## Facts

- John C. Gorman bought a satellite television system using an MBNA credit card and later claimed the merchant delivered defective goods and caused property damage during installation.
- Gorman asserted he rejected the goods and sought a refund; MBNA maintained a differing account of whether replacement equipment was provided and retained.
- After Gorman disputed the charge with MBNA and did not pay the billed amount, MBNA treated the account as delinquent, reported delinquencies to credit reporting agencies (CRAs), charged off the account, and referred it for collection.
- Gorman disputed MBNA’s reporting with CRAs, which sent dispute notifications (ACDVs) to MBNA containing codes and brief text reflecting varying dispute characterizations (including fraud/identity-type codes and a “goods/services not delivered” type dispute).
- In responding to ACDVs, MBNA primarily verified information against its internal electronic records and did not substantively assess the underlying billing dispute with the merchant.
- Gorman alleged the negative reporting harmed his credit opportunities.
- The district court granted MBNA summary judgment on federal claims under the Fair Credit Reporting Act (FCRA), dismissed a California statutory claim as preempted, and granted summary judgment to MBNA on a California libel claim.

## Issues

1. Under 15 U.S.C. § 1681s-2(b), whether MBNA conducted a reasonable investigation after receiving CRA dispute notices and whether summary judgment was proper.
2. Whether § 1681s-2(b) requires a furnisher, in appropriate circumstances, to report that an account is disputed, and whether failure to do so can constitute reporting “incomplete or inaccurate” information.
3. Whether a private claim under California Civil Code § 1785.25(a) is preempted by the FCRA’s preemption provisions.
4. Whether Gorman produced sufficient evidence to sustain a California libel claim based on credit reporting.

## Decision

- Affirmed in part and reversed in part the district court’s judgment; remanded for further proceedings.
- Held that reasonableness of a furnisher’s investigation under § 1681s-2(b) depends on the nature and specificity of the dispute notice; some aspects of MBNA’s investigation supported summary judgment, but other aspects presented triable issues.
- Held that a furnisher’s failure to indicate a bona fide dispute can be actionable under § 1681s-2(b) where omission renders reporting materially misleading; summary judgment against Gorman on that theory was improper.
- Held California Civil Code § 1785.25(a) was not categorically preempted; dismissal of that claim was reversed.
- Affirmed summary judgment for MBNA on the libel claim.
- Held Gorman produced sufficient evidence of causation and damages to proceed on the revived FCRA and California statutory claims.

## Legal Principles

- A furnisher’s duties under 15 U.S.C. § 1681s-2(b) are triggered only after notice of a dispute from a CRA and include investigating, reviewing CRA-provided information, reporting results, and correcting, deleting, or blocking information that is inaccurate, incomplete, or unverifiable.
- The required investigation is evaluated by a reasonableness standard tied to the content of the CRA’s notice; merely confirming that reported data matches a furnisher’s internal records may be insufficient when the dispute calls for review of underlying materials.
- “Inaccurate or incomplete” information under the FCRA includes information that is materially misleading; omission of a bona fide dispute notation may be misleading if it could reasonably affect credit decisions.
- FCRA preemption requires reconciling 15 U.S.C. § 1681t(b)(1)(F) and § 1681h(e); state claims are not automatically barred where Congress preserved a category of state-law liability tied to heightened fault (malice or willful intent) and where the state statute is consistent with federal objectives.
- A defamation-based claim premised on credit reporting requires adequate evidence of falsity and the applicable heightened fault standard; unresolved disputes over the underlying obligation, without proof the furnisher knew reporting was false, are insufficient.

## Conclusion

The Ninth Circuit held that a furnisher’s investigation after CRA notice must be reasonable in light of the dispute presented and that failing to report a bona fide dispute may create materially misleading credit reporting actionable under the FCRA; it also held California’s § 1785.25(a) claim was not preempted, while affirming summary judgment on the libel claim and remanding for further proceedings on the reinstated statutory claims.


Gorman v. Wolpoff & Abramson, LLP, 584 F.3d 1147 (9th Cir. 2009)