Dutta: The Ninth Circuit Strikes Another Blow to FCRA Plaintiffs

by Bryan Cave Leighton Paisner

On July 13, 2018, the United States Court of Appeals for the Ninth Circuit affirmed summary judgment against a plaintiff that lacked Article III standing to assert a claim under the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (“FCRA”).  In Dutta v. State Farm Mutual Automobile Insurance Company, 895 F.3d 1166 (9th Cir. 2018), the Ninth Circuit held that the plaintiff "failed to establish facts showing that he suffered actual harm or material risk of harm." The Ninth Circuit harmonized principles from the Supreme Court’s ruling in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) (“Spokeo II”), as well as the Second Circuit’s Strubel v. Comenity Bank, 842 F.3d 181 (2nd Cir. 2016) ruling.  The ruling provides construct under which defendants may successfully challenge a plaintiff's implausible or incorrect factual assertions of actual harm at the summary judgment stage. This outcome is another significant piece of the Article III standing puzzle, particularly after the Supreme Court’s refusal to clarify its stance on the issue earlier this year (see Client Alert here). 

Article III Standing Under Spokeo II

In Spokeo II, the Supreme Court addressed head-on the issue of plaintiffs asserting claims under federal statutes, such as the FCRA, despite the lack of any accompanying injury resulting from the statutory violation.  Article III standing requires (1) an injury-in-fact, (2) fairly traceable to the challenged conduct, (3) that is likely to be redressed by a favorable judgment.  At issue in Spokeo II was whether the FCRA plaintiff had suffered an injury-in-fact sufficient to confer standing.  The Supreme Court instructed that Congress cannot create Article III standing by inserting a private right of action into a federal statute, such as the FCRA. Rather, the injury-in-fact requirement required the plaintiff’s injury be both concrete and particularized, and that these requirements are to be evaluated separately, even when the plaintiff asserts a statutory violation.  The Supreme Court further clarified that concrete injuries can be tangible or intangible, but that, when the injury is intangible, the mere fact that Congress codified a cause of action does not confer Article III standing.  To confer standing, the intangible injury must be real and have a close relationship to traditional, common law harms.  Importantly, a plaintiff does not satisfy the requirements for Article III standing by alleged only a “bare procedural violation, divorced from any concrete harm.”

Dutta Background

The Dutta dispute arose in conjunction with Bobby Dutta’s (“Dutta”) application for employment with State Farm.  As part of his application, Dutta authorized State Farm to obtain his credit report.  State Farm’s policy was to disqualify any applicant whose credit report indicated a charged off account greater than $1,000 or three or more 90-day late payments over the previous two years.  After State Farm obtained Dutta’s credit report, the company notified him that his employment application had been rejected because of a charged off debt and two loan delinquencies that had occurred in the previous two years.  Three days later, Dutta received from State Farm the FCRA required pre-adverse action notice, which enclosed a copy of his credit report, and advised him that he had five days to contact State Farm if the report contained any inaccuracies or incomplete information.  Dutta contacted State Farm within the five day period to advise of alleged inaccuracies in the report, but State Farm advised him that his application was deemed withdrawn. 

Both the district court and Ninth Circuit subsequently held that the inclusion of the charged off debt and delinquencies on Dutta’s credit report was, in fact, accurate.  Additionally, both courts accepted evidence that State Farm would have rejected Dutta’s employment even if the alleged inaccuracies were removed from Dutta’s report. The Ninth Circuit found that State Farm introduced evidence "which dashed any hope Dutta might have had to assert more than a bare procedural violation," and which made alleged inaccuracies in the credit report Plaintiff raised "immaterial."

The District Court Case

Dutta filed an FCRA claim against State Farm, alleging that State Farm violated Section 1681b(b)(3)(A) of the statute, which regulates when third parties are permitted to obtain a consumer’s credit report for employment purposes, and requires that such employers provide employees and prospective employees with notice that they intend to take adverse action against the employee or prospective employee (e.g., denial of employment) prior to taking such adverse action.  Dutta alleged that State Farm violated the statute by failing to timely provide a copy of his credit report, failing to timely provide a summary of his rights under the FCRA, and failing to allow him sufficient time to correct alleged inaccuracies in his report.

After the Supreme Court’s ruling in Spokeo II, State Farm filed a motion for summary judgment on the grounds that Dutta lacked Article III standing to assert his FCRA claim because he had not suffered a concrete injury.  The district court agreed and granted summary judgment in favor of State Farm.  The district court first held that the alleged violation of Section 1681b(b)(3)(A) was procedural, as opposed to substantive, because it related to the timing of State Farm’s compliance with the statute.  In other words, Dutta’s claim was simply that State Farm complied with the statute three days later than it should have.  The district court next held that Dutta lacked standing under Spokeo to state a claim based on this procedural violation because he had not suffered a concrete injury from the delay.  The district court found that Dutta had not suffered a concrete injury because the credit reporting at issue on Dutta’s report was, in fact, accurate.  Thus, Dutta suffered no injury from State Farm’s delayed compliance with the FCRA because any dispute of the items in the report would have been futile.  The district court found this to be a “textbook example” of a bare procedural violation of the FCRA that lacks standing under Spokeo II

The Appeal

The Ninth Circuit recognized Dutta’s appeal to be “another installment in the development of the jurisprudence evolving from the Supreme Court’s decision in [Spokeo II].”  In considering the appeal, the Ninth Circuit reiterated that Spokeo II remains good law and recited a number of the Spokeo II pillars that guide a court’s consideration of an FCRA plaintiffs’ standing:

  • “To be ‘concrete’ the injury ‘must actually exist’ – that is, it must be ‘real’ and ‘not abstract’ or purely ‘procedural’ – but it need not be tangible.”
  • “In simple terms, the fact that Congress has created a statutory right does not automatically and always confer Article III standing for a plaintiff to sue in federal court for a plausibly claimed breach of it.”
  • “Congress’s identification of such harms ‘does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.”
  • “In short, ‘Article III standing requires a concrete injury even in the context of a statutory violation.’”
  • “Accordingly, the plausible pleading of a flat out violation of a statutory provision will not necessarily support a civil law suit in federal court since ‘a bare procedural violation [of a law creating that right], divorced from any concrete harm’ will not constitute an injury-in-fact as demanded by Article III.”
  • “In other words, we must consider whether, in the case before us, the procedural violation caused a real harm or a material risk of harm.”

Applying these pillars, the Ninth Circuit agreed with the district court that Dutta lacked Article III standing because, although he had plausibly pled a violation of the FCRA, Dutta had not demonstrated that any “actual harm” resulted from State Farm’s violation. The Ninth Circuit found that Dutta had not established a concrete injury because the alleged credit reporting inaccuracies raised by Dutta were accurate, and that, even if that was not the case, there were additional delinquencies on Dutta’s credit report that would have caused State Farm to reject Dutta’s employment application regardless.  Thus, even if State Farm had complied with the FCRA and timely provided the required notices and information to Dutta, the result would have been the same, i.e., State Farm would have rejected Dutta’s employment application. The