The Supreme Court granted two cases this morning, Safeco v. Burr and GEICO v. Edo, which present the question whether a "willful" violation of the Fair Credit Reporting Act (FCRA) can be established by proof that the defendant recklessly disregarded the law. The cases arise from a set of related cases in which the Ninth Circuit, following Third Circuit precedent under FCRA as well as Supreme Court precedents interpreting other statutes with willfulness requirements, held that reckless disregard would suffice and remanded for discovery and, ultimately, decisions on whether the defendants' conduct met that standard. (We mentioned these cases last week, in a post previewing the Court's "long conference.")
The defendants in the cases sought Supreme Court review based largely on the Ninth Circuit's statement that it disagreed with an Eighth Circuit decision requiring knowing disregard of legal requirements to satisfy the willfulness standard.
There were a number of reasons we had hoped the Court would choose to deny certiorari, including distinctions among the cases in the different circuits and the absence of a developed factual record to frame the issue of willfulness. (Here's our Brief in Opposition.) Nonetheless, the Court's decision to hear the cases is not terribly surprising in light of the Ninth Circuit's express statement that it was choosing to side with the Third Circuit over the Eighth on the willfulness issue.
Unlike some cases in which the Court grants review of Ninth Circuit decisions that appear doomed from the outset, this is by no means a case in which reversal is likely. The Ninth Circuit's view of the statute finds support in a number of Supreme Court opinions that treat reckless disregard of the law as equivalent to willfulness under various statutes, and the legislative history of FCRA provides no support for the defendants' more restrictive reading and, indeed, gives affirmative support to the Ninth Circuit's ruling. And the Ninth Circuit panel that decided the case included a diverse spectrum of judges (Reinhardt, Berzon, and Bybee), who all ultimately came to agreement on the result.
The cases arise from the use of credit reports by insurance companies in setting premiums when new applicants apply for policies. The companies charge higher premiums for applicants with lower credit ratings, but do not disclose these increased charges as "adverse actions." The Ninth Circuit found that under the plain meaning of the statute, these increases were adverse actions that required disclosure under the statute, and that the plaintiffs could proceed with claims that the nondisclosure was willful.
The cases actually generated four certiorari petitions, only two of which were granted. Safeco's petition, which was granted, focused exclusively on the willfulness issue without adding extraneous questions that were less likely to be of interest to the Court, as did the petitions filed by Hartford, State Farm, and GEICO.
The Hartford petition, which was not granted but is likely being held pending the outcome of the case on the merits, faced an additional obstacle in that Hartford entered into a proposed settlement with the plaintiffs after it filed its petition, while the State Farm petition came from a case that actually did not even present the key issue of willfulness.
The GEICO petition, which was also granted, raises an additional question: A challenge to the Ninth Circuit's adverse action ruling, which is based on GEICO's contention that on the particular facts of its case, the insurance applicant actually "benefited" from the review of credit information (even though a lower premium concededly would have been charged if the credit information was more favorable). We're frankly surprised the Court was willing to consider the additional, factbound question posed by the GEICO petition, but it seems unlikely to be the principal focus of the case.
The bottom line is that these are winnable cases in the Supreme Court, and, now that they are there, it is important to win them. Consumer advocates should be considering how best to support the respondents in these cases.