[00:00:03] Speaker 02:
The next case for argument is Howard Mayo versus Experian Information Solutions.

[00:00:09] Speaker 02:
Looks like we have one council on Zoom.

[00:00:11] Speaker 02:
Mr. Grimm, can you hear me?

[00:00:12] Speaker 05:
Yes, I can, your honor.

[00:00:15] Speaker 05:
Can you hear me?

[00:00:15] Speaker 02:
Yes.

[00:00:18] Speaker 02:
And I guess we'll give council a minute to change tables.

[00:00:56] Speaker 02:
Mr. Graham, whenever you're ready to proceed.

[00:01:01] Speaker 05:
Your honors, and may it please the court, Andrew Graham on behalf of plaintiff, appellant Howard Mayo.

[00:01:08] Speaker 05:
I respectfully request two minutes for rebuttal, your honors.

[00:01:15] Speaker 05:
Everyone agrees that preclusion principles can apply stemming from a

[00:01:22] Speaker 05:
small claims court judgment in Washington.

[00:01:26] Speaker 05:
The dispute here is about how to apply it.

[00:01:30] Speaker 05:
And I think there are three principles connected with three central authorities that I'd just like to highlight and address any questions that your honors have.

[00:01:41] Speaker 05:
So I think the first broad principle discussed in the statement second is that the procedure of the forum

[00:01:49] Speaker 05:
of the rendering judgment is intimately connected to the preclusion principles.

[00:01:55] Speaker 05:
And so we're used to federal court, which is arguably the most procedurally complex forum.

[00:02:01] Speaker 05:
This is a judgment coming out of a small claims court.

[00:02:05] Speaker 05:
And so a knee-jerk application of federal preclusion law is not warranted.

[00:02:12] Speaker 05:
We want to think about how does

[00:02:14] Speaker 05:
the procedure differ.

[00:02:16] Speaker 05:
And I think there's one, there are many differences that we discussed, but I think one that's crucial for a very narrow reversal here.

[00:02:24] Speaker 05:
And it stems from the Avery decision that the district court relied on.

[00:02:29] Speaker 05:
And the Avery decision says that if there is no jurisdiction for the rendering court to have considered

[00:02:40] Speaker 05:
those claims, then preclusion does not apply as to those claims.

[00:02:47] Speaker 05:
And under RCW 1240-010, the only relief that the Washington Small Claims Court can provide is monetary relief.

[00:02:59] Speaker 05:
And Mr. Mayo had already maxed that out at $10,000.

[00:03:04] Speaker 05:
So even a penny of additional relief requested would have divested

[00:03:09] Speaker 05:
and the court that would have digested the small claims court of jurisdiction.

[00:03:14] Speaker 05:
And so that leads to a very straightforward, very narrow reversal, which is if there are any claims that weren't brought, we typically think of a common nucleus theory in federal court because we have unlimited jurisdiction.

[00:03:28] Speaker 05:
The magic's number is 75,000 for diversity cases, and you can't go below it.

[00:03:34] Speaker 05:
You can go unlimited above it.

[00:03:35] Speaker 05:
You can bring as many claims as you want.

[00:03:37] Speaker 05:
And so that's not true for a small claims court.

[00:03:41] Speaker 05:
So the narrow reversal we are requesting in that respect.

[00:03:46] Speaker 05:
is to say that for any claims that were not adjudicated in the Small Claims Tribunal, those should not be held as precluded, because there was no jurisdiction to have heard them.

[00:04:00] Speaker 05:
So that's the first big point.

[00:04:02] Speaker 02:
Can I ask, the Fair Credit Reporting Act, is there a statutory penalty for each violation, or what's the remedy usually for these violations?

[00:04:15] Speaker 05:
The remedy is, it depends if it's negligent or willful.

[00:04:19] Speaker 05:
If the court determines it's willful, it's $1,000 statutory damages plus actual damages plus punitives plus attorney fees.

[00:04:30] Speaker 05:
If it determines it's negligent, I believe that's actual damages plus attorney fees.

[00:04:36] Speaker 05:
In this case, I think there's meaningful actual damages to Mr. Mayo, assuming that he were to prevail because

[00:04:44] Speaker 05:
his allegations are his loss of his credit history meant he couldn't get a condominium and that renting portions of that would supplement his veteran's income.

