M.D.N.C.: Scott v. Full House Marketing — No “Bad Faith” in FCRA Claim, Even After Jury Loss

Summary:

In Scott v. Full House Marketing, Inc., No. 1:21-cv-242 (M.D.N.C. Sept. 30, 2025), Judge William Osteen, Jr. denied the defendant’s motion for attorneys’ fees and costs after a jury verdict in its favor on claims under the Fair Credit Reporting Act (FCRA). Full House Marketing argued that both the plaintiff, Derrick Scott, and his counsel acted in “bad faith” by pursuing a baseless claim and prolonging litigation unnecessarily. The court disagreed, holding that neither 15 U.S.C. § 1681n(c) nor 28 U.S.C. § 1927 justified a fee award.

Scott had sued Full House Marketing and its background-check vendor, Resolve Partners, alleging that he was denied employment based on an inaccurate consumer report that confused him with another person. Although the jury found for Full House on the negligence claim, it found against Resolve. After the verdict, Full House sought sanctions and fees, asserting that Scott had fabricated portions of his résumé and continued litigating after evidence undermined his case.

Judge Osteen found that the FCRA’s bad-faith fee provision requires proof of subjective bad faith at the time of filing — not merely that the claims later failed. He emphasized that earlier rulings denying Rule 11 sanctions and summary judgment already established that Scott’s claims had “some factual basis.” Likewise, § 1927 sanctions against counsel were inappropriate, since overestimating a case’s strength or rejecting settlement offers is not “unreasonable and vexatious” conduct. As the court concluded, “[a] mistake in judgment does not amount to bad faith.”

Commentary:

This decision offers a measured reaffirmation of the high bar for fee-shifting under both the FCRA and § 1927 — a bar that remains especially relevant in consumer litigation where plaintiffs’ counsel often press close factual questions against corporate defendants. The court’s refusal to equate loss at trial with bad faith in filing stands as an important guardrail against chilling legitimate, if ultimately unsuccessful, FCRA claims.

For consumer  practitioners, Scott reinforces two parallel themes familiar from dischargeability and fee-reasonableness disputes:

1. Objective weakness ≠ subjective bad faith.
   Just as an unsuccessful § 523(a)(2) complaint does not automatically trigger § 523(d) fees, a losing FCRA claim is not “bad faith” merely because a jury disagreed. The focus remains on the filer’s mental state at filing — a distinction crucial when creditors attempt to penalize debtors or their counsel for asserting rights under the FCRA, FDCPA, or RESPA.

2. Counsel’s persistence is not misconduct.
   Judge Osteen’s observation that “a mistake in judgment does not amount to bad faith” could easily apply to debtors’ attorneys who litigate plan confirmation or stay-violation claims that later fail. Zealous advocacy and aggressive strategy — even when frustrating to the other side — are not sanctionable absent genuine vexatiousness or dishonesty.

In sum, Scott v. Full House Marketing tempers the reflexive urge to punish consumer plaintiffs after a defense verdict, reminding courts that losing a close case is not the same as filing a frivolous one.

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