                     United States Court of Appeals
                         FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 97-3267
                                   ___________

Johnny L. Bakker, Teresa Bakker,        *
Carrie Ann Bakker,                      *
                                        *
            Appellees,                  *
                                        * Appeal from the United States
      v.                                * District Court for the
                                        * Western District of Arkansas
Laura J. McKinnon,                      *
                                        *
            Appellant.                  *
                                   ___________

                         Submitted:   March 11, 1998

                             Filed: August 21, 1998
                                   ___________

Before McMILLIAN, FAGG and BOWMAN,1 Circuit Judges.
                            ___________


McMILLIAN, Circuit Judge.




      1
      The Honorable Pasco M. Bowman succeeded the Honorable Richard S.
      Arnold as Chief Judge of the United States Court of Appeals for the
      Eighth Circuit at the close of business on April 17, 1998.
        Laura J. McKinnon, an attorney, appeals from a final judgment entered in the
United States District Court2 for the Western District of Arkansas, following a bench
trial, finding that she had intentionally and willfully violated the Fair Credit Reporting
Act (FCRA or the Act), 15 U.S.C. § 1681 et seq. Bakker v. McKinnon, Civil
No. 96-5112 (W.D. Ark. July 21, 1997) (mem. op.). The district court awarded to each
appellee, Dr. Johnny L. Bakker and his two daughters, Teresa Bakker and Carrie Ann
Bakker, $500 in compensatory damages and $5,000 in punitive damages. For reversal,
appellant contends that the district court erred in finding that she violated the FCRA
and in awarding an unreasonable amount for punitive damages.

      The district court has subject matter jurisdiction pursuant to 28 U.S.C. § 1331
(federal question). This court has jurisdiction pursuant to 28 U.S.C. § 1291. The
notice of appeal was timely filed pursuant to Fed. R. App. P. 4(a). For the reasons
given herein, we affirm the judgment of the district court.

                                            I

       In September 1996 appellees Dr. Johnny L. Bakker, who is a dentist, and his
adult daughters, Teresa Bakker and Carrie Ann Bakker, filed this lawsuit alleging that
appellant had requested several consumer credit reports about them from a local credit
bureau in violation of the FCRA. Appellant represents several women patients of Dr.
Bakker who claimed that Dr. Bakker had committed dental malpractice by improperly
touching them during the course of dental treatments. Appellant filed lawsuits in state
court on behalf of these women against Dr. Bakker.

     The district court found that appellant and her associates had engaged in
numerous acts which, in the district court’s view, “grossly crossed the line in respect


      2
        The Honorable H. Franklin Waters, United States District Judge for the Western
District of Arkansas.

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to what is proper in conducting litigation.” Mem. op. at 2 (footnote omitted).
Basically, the district court concluded that appellant and her associates had requested
the credit reports as part of the litigation process to force a settlement. Id. at 3-9. The
district court noted that a speaker at a meeting of the Arkansas Trial Lawyer’s
Association (of which appellant was a member of the board of governors and a former
president) had recommended that consumer credit reports be routinely obtained against
defendants or prospective defendants. Id. at 7.

        Appellant admitted that she (or, more precisely, someone in her office) obtained
the credit reports, but she argued that (1) she obtained them for a commercial or a
professional purpose and, thus, the credit reports were not consumer credit reports
within the meaning of the FCRA, 15 U.S.C. §§ 1681a(d), 1681b, or (2) in the
alternative, assuming the credit reports were consumer reports within the meaning of
the FCRA, she had a legitimate business need for requesting them, id. § 1681b(3)(E).
Dr. Bakker’s attorney had informed appellant that CNA Insurance Co. was defending
Dr. Bakker under reservation of rights letters. Appellant testified that she obtained the
credit reports about Dr. Bakker and his daughters in order to determine whether he was
judgment proof and whether he was transferring his assets to his daughters. Appellant
filed a motion for summary judgment, alleging that the credit reports were not consumer
reports or, in the alternative, they were obtained for a legitimate business need. The
district court denied the motion for summary judgment, holding that the credit reports
were consumer reports within the meaning of the FCRA. Order at 5-7 (Apr. 25, 1997)
(order denying defendant's motion for summary judgment). The district court decided
that the key is the purpose for which the information was collected, not the use to
which the information contained therein is put. Id. at 6, citing St. Paul Guardian Ins.
Co. v. Johnson, 884 F.2d 881, 883 (5th Cir. 1989) (St. Paul Guardian). Here, the credit
reports apparently consisted primarily of a listing of outstanding credit card and similar
debts. Mem. op. at 9. The district court also rejected appellant’s legitimate business
need argument because she and appellees were not involved in a business transaction
within the meaning of the FCRA. Order at 7. The district court rejected the “broad”


