensive exploration of their subtleties, or

reconciliation of their potentially overlapping domains.

“Cf., e.g., Beggerly, 524 U.S. at 48 (indicating that by

including its own express discovery rule, a statutory

limitation provision had “already effectively allowed for

equicable tolling”); Holmberg, 327 U.S. at 397 (dis-

cussing equitable doctrines and giving as an example

the discovery rule traditionally applied in cases of

fraud). What we have said in broad outline concerning

the relevant background legal principles suffices to

show that the express anti-concealment provision in

Section 1681p covers only circumstances that would

otherwise be addressed primarily by the “fraudulent

21

concealment” strain of the equitable estoppel doctrine.

Because that doctrine is distinct from the discovery

rule, and because use of the discovery rule is otherwise

appropriate in the special circumstances the FCRA (see

pp. 24-30, infra), the fact that Congress chose to

address directly circumstances that would otherwise

raise issues of estoppel does not justify an inference

that it thereby intended to exclude operation of the

discovery rule in determining when the basic limitation

period begins to run. Cf. Herman & MacLean v.

Huddleston, 459 U.S. 375, 387 n.23 (1983) (expressio

unius maxim “cannot properly be applied to a situation

where the remedies redress different misconduct and

where the remedial purposes of the Acts would be

undermined by a presumption of exclusivity”).

2. Nor would use of the discovery rule render the

anti-concealment provision “superfluous.” See Pet. Br.

23-25. As the foregoing discussion explains, the two

apply in different circumstances, and address different

potential problems. The discovery rule applies when a

potential plaintiff does not even know that she has been

injured, and prevents the limitation period from begin-

ning to run until she is (or should be) on notice of the

injury—at which point she may fairly be held to a

requirement of due diligence. The concealment provi-

sion applies, whether or not the plaintiff is aware of the

injury, if the defendant attempts through wrongful

misrepresentations to prevent or dissuade the plaintiff

from filing suit, and seeks to ensure that the defendant

will not profit from that conduct.

These differences lead to the use of different criteria

for when the limitation period begins to run: When the

potential plaintiff learned or should have learned of her

injury, or when she actually learned of the potential

defendant’s wrongful misrepresentations. As the Dis-

22

trict of Columbia Circuit explained in a Privacy Act

case, rejecting essentially the same argument peti-

tioner makes here, the difference between the date

when the plaintiff should, with due diligence, have

learned of her injury and the date that she actually

learned, with or without diligence, of a defendant’s

related misrepresentation is enough to give each rule

independent scope. See Tijerina, 821 F.2d at 798; ef.

Wolin, 83 F.3d at 852 (distinguishing tolling from

estoppel based on diligence requirement).

A simple example clarifies the point. If a credit

reporting agency included false derogatory information

in a consumer’s file and released it to a requester, in

violation of the Act, but the consumer had no reason to

learn of the wrong (for instance, because the requester

granted her credit in any event—although perhaps on

less favorable terms than it otherwise would have

offered), under the discovery rule the limitation period

in Section 1681p wouid not begin to run. If another

requester, receiving the same information, later denied

the consumer credit, the consumer would presumably

be put on inquiry notice of the violation, and the dis-

covery rule would start the running of the normal

limitation period—whether or not the consumer took

any further action. If, however, the consumer then

asked the reporting agency whether it had provided a

report to the second requester, and the agency denied

doing so, then the basic period would become irrelevant

as to that defendant. The anti-concealment rule would

start a new period running whenever the consumer

later actually discovered that the defendant had lied to

her—even if the consumer had other means of learning

the truth at the time of the first denial, and even if she

did not diligently pursue the matter thereafter.

23

The discovery rule would not, therefore, “operate in

exactly the same manner” as the anti-concealment pro-

vision, even “[a]s a practical matter.” See Pet. Br. 24.

