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A wave of Fair Credit Reporting Act lawsuits concerning whether automobile, credit card and mortgage lenders unlawfully accessed consumer credit reports before mailing preapproved credit offers is jamming appeals courts. The cases � which claim that the lenders violated the act by not making a “firm offer of credit” after accessing the credit reports without consumers’ consent � have also generated conflicting district court decisions. Lawyers say what opened the floodgates was a 7th U.S. Circuit Court of Appeals ruling that reversed a FCRA case dismissal because the creditor’s offer lacked specific terms and “sufficient value” to justify invading the consumer’s privacy. The ruling was followed by an estimated 200 to 300 cases since 2004. Cole v. U.S. Capital Inc., 389 F.3d 719 (7th Cir. 2004). Yet defense lawyers believe that they have found a safe harbor in a U.S. Supreme Court ruling that said that willful violations of the act � which can be penalized at up to $1,000 per violation � must go beyond “merely careless” infractions. Safeco Insurance Co. of America v. Burr, 127 S. Ct. 2201 (2007). Appeals are pending in the 1st, 3d, 4th, 7th and 8th circuits. In the past six months, 11 new cases have been filed in federal courts in Illinois, Missouri, New York, Pennsylvania, South Carolina and Wisconsin. That total includes two that have been settled and two that were dismissed. An intracircuit split At the U.S. district court level, Judge Nancy Gertner of Boston opposed two other district judges in her court when she issued a Feb. 24 electronic order denying a defendant’s motion to dismiss a case despite the “weight of precedent.” Gertner said the plaintiff, a Massachusetts resident who had received an automobile refinancing offer in the mail, “sufficiently pleaded a willful violation” of the law. Macklin v. Texas National Bank, No. 1:06-cv-12266 (D. Mass.). “While the FCRA’s definition of a firm offer of credit is strikingly lax, it is not without limits,” Gertner wrote. “As an initial matter, a firm offer of credit must be, at a minimum, an offer rather than a mere solicitation.” Christopher Lefebvre, an attorney at Pawtucket, R.I., firm Claude Lefebvre Christopher Lefebvre P.C. who is representing the Macklin plaintiff in the Boston district court case and plaintiffs in the two 1st Circuit cases, hopes the circuit court will counter “a tidal wave” of district court opinions outside the 7th Circuit that a firm offer of credit is “tantamount to anything.” “The good news will be that the law will hopefully be clarified in the 1st Circuit,” Lefebvre said. The Texas National Bank defense team was “quite surprised” by Gertner’s order, said Steven N. Fuller, an attorney in Akerman Senterfitt’s Fort Lauderdale, Fla., office. Yet Fuller doubts that the plaintiff could win class certification because she wasn’t denied credit. “If you don’t have willfulness, you have to have each individual show they were damaged,” Fuller said. 7th Circuit action In 7th Circuit is tackling a new crop of cases from the lower courts involving the willful violation issue. Although it defines willful violations of the act, plaintiffs’ lawyer James Latturner of Chicago’s Edelman, Combs, Latturner & Goodwin, whose firm is representing plaintiffs in five pending 7th Circuit cases, believes that the high court’s Safeco ruling also benefits his clients in other ways. Since Safeco pointed creditors to the appeals courts and federal agencies for guidance on how to comply with the act, defendants aren’t safe relying on district court opinions, many of which diverged from Cole, he said. “[ Safeco] specifically cut off the district courts,” Latturner said. “We think Cole is binding.” Thomas J. Cunningham, a lawyer in Locke Lord Bissell & Liddell’s Chicago office, said it doesn’t make sense to apply Cole to mortgage offers, which are much more complex than credit card or automobile loan offers. Cunningham opposes Latturner’s firm in a pending 7th Circuit case involving a mortgage loan solicitation. Murray v. GMAC Mortgage Corp., No. 07-2776. He also said that conflicting court interpretations will make it tough for plaintiffs to prove the lender willfully violated the law. “A [district] court can’t say the defendant’s interpretation was objectively unreasonable because it has been accepted by a number of other courts around the U.S.,” Cunningham said.

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