                                           -3-
interpretation of “business transaction” and instead limited “business transaction” to
consumer credit, insurance or employment transactions. Id.; see Ippolito v. WNS, Inc.,
864 F.2d 440, 451 (7th Cir. 1988), cert. dismissed, 490 U.S. 1061 (1989). The district
court also noted that appellant's reason for obtaining the credit reports was not a
“business need” within the meaning of the FCRA because “[d]etermining whether an
adverse party in litigation will be able to satisfy a judgment is plainly a purpose
unrelated to ‘an individual’s eligibility for credit, insurance or employment.’” Order at
8, citing Mone v. Dranow, 945 F.2d 306, 308 (9th Cir. 1991) (per curiam) (citing
cases).

        Before trial, the district court had advised the attorneys that, in light of its
previous rulings, the only issue left for trial was damages. Mem. op. at 12. Appellees
testified about how appellant's wrongful requests for their credit reports had violated
their privacy. The district court found that appellant and her associates had willfully
violated the FCRA, 15 U.S.C. § 1681q, by requesting consumer reports on appellees
in “a blatant attempt to extract a settlement from the insurance carrier for Dr. Bakker
by whatever means were at hand.” Id. at 14. The district court characterized the
multiple requests for credit reports as part of a “vendetta” pursued by appellant and her
associates against Dr. Bakker and his family to harass and coerce them into settling the
litigation. The district court awarded each appellee actual damages in the amount of
$500 and punitive damages in the amount of $5,000. Id. at 16-17. Subsequently, the
district court awarded appellees attorney’s fees and costs. Order at 1-2 (Aug. 12,
1997) (order granting plaintiffs' motion for attorney's fees and costs). This appeal
followed.

                                           II

      Appellant first argues that the district court erred in denying her motion for
summary judgment because she did not violate the FCRA as a matter of law. Although
we do not believe appellant properly preserved this issue for appellate review, we need


                                          -4-
not decide that issue because the denial of summary judgment is interlocutory in nature
and not appealable after a full trial on the merits; judgment after a full trial on the merits
supersedes earlier summary judgment proceedings. Metropolitan Life Ins. Co. v.
Golden Triangle, 121 F.3d 351, 354 (8th Cir. 1997), citing Johnson Int’l Co. v. Jackson
Nat’l Life Ins. Co., 19 F.3d 431, 434 (8th Cir. 1994).

                                             III.

        Appellant argues the district court erred in finding that she violated the FCRA.
Appellant argues she requested the credit reports in the course of a commercial or
professional transaction, that is, in her capacity as an attorney representing clients in
litigation, and not in connection with any type of consumer transaction involving
appellees’ credit, insurance or employment. Appellant argues that credit reports
obtained in connection with commercial or professional transactions are not covered
by the FCRA. Appellant also argues that there was no evidence that she obtained the
credit reports under false pretenses. In the alternative, appellant argues that, assuming
for purposes of analysis that the credit reports are consumer reports within the meaning
of the FCRA, she did not violate the FCRA because she had a legitimate “business
need” for obtaining them within the meaning of 15 U.S.C. § 1681b(3)(E). We do not
agree.

       The underlying facts are not substantially disputed. Whether the credit reports
were consumer reports and, if so, whether the business need exception applies are
questions of statutory interpretation of the FCRA. The district court found that
appellant had engaged in numerous acts, which in its view, grossly crossed the line in
respect to what is proper in conducting litigation; during the litigation against Dr.
Bakker, appellant had attempted to “dig up as much dirt” as possible about appellees
without regard to its relevance; appellant had threatened to destroy and ruin Dr.
Bakker’s dental practice through litigation and publicity; and appellant had improperly
accused Dr. Bakker of being a child molester. Mem. op. at 2-8 (citing letters dated


                                             -5-
January 23, 1992, and February 14, 1992). The district court found that appellant’s
reason for obtaining the credit reports was a blatant attempt to coerce a settlement from
Dr. Bakker's insurance carrier.

      When appellant obtained the credit reports in September 1995 and April 1996,
15 U.S.C. § 1681b(3) provided in part that

      any consumer reporting agency may furnish a consumer report under
      the following circumstances and no other:

             ....

             (3) To a person which it has reason to believe--
             (A) intends to use the information in connection with a credit
      transaction involving the consumer on whom the information is to be
      furnished and involving the extension of credit to, or review or
      collection of an account of, the consumer; or
             (B) intends to use the information for employment purposes; or
             (C) intends to use the information in connection with the
      underwriting of insurance involving the consumer; or
             (D) intends to use the information in connection with a
      determination of the consumer’s eligibility for a license or other benefit
      granted by a governmental instrumentality required by law to consider
      an applicant’s financial responsibility or status; or
             (E) otherwise has a legitimate business need for the information
      in connection with a business transaction involving the consumer.


