United States: Ninth Circuit In Spokeo: Inaccurate Consumer Reports Support Standing In FCRA Cases

The U.S. Court of Appeals for the Ninth Circuit held that allegations that Spokeo Inc. published an inaccurate consumer report in violation of the Fair Credit Reporting Act established a concrete injury sufficient to confer Article III standing. This new Robins v. Spokeo decision, which came down on Aug. 15, is significant not only because it makes it easier for plaintiffs to bring statutory violation cases but also because it places the Ninth Circuit firmly on the side of those circuits which have found that violations of federal statutory rights are generally sufficient to create Article III standing.

Fair Credit Reporting Act

Congress enacted the Fair Credit Reporting Act to "ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." See Safeco Ins. Co. of Am. v. Burr (2007). The FCRA imposes procedural requirements on any "consumer reporting agency" that "regularly . . . assembl[es] or evaluat[es] consumer credit information . . . for the purpose of furnishing consumer reports to third parties." One of these requirements is that "[w]henever a consumer reporting agency prepares a consumer report, it shall follow reasonable procedures to assure maximum possible accuracy of the information concerning the individual about whom the report relates."

The FCRA provides a private right of action for willful or negligent failures to comply with its requirements. For willful violations, plaintiffs may recover statutory damages, punitive damages, and attorney's fees and costs.

Background

Spokeo operates a website that compiles consumer data and builds individual consumer information profiles. Parties can visit the website to view a report containing information about a person's life, such as age, contact information, marital status, occupation, hobbies and economic health.

Thomas Robins discovered that Spokeo had published a profile of him which inaccurately stated that he was in his 50's, married with children, employed in a professional or technical field, possessed a graduate degree and that his wealth level was higher than it actually was. Robins sued Spokeo for willfully violating the various procedural requirements under FCRA, including failing to "follow reasonable procedures to assure maximum possible accuracy" of the information in his consumer report.

The district court dismissed Robin's complaint for lack of standing, concluding that he had only alleged a bare violation of the statute which was not an actual injury-in-fact. The Ninth Circuit reversed the dismissal in Robins v. Spokeo (9th Cir. 2014) (Spokeo I), holding that Robins had suffered a concrete and particularized injury because he had alleged that Spokeo had violated his specific statutory rights. After the Supreme Court granted certiorari in Spokeo v. Robins (2016) (Spokeo II), it vacated the Ninth Circuit's decision, holding that, although the Ninth Circuit had properly addressed whether the alleged injuries were particularized as to Robins, the Ninth Circuit did not conduct a proper analysis concerning whether the alleged injuries were sufficiently concrete as well. Therefore, the Supreme Court remanded the case to the Ninth Circuit with instructions to consider specifically whether the injuries alleged by Robins met the "concreteness requirement" imposed by Article III.

Ninth Circuit Decision – A Second Time Around

Taking up Robin's FCRA allegations once again, the Ninth Circuit again reversed the district court's dismissal, concluding that Robin's alleged injuries were sufficiently concrete for purposes of Article III standing.

The Ninth Circuit began its analysis by reviewing the Supreme Court's decision. Citing Spokeo II, the Ninth Circuit noted that plaintiffs must allege a concrete injury, which may be either tangible or intangible, in the context of a statutory violation, and not simply "bare procedural violation" of the statute. In determining whether an intangible injury is sufficiently concrete, the court explained that "Congress is well positioned to identify intangible harms that meet minimum Article III requirements," and "its judgment is . . . instructive and important." Moreover, even if an injury was "previously inadequate at law," Congress may elevate it to "the status of [a] legally cognizable injur[y]."

With the Supreme Court's guidance in mind, the Ninth Circuit looked to whether the FCRA was established to protect consumers' concrete interests (as opposed to their purely procedural rights). The Ninth Circuit observed that "the Supreme Court seems to have assumed that, at least in general, the dissemination of false information in consumer reports can itself constitute a concrete harm." The court also observed that the interests that the FCRA protects are similar to other "reputational and privacy interests that have long been protected in the law[,]" and although "there are differences between FCRA's cause of action and those recognized at common law, the relevant point is that Congress has chosen to protect against a harm that is at least closely similar in kind to others that have traditionally served as the basis for lawsuit." Thus, informed by both Congress and historical practice, the Ninth Circuit held that Congress enacted the FCRA to protect consumers' concrete interest in accurate credit reporting.

The Ninth Circuit then addressed whether the injuries alleged by Robins actually harmed, or at least created a material risk of harm, to this concrete interest. The Ninth Circuit found that "Spokeo II requires some examination of the nature of the specific alleged reporting inaccuracies to ensure that they raise a real risk of harm to the concrete interests that FCRA protects." Noting that Robin's Spokeo profile contained inaccurate information about his age, marital status, profession, education level and wealth, the court found that "[i]t [did] not take much imagination to understand how inaccurate reports on such a broad range of material facts about Robin's life could be deemed a real harm." Indeed, the Ninth Circuit found that "[e]ven if their likelihood to actually harm Robin's job search could be debated, the inaccuracies alleged in this case do not strike us as the sort of 'mere technical violation[s]' which are too insignificant to present a sincere risk of harm to the real-world interest that Congress chose to protect with the FCRA."

Finally, the Ninth Circuit rejected Spokeo's argument that the injuries alleged by Robins were too speculative to establish a concrete injury. The Ninth Circuit held that both the challenged conduct and the attendant injury had already occurred as Spokeo had already published a "materially inaccurate consumer report" about Robins resulting in the alleged intangible injury caused by the report.

Takeaways

The new Spokeo decision exacerbates a growing division among the circuits concerning how Spokeo II is applied in federal statutory injury cases. It is consistent with prior Ninth Circuit precedent in Syed v. M-I (9th Cir. 2017) and Van Patten v. Vertical Fitness Group (2017) and the Third Circuit's decision in In re Horizon Healthcare Services Data Breach Litig. (3d Cir. 2017) in adopting an expansive interpretation of Spokeo II and recognizing Article III standing based on violations of the statutory protections created by federal privacy statutes, such as the FCRA. However, other circuits have applied Spokeo II much more narrowly in federal statutory injury cases and found that procedural or technical violations of statutory rights created by Congress without any allegations of actual harm do not establish a concrete injury and Article III standing. For instance, the Fourth Circuit in Dreher v. Experian Info. Solutions (4th Cir. 2017) and Seventh Circuit in Groshek v. Time Warner Cable (7th Cir. 2017) both denied Article III standing in cases alleging procedural FCRA violations on this basis. This circuit split will likely not be resolved until and if the Supreme Court decides to take up the issue again.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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