[00:04:55] Speaker 05:
And then in turn, that would allow him to be in the black every month or a little bit of extra money.

[00:05:03] Speaker 02:
So you were suggesting a narrow path to reverse.

[00:05:07] Speaker 02:
Isn't it just a narrow path to say that these are not common nucleus effects, that they all happen on separate dates, and so therefore they're different nucleus effects?

[00:05:18] Speaker 05:
That would work as well, Your Honor.

[00:05:20] Speaker 05:
I think either one of those works, because the Washington Supreme Court has told us if they arise on separate dates,

[00:05:26] Speaker 05:
and they're not in the common nucleus.

[00:05:28] Speaker 05:
So that would work as well.

[00:05:31] Speaker 00:
And if I might, in that regard also, that as to each alleged failure under the Fair Court Reporting Act, the act specifically, I think section 1681 requires that there's a period of 30 days if there has been no reasonable reinvestigation of a matter, meaning in this case, as to each incident

[00:05:52] Speaker 00:
there's a 30-day period for at least having some kind of reinvestigation of it would also apply, would it not?

[00:05:59] Speaker 00:
In terms of a series of events as opposed to one issue.

[00:06:03] Speaker 05:
That's correct.

[00:06:04] Speaker 05:
And so I think that shows that they should be treated separately.

[00:06:08] Speaker 05:
I also think that there's a really big pragmatic importance to not doing a broad common nucleus theory in small claims court.

[00:06:19] Speaker 05:
If I'm a nonprofit lawyer, if I get someone who seems to have a small claim, you can send it to a small claims court.

[00:06:29] Speaker 05:
But if there's a worry of a common nucleus and you'd have to investigate every possible claim for everyone you can't take, then you wouldn't want to send them there on the risk that

[00:06:40] Speaker 05:
you're on the risk that they might face preclusion.

[00:06:42] Speaker 05:
So you'd want to send them to a claim of unlimited jurisdiction, like the Washington Superior Court.

[00:06:47] Speaker 05:
When that happens, Experian has to remove, because there's a lot more cost of litigation to that, and they have unlimited exposure on the upside, again, punitive damages.

[00:06:55] Speaker 05:
So I think the point of res judicata is to save courts time.

[00:06:59] Speaker 05:
It's a finality principle, but it's also to preserve public resources for adjudication of other claims.

[00:07:05] Speaker 05:
And so a broad common nucleus restructures the incentives away from

[00:07:10] Speaker 05:
a small claims court and in favor of an unlimited court, which exacerbates the smallest of claims.

[00:07:17] Speaker 05:
And I think that's utterly contrary to the whole reason that we apply claim preclusion.

[00:07:22] Speaker 05:
So I think that's an important consideration is how it structures the incentives of where people who may not have access or ability to have a full-time lawyer get sent in the system.

[00:07:33] Speaker 01:
Would you agree that all of the claims arise out of the alleged erroneous reporting of the closed account?

[00:07:45] Speaker 01:
If not, then show me one that's different.

[00:07:52] Speaker 05:
Yet they do, but they're a little bit different because there's the reasonable procedure claims, and then there's the reasonable investigation claims.

[00:08:01] Speaker 05:
And those are two separate types of claims.

[00:08:05] Speaker 05:
And so one relates to the investigation that the credit reporting agency here, Experian, has to do.

[00:08:15] Speaker 05:
The other relates to

[00:08:19] Speaker 05:
that relates to their procedures for ensuring accuracy in the first place.

[00:08:24] Speaker 05:
But for the purposes of this appeal, the district court took for granted that the claims are arising separately over time.

[00:08:32] Speaker 05:
And of course, there are two separate types of claims.

[00:08:36] Speaker 05:
So I think for the purposes of the appeal, that was taken for granted below.

[00:08:40] Speaker 05:
We presented that, took that position in our opening brief.

[00:08:44] Speaker 05:
experienced, strategically chose not to challenge that because it allows to clarify some principles, important ones, we think, of Residua Carta, Your Honor.

[00:08:54] Speaker 01:
And would you agree that all of these claims existed at the time of the entry of judgment in the Small Claims Court, correct?