In 1996 § 1681b was amended and the “business need” exception was renumbered
as § 1681b(a)(3)(F). That subsection now provides that a party may obtain a report
if it “otherwise has a legitimate business need for the information–– (i) in connection
with a business transaction that is initiated by the consumer; or (ii) to review an
account to determine whether the consumer continues to meet the terms of the
account.” Consumer Credit Reform Act of 1996, Pub. L. No. 104-208, § 2403, 110
Stat. 3009, 3009-430 (1996). Because the 1996 amendment does not apply here (its
effective date was 365 days after September 30, 1996), our statutory analysis


                                          -6-
does not consider it. See Duncan v. Handmaker, No. 96-6523, 1998 WL 292256, at *2
n.3 (6th Cir. June 8, 1998) (noting 1996 amendment arguably restricts scope of
business need exception), citing Northrop v. Hoffman of Simsbury, Inc., 134 F.3d 41,
45 n.5 (2d Cir. 1997).

      Appellant testified that she obtained the credit report on Dr. Bakker seeking
information concerning his ability to satisfy a judgment if the parties settled the
underlying litigation. She admitted that the first credit report did not contain any such
information. Yet, she subsequently obtained a second credit report on Dr. Bakker and
his two daughters. Her explanation for obtaining credit reports on Dr. Bakker’s
daughters was to see if Dr. Bakker was transferring assets to his daughters. Appellant
gave no explanation why she thought the later reports might provide helpful information
even though the earlier report had not done so. Mem. op. at 9-10.

       Appellant argues that, because she obtained the credit reports in connection with
the underlying litigation against Dr. Bakker, they were obtained for a commercial or
professional use and not in connection with a consumer transaction. Thus, she
contends that the credit reports are not consumer reports covered by the FCRA. The
district court rejected this argument, holding that appellant’s alleged purpose did not
alter the fact that the credit reports in question were consumer reports within the
meaning of the Act. Order at 5. The definition of “consumer reports” under the Act
is “limited to information that is ‘used or expected to be used or collected’ in
connection with a ‘business transaction’ involving one of the ‘consumer purposes’ set
out in the statute, that is, eligibility for personal credit or insurance, employment
purposes, and licensing.” Ippolito v. WNS, Inc., 864 F.3d at 451.

       We hold that, regardless of appellant’s intended use of the credit reports, these
reports are consumer reports within the meaning of the FCRA because the information
contained therein was collected for a consumer purpose. Under the FCRA whether a
credit report is a consumer report does not depend solely upon the ultimate use to




                                          -7-
which the information contained therein is put, but instead, it is governed by the
purpose for which the information was originally collected in whole or in part by the
consumer reporting agency. St. Paul Guardian, 884 F.2d at 883-84.

      In other words, even if a report is used or expected to be used for a non-
      consumer purpose, it may still fall within the definition of a consumer
      report if it contains information that was originally collected by a
      consumer reporting agency with the expectation that it would be used for
      a consumer purpose.

Ippolito v. WNS, Inc., 864 F.3d at 453. Furthermore, appellant’s contract with the
Credit Bureau of Fayetteville/Springdale indicated that the reports were subject to the
Act and that she agreed that she would only request the information when she intended
to use the information in relation to consumer purposes identical to those set out in the
Act, i.e., eligibility for personal credit or insurance, employment purposes and licensing
or a business transaction involving the consumer.

       Next, appellant contends pursuant to § 1681b(3)(E) that she had a legitimate
business need for the credit reports. Appellees, of course, argue that appellant failed
to articulate a legitimate business need within the Act’s exception. We hold that
appellant cannot be said to have a legitimate business need within the meaning of the
Act unless and until she can prove or establish that she and appellees were involved in
a business transaction involving a consumer. In order to be entitled to the business
need exception found in § 1681b(3)(E), the business transaction must relate to “a
consumer relationship between the party requesting the report and the subject of the
report” regarding credit, insurance eligibility, employment, or licensing. Houghton v.
New Jersey Mfrs. Ins. Co, 795 F.2d 1144, 1149 (3d Cir. 1986). Appellant admits that
she and appellees were not involved in any consumer transaction involving the
extension of credit, insurance, employment, or licensing. Thus, no consumer
relationship existed between appellant, the party requesting the reports, and appellees,
the subjects of the reports, and the business need exception did not apply. We also


                                           -8-
reject appellant's argument that , as an attorney representing clients in litigation, she had
a business need to obtain credit reports on the opposing parties. See Duncan v.
Handmaker, 1998 WL 292256, at *2-3; cf. Mone v. Dranow, 945 F.2d at 308
(employer's obtaining credit report for purpose of determining whether employee would
be able to satisfy judgment was not for lawful purpose).

