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Financial Services Law Insights and Observations

District Court lowers punitive damages award in FCRA dispute

Courts FCRA Damages Punitive Damages Consumer Finance Debt Collection Credit Report

Courts

On April 8, the U.S. District Court for the Southern District of Florida denied in part and granted in part a defendant’s motion for judgment as a matter of law and alternative motion for a new trial, after concluding that the debt collector violated the FCRA by incorrectly reporting medical debts on the plaintiff’s credit reports despite allegedly receiving 31 separate disputes challenging the validity of the debt. The plaintiff contended that the medical debts in question belonged to his father, and that due to the inaccurate reporting, he was denied credit by two lenders. At trial, after finding that the defendant failed to conduct a reasonable investigation into the plaintiff’s FCRA disputes as required by the statute, a jury awarded the plaintiff $80,000 in actual damages and $700,000 in punitive damages for willful violations. The defendant challenged the award and requested a new trial, arguing that the court improperly admitted hearsay testimony, that the plaintiff failed to prove he suffered emotional damage, and that the jury’s punitive damages award was too high.

The court denied defendant’s request for a new trial, finding that the plaintiff suffered emotional damages and that the “verdict could be supported ‘without considering the challenged testimony.’” With respect to the amount of punitive damages awarded, the court concluded that the defendant’s actions were “highly reprehensible” and “callous” in the way it processed consumers’ disputes. However, in comparing the ratio of punitive damages to compensatory damages in other cases, the court determined that $700,000 was too high based on the actual damages award and lowered the punitive damages to $475,000 to be consistent with Eleventh Circuit law. The court concluded, “to be sure, the high punitive damages award likely reflects the jury’s assessment of Defendant’s callous behavior throughout the eighteen months of processing Plaintiff’s approximately thirty disputes, and Defendant’s employees’ testimony which confirmed that such treatment would likely repeatedly occur with countless other consumers,” adding that “given the size of [the defendant], and the number of disputes handled annually, it is not surprising that the jury deemed a high punitive damages award necessary to send the Defendant a deterrence message.”