First, it is not true that a potential plaintiff who is able

to invoke the concealment provision is necessarily “also

blamelessly ignorant of her claims and therefore pro-

tected by a general discovery rule.” Jbid. Such a

plaintiff might well be on at least inquiry notice of her

claims, and thus outside the protection of the discovery

rule, at the time a misrepresentation is made. Or a

plaintiff who is on notice may never make the inquiry

that might trigger either a misrepresentation or an

honest response. Indeed, that would be the classic

situation for the operation of any statute of limitations

—when the plaintiff is on notice that she has (or may

have been) been injured, and has enough information to

pursue her right to legal redress, but does not do so

with due diligence. See, e.g., Kubrick, 444 U.S. at 122-

125. :

Second, it is not true that “the limitations period

under a general discovery rule would commence at the

same time as the period under the” concealment provi-

sion. See Pet. Br. 24. In cases where there is a

misrepresentation, the general period may or may not

have begun to run before that time, depending on

whether other circumstances have given the potential

plaintiff reason to know that she has been injured by

conduct within the purview of the Act. For the same

reason, the basic limitation period in such a case might

or might not, in theory, “run for the same two-year

period” as the period established by the concealment

provision. Whether it would or not is of little moment,

however, because if there is a misrepresentation, the

concealment provision wholly supplants the basic

limitation period with respect to the misrepresenting

24

defendant—whether or not the discovery rule is, or

otherwise would have been, used to determine when

that period began to run. The basic period operates in

cases—presumably the vast majority—in which there is

not a misrepresentation; and in those cases, a variety of

other attendant circumstances will determine when a

potential plaintiff first had enough information to

trigger a duty of diligence in deciding whether or not to

pursue a legal remedy under the FCRA.

Il. USE OF A DISCOVERY RULE BEST COMPORTS

WITH THE HISTORY, STRUCTURE, AND PUR-

POSES OF THE FAIR CREDIT REPORTING ACT

Because the text of Section 1681p neither requires

nor precludes the use of a discovery rule for purposes of

the basic limitation period, the real question in this case

is which of two possible statutory constructions—a

discovery rule, or a strict time-of-violation rule—is the

more appropriate one. This Court has repeatedly cau-

tioned that such an inquiry is purposive, not “technical”

or “mechanical.” Crown Coat Front, 386 U.S. at 517;

Urie, 337 U.S. at 169;-Reading Co., 271 U.S. at 61-62

(“We do not think it is possible to assign to the word

‘accrued’ any definite technical meaning which by itself

would enable us to say whether the statutory period

begins to run at one time or the other.”); cf. Alehr, 521

U.S. at 192-193 (deferring consideration of possible

accrual rules). In Kubrick, for example, the Court

accepted the basic discovery rule (awareness of injury

and cause) as appropriate for malpractice cases under

the FTCA, but rejected a more generous rule because it

“would undermine the purpose of the limitations stat-

ute, which is to require the reasonably diligent pres-

entation of tort claims.” 444 U.S. at 123; see id. at 122-

125. As Kubrick demonstrates, such distinctions are to

25

be made by interpreting any given limitation provision

“in the light of the general purposes of the statute and

of its other provisions, and with due regard to those

practical ends which are to be served” by the limitation

period. Reading Co., 271 U.S. at 62; cf. Burnett v. New

York Cent. R.R., 380 U.S. 424, 426-436 (1965) (pur-

posive analysis of tolling question). In the case of the

FCRA, those considerations favor use uf a discovery

rule.

The “obvious purpose” of a limitation provision “is to

encourage the prompt presentation of claims.” Kub-

rick, 444 U.S. at 117. Limitation of actions protects

potential defendants and the courts from the need to

litigate stale claims—after “affording plaintiffs what

the legislature deems a reasonable time to present

thlose}] claims.” /bid. In the ordinary case, in which

conduct by a known defendant has arguably led to a

known or alleged injury to the plaintiff, those dual

purposes are well served by starting the running of the

limitation period from the time when the plaintiff’s

claim is first ripe for legal resolution. See note 3, supra;

Connors, 935 F.2d at 342.