[00:09:05] Speaker 01:
I mean, there are no claims that postdate the judgment.

[00:09:11] Speaker 05:
I believe that's correct, but that goes back to the point that- I just want to make sure I understand the record.

[00:09:19] Speaker 05:
I think that's correct.

[00:09:22] Speaker 05:
They don't post-state the judgment, but there had been no ability to bring additional claims once he's already put the $10,000 amount in controversy.

[00:09:33] Speaker 05:
I've scoured the statute in the case law, there's nothing that would suggest that he has to just waive his other claims for the purposes of that.

[00:09:41] Speaker 02:
Is it also true that some of the claims occurred after argument in small claims occurred and then entry of judgment?

[00:09:50] Speaker 02:
I think that that's right.

[00:09:51] Speaker 05:
That's my understanding of the timing of that.

[00:09:54] Speaker 02:
Right, so to have brought those claims under small claims, you would have to

[00:09:57] Speaker 02:
like restart the proceedings, and then re-amended the complaint, and then get a judgment after that, right?

[00:10:07] Speaker 05:
Yeah, I think you'd essentially be re- from my perspective, I mean, small claims procedure is very different, but it'd be like kind of trying to bring new claims on the eve of trial is more complex.

[00:10:19] Speaker 02:
You want to save some time for rebuttal?

[00:10:20] Speaker 05:
Yeah, can I save some time for rebuttal, Your Honor?

[00:10:22] Speaker 02:
Go ahead.

[00:10:23] Speaker 05:
Thank you.

[00:10:27] Speaker 04:
Good morning, Your Honors, and may it please the court, Nathaniel Garrett for Experian.

[00:10:31] Speaker 04:
Judge Boumete, I want to start with your last question, because I think it's actually a critical factual point.

[00:10:37] Speaker 04:
None of the claims accrued or relate to a time period after the hearing.

[00:10:44] Speaker 04:
The hearing was on December 16, 2020.

[00:10:47] Speaker 04:
There is one reinvestigation claim that comes after the complaint was filed in August 2020.

[00:10:57] Speaker 04:
And the last reasonable, the last, what he calls a credit report, it's not really a credit report, but the last one he calls a credit report was October 26th.

[00:11:06] Speaker 04:
That was before the December hearing.

[00:11:09] Speaker 04:
That's because the reporting was corrected a month before the small claims hearing in November of 2020.

[00:11:16] Speaker 04:
So all his claims could have been argued in the small claims decision.

[00:11:22] Speaker 02:
So there are nine claims, right, of reinvestigation.

[00:11:25] Speaker 02:
Correct.

[00:11:26] Speaker 02:
And then when was the hearing?

[00:11:28] Speaker 02:
December 16th of 2020.

[00:11:35] Speaker 00:
Mr. Garrett, the Small Claims Court never made any findings as to the reinvestigation issue.

[00:11:44] Speaker 04:
Well, it granted judgment to experience on both claims, so I think.

[00:11:48] Speaker 00:
But exactly what in the record goes in any way made any findings as to that?

[00:11:53] Speaker 04:
Well, we're not here to argue issue preclusion.

[00:11:55] Speaker 04:
I understand.

[00:11:56] Speaker 04:
But the point is the claims were made and judgment was entered on inexperience.

[00:12:01] Speaker 00:
Is it correct in terms of the ambit of this in terms of

[00:12:05] Speaker 00:
the issue of race judicata as to a fair court reporting that claim.

[00:12:08] Speaker 00:
If I'm wrong on this, but first of all, in the small claims court, it isn't that you don't have counsel, you're not allowed to have counsel.

[00:12:16] Speaker 04:
Neither side is.

[00:12:17] Speaker 04:
So we didn't either, Your Honor.

[00:12:19] Speaker 00:
My point is that there is no opportunity for discovery.

[00:12:22] Speaker 04:
That's correct.

[00:12:23] Speaker 04:
And that's exactly what State Farm versus Avery.

[00:12:25] Speaker 00:
I understand.

[00:12:26] Speaker 00:
I'm just trying to make sure the big picture is clear here.

[00:12:28] Speaker 00:
So there's no opportunity for discovery.

[00:12:31] Speaker 00:
There's no permissibility.

