Settlement Amount:
$1.9 Million

Case Name:
DONNA K. MATHEWS, On Behalf of Herself and All Others Similarly
Situated and on Behalf of the General Public v. GOVERNMENT
EMPLOYEES INSURANCE COMPANY (GEICO)

Case number and date:
96 -1850-B (CGA) Date: 9/20/98

Plaintiffs:
Donna Mathews On Behalf of Herself and All Others Similarly
Situated and on Behalf of the General Public

Defendants:
GOVERNMENT EMPLOYEES INSURANCE COMPANY

Facts and Background:
This class action was filed in San Diego Superior Court on
September 20, 1996. The state action alleged causes of action for
Violation of the Consumer Credit Reporting Agencies Act,
Unlawful, Unfair and Fraudulent Business Practices, and
Negligence arising out of defendant’s use of consumer credit
reports to evaluate applicants for employment. The gravamen of
the complaint concerned allegations that defendant failed to
inform the applicants that their employment had been denied, in
whole or in part, based on information contained in consumer
credit reports. Defendant removed the action to the United States
District Court, Southern District of California. The class was
certified on October 27, 1997.

Plaintiffs’ Contentions:
Defendant failed to inform the applicants that their employment
had been denied, in whole or in part, based on information
contained in consumer credit reports.

Defendants’ Contentions:
GEICO admitted that its actions directly violated the plain
letter of the Fair Credit Reporting Act (15 U.S.C. Section 1681,
et seq., "FCRA"). FCRA requires that employers inform affected
persons that their employment was denied based on credit report
considerations and to provide those persons with the name,
address and telephone number of the credit reporting agency that
provided the adverse credit information. However, despite its
admission that its actions violated the FCRA, GEICO contended
that it maintained "reasonable procedures" to ensure compliance
with the FRCA and plaintiffs’ claim should be dismissed. In
addition, GEICO contended that the potential applicants suffered
no damages as a result of its failure to notify them that their
employment had been denied, in whole or in part, based on
information contained in their credit reports. GEICO also
contended that punitive damages were not justified, since its
failure to notify rejected applicants was not knowing or willful.

Injuries and/or Damages:
Civil penalties. Punitive Damages.