In Williams v. First Advantage LNS Screening Solutions, Inc., 947 F.3d 735 (11^th Cir. Jan. 9, 2020), the plaintiff recovered a jury verdict under the FCRA for $250,000 of compensatory damages and $3.3 Million of punitive damages.  The defendant was a criminal background report provider.  Because of various mistakes and procedures, the plaintiff’s information was mismatched and inaccurately lead potential employers to believe he had a criminal background.  Liability was asserted primarily under 15 U.S.C. § 1681e(b), which requires CRAs to follow “reasonable procedures to ensure maximum possible accuracy.”

The Eleventh Circuit affirmed liability and noted the need for punitive damages.  However, the Panel struggled with the size of the punitive damages and the standard for judging punitive damages, writing a 77 page opinion.  Ultimately, the Panel compromised and reduced the punitive damages portion of the opinion to $1 Million (a 4:1 ratio).  Their opinion considers many things in reviewing the size and ratio of the punitive damages but ultimately seems to set the 4:1 ratio as a default for the top end of the range of such punitive damage verdicts.  The Court wrote:

The jury in this case awarded Plaintiff $250,000 in compensatory damages and $3.3 million in punitive damages. As to the degree of disparity between the punitive damages award and the harm to Plaintiff, the above figures represent a 13.1 ratio between the punitive and compensatory damages. The Supreme Court has stated that a 4:1 ratio will typically be close to the line of constitutional propriety and that few awards exceeding a single-digit ratio to a significant degree will satisfy due process. The 13:1 ratio here obviously violates those benchmarks. While the Supreme Court has made clear that its suggested benchmarks do not create a binding rule and that each case should be considered on its own facts, we will assume this 4:1 ratio to be a default position for purposes of framing our analysis.

While financial institutions should certainly view this result as a cautionary tale for the potential of a jury to be inflamed when dealing with credit reporting, it is likewise important to know that the Eleventh Circuit is willing to carefully scrutinize large punitive awards.  Such knowledge can provide defendants the confidence to fight claims when liability should not exist.