[00:12:32] Speaker 00:
It isn't that someone proceeds, per se.

[00:12:34] Speaker 00:
Someone is not allowed to have an attorney.

[00:12:37] Speaker 00:
And essentially, the small claims court judge in the Washington small claims court then informally conducts discovery, correct?

[00:12:48] Speaker 04:
The judge can ask questions.

[00:12:49] Speaker 04:
I mean, the parties are supposed to bring their evidence to the hearing.

[00:12:52] Speaker 00:
So it sounds to me like if you proceed, if you're an individual person and you feel a Fair Credit Reporting Act has been violated, it sounds to me like if you make the mistake of going into a small claims court, that just brings the curtain down.

[00:13:07] Speaker 00:
Well, certainly.

[00:13:07] Speaker 00:
With respect to any findings as to the requirements of the Fair Credit Reporting Act?

[00:13:11] Speaker 00:
In terms of reinvestigation, in terms of the 30-day time period, clearly the Fair Credit Reporting Act has a 30-day reinvestigation requirement, does it not?

[00:13:21] Speaker 00:
Correct.

[00:13:21] Speaker 00:
All right.

[00:13:22] Speaker 00:
And so there's literally no opportunity to investigate that in the sense that if one chooses to go into small claims court,

[00:13:28] Speaker 00:
You not only have the issue of the jurisdictional limit under 12-40-10, I mean, $10,000 limit, but the entire issue of the Fair Court Reporting Act is in fair play, apparently, in the hands of a small claims court judge.

[00:13:42] Speaker 04:
I think those are really important arguments as a policy matter that could be made to a legislature, and that's why different states have different rules about the preclusive effect of small claims court.

[00:13:51] Speaker 04:
But Washington has made that decision, both with respect to issue preclusion and claim preclusion.

[00:13:55] Speaker 04:
It differs from other states in some ways, but it's made that determination that these are entitled to claim preclusive effect.

[00:14:01] Speaker 04:
And as to the jurisdiction argument, which is really the main argument made in the

[00:14:05] Speaker 04:
In a complaint, I mean, number one, it was waived.

[00:14:07] Speaker 04:
It wasn't made below, but I do want to, I'm certainly going to address the merits.

[00:14:11] Speaker 04:
This is the precise issue addressed in the restatement section 24 comment G and we cite a legion of cases that have looked at, that have followed that rule and looked at that issue and held that if the plaintiff voluntarily brings a claim in small claims court.

[00:14:26] Speaker 04:
even though they had the opportunity to go to a court of general jurisdiction in the same state, claim preclusion principles apply.

[00:14:32] Speaker 04:
There's a legion of cases that hold that.

[00:14:34] Speaker 04:
Simmons, the Second Circuit, recently held that.

[00:14:38] Speaker 04:
So there's a good reason for that, because while Mr. Mayo may benefit from beholding that no claim preclusion applies,

[00:14:45] Speaker 04:
there are dangerous consequences to holding that preclusion doesn't apply to small claims court.

[00:14:50] Speaker 04:
It means that you could have inconsistent verdicts.

[00:14:54] Speaker 02:
It means that there's going to be de novo review in the superior court, regardless of... Yeah, I mean, I agree with all that, but why are these individual events, nine events, not different nucleus of facts?

[00:15:08] Speaker 02:
That's what I don't understand.

[00:15:09] Speaker 04:
Sure.

[00:15:10] Speaker 04:
So I think nucleus of facts,

[00:15:12] Speaker 04:
looks at as as the court as the decisions hold it looks at whether the key that claims are related in time space motivation and origin whether they would form a convenient trial unit.

[00:15:23] Speaker 04:
And whether the parties would expect all these to be treated as a whole.

[00:15:27] Speaker 04:
And I think here clearly they would.

[00:15:29] Speaker 04:
This is what Mr. Mayo himself has said.

[00:15:31] Speaker 04:
This is one series of events from November 2019 to 2020.

[00:15:35] Speaker 04:
It was one account that he believes should be reporting open that was reported closed.

[00:15:40] Speaker 04:
He made a series of requests to Experian to look at why his report was reporting as closed or open.

[00:15:49] Speaker 02:
They were all this the same request to reinvestigate the same sure, but I just don't understand the limits of that so like say that you know That mr. Mayo gets in a fight with the same guy nine times Same exact fact pattern the guy comes over and punches him in the face nine different times nine different days Are you saying that like we can't charge that person with assault nine different times or has to be one assault charge?

[00:16:13] Speaker ?:
I

[00:16:13] Speaker 04:
what what i'm no no right what so that is trying to see how it because the difference here is these were all about the same account they were reaching about the same and i think they might matter but that they and and eight of the nine occurred before he filed his small claims complaint and the point of claim preclusion is to say could you have brought your client yet could you but it is you know say he brought him uh... in assault charge in small claims claim

[00:16:38] Speaker 02:
If he only brought four of the assaults, you're saying he couldn't bring in the other five assaults.

[00:16:44] Speaker 04:
If a plaintiff sued on all nine assaults had occurred before the first time, and he says, we have a problem with our relationship, I don't know what the claim would be, but he's saying, I'm suing you for physical injury, and he doesn't include five of them, absolutely claim precluded.

[00:17:01] Speaker 04:
Absolutely, because he could have and should have brought those if they're all related to the same dispute, which here they are, they're all related to the same account.

[00:17:09] Speaker 02:
I mean, it's not the criminal case, but in the criminal context, you would not agree that that's the same, right?

[00:17:14] Speaker 02:
They could have been nine separate charges.

[00:17:15] Speaker 04:
I don't know about the criminal context, but what I am imagining is all the problems that would arise if you had a consumer who, let's say,

[00:17:24] Speaker 04:
two, even two different disputes and then bring suit on one.

[00:17:29] Speaker 04:
The court says, no, that was reasonable.

[00:17:31] Speaker 04:
The account was accurate.

[00:17:34] Speaker 04:
And then he files a second time and says, well, I could have brought that before, but now I want to relitigate the accuracy of this before a different judge.

[00:17:41] Speaker 04:
I mean, I think that's exactly the kind of inconsistent verdicts we ought to be concerned about with quite a few.

[00:17:46] Speaker 02:
But they're discrete events.

[00:17:47] Speaker 02:
I mean, so this involves reinvestigation, right?

[00:17:51] Speaker 02:
You know if if he complains once experience supposed to investigate and then that the failure to reinvestigate is the cause of action correct.

[00:18:00] Speaker 02:
So one time experience could do one action and on the second time it could do second action.

[00:18:05] Speaker 02:
Right.

[00:18:06] Speaker 02:
Right.

[00:18:06] Speaker 04:
So but I think what your honor's question is getting to is a little more about issue preclusion.

[00:18:10] Speaker 04:
I mean there might be an argument that for example.

[00:18:12] Speaker 04:
Well, it wasn't exactly the same issue that was litigated last time because you had different facts you should investigate.

[00:18:18] Speaker 04:
I get that.

[00:18:19] Speaker 04:
But claim preclusion is different.

[00:18:20] Speaker 04:
Claim preclusion here is about should he have included this in the first suit because the parties would have expected to litigate all these issues at once.

[00:18:28] Speaker 02:
And I think... Doesn't that all go back to the... It seems like the concession that the Federal Credit Reporting Act is all discrete claims.

[00:18:37] Speaker 02:
Each event is a discrete claim.

[00:18:39] Speaker 04:
Well, there's a difference between reinvestigation and reasonable procedures claims that I do think is important.

[00:18:43] Speaker 04:
So the reinvestigation claims, he's got nine different claims.

[00:18:47] Speaker 04:
Eight of them occurred before the first complaint was filed.

[00:18:50] Speaker 04:
One occurred before judgment.

[00:18:52] Speaker 04:
I do want to make the point that under Washington law, what matters is whether those claims accrued before judgment, not after the complaint was filed.

[00:19:00] Speaker 04:
That's Cotus Bodi from this case.

[00:19:02] Speaker 04:
It's Weaver.

[00:19:03] Speaker 02:
So all of those claims we think are... I think it's a little... My reading of those cases is a little more ambiguous than that.

[00:19:08] Speaker 04:
I think Cotus Bodi, we do think was clear about that, but I take your honor's point.

