Cavin v. Home Loan Center-Class Action Defense Cases: Federal Fair Credit Reporting Act (FCRA) Prohibits Private Right Of Action For Violations Of § 1681m’s Disclosure Requirement Illinois District Court Holds

Sep 22, 2006 | By: Michael J. Hassen

Illinois Federal Court Grants in Part Motion to Certify Class Action but Dismisses FCRA § 1681m Disclosure Violation Claim

Plaintiffs filed a class action against Home Loan Center alleging that it violated the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. §§ 1681 et seq., by accessing their credit. Cavin v. Home Loan Center, Inc., 236 F.R.D. 387 (N.D. Ill. 2006). The plaintiffs’ lawyer filed a motion for class certification, together with a motion to compel discovery; defense lawyers argued inter alia that FCRA does not permit private rights of action for alleged violations of the disclosure requirements imposed by FCRA § 1681m. The district court granted in part and denied in part both motions. The court also dismissed plaintiffs’ § 1681m claim, agreeing with defense attorneys that no such claim could be maintained.

The lawsuit arose out of three letters sent to plaintiffs by Home Loan Center concerning a “‘prescreened’ offer of credit [that] is based on information in your credit report indicating that you meet certain criteria.” Unless authorized by the consumer, the FCRA prohibits credit reporting agencies from disclosing consumer information unless “the request is in connection with a ‘firm offer of credit.’” Cavin, at 390 (citing 15 U.S.C. § 1681b(c)(1)(B)). Plaintiffs alleged that the letters were not “firm offers of credit” and, accordingly, the lender violated § 1681n, and they alleged further that the letters violated the disclosure requirements contained in § 1681m. Id. Plaintiffs sought certification of a class action under Rule 23(b)(3), which the district court granted for reasons summarized in the Note below.

The district court granted the defense motion to dismiss plaintiffs’ § 1681m claim. The court recognized the conflict in authority as to whether the amendments to the FCRA abolished all private rights of action under § 1681m, or whether Congress intended to limit the scope of the statutory provision eliminating private rights of action to subsection § 1681m(h)(8). Cavin, at 396. Because the Seventh Circuit resolved that issue in Murray v. GMAC Mortgage Corp., 434 F.3d 948, 951 (7th Cir.2006) – discussed in a separate article on this site – it was required to dismiss plaintiffs’ FCRA § 1681m claim. Id.

NOTE: The district court certified the class action because it found the requirements of Rule 23(a) satisfied as follows: (1) the class consisted of approximately 49,000 people, thus satisfying the numerosity requirement, Cavin, at 391; (2) common questions of law or fact existed as to whether the terms of the letters constituted firm offers of credit, id., at 391-92; (3) plaintiffs’ claims were typical of the claims held by members of the class, id., at 392; and (4) plaintiffs will be adequate class representatives, id., at 392-95. The court also found that plaintiffs had met the requirements of Rule 23(b)(3), id., at 395-96.

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