United States: Ninth Circuit Revisits Article III Standing For An Alleged FCRA Violation

Last Updated: August 21 2017
Article by Rod M. Fliegel and Allen P. Lohse

On August 15, 2017, the U.S. Court of Appeals for the Ninth Circuit issued another opinion in the saga of Robins v. Spokeo, Inc.—a case dealing with the question of what violations of a federal statute are sufficient to confer Article III standing. The plaintiff alleges Spokeo violated the federal Fair Credit Reporting Act ("FCRA") by reporting inaccurate information about him. While the district court dismissed for lack of standing, the Ninth Circuit reversed and found that the plaintiff established an injury-in-fact. In May 2016, the U.S. Supreme Court vacated the Ninth Circuit's opinion and declared that a plaintiff does not "automatically" have the requisite injury-in-fact "whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." The Supreme Court held that the Ninth Circuit's standing analysis was incomplete because it did not address the "concreteness" element—i.e., whether the statutory violation cause some "real" harm that "actually exists in the world."1 On remand from the Supreme Court, the Ninth Circuit has now determined that the plaintiff 's allegations of inaccurate reporting of information about his marital status, age, education background and employment history constitute harm sufficiently concrete to satisfy the injury-in-fact requirement for standing.

Summary of the Allegations and Prior Decisions

Spokeo provides a "people search engine" that compiles consumer data and builds individual consumer profiles. Spokeo generates search results, in response to an inquiry, that contain an array of details about a person's life, including name, age, e-mail address, marital status, occupation, hobbies and finances. Spokeo allegedly markets to companies, claiming its search results provide a way to learn more about prospective business associates and employees.

The plaintiff alleges that Spokeo, in the capacity of a "consumer reporting agency" ("CRA") subject to the FCRA, published a report on him that falsely stated his age, marital status, wealth, education level and profession. These search results contained "flattering inaccuracies," which portrayed the plaintiff as the holder of a master's degree, relatively affluent, and married with children. Still, the plaintiff filed a FCRA suit alleging Spokeo failed to "follow reasonable procedures to assure maximum possible accuracy" of the information in violation of 15 U.S.C. § 1681e(b). The plaintiff alleges that the reporting errors had in fact harmed his employment prospects at a time when he was out of work, and caused him resulting emotional distress.

The district court dismissed the case for lack of standing, finding the plaintiff alleged only a bare violation of the statute divorced from any actual injury. The Ninth Circuit, reversing the district court, determined that the plaintiff did allege an injury sufficient to confer standing. The Ninth Circuit explained that the plaintiff "alleges that Spokeo violated his statutory rights not just the statutory rights of other people," and that his "personal interests in the handling of the credit information are individualized rather than collective."

The U.S. Supreme Court rejected the Ninth Circuit's analysis as incomplete. The Court explained that standing requires a plaintiff to plead an injury-in-fact that is both "particularized" and "concrete." The Ninth Circuit, however, addressed only the "particularized" nature of the alleged injury, and not whether the injury was "concrete"—i.e., "'real' and not 'abstract.'" In this regard, the Ninth Circuit erred by implicitly relying on Spokeo's alleged statutory violation, without more, to find concreteness. The Supreme Court explained that "Article III standing requires a concrete injury even in the context of a statutory violation." The Court also reasoned that "not all inaccuracies cause harm or present any meaningful risk of harm" and "[a] violation of one of the FCRA's procedural requirements may result in no harm." The Court therefore remanded to the Ninth Circuit to address the "concreteness requirement."

The Ninth Circuit's New Decision

On remand, the Ninth Circuit determined that the plaintiff has sufficiently pled a concrete injury under the Supreme Court's rubric. The panel began by noting "that some statutory violations, alone, do establish concrete harm." The Ninth Circuit endorsed the Second Circuit's standard for determining concreteness in the context of a statutory violation: "an alleged procedural violation [of a statute] can by itself manifest concrete injury where Congress conferred the procedural right to protect a plaintiff's concrete interests and where the procedural violation presents 'a risk of real harm' to that concrete interest." Therefore, to establish concrete harm, a plaintiff must demonstrate that (1) "the statutory provisions at issue were established to protect his concrete interests (as opposed to purely procedural rights);" and, if so, (2) "the specific procedural violations alleged in the case actually harm, or present a material risk of harm to, such interests."

