## Facts

- Christopher Neil Smith purchased a 2001 GMC Suburban from Bob Smith Chevrolet, Inc., using a GMAC credit application and expecting a General Motors supplier discount.
- The dealership agreed to the discounted price on a handwritten purchase order, conditioned on Smith later proving eligibility for the discount.
- The dealership later discovered an internal error: an employee had double-entered the discount, and the dealership claimed Smith owed additional money and withheld the vehicle title.
- Smith sued in Kentucky state court for breach of the sales contract and obtained a judgment against the dealership.
- During the pricing dispute and title withholding, the dealership obtained Smith’s consumer credit report from a consumer reporting agency.
- Smith filed a federal action alleging (1) the dealership obtained his credit report without a permissible purpose in violation of the Fair Credit Reporting Act (FCRA), and (2) invasion of privacy under Kentucky common law.
- The dealership sought summary judgment on claim preclusion and on the theory it had an FCRA permissible purpose, and it sought dismissal of the invasion-of-privacy claim; the parties also filed cross-motions on permissible purpose.

## Issues

1. Whether Kentucky claim preclusion barred the FCRA claim because Smith previously litigated a contract dispute arising from the same vehicle sale.
2. Whether the dealership had a permissible purpose under 15 U.S.C. § 1681b to obtain Smith’s credit report after the sale, in connection with an asserted need to collect an “account” or satisfy a “legitimate business need.”
3. Whether the alleged improper access to the credit report stated a viable Kentucky invasion-of-privacy claim (intrusion upon seclusion) at the dispositive-motion stage.

## Decision

- The court denied the dealership’s summary judgment motion based on Kentucky claim preclusion.
- The court held the dealership lacked a permissible purpose under the FCRA to obtain Smith’s credit report in the circumstances presented.
- The court denied the dealership’s dispositive motion directed at the invasion-of-privacy claim, allowing it to proceed.
- The court resolved the permissible-purpose question in Smith’s favor on the parties’ cross-motions, leaving remaining issues (including damages) for further proceedings.

## Legal Principles

- Kentucky claim preclusion requires identity of parties, a final judgment on the merits, and identity of causes of action; a later claim is not barred when it vindicates a different primary right and duty than the earlier action.
- An FCRA claim based on improper access to a consumer report is distinct from a state-law breach-of-contract claim about the terms and performance of a vehicle sale, even if both arise from related events.
- Under 15 U.S.C. § 1681b(a), permissible purposes are limited and include obtaining a report in connection with (i) a credit transaction involving the consumer, including extension of credit, or review or collection of an account, or (ii) a legitimate business need in connection with a business transaction initiated by the consumer.
- A completed sales/financing transaction, followed by a seller’s later demand for additional payment due to the seller’s own pricing mistake, does not by itself create an “account” whose “collection” permits pulling a credit report under the FCRA.
- “Legitimate business need” is constrained by the statutory requirement that it be tied to a consumer-initiated business transaction; it does not authorize obtaining a report solely to gain leverage in a post-transaction contract dispute.
- Kentucky recognizes intrusion upon seclusion where an intentional intrusion into a person’s private affairs would be highly offensive to a reasonable person; alleged improper procurement of a credit report may support the claim depending on the circumstances.

## Conclusion

The court held that a dealership may not obtain a consumer’s credit report under the FCRA’s permissible-purpose provisions merely because it is embroiled in a post-sale pricing dispute, and it rejected the argument that the earlier contract judgment barred the later FCRA action, allowing both the FCRA and related invasion-of-privacy claims to proceed.


Smith v. Bob Smith Chevrolet, Inc., 275 F. Supp. 2d 808 (W.D. Ky. 2003)