Class Action Alleging Violations of FCRA (Fair Credit Reporting Act) Properly Dismissed because Mailer Constituted “Firm Offer” within Meaning of FCRA Third Circuit Holds
Plaintiff filed a putative class action against State Farm Mutual Automobile Insurance Company alleging violations of the federal Fair Credit Reporting Act (FCRA); specifically, the class action complaint alleged that State Farm obtained credit information in order to send out “prescreened offers” but that it did so in violation of the FCRA. Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 2009 WL 3163553, *2 (3d Cir. 2009). According to the allegations underlying the class action complaint, in November 2004 State Farm asked Experian for plaintiff’s consumer credit report without his consent, and that he did not learn about it until April 2006, “when he received a copy of his consumer credit report from Experian.” Id. State Farm claimed that it obtained plaintiff’s credit report for a “permissible purpose” within the meaning of the FCRA, and “used it to select [plaintiff] to receive materials pertaining to insurance products that he might qualify for and/or be interested in.” Id. The mailer sent to plaintiff stated that it was a “prescreened offer,” and invited him to contact State Farm for a quote in order to determine whether switching to State Farm as his auto insurance carrier could save him money. Id. The mailer also contained a “prescreen & opt-out notice,” id. The class action alleged that the mailer is nothing more than “an invitation to call State Farm to find out about the various insurance products that State Farm might attempt to sell”; in other words, “the State Farm mailing is nothing more than promotional material soliciting him to contact State Farm regarding its various insurance products and that it is therefore not the kind of firm offer of insurance that would legitimize State Farm’s access to his credit report under federal law.” Id., at *2. Defense attorneys moved to dismiss the class action; the district court granted the motion as to all claims in the class action complaint, id. The Third Circuit affirmed.
The class action alleged that State Farm intentionally or negligently obtained plaintiff’s credit report under false pretenses and without a permissible purpose, and sent an offer of insurance that failed to include the “clear and conspicuous” disclosures required by the FCRA. Gelman, at *2. The complaint sought declaratory and injunctive relief, id. The district court granted State Farm’s motion to dismiss the class action because it found that the mailer “constituted an offer of insurance under the FCRA,” that “the FCRA does not provide for a private right of action to recover for disclosures that are contrary to provisions of the FCRA,” and that “the FCRA does not provide private litigants declaratory and injunctive relief.” Id. We do not here summarize the Circuit Court’s discussion of the legal background behind the FCRA, see id., at *3-*4. The Circuit Court began its legal analysis by addressing the district court’s conclusion that State Farm’s mailer satisfied the FCRA because the offer of insurance need not have “value” to the consumer. Id., at *4. Plaintiff’s theory was premised “exclusively” on the Seventh Circuit opinion in Cole v. U.S. Capital, Inc., 389 F.3d 719 (7th Cir. 2004), which held that a “firm offer” under the FCRA “must have sufficient value for the consumer to justify the absence of the … protection of his privacy.” Id. (quoting Cole, 389 F.3d at 726). (The Third Circuit’s summary of Cole may be found at pages *4 and *5 of its opinion.)
The Third Circuit rejected plaintiff’s argument that the offer did not have any value to him. First, the Court noted plaintiff’s failure to explain “what ‘value’ the mailer should have provided him.” Gelman, at *5. Second, according to the express terms of the statute, a “firm offer of … insurance” means “any offer of … insurance to a consumer that will be honored if the consumer is determined, based on information in a consumer report, to meet the specific criteria used to select the consumer for the offer.” Id., at *6 (quoting 15 U.S.C. § 1681a(l). The word “value” is not contained therein, id., at *6. Third, the Seventh Circuit’s post-Cole decisions of Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006), and Murray v. New Cingular Wireless Services, Inc., 523 F.3d 719 (7th Cir. 2008), clarified Cole, and make it clear that no “value” requirement is imposed by the FCRA. Gelman, at *6-*7. And while the Third Circuit acknowledged that the mailer “contained substantial puffery and statements that could only have been intended as promotional,” it nonetheless found that it satisfied the FCRA’s statutory definition of a “firm offer.” Id., at *7. Accordingly, the Circuit Court affirmed the dismissal of the class action complaint, _id._¸ at *8.
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