Santos v. Healthcare Revenue Recovery Grp., LLC.

90 F.4th 1144

Omar SANTOS, on behalf of themselves and all others similarly situated, Amanda Clements,on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. HEALTHCARE REVENUE RECOVERY GROUP, LLC.,d.b.a. ARS Account Resolution Services, Defendant,Experian Information Solutions, Inc., Defendant-Appellee.

No. 22-11187

United States Court of Appeals, Eleventh Circuit

Filed: January 12, 2024

Appeal from the United States District Court for the Southern District of Florida, D.C. Docket No. 1:19-cv-23084-KMW

Peter Prieto, Matthew P. Weinshall, Alissa Del Riego, Podhurst Orseck, PA, Miami, FL, Catherine Dorsey, Baron & Budd, PC, Washington, DC, Jonas Mann, Roland Tellis, Baron & Budd, PC, Encino, CA, Dennis McCarty, Jonathan Raburn, McCarty & Raburn PLLC, Rockwall, TX, for Plaintiffs-Appellants.

Robert Nolan Stander, Jacob Roth, Jones Day, Washington, DC, Alexander G. Hughes, Jones Day, Houston, TX, Ana Maria Cristina Perez Soto, Jones Day, Miami, FL, John A. Vogt, Jones Day, Irvine, CA, for Defendant - Appellee.

Before William Pryor, Chief Judge, and Luck and Hull, Circuit Judges.

Per Curiam:

We grant the petition for panel rehearing, vacate our prior opinion reported at 85 F.4th 1351 (11th Cir. 2023), and substitute the following opinion making some minor changes to Part III.

* * * *

Where a consumer reporting agency willfully fails to comply with the requirements imposed on it under the Fair Credit Reporting Act, a consumer has two options to recover damages. The first option allows a consumer to recover "any actual damages sustained by the consumer as a result of the failure." 15 U.S.C. § 1681n(a)(1)(A). And the second option allows a consumer to recover "damages of not less than $100 and not more than $1,000." Id. The issue in this case is whether, under the second option, the consumer can recover "damages of not less than $100 and not more than $1,000" without proving actual damages caused by the consumer reporting agency's willful violation of the Act. Joining every other circuit to address the same issue, we conclude that a consumer does not have to prove actual damages to recover statutory damages under the second option. Because the district court reached the opposite conclusion and denied class certification as a result, we vacate the district court's class certification order and remand for further proceedings.

I.

Experian Information Solutions, Inc. is a "consumer reporting agency," meaning it receives consumers' credit data from approved furnishers and compiles that information into files summarizing consumers' credit histories. Experian provides these summaries in the form of "reports," known as "disclosures" when the reports are sent to the consumer directly, listing every credit and collection account a consumer has incurred. Each account on these reports is known as a "tradeline."

Healthcare Revenue Recovery Group, LLC is a debt collection company that obtains accounts in default, known as collection accounts, from medical providers. In 2017, Healthcare Revenue began furnishing its collection account data to Experian, but Experian misadjusted a technical setting that affected how it processed Healthcare Revenue's data.

That faulty setting caused all consumer reports featuring Healthcare Revenue accounts to display inaccurate "dates of status" or "payment level dates" on the Healthcare Revenue tradelines. These status date fields are supposed to show the date when an account reached its currently reported status. For collection accounts, like the ones Healthcare Revenue reported to Experian, the status dates should generally reflect the date a consumer's debt entered collections. The status date usually shouldn't change because once a debt collector opens a collection account the account's status remains the same until the debtor makes a payment or the Act requires consumer reporting agencies to stop reporting the account. But, because of Experian's technical error, the status dates on the Healthcare Revenue tradelines in consumers' credit reports improperly updated each month to display the current month.

This error continued for more than a year and a half before Experian detected and corrected it. When Experian's employees finally noticed the error, they worried about the impact it would have on credit scores, consumer disputes, and automated Experian reporting products.

All told, more than 2.1 million consumers had credit reports with inaccurate Healthcare Revenue status dates sent by Experian to third parties. Among those consumers were Mr. Santos and Ms. Clements. Their July 2017 consumer disclosures list incorrect status dates of July 2017 for their Healthcare Revenue tradelines and state that this credit information was "shared with" their "current and prospective creditors and employers." Although Mr. Santos's and Ms. Clements's credit scores weren't lowered by these errors, consumers' creditworthiness can nevertheless be affected by how long an account has been in collection—with more recent collection accounts having a greater negative impact.