Answering the first question, the Ninth Circuit determined that Congress established the FCRA provision at issue (§ 1681e(b)) to protect consumers' concrete interests—i.e., to protect consumers from the transmission of inaccurate information in consumer reports. The Ninth Circuit found that the interests protected by the FCRA's procedural requirements are "'real,' rather than purely legal creations," and that the "dissemination of false information in consumer reports can itself constitute a concrete harm" and has "real-world implications." The Ninth Circuit compared the interests the FCRA protects to "other reputational and privacy interests that have long been protected in the law," including data breach and defamation. As the Ninth Circuit explained, the similarities between FCRA claims and these common law causes of action show 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." The Ninth Circuit determined that "the FCRA procedures at issue in this case were crafted to protect consumers' (like Robins's) concrete interests in accurate credit reporting about themselves."

As to the second question—whether the alleged violation harms, or present a material risk of harm to, the concrete interest—the Ninth Circuit initially noted: "This second requirement makes clear that, in many instances, a plaintiff will not be able to show a concrete injury simply by alleging that a consumer reporting agency failed to comply with one of the FCRA's procedures." The Ninth Circuit used the hypothetical of a CRA whose failure to follow certain FCRA requirements does not result in creation of an inaccurate report. Under this scenario, the statute would have been violated, but the violation alone would not have affected the protected interests in accurate reporting. The Ninth Circuit also rejected the plaintiff's argument that any FCRA violation premised on some inaccurate disclosure of information is sufficient for standing. As the Ninth Circuit explained, "every minor inaccuracy" (such as an incorrect zip code or misreporting a person's age by a day or their wealth by a dollar) will not create the risk of real harm.

Thus, the concreteness determination "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." The Ninth Circuit found that the plaintiff had alleged facts "substantially more likely to harm his concrete interests than the Supreme Court's example of an incorrect zip code." The alleged inaccuracies relate to the plaintiff's age, marital status, employment, graduate degrees and wealth level. The plaintiff also alleges that the inaccurate report "'caused actual harm to [his] employment prospects' by misrepresenting facts that would be relevant to employers." While the Ninth Circuit acknowledged that the "misrepresentations could seem worse," and that many of the inaccuracies were actually "flattering," the court agreed with the plaintiff that this was the type of information important to employers—the accuracy of which the FCRA seeks to protect. The Ninth Circuit further reasoned that such inaccuracies "can hurt an individual's employment prospects as they may cause a prospective employer to questions the applicant's truthfulness or to determine that he is overqualified for the position sought." In sum, the Ninth Circuit found that the alleged inaccuracies were not the sort of "'mere technical violations' which are too insignificant to present a sincere risk of harm to the real-world interests that Congress chose to protect with FCRA." Therefore, the Ninth Circuit found that the plaintiff adequately alleged the elements necessary for standing and remanded the case to the district court.

Takeaways

The FCRA is a fertile source of nationwide class action litigation against consumer reporting agencies and employers.2 Standing to proceed with FCRA claims in federal court is an evolving area of the law. While the Ninth Circuit has generally adopted a plaintiff-friendly standard, it remains to be seen whether its generous interpretation will find acceptance in other courts.

Footnotes

1 See Rod Fliegel and Phil Gordon, U.S. Supreme Court Holds Not Every Violation of a Federal Statute is a Ticket to File a Federal Court Lawsuit, Littler Insight (May 17, 2016).

2 See Rod Fliegel, California Court Certifies FCRA Class of Over 40,000 Applicants (Jul. 17, 2017); Rod Fliegel, Ninth Circuit is the First Appellate Court to Rule on "Extraneous Text" in a FCRA Background Check Disclosure, Littler Insight (Jan. 25, 2017); Rod Fliegel, Weathering the Sea Change in Fair Credit Reporting Act Litigation in 2014, Littler Insight (Jan. 6, 2014); Rod Fliegel and William Simmons, The Swelling Tide of Fair Credit Reporting Act (FCRA) Class Actions: Practical Risk-Mitigating Measures for Employers, Littler Report (Aug. 1, 2014).

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.

Authors
Rod M. Fliegel
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
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
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

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 or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq 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 of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions