Summarize Case Brief 25-5 Safeco Insurance Co.v. Burr in a form known as a case brief.
For a sample of a case brief, see the (Martha Stewart Case Brief attached)
CASE Brief 25-5
Safeco Insurance Co. v. Burr
United States Supreme Court
127 S. Ct. 2201 (2007)
Safeco Insurance Company and GEICO General Insurance Company issued automobile insurance policies to three applicants without telling them that the companies had obtained credit reports on the applicants. One applicant filed a lawsuit against Safeco and two applicants sued GEICO under the Fair Credit Reporting Act.
Justice Souter
The Fair Credit Reporting Act requires notice to any consumer subjected to “adverse action based in whole or in part on any information contained in a consumer credit report.” Anyone who “willfully fails” to provide notice is civilly liable to the consumer. The questions in these consolidated cases are whether willful failure covers a violation committed in reckless disregard of the notice violation, and, if so, whether petitioners Safeco and GEICO committed reckless violations. We hold that reckless action is covered, that GEICO did not violate the statute, and that while Safeco might have, it did not act recklessly.
Congress enacted the Act in 1970 to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy. The Act requires, among other things, that “any person who takes any adverse action with respect to any consumer that is based in whole or in part on any information contained in a consumer report” must notify the affected consumer. The notice must point out the adverse action, explain how to reach the agency that reported on the consumer’s credit, and tell the consumer that he can get a free copy of the report and dispute its accuracy with the agency. As it applies to an insurance company, “adverse action” is “a denial or cancellation of, an increase in any charge for, or a reduction or other adverse or unfavorable change in the terms of coverage or amount of any insurance, existing or applied for.”
In GEICO’s case, the initial rate offered to Edo [one of the applicants] was the one he would have received if his credit score had not been taken into account, and GEICO owed him no adverse action notice under the Act.
Safeco did not give Burr and Massey (the other applicants) any notice because it thought the Act did not apply to an initial application, a mistake that left the company in violation of the statute if Burr and Massey received higher rates “based in whole or in part” on their credit reports; if they did, Safeco would be liable to them on a showing of reckless conduct (or worse). The first issue we can forget, however, for although the record does not reliably indicate what rights they would have obtained if their credit reports had not been considered, it is clear enough that if Safeco did violate the statute, the company was not reckless in falling down in its duty.
There being no indication that Congress had something different in mind, we have no reason to deviate from the common law understanding in applying the statute. Thus, a company subject to the Act does not act in reckless disregard of it unless the action is not only a violation under a reasonable reading of the statute’s terms, but shows that the company ran a risk of violating the law substantially greater than the risk associated with a reading that was merely careless. Here, there is no need to pinpoint the negligence/recklessness line, for Safeco’s reading of the statute, albeit erroneous, was not objectively unreasonable.
Reversed, in favor of defendant and remanded.
The Court of Appeals correctly held that reckless disregard of a requirement of the Act would qualify as a willful violation within the meaning of the Act. But there was no need for that court to remand the cases for factual development. GEICO’s decision to issue no adverse action notice to Edo was not a violation of the Act, and Safeco’s misreading of the statute was not reckless. The judgments of the Court of Appeals are therefore reversed in both cases, which are remanded for further proceedings consistent with this opinion.
CRITICAL THINKING ABOUT THE LAW
Very early in our lives, most of us are told that “ignorance of the law is no excuse.” Are Safeco and GEICO being permitted to violate the law on the ground that they were unaware of the meaning of the law?
• 1. Express the legal rule in this case in a manner that addresses the Court’s apparent understanding of reckless disregard of a statute.
• Clue: Does Justice Souter believe that reckless disregard constitutes violation of a statute? When would disregard become reckless?
•
• 2. What facts would have made this case go in favor of the plaintiffs?
o Clue: Construct a set of facts under which each insurance company would have violated the statute.
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