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Humphrey v. Navient Solutions, Inc.

United States District Court, W.D. Wisconsin

January 8, 2020

IAN HUMPHREY, Plaintiff,



         A jury awarded plaintiff Ian Humphrey $180, 000 in compensatory damages and $120, 000 in punitive damages on his claim that defendant Navient Solutions, Inc., (Humphrey's student loan servicer) violated Humphrey's rights under the Fair Credit Reporting Act (FCRA) by failing to reasonably investigate disputed information on his credit report. Two motions filed by Navient are now before the court: (1) a motion under Federal Rule of Civil Procedure 50(a) that Humphrey hasn't met the standard for obtaining punitive damages, Dkt. 195; and (2) a motion under Rule 59 to either reduce Humphrey's compensatory and punitive damages or grant a new trial, Dkt. 210.

         The court will grant Navient's Rule 50 motion. It was reasonable for the jury to find that Navient should have done more to confirm the accuracy of disputed information on Humphrey's credit reports, but there is no basis for finding that Navient willfully violated the law, which is the relevant standard for awarding punitive damages under the FCRA.

         The court will deny Navient's Rule 59 without prejudice. Because the court is granting Navient's Rule 50 motion, the Rule 59 motion is now moot as to punitive damages. And the Rule 59 motion is premature as to compensatory damages because the court hasn't entered judgment yet.


         Navient serviced Humphrey's student loans from 2010 to 2014, when Humphrey received a discharge for being disabled. Humphrey's claim against Navient arises under 15 U.S.C. § 1681s-2(b)(1)(A), which requires a “furnisher” of credit information to conduct a reasonable investigation when it receives notice from a credit reporting agency of a dispute about the accuracy of information that the furnisher provided. See Westra v. Credit Control of Pinellas, 409 F.3d 825, 827 (7th Cir. 2005).[1] There is no dispute that Navient qualifies as a furnisher under the statute.

         Humphrey's claim is that Navient violated § 1681s-2(b)(1)(A) by failing to reasonably investigate notices it received in 2014 and 2015 from credit reporting agencies such as TransUnion and Equifax that Humphrey was disputing the accuracy of his credit reports. Humphrey cited multiple reasons for challenging the accuracy of his credit reports, but the only one relevant to this case is that Humphrey had filed an application for a “Total and Permanent Disability Discharge” in November 2012, and under the version of 34 C.F.R. § 682.402(c)(7)(i) in effect in 2012, a lender must suspend collections while an application for a disability discharge is pending. As a result, Humphrey says that Navient was inaccurately reporting his accounts as “past due” due in December 2012 and from July 2013 to December 2013.[2]

         This court granted summary judgment to Navient on two grounds: (1) Humphrey didn't comply with the requirements for submitting a disability application, so Navient wasn't required to suspend collections and the information it provided was accurate; and (2) Navient didn't have a duty to investigate the possibility whether Humphrey had a disability discharge application pending in 2012 or 2013 because the notices Navient received from the credit agencies didn't say anything about such an application. The Court of Appeals for the Seventh Circuit disagreed with both of these conclusions, holding that Humphrey had submitted a valid application in November 2012 and that a “reasonable jury could infer that Navient had sufficient notice of the nature of the dispute, or, alternatively, that any deficiency of information resulted from Navient's own failure to conduct a reasonable investigation.” Dkt. 165-1, at 9.

         At trial, the jury found that: (1) Navient failed to conduct a reasonable investigation on seven notices that it received from credit reporting agencies in 2014 and 2015; (2) Navient's conduct was a substantial factor in causing harm to Humphrey; (3) Humphrey is entitled to $180, 000 in compensatory damages; (4) Navient's violation of Humphrey's rights was willful; and (5) Humphrey is entitled to $120, 000 in punitive damages. Dkt. 204.

         The court denied Navient's motion for a judgment as a matter of law under Federal Rule of Civil Procedure 50(a) as to liability and compensatory damages but reserved a ruling on Navient's contention that Humphrey failed to show that Navient willfully violated the FCRA. The court deferred entry of judgment to allow the parties to brief that question. Dkt. 205.


         Navient has raised three issues in its post-trial briefs: (1) its conduct was not willful as a matter of law, so Humphrey isn't entitled to punitive damages; (2) the jury's award of compensatory damages was excessive; and (3) the jury's award of punitive damages was excessive. Navient raises the first issue under Rule 50(a) and the second two issues under Rule 59(e). But Rule 59(e) applies to motions to alter or amend the judgment, which, as noted above, the court hasn't entered yet. And Navient states in its motion that it “does not waive its right to seek relief under Rule 59, after judgment is actually entered.” Dkt. 211, at 2. There is no point in deciding two Rule 59 motions, so the court will deny the Rule 59 motion without prejudice to Navient refiling it after judgment is entered. The court will limit its analysis to the question whether Humphrey met the legal standard for obtaining punitive damages.

         A plaintiff bringing a claim under the FCRA may not recover punitive damages unless he shows that the defendant “willfully fail[ed] to comply with” the FCRA. 15 U.S.C. § 1681n. The jury instructions described that standard as follows:

You may assess punitive damages against Navient only if Humphrey has proved that Navient violated his rights willfully. A violation is willful if the defendant knowingly or recklessly violated the plaintiff's rights. In other words, Humphrey must show that Navient either knew of an unjustifiably high risk that a ...

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