The U.S. Court of Appeals for the Fifth Circuit issued a decision Monday vacating sanctions against attorneys in a Fair Credit Reporting Act case involving alleged identity theft, reversing a district court's determination that the lawsuit was baseless.
In *Fletcher v. Experian Information Solutions, Incorporated* (5th Cir. 2026), the appeals court ruled on Case No. 25-20086, which centered on plaintiff Robert Fletcher's claims that he was the victim of identity theft and never opened an automobile finance account that became delinquent and was reported to credit bureaus.
Fletcher, represented by Jaffer & Associates, PLLC, sued both Bridgecrest Credit Company, L.L.C., the loan's holder and servicer, and Experian Information Solutions, the credit bureau that reported the delinquent loan. The case arose under the Fair Credit Reporting Act, which governs how credit reporting agencies handle consumer credit information and disputes.
The legal dispute began when Fletcher discovered a delinquent auto loan on his credit report that he claimed he never authorized or opened. Under the FCRA, consumers have the right to dispute inaccurate information on their credit reports, and credit reporting agencies must investigate such disputes and remove information that cannot be verified.
The U.S. District Court for the Southern District of Texas, however, took a harsh view of Fletcher's claims. After reviewing the case, the district court determined that the Fair Credit Reporting Act claims were baseless and imposed significant financial penalties on Fletcher's legal representation.
Under Federal Rule of Civil Procedure 11, the district court awarded attorney fees to Bridgecrest. Rule 11 sanctions are designed to deter frivolous litigation by requiring attorneys to conduct reasonable investigations before filing lawsuits and to ensure that legal claims have factual and legal support.
The district court went further, also awarding attorney fees to Experian under 28 U.S.C. § 1927. This statute allows courts to impose attorney fee sanctions when an attorney "unreasonably and vexatiously" multiplies court proceedings. Section 1927 sanctions are considered more severe than Rule 11 sanctions and require a finding of bad faith or intentional misconduct.
The dual sanctions represented a significant rebuke of Fletcher's legal team and suggested the district court viewed the identity theft claims as not merely weak, but potentially frivolous or brought in bad faith.
However, the Fifth Circuit Court of Appeals reached a different conclusion. In a per curiam opinion issued January 6, 2026, a three-judge panel consisting of Chief Judge Elrod and Circuit Judges Smith and Wilson vacated the sanctions order and remanded the case back to the district court.
The appeals court's decision to vacate the sanctions suggests that the district court may have erred in its analysis of either the underlying Fair Credit Reporting Act claims or the standards for imposing attorney fee sanctions. Per curiam opinions are typically used for cases that don't require extensive legal analysis or where the outcome is relatively straightforward based on existing precedent.
The Fifth Circuit's ruling is significant for Fair Credit Reporting Act litigation, particularly in cases involving identity theft claims. Identity theft has become increasingly common, and victims often face challenges in removing fraudulent accounts from their credit reports even when they can demonstrate they never opened the disputed accounts.
The case also highlights the tension between courts' desire to prevent frivolous litigation and the need to ensure that legitimate consumer protection claims can proceed through the legal system. FCRA cases often involve complex factual disputes about whether consumers actually opened disputed accounts, making it challenging for courts to determine early in litigation whether claims have merit.
For credit reporting agencies like Experian, the decision may signal that courts should be cautious about finding FCRA claims baseless, particularly in identity theft cases where factual development may be necessary to resolve disputes about account ownership.
The remand means the case will return to the Southern District of Texas for further proceedings. The district court will need to reconsider its sanctions ruling in light of the Fifth Circuit's decision, though the appeals court's opinion does not provide detailed guidance on what specific errors led to the vacation of the sanctions.
The case serves as a reminder that Rule 11 and Section 1927 sanctions should be imposed carefully, particularly in consumer protection cases where the underlying facts may be complex and require discovery to fully develop. While courts have broad authority to prevent abuse of the legal system, they must balance this authority against the need to ensure access to justice for consumers claiming violations of their rights under federal consumer protection statutes.
The decision in *Fletcher* may encourage other identity theft victims to pursue FCRA claims against credit reporting agencies, knowing that courts cannot simply dismiss such cases as baseless without careful consideration of the factual allegations and applicable legal standards.