[00:19:13] Speaker 04:
The reasonable procedures claim is a little different because

[00:19:16] Speaker 04:
That's tied to credit reports, which go to third parties.

[00:19:19] Speaker 04:
In the complaint, there's only two credit reports alleged.

[00:19:23] Speaker 04:
This is at 335 and 342 of the excerpts of record.

[00:19:26] Speaker 04:
And both of those happened before the complaint was filed.

[00:19:29] Speaker 04:
And so he clearly had an opportunity.

[00:19:31] Speaker 04:
In fact, one of those, he definitely did litigate in the small claims judgment and had an opportunity.

[00:19:37] Speaker 02:
But for now, for at least our purposes, we can say that the reinvestigation claims is each of the failure, the nine failures to reinvestigate claims are discrete claims.

[00:19:47] Speaker 04:
Well, again, we didn't really brief that because we don't think it's material because we think the issue is really

[00:19:53] Speaker 04:
Was there a common nucleus of operative factor?

[00:19:55] Speaker 04:
Whether they accrue separately or together, are they all part of the same dispute?

[00:19:59] Speaker 04:
Are they related in origin, time, and motivation?

[00:20:02] Speaker 04:
And here we think they are.

[00:20:03] Speaker 04:
While they occurred on different dates, they were the same complaint about the same account for the same reason.

[00:20:11] Speaker 04:
We clearly experienced and expected that if we were going to litigate this issue of the Bank of Missouri account, let's do it in one fell swoop.

[00:20:18] Speaker 04:
I think Mr. Mayo actually had the same expectation.

[00:20:21] Speaker 04:
He just says he discovered

[00:20:23] Speaker 04:
certain evidence after the fact.

[00:20:27] Speaker 04:
Any further questions, Your Honors?

[00:20:28] Speaker 02:
Thank you.

[00:20:28] Speaker 04:
Thank you.

[00:20:29] Speaker 02:
Thank you, counsel.

[00:20:38] Speaker 05:
Thank you, Your Honors.

[00:20:39] Speaker 05:
I want to make a few quick points.

[00:20:43] Speaker 05:
First of all, to my friend's concerns about inconsistent judgments, I think that's an issue preclusion, which we're not deciding.

[00:20:50] Speaker 05:
So if the concern is,

[00:20:52] Speaker 05:
I think that's a separate issue we're not looking at today.

[00:20:58] Speaker 05:
The second, he mentioned that Washington has adopted these, and I would note the Washington Supreme Court has never spoken on these questions whatsoever.

[00:21:08] Speaker 05:
And in fact, there's no Washington State Supreme Court decision

[00:21:13] Speaker 05:
that has ever looked at it in the small claims, the closest is the 2019 Weaver decision, which we think is one of the most important authorities should be consulted.

[00:21:23] Speaker 05:
And it goes there.

[00:21:26] Speaker 05:
If your honors would be open to it, we'd be happy to file a certification motion to have the Washington State Supreme Court clarify some of this, because the two decisions relied on are Avery and Landry, which are from 1990

[00:21:40] Speaker 05:
I think 2002, and don't go there.

[00:21:43] Speaker 05:
The third point that we think is important is the Washington Supreme Court's Weaver decision requires a consideration of the justice principles or injustice considerations, and those weren't considered.

[00:21:55] Speaker 05:
They render it fundamentally different and an equitable consideration.

[00:21:59] Speaker 05:
And I think the final point, if I may, Your Honor.

[00:22:02] Speaker 05:
Go ahead.

[00:22:03] Speaker 05:
I think the final point here is what

[00:22:05] Speaker 05:
What is being suggested is that Mr Mayo would have had to have sacrificed a bunch of claims to go to small claims court that would radically shifts the incentives to where you file.

[00:22:15] Speaker 05:
If you file in Superior Court, they're going to remove.

[00:22:18] Speaker 05:
So it's counterproductive to the whole purpose of of residue.

[00:22:24] Speaker 05:
a simple forum where you can resolve some of the claims.

[00:22:27] Speaker 05:
So I think I respectfully disagree with my friend on those points.

[00:22:31] Speaker 02:
Okay.

[00:22:31] Speaker 02:
Thank you, counsel.

[00:22:32] Speaker 02:
This case is submitted and we are adjourned for today.