Mr. Santos and Ms. Clements filed a class action complaint and sought to represent a class of individuals whose Healthcare Revenue tradelines had been wrongly "re-aged" by Experian. They alleged that Experian "willfully" violated its obligation under the Fair Credit Reporting Act to "follow reasonable procedures" to ensure consumer credit reports were prepared with "maximum possible accuracy" when it allowed credit reports to reflect allegedly inaccurate status dates. See 15 U.S.C. §§ 1681e(b), 1681n(a)(1)(A). And they sought "damages of not less than $100 and not more than $1,000" for Experian's willful violation of the Act. See id. § 1681n(a)(1)(A).

Experian eventually moved for summary judgment. It did not dispute that Mr. Santos's and Ms. Clements's credit reports listed inaccurate status dates for their Healthcare Revenue tradelines. But it argued that the Act's damages provision for willful violations—section 1681n(a)(1)(A)—required Mr. Santos and Ms. Clements to prove that they were denied credit, and incurred actual damages, as a result of the re-aged status dates. Because they didn't show a genuine dispute of any actual damages, Experian argued that it was entitled to summary judgment. Mr. Santos and Ms. Clements responded that section 1681n(a)(1)(A) allowed consumers to recover "damages of not less than $100 and not more than $1,000" without having to prove, as an element of their claim, that they incurred actual damages. The district court, relying on our decision in Cahlin v. General Motors Acceptance Corporation, 936 F.2d 1151 (11th Cir. 1991), concluded that section 1681n(a)(1)(A) required proof of actual damages. But the district court denied Experian's summary judgment motion because there was some evidence that Mr. Santos and Ms. Clements suffered actual damages.

After the close of discovery, Mr. Santos and Ms. Clements moved to certify a class of all consumers "whose Experian credit reports had an account or accounts reported by [Healthcare Revenue] with an inaccurately displayed Date of Status and were viewed by one or more third-parties." They argued they met the numerosity, commonality, typicality, and adequacy requirements of Federal Rule of Civil Procedure 23(a) and the predominance and superiority requirements of Rule 23(b). As to the predominance requirement, Mr. Santos and Ms. Clements rehashed their summary judgment argument that, because the class only sought "damages of not less than $100 and not more than $1,000," they did not have to prove any actual damages caused by Experian's willful violation of the Act. Thus, "any individualized issues concerning class members' actual damages" were "irrelevant." Experian, in response, argued that because section 1681n(a)(1)(A) required that the putative class members prove they were actually injured by a consumer reporting agency's willful violation of the Act, each class member's individual proof of damages would predominate over common questions.

The magistrate judge agreed with Experian that Mr. Santos and Ms. Clements hadn't met the predominance requirement in Rule 23(b). That's because, the magistrate judge explained, the district court had already concluded in its summary judgment order that section 1681n(a)(1)(A) required consumers to prove they incurred actual damages as a result of willful violations of the Act. And because the putative class members would have to prove they incurred actual damages because of the re-aged status dates, the magistrate judge concluded that the district court would be required to engage in "an individual and highly factual determination" as to whether each class member suffered actual damages. With the predominance requirement unmet, the magistrate judge recommended denying Mr. Santos and Ms. Clements's class certification motion and did not reach the other Rule 23 class certification requirements. The district court adopted the magistrate judge's recommendation and denied class certification.

Mr. Santos and Ms. Clements petitioned for permission to appeal the district court's class certification order under Rule 23(f). See Fed. R. Civ. P. 23(f) ("A court of appeals may permit an appeal from an order granting or denying class-action certification . . . ."). They sought permission to appeal the district court's conclusion that section 1681n(a)(1)(A) required them to prove they incurred actual damages "to prevail on their claims seeking statutory damages for willful violations" of the Act. We granted permission, and this is their appeal.

II.

"Whether a plaintiff has standing to sue is a threshold jurisdictional question that we review de novo." MacPhee v. MiMedx Grp., 73 F.4th 1220, 1238 (11th Cir. 2023). "We review orders denying class certification for abuse of discretion. Nonetheless, whether the district court applied the correct legal standard in reaching its decision on class certification is a legal question...