October 5, 2007 - The US Ninth Circuit Court of Appeals in San Francisco has ruled that credit reporting agencies can be held liable when they inaccurately report court judgments on credit reports. A three judge panel from the court reversed a lower court ruling in a case which Experian had erroneously stated that a man named Jason Denis had had a court judgment of nearly $3,000 entered against him. The case is important because Experian, Equifax and Trans Union have all had a longstanding practice of stating that they are not responsible for reporting inaccurate data from the courts.

The case started in 2002 when Dennis was sued by his landlord. Dennis and the landlord eventually reached and accord that allowed Dennis to pay the money he owed using an installment plan. As a part of their agreement, both sides agreed that no court judgment would be entered against Dennis. But unfortunately for Dennis, the court mistakenly published a report that stated that a trial had been held and a judgment had been entered.

Unbeknownst to Dennis or his landlord, Experian used this report to place a notation on Dennis's credit report. Two months later, Dennis paid off his debt and the court reported that the action against him had been dismissed.

When Dennis became aware of the erroneous judgment on his Experian credit report, he disputed it. Experian, which uses an outside vendor to gather court records, went back to that vendor and asked them to investigate. The vendor, Hogan Information Services, apparently did a cursory investigation and concluded that its information regarding the judgment had been correct. Based on this, Experian refused to remove reference to the judgment from Dennis's credit report. Based on this, Dennis eventually sued.

When the case finally went to court, the trial judge ruled in favor of Experian and dismissed the case. This is the verdict that the Appeals Court reversed in language that was none too kind to the lower court.

The opinion essentially said that Experian could have and should have easily determined that the information that it was reporting regarding Dennis was inaccurate. It names several ways in which the company could have arrived that this conclusion. And it stated in plain language that Experian's failure to reach this determination was "negligent". It also found that Experian was liable for the negligence of its outside vendor; Hogan.

One of the more stunning portions of the court opinion read, "Ordinarily we would remand Dennis's claim for trial so that a jury could determine whether Experian's failure to reinvestigate was negligent. Here, however, a remand would be pointless. Even accepting as true everything Experian has claimed, no rational jury could find that the company wasn't negligent."

The finding is good news for consumers. Cases like Dennis's seldomly become case law because the CRAs often offer to settle prior to them going to court. These settlements don't have the force of law and they are almost always subject to nondisclosure by plaintiffs in a case.  The case, Jason Dennis v. Experian Information Systems, should be kept in mind by anyone disputing inaccurate court ruling information on their credit report.

by Jim Malmberg

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