In certain types of cases, however, the plaintiff often

will not learn of an injury, in the ordinary course, until

some time after it has been inflicted. In such cases it

may be meaningless to require “diligence” by the

plaintiff from the time of the unsuspected injury, and

inconsistent with legislative intent to allow a period of

limitation to begin to run (and perhaps to run com-

pletely) before the plaintiff is even aware of the basic

factual predicates for her potential cause of action. It is

in such situations that this Court has applied the

discovery rule. See Kubrick, 444 U.S. at 122 (medical

malpractice) (“That [the plaintiff] has been injured in

fact may be unknown or unknowable until the injury

26

manifests itself; and the facts about causation may be in

the control of the putative defendant, unavailable to the

plaintiff or at least very difficult to obtain.”); Urie, 337

U.S. at 170 (compensation for latent occupational

injury) (Remedial legislation would not have “intended

such consequences to attach to blameless ignorance”;

rather, “statutes of limitations * * * conventionally

require the assertion of claims within a specified period

of time after notice of the invasion of legal rights.”); see

also Holmberg, 327 U.S. at 397 (fraud).

The FCRA fits this model. As the D.C. Circuit ob-

served about the Privacy Act, the FCRA “seeks to pro-

vide a remedy for [wrongful] conduct that by its very

nature is frequently difficult to discover.” Tijerina, 821

F.2d at 797. As with Privacy Act violations, “unau-

thorized, unconsented-to disclosure[s}” of credit infor-

mation, or careless inclusions of inaccurate information

in a credit report, are “unlikely to come to the subject’s

attention until [they] affect{] him adversely, if then,”

and “possible violations of the Act are often not

immediately apparent to the aggrieved individual.” /d.

at 797-798. Thus, in construing the FCRA, as in con-

struing the Privacy Act, “Congress’s desire to provide a

civil remedy would be poorly served if the cause of

action could arise before the plaintiff even had reason to

know of the violation.” Jd. at 798; see also Connors, 935

F.2d at 343 (holding discovery rule applicable under

different statute because conduct was “likely to [cause]

- a hidden injury, similar to the type of injury that has

long triggered the discovery rule,” and because use of

rule would be consistent with Congress’s remedial

intent). It is similarly appropriate to construe Section

1681p to include the discovery rule.

That conclusion is consistent with the length of the

FCRA limitation period. Where a statute permits an

27

unusually long time to bring suit, Congress may already

have taken into account the difficulties a plaintiff may

face in learning the facts necessary to perfect his cause

of action. Cf. Beggerly, 524 U.S. at 48-49 (taking “un-

usually generous nature” of 12-year period into account

in rejecting equitable tolling under the Quiet Title Act).

The FCRA’s two-year period is, however, not lengthy,

and suggests that Congress would not have expected

the period to begin to run until the potential plaintiff is

on at least inquiry notice of a possible claim.

Use of a discovery rule is also consistent with the

history and structure of the FCRA. As petitioner

recognizes (Br. 36), Congress when it adopted the Act

was well aware of the difficulties then facing consumers

in discovering how or whether they might have been

harmed by credit reporting practices. Although the

Act addressed those difficulties in part by adopting new

disclosure rules and record-correction mechanisms, see

15 U.S.C. 1681g-1681i (1994 & Supp. V 1999), it also

required reporting agencies to follow “reasonable pro-

cedures” to ensure the accuracy of their reports,

15 U.S.C. 168le(b), and to ensure compliance with the

Act’s specific restrictions on the release of information

to third parties, 15 U.S.C. 1681b (1994 & Supp. V 1999);

15 U.S.C. 168le(a). Those procedural requirements

were to be enforced in large part through private law-

suits. 15 U.S.C. 1681n-1681o0 (1994 & Supp. V 1999). In

enacting those provisions, Congress was surely aware

that the nature of the credit reporting business would

not fundamentally change, and that many records

would still be compiled and released to third parties

without any direct notice to the affected consumer.

Although it no doubt expected potential plaintiffs to be

diligent in pursuing suspected claims—in part by using

the Act’s new tools for forcing disclosures by the

28

reporting agencies—there is no reason to think it

intended to impose a limitation period that would run

even as to claims a consumer had no reason to suspect.”

That conclusion serves the public interest, as well as

the interests of private litigants such as respondent. As

petitioner points out (Br. 30), major credit reporting

agencies in the United States maintain computerized

files on nearly 200 million individuals—virtually the

entire adult population of the United States—and issue

hundreds of millions of consumer reports every year.

