Any person who willfully fails to comply with the Fair Credit Reporting Act (“FCRA”), can be liable, even absent actual damages, for statutory damages of not less than $100 and not more than $1,000 per violation. Defendants in FCRA cases have sometimes argued that the statutory damages provision is unconstitutionally vague under the due process clause because it does not identify factors to guide setting the amount of damages, particularly in the context of a class action. That argument has been met with mixed results.

To date, at least four courts have ruled on this precise issue. In Grimes v. Rave Motion Pictures Birmingham, L.L.C., 552 F. Supp. 2d 1302 (N.D. Ala. 2008), an Alabama Federal District dismissed a class action complaint against the defendant, concluding that the statutory damages provision was unconstitutionally vague. Describing the statutory language as nonsensical, the court stated that the provision provided “no guidance for deciding between $100 and $1000, leaving it to the whim of the jury.”

Other courts, however, have rejected the view of the Grimes court and held the provision to be constitutional. In Smith v. Casino Ice Cream, LLC., No 0861285-CIV, 2008 U.S. Dist. Lexis 81550 (S.D. Fla. Oct, 9 2008) and Smith v. MSV Sales & Services, LLC, No. 08-62436-CIV, 2008 U.S. Dist. Lexis 93996 (S.D Fla., Nov. 18, 2008), the Southern District of Florida held that the statutory damages provision was not unconstitutionally vague. That court concluded that a reasonable jury is able to determine a proper amount of damages within the FCRA’s sliding scale.

Most recently, the U.S. District Court in Oregon weighed in on this matter and adopted the view of the Southern District of Florida. In Ashby v. Farmers Ins. Co. of Oregon, No. 01-CV 1446- BR, 2008 U.S. Dist. Lexis 105612 (D. Or., Dec. 12, 2008), the court stated that it agreed with the reasoning of the Southern District of Florida and concluded that the provision was constitutional.

Unless Congress amends the FCRA to clarify this issue, or circuit courts of appeal provide guidance, varying decisions from trial courts are likely to continue.