When someone is faced with a decision that he doesn’t think he has the right to make, he can respond that “it’s above my pay grade.” The phrase appears to have originated in the US military – which has pay grades – and spread from there.
About a decade ago, the First Circuit and Ninth Circuit both discussed what could be called the “above my pay grade” defense to FCRA liability. More recently, the 10th Circuit has joined the conversation. This post will discuss what the “above my pay grade” defense is, and how the three courts have discussed it.
The “above my pay grade” defense applies to claims that a consumer reporting agency (CRA) did not conduct a “reasonable reinvestigation” of a consumer’s dispute, and thereby violated 15 U.S.C. Sec. 1681i.
As far as I can tell, the defense first came up* in DeAndrade v. Trans Union LLC, 523 F.3d 61 (1st Cir. 2008). In that case, the plaintiffs alleged that a mortgage on their house had been procured through fraud; that they had asked the CRAs to report it that way; and that the CRAs’ refusal to do so was a violation of 15 U.S.C. Sec. 1681i. Trans Union moved for summary judgment, the district court granted the motion, and the First Circuit affirmed.
The First Circuit found that to resolve claims under Section 1681i, “the decisive inquiry is whether the defendant credit bureau could have uncovered the inaccuracy if it had reasonably reinvestigated the matter.” Id. at 68 (citation omitted). It then stated that a CRA’s duty to “reasonably reinvestigate” a consumer’s dispute does not extend to deciding whether a lender procured a loan through fraud: “DeAndrade has crossed the line between alleging a factual deficiency that Trans Union was obliged to investigate pursuant to the FORA and launching an impermissible collateral attack against a lender by bringing an FCRA claim against a consumer reporting agency.” Id.
Two years after the First Circuit decided DeAndrade, the Ninth Circuit issued a similar decision in Carvalho v. Equifax Info. Servs., LLC, 629 F.3d 876 (9th Cir. 2010). In Carvalho, the plaintiff did not pay a medical bill because she thought her insurance should cover it. She asked the CRAs to stop reporting that she owed the debt, and when they didn’t, she sued them for violating Sec. 1681i. All three CRAs moved for summary judgment; the district court granted the motion; and the Ninth Circuit affirmed. It followed DeAndrade and stated that the CRAs were not in a position to determine whether plaintiff’s insurance company should or should not have paid her medical bill, and that “reinvestigation claims are not the proper vehicle for collaterally attacking the legal validity of consumer debts.” Id. at 892.
For several years, no federal appeals courts took up this issue. But in 2015, the Tenth Circuit did so in Wright v. Experian Info. Solutions, Inc., 805 F.3d 1232 (10th Cir. 2015). In Wright, the IRS issued a lien for unpaid taxes against “Attorneys Title Insurance Agency of / Wright Gary A Member,” which Pitkin County, Colorado recorded as a lien against Mr. Wright personally (as opposed to a lien against AITA the corporation, which Mr. Wright owned and operated). The CRAs issued consumer reports about Mr. Wright which showed that he owed the lien, and when he disputed that, they changed their reports to show that the lien had been paid (because it had). But they still showed the lien as pending against Mr. Wright personally. He sued them under Sec. 1681i, but the district court found that their reinvestigation had been reasonable, and the Tenth Circuit affirmed.
The Tenth Circuit found that because the IRS’s lien named both Mr. Wright and his corporation, it was reasonable for the CRAs to think that the lien was against Mr. Wright personally. Mr. Wright contended that the CRAs should have gone further than that and asked the IRS, or a tax law expert, whether the lien really applied to him. The Tenth Circuit disagreed and stated that “Like the consumers in Carvalho and DeAndrade, Mr. Wright’s argument would require the CRAs to do more than a reasonable reinvestigation requires.” Id. at 1245.
You can see the pattern here. In DeAndrade, Carvalho, and Wright, a consumer asked the CRAs to change the way they were reporting something and sued them when they didn’t. The courts ruled that the CRAs had not violated the FCRA because they were not in a position to decide whether the basis of the consumer’s dispute (fraud in DeAndrade; breach of insurance contract in Carvalho; tax lien interpretation in Wright) was sound.
The opinion in DeAndade suggested that there is a “line” between consumer disputes that CRAs have the power to resolve (like “the credit card on my consumer report belongs to my dad, not me”) and disputes that CRAs do not have the power to resolve (like “yes, my name is on that loan, but it was procured through fraud”).
I don’t know where the line will be drawn: three appellate court cases are not enough of a sample to tell us. But those three opinions suggest that CRAs who have been sued under 15 U.S.C. Sec. 1681i should consider whether the “above my pay grade” defense could apply in their cases.
*I said above that the “above my pay grade” defense appears to have first come up in DeAndrade. I say that because while the DeAndrade court cited prior cases, those cases did not involve the “above my pay grade” defense as I have outlined it here. For example, both DeAndrade and Carvalho cited prior cases in which a consumer sued a creditor under 15 U.S.C. 1681s-2 and the court, in the course of resolving that lawsuit, issued some dicta about the limits to what a CRA could and couldn’t do. Those prior exist and are helpful, but they don’t make the same point that three cases that I’ve discussed here make.