       Finally, we consider appellant’s argument that the punitive damages award was
unreasonable. Title 15 U.S.C. § 1681q provides criminal penalties for knowingly and
willfully obtaining a credit report under false pretenses. A violation of this criminal
statute is a violation of any requirement imposed under the subchapter within the
meaning of §§ 1681n and 1681o. Hansen v. Morgan, 582 F.2d 1214, 1218 (9th Cir.
1978) (violation of § 1681q forms a basis of civil liability under §§ 1681n and 1681o).
Therefore, obtaining a credit report under false pretenses creates civil liability under the
FCRA. Where civil liability exists because of a willful failure to comply with the
requirements of the Act, the consumer may recover (1) any actual damages sustained
by the consumer as a result of the failure; (2) such punitive damages as the court may
allow; and (3) in the case of any successful action to enforce liability under this section,
the costs of the action together with reasonable attorney’s fees as determined by the
court. 15 U.S.C. § 1681n(a).

       Therefore, the question becomes whether the evidence showed that appellant’s
and her associates’ conduct in obtaining the reports was willfully done. “To show
willful noncompliance with the FCRA, [the plaintiff] must show that [the defendant]
‘knowingly and intentionally committed an act in conscious disregard for the rights of
others,’ but need not show ‘malice or evil motive.’” Cushman v. Trans Union Corp.,
115 F.3d 220, 226 (3d Cir. 1997), citing Philbin v. Trans Union Corp., 101 F.3d 957,
970 (3d Cir. 1996) (citing Pinner v. Schmidt, 805 F.2d 1258, 1263 (5th Cir. 1986), cert.
denied, 483 U.S. 1022 (1987)); accord Thornton v. Equifax, Inc., 619 F.2d 700, 705
(8th Cir.), cert. denied, 449 U.S. 835 (1980). In Millstone v. O’Hanlon Reports, Inc.,
528 F.2d 829 (8th Cir. 1976) (O'Hanlon), an opinion written by Associate Justice Tom


                                            -9-
C. Clark, sitting by designation, the credit reporting agency had produced a report on
the plaintiff which was filled with inaccuracies. There was evidence that the
defendant’s agent did a sloppy job because he had only devoted, at most, 30 minutes
to prepare the report. Justice Clark concluded that the defendant had willfully violated
both the spirit and the letter of the FCRA by “trampling recklessly” upon the plaintiff's
rights thereunder, upheld the recovery of damages for “mere mental pain and anxiety,”
and also held that the trial court was acting within its discretion when it awarded
punitive damages. Id. at 834-35. “Actual damages are not a statutory prerequisite to
an award of punitive damages under the [FCRA].” Yohay v. City of Alexandria
Employees Credit Union, Inc., 827 F.2d 967, 972 (4th Cir. 1987) (noting an award of
punitive damages in the absence of any actual damages, in an appropriate case,
comports with the underlying deterrent purpose of FCRA).

        Here, the district court found that at the very early stages of the underlying
litigation, appellant and her associates set out upon a course of conduct, which in the
words of O’Hanlon, 528 F.2d at 835, “willfully violated both the spirit and the letter of
the Fair Credit Reporting Act . . . by trampling recklessly upon [appellees’] rights
thereunder.” That conduct was obviously a blatant attempt to extract a settlement from
Dr. Bakker’s insurance carrier, without regard to whether such conduct was fair or a
clear violation of Rule 4.4 of the Arkansas Rules of Professional Conduct.

       The district court further found that appellant intentionally and egregiously
threatened Dr. Bakker with loss of his profession, both by the destruction of his name
and by forfeiture or suspension of his dental license. Appellant’s conduct included
allegations that Dr. Bakker and his wife had been involved in child molestation matters,
allegations that could have had a devastating effect upon their lives even if false.
Finally, the district court found that appellant’s multiple requests for credit reports on
Dr. Bakker and his daughters were designed and intended to carry on the “vendetta”
that appellant's law firm pursued against appellees.



                                          -10-
      While it is true that appellees were not able to produce any actual out-of-pocket
expenses or costs incurred as a result of appellant's willful conduct, appellees testified
about how they felt when appellant obtained their credit reports and violated their
privacy, thereby causing them some emotional distress. We hold that the district court
did not abuse its discretion in awarding appellees actual and punitive damages.

      Accordingly, the judgment of the district court is affirmed.

      A true copy.

             Attest:

                     CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




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