Although the FCRA gives the Federal Trade Commis-

sion and other federal officials authority to enforce the

Act, 15 U.S.C. 1681s (1994 & Supp. V 1999), their

resources are not sufficient by themselves to ensure

adequate monitoring of compliance. Enforcement of the

Act therefore depends to an important degree on

private damage actions, in which plaintiffs act not only

on their own behalf, but as “private attorneys general.”

Rotella, 528 U.S. at 557; ef., e.g., Basic Inc. v. Levinson,

485 U.S. 224, 231 (1988) (private suits are “an essential

tool for enforcement” of securities laws).

5 Petitioner notes (Br. 36-37) that Congress did not adopt in

haec verba a proposal, offered in testimony by Professor Arthur

Miller, that the limitation period “should be measured ‘from the

date of the occurrence of the violation or the date on which the

violation is discovered.’” On the other hand, as petitioner explains

(Br. 37), the “occurrence” language of various precursor bills was

ultimately changed, without explanation, to the final “liability

arises” language of Section 1681p. Neither observation answers

the question, presented here, whether the language Congress actu-

ally adopted should or should not be read to incorporate the dis-

covery rule. Since the language permits such a reading, that ques-

tion is best answered by examining whether use of the rule is

consistent with the remainder of the Act and serves its purposes.

29

Such actions have become even more important in

recent years as the phenomenon of identity theft,

illustrated by the facts of this case, has expanded the

possibilities for (and potential damage from) violations

of the Act. Identity theft cases underscore the impor-

tance of the “reasonable procedures” provisions

(15 U.S.C. 168le(a) and (b)) that lie at the heart of

respondent’s claim on the merits in this case. Yet the

Federal Trade Commission’s analysis of consumer com-

plaints indicates that in cases of identity theft it takes

more than 25% of victims a year or more to discover

that they have been victimized. In the absence of a

discovery rule, those victims would have a year or less

to investigate whether they had been harmed by

related violations of the FCRA, and if so to bring suit.

The important public purposes served by private

litigation can under some circumstances counsel against

undue extension of a limitation period. See Rotella, 528

U.S. at 558 (enforcement of statutes through such

litigation is “an object pursued the sooner the better”).

It supports, however, the use of a rule under which the

limitation period begins to run only once a potential

plaintiff knows that she has been injured. Only then

may the running of the period effectively encourage a

private litigant to be diligent in pursuing her potential

statutory remedies, thereby also serving the public

interest. Compare id. at 558-559 (“Rotella does not deny

that he knew of his injury * * * when it occurred{.}”).

Compared to a rule under which “liability arises” at

the time of an FCRA violation, even if the affected

consumer has no reason to know the violation has

occurred, a discovery rule will somewhat lengthen the

time during which a defendant may find itself subject to

suit. By definition, however, it does so only when the

plaintiff has exercised due diligence. In such situations,

30

in which neither party is to blame for the delay in notice

of injury to the plaintiff, and in which the defendant

may or may not be operating in complete good faith, the

discovery rule reconciles the affected interests by

allowing litigation on the merits of the plaintiff’s statu-

tory claims. That outcome serves the ends of justice

and law enforcement, and imposes on defendants only

the ordinary costs of establishing that their business

practices comply with applicable federal law. Accord-

ingly, in the view of the United States and the Federal

Trade Commission—the agency charged by Congress

with principal responsibility for enforcement of the

FCRA—use of the discovery rule under the FCRA

strikes the proper balance between potential defen-

dants’ legitimate interest in repose and the private and

public interests in ensuring that potential plaintiffs

receive the full measure of “what the legislature [has]

deem[ed] a reasonable time to present their claims.”

Kubrick, 444 U.S. at 117.

CONCLUSION

The judgment of the court of appeals should be

affirmed.

Respectfully submitted.

—_ BARBARA._D. UNDERWOOD

' Acting Solicitor General

JOHN D. GRAUBERT LAWRENCE G. WALLACE

Acting General Counsel Deputy Solicitor General

JOHN F. DALY EDWARD C. DUMONT

Assistant General Counsel Assistant to the Solicitor

LAWRENCE DEMILLE-WAGMAN General

Attorney

Federal Trade Commission

MAY 2001