Fourth Circuit Issues Mixed-Bag Decision On Punitive Damages In FCRA Cases

Inevitably, when conscientious judges delve into the multi-dimensional issue of excessive punitive damages, they get some things right and other things wrong. Such is the case with the Fourth Circuit's recent decision in Daugherty v. Ocwen Loan Servicing, LLC. Unfortunately, as a doctrinal matter at least, the erroneous aspects of the decision predominate.  

In Daugherty, Ocwen—a so-called furnisher of information to credit reporting agencies—was held liable for $6,128.39 in compensatory damages and $2.5 million in punitive damages for willfully violating the Fair Credit Reporting Act ("FCRA") by failing to correct inaccurate information about the plaintiff in response to verification requests sent by Equifax, a credit reporting agency.  The Fourth Circuit upheld the liability finding, but held that the punitive damages were unconstitutionally excessive and ordered a new trial unless the plaintiff agrees to accept a reduced award of $600,000.