Key points:

Database companies can be CRAs subject to FCRA if they collect information that is provided to insurance companies, banks, or any other entity to make credit eligibility or employment decisions.

A violation of FCRA is unlikely to be considered 'wilful' for the purposes of qualifying for statutory damages where the organization relied on an opinion of the FTC to conclude the activities were not subject to FCRA

Background

Lexis is a data broker that sells an identity report called Accurint® for Collections ("Accurint"), used to locate people and assets, authenticate identities, and verify credentials. The Accurint database contains information on over 200 million people, and millions of Accurint reports are sold each year. For years, Lexis sold Accurint without complying with the FCRA, on the theory that Accurint is not a "consumer report" that triggers the Act's protections.

A class action lawsuit was brought against defendants, LexisNexis Risk and Information Analytics Group, Inc.; Seisint, Inc.; and Reed Elsevier Inc. (together, "Lexis"). The class consisted of:

(1) approximately 200 million people whose information resides in the Accurint database; and

(2) an additional 31,000 people comprise a second class of people who requested a copy of an Accurint report, or submitted a dispute regarding their report.

Class counsel and Lexis had a long history. This case was the third national putative class action brought by counsel against Lexis, each alleging essentially the same thing: that Lexis violated the FCRA by selling Accurint reports without affording FCRA protections. Neither of the two prior suits resulted in any class settlement or court-ordered relief.

  • In Graham v. LexisNexis Risk & Information Analytics Management Group, Inc., №3:09-cv-00655-JRS (E.D. Va. Jan. 21, 2011), the plaintiffs dismissed the claims after Lexis moved to dismiss for lack of standing.
  • In Adams v. LexisNexis Risk & Information Analytics Group, Inc., №08–4708 (D.N.J. October 28, 2010), the parties settled after the district court denied Lexis's motion for judgment on the pleadings.

Litigation and settlement

Issues litigated

Whether Accurint reports in fact constitute "consumer reports" under the FCRA was the crux of the parties' dispute. Specifically, the dispute centered around Lexis's sale of personal data reports to debt collectors.

Throughout litigation, class counsel endeavored to prove not only that Lexis violated the FCRA, but also that it did so "willfully." That is because in addition to creating liability for actual damages sustained by an individual as a result of a violation, 15 U.S.C. § 1681o(a), the FCRA provided for statutory damages of between $100 and $1,000 for willful violations, which would be available to all class members. However, the FTC had issued and advisory opinion expressly specifying that Accurint reports are not subject to the FCRA, (FTC Opinion Letter to Marc Rotenberg from July 28, 2008).

Settlement

After three separate lawsuits, extensive discovery, and a long series of mediation conferences, a deal was struck. Lexis would make sweeping changes to its product offerings in order to protect consumer information and pay an award to certain class members. In exchange, the class members would release any statutory damages claims under FCRA.

  • The settlement only provided award for the members of class (2) (as described in 'Background' above). The award was approximately $300 for each of the 31,000 class members.
  • Under the terms of the settlement, LexisNexis agreed to reform its procedures for sharing debtors' information to ensure compliance with the FCRA.

The total settlement was a $13.5 million fund after attorneys' fees. The judge also approved an attorneys' fees award of $5.3 million, and a $5,000 award for each named plaintiff.

The district court certified and approved the settlement

Appeal against the settlement

Various organizations appealed the district court's approval of a settlement over data marketing practices, arguing class members could not opt out of the settlement, and class members receive only injunctive relief (that was forbidden by statute), while plaintiffs' lawyers were awarded over $5.3M. The Fourth Circuit affirmed the settlement.

Request for certiorari

Various organizations raised a petition for certiorari to the Supreme Court on the basis that the lower court failed to follow governing Supreme Court law that recognizes the inherent potential for abuses of the class action settlement process. On October 3, 2016 the Supreme Court denied certiorari.

Resources

Legal citations and case documents

Berry v. LexisNexis Risk & Info. Analytics Grp., Inc., №3:11-CV-754, 2014 WL 4403524 (E.D. Va. Sept. 5, 2014).

See also similar cases:

  • Searcy v. eFunds Corp, 2010 WL 1337684 (N.D. III. Mar. 31, 2010)

Golden Data Articles

What is a 'consumer report'?