United States: The Third Circuit Holds That Allegations That Personal Information Was Improperly Disclosed In Violation Of The Fair Credit Reporting Act Are Sufficient To Establish Standing At The Pleading Stage

Last week, the Third Circuit held that allegations of the unauthorized disclosure of personal information in violation of the Fair Credit Reporting Act (FCRA) constituted a de facto injury sufficient to confer standing at the pleading stage in reversing the dismissal of a class action complaint in a data breach case in In re: Horizon Healthcare Services, Inc. Data Breach Litigation, No. 15-2309 (3d Cir. Jan. 20, 2017).

The Fair Credit Reporting Act

The FCRA was enacted to "ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. V. Burr, 551 U.S. 47, 52 (2007). It imposes certain 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." 15 U.S.C. § 1681a(f). The FCRA provides a private right of action against consumer reporting agencies for their willful or negligent failures to comply with the FCRA's requirements. See 15 U.S.C. § 1681n(a) & 1681o(a).


Horizon Healthcare Services, Inc., d/b/a Horizon Blue Cross Blue Shield of New Jersey ("Horizon") provides health insurance products and services and collects and maintains both personally identifiable information and protected history information in the ordinary course of business. During the week of November 1, 2013, two laptop computers alleged to contain the unencrypted personal information of more than 839,000 members of Horizon insurance plans were stolen from Horizon's headquarters. After the theft, Horizon alerted the affected members by letter and a press release. Horizon offered one year of credit monitoring and identity theft protection services to the affected members.

The four named plaintiffs — Courtney Diana, Mark Miesel, Karen Pekelney, and Mitchell Rindner — filed a class action complaint on June 27, 2014, on behalf of all Horizon members whose personal information was stored on the stolen laptops, asserting both willful and negligent violations of FCRA and various state law violations. Plaintiffs alleged that Horizon was a consumer reporting agency which "furnish[ed]" their information in an unauthorized manner by allowing it to fall into the hands of thieves. They also alleged that Horizon fell short of its FCRA responsibility to adopt reasonable procedures, such as encryption, to keep their personal information confidential. One of the fourt plaintiffs alleged he had experienced identity theft following the incident.

The district court dismissed the complaint, concluding that plaintiffs had not alleged a cognizable injury sufficient to confer Article III standing. The district court found that any future risk of harm, such as identity fraud or theft, depended on the "conjectural conduct of a third party bandit," and was too "attenuated" to establish standing.

Third Circuit Decision

The Third Circuit reversed the district court's dismissal and remanded the case for further proceeding in in In re: Horizon Healthcare Services, Inc. Data Breach Litigation, No. 15-2309 (3d Cir. Jan. 20, 2017), concluding that plaintiffs' allegations that their personal information was disclosed without their authorization in violation of the FCRA was sufficient to establish standing at the pleading stage. Because the district court had not ruled on Horizon's Rule 12(b)(6) challenge, the Third Circuit did not reach the issue of whether the complaint's questionable allegation that Horizon was a consumer reporting agency adequately pleaded a claim under FCRA.

The court began its standing analysis by revisiting two of its recent decisions in favor of allowing plaintiffs to sue for violations of their statutory rights, even without allegations of additional injury. In re Google Inc. Cookie Placement Consumer Privacy Litigation, 806 F.3d 125 (3d Cir. 2015), the Third Circuit found that, despite not having suffered any actual monetary loss, plaintiffs still possessed standing because their allegations that the placement of cookies (i.e., small files with identifying information) on their web browsers – violated several federal and state statutes, including the Stored Communications Act, constituted a concrete injury. The Court found that "the actual or threatened injury required by Art. III may exist solely by virtue of statutes creating standing." Google, 806 F.3d at 134. Similarly, in In re Nickelodeon Consumer Privacy Litigation, 827 F.3d 262 (3d Cir. 2016), the Third Circuit held that plaintiffs who alleged that Viacom and Google had unlawfully collected their personal information on the Internet in violation of numerous federal and state statutes, including the Wiretap Act and the Video Privacy Protection Act, had standing because "the unlawful disclosure of legally protected information" in violation of these statutes constituted a "clear de facto injury." Nickelodeon, 827 F.3d at 274.

Citing Spokeo v. Robins, 136 S. Ct. 1540, 1549 (2016), the Third Circuit noted that plaintiffs must allege a concrete injury, which may be either tangible or intangible, and not simply a "bare procedural violation." In determining whether an intangible injury is concrete, the Court explained "Congress is well positioned to identify intangible harms that meet minimum Article III requirements," and "its judgment is ... instructive and important." Id. Moreover, even if an injury was "previously inadequate at law," Congress may elevate it "to the status of [a] legally cognizable injur[y]." Id.

Turning to the allegations of the complaint, the Third Circuit held that "with the passage of FCRA, Congress established that the unauthorized dissemination of personal information by a credit reporting agency causes an injury in and of itself – whether or not the disclosure of that information increased the risk of identity theft or some other future harm." Horizon, No. 15-2309, at 27. The Court continued: "[Congress] created a private right of action to enforce the provisions of FCRA, and even allowed for statutory damages for willful violations – which clearly illustrates Congress believed that the violation of FCRA causes a concrete harm to consumers." Id. The court found, therefore, that the alleged dissemination of personal information by a consumer reporting agency is not a bare procedural violation. Given the "close relationship" between the intangible harm that FCRA seeks to remedy and the harm that formed the basis for invasion of privacy lawsuits, the Third Circuit concluded that the "unauthorized dissemination" of personal information in violation of FCRA constituted "a de facto injury that satisfies the concreteness requirement of Article III standing." Id. at 30, 31.


Horizon has substantial implications for data breach litigation involving companies that are alleged to be consumer reporting agencies under FCRA. Prior appellate decisions in data breach cases not involving FCRA claims, such as Lewert v. P.F. Chang's China Bistro, Inc., 819 F.3d 963 (7th Cir. 2016), and Galaria v. Nationwide Mut. Ins. Co., No. 15-3386 (6th Cir. Sept. 12, 2016), required plaintiffs to allege not only that their personal information was stolen but also that they faced an increased risk of identity theft and incurred mitigation costs in order to establish the existence of a particularized and concrete injury sufficient to confer Article III standing. This standard made it extremely difficult to have a data breach complaint dismissed at the pleading stage. Horizon raises that bar and makes a dismissal even less likely where the complaint alleges the defendant was a consumer reporting agency under FCRA or was otherwise regulated by statute creating a right against dissemination of personal information. Under Horizon, plaintiffs in data breach cases (at least in the Third Circuit) need not allege that they will suffer any potential harm from a breach of a consumer reporting agency. Nor do they need to allege that they engaged in any mitigation efforts or incurred any mitigation costs. Instead, these plaintiffs need only allege that the unauthorized disclosure or dissemination of their personal information violated a Congressional statute that provides a personal right of action to establish a de facto injury and survive a motion to dismiss for lack of standing.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
25 Oct 2017, Conference, California, United States

CALOBA is excited to bring you our General Counsel (GC) roundtable event. Our distinguished panel of top legal counsel will share their experiences at the helm of some of the top technology companies.

30 Oct 2017, Seminar, California, United States

This program will address some of the hottest legal and policy topics that online platforms have brought to the fore: free speech, hate speech, fake news, privacy and surveillance, artificial intelligence, augmented reality, changing notions of “ownership” of information and software-enabled consumer products, and the perennial issue of copyright.

8 Nov 2017, Conference, California, United States

Fenwick & West is proud to be participating in PLI’s 49th Annual Institute on Securities Regulation scheduled for November 8-10, 2017 at The Roosevelt Hotel in New York City. The Institute is considered the premier conference, as well as one of the longest running, in the securities law field.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.