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Bersaw v. Northland Group Inc.

United States District Court, D. New Hampshire

March 11, 2015

Douglas Bersaw,
Northland Group Inc.


JOSEPH N. LAPLANTE, District Judge.

In this action under the Fair Credit Reporting Act, 15 U.S.C. § 1681 et. seq. ("FCRA"), [1] plaintiff Douglas Bersaw alleges that on two occasions in February 2011, defendant Northland Group Inc. obtained his consumer credit report from credit reporting agency Experian. Bersaw says that he had never had any business dealings with, or sought credit from, Northland, and that he had never given it permission to obtain his report. Offended by what he viewed as "an egregious violation of [his] right to privacy, " Bersaw filed suit in the 8th Circuit Court, District Division.

Northland, invoking this court's jurisdiction over civil actions arising under federal law, see 28 U.S.C. § 1331, removed the case to this court, see id. § 1441. It has now moved for summary judgment, see Fed.R.Civ.P. 56, arguing that the undisputed material facts show that it had a permissible purpose for obtaining Bersaw's consumer report-i.e., to collect an "account" of Bersaw's, as the FCRA defines that term-and that Bersaw therefore cannot recover. Alternatively, Northland argues, it cannot be held liable under the FCRA even if it had no lawful purpose for obtaining Bersaw's consumer report because the evidence does not show that it did so negligently or willfully. Having heard oral argument and carefully considered the parties' written submissions, the court concludes that the evidence fails to show conclusively that the debt Northland sought to collect qualified as an "account" under the FCRA, and that there is sufficient evidence to establish that Northland was, at minimum, negligent in accessing Bersaw's consumer report. As fully explained below, the court therefore denies Northland's motion.

I. Applicable legal standard

Summary judgment is appropriate where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). A dispute is "genuine" if it could reasonably be resolved in either party's favor at trial. See Estrada v. Rhode Island, 594 F.3d 56, 62 (1st Cir. 2010) (citing Meuser v. Fed. Express Corp., 564 F.3d 507, 515 (1st Cir. 2009)). A fact is "material" if it could sway the outcome under applicable law. Id . (citing Vineberg v. Bissonnette, 548 F.3d 50, 56 (1st Cir. 2008)). In analyzing a summary judgment motion, the court "views all facts and draws all reasonable inferences in the light most favorable to the non-moving party." Id . The following background summary is consistent with that approach.

II. Background[2]

In 2005, Palisades Collection, LLC, purchased from Chase Bank, USA N.A. what Palisades characterizes as "two accounts in the name of Douglas A. Bersaw, " but which were, so far as the evidence shows, simply debts of some kind. Six years later, in early 2011, Palisades contacted defendant Northland Group Inc., which is a debt collection agency, and asked it to collect both of Bersaw's debts. To this end, Palisades provided Northland with certain information about Bersaw and the debts themselves- though the record before the court does not reveal precisely what information was communicated.

Northland, undertaking the process it routinely uses when retained to collect a debt, contacted the credit reporting agency Experian two times (once for each debt) and requested a consumer credit report for Bersaw. Experian, having previously received Northland's certification that it would request such reports only for purposes permitted by FCRA, provided the report both times. Not long thereafter, Northland, satisfied that Bersaw in fact owed the debts in question, sent him two letters, making an offer to settle the debts and asking him to get in touch within thirty days if he disputed their validity. Bersaw did not do so.

In early 2012, Bersaw obtained his own consumer credit report from Experian, and discovered that Northland had twice sought and obtained the report as well. Bersaw had not had any business dealings or accounts with Northland, nor applied for credit or employment with it. In addition, according to Bersaw, "there was no account that [Northland] had any right to collect." Believing, therefore, that Northland had violated the FCRA and state law, Bersaw filed this action.

III. Analysis

The FCRA, which "regulates access to individuals' consumer reports' (commonly known as credit reports), " provides that "[a]n entity may gain access to an individual's consumer report only with the written consent of the individual, unless the consumer report is to be used for certain permissible purposes, ' in which case written consent is not required." Dixon v. Shamrock Fin. Corp., 522 F.3d 76, 77-78 (1st Cir. 2008) (quoting 15 U.S.C. § 1681b); see also 15 U.S.C. § 1681b(f) ("A person shall not use or obtain a consumer report for any purpose unless... the consumer report is obtained for a purpose for which the consumer report is authorized to be furnished under this section[.]"). Bersaw's FCRA claim relies upon the proposition that Northland had neither his written consent nor any "permissible purpose" recognized by the FCRA when it obtained his consumer report. Northland disagrees, arguing that the FCRA expressly permits an entity to obtain a consumer report when collecting a debt from the consumer, which, the undisputed evidence shows, was its purpose in obtaining Bersaw's report. As a result, it says, it is entitled to summary judgment. Northland is only partially correct about the law, and is incorrect about its entitlement to summary judgment.

As Northland points out, the FCRA permits an entity to obtain a consumer report when it "intends to use the information in connection with a credit transaction involving the consumer on whom the information is to be furnished and involving the extension of credit to, or review or collection of an account of, the consumer[.]" 15 U.S.C. § 1681b(a)(3)(A) (emphasis added). So, as another court in this circuit has noted, "[i]t is well established that a debt collection agency has the right to obtain a credit report [under this provision] so long as it is done in connection with efforts to review or collect an account." Searle v. Convergent Outsourcing, Inc., No. 13-cv-11914, 2014 WL 4471522, *3 (D. Mass. June 12, 2014) (citing cases).

Significant to this case, however, is that the FCRA does not permit the retrieval of a consumer report in connection with the collection of any debt, as Northland suggests. Rather, as both Searle and the text of § 1681b(a)(3)(A) indicate, that is permitted only when the report is to be used in connection with the collection of an "account." The parties agree that the FCRA provides a specific, narrow definition of that term, which encompasses only

a demand deposit, savings deposit, or other asset account (other than an occasional or incidental credit balance in an open end credit plan as defined in [15 U.S.C. § 1602(j)]), as described in regulations of the Bureau [of Consumer Financial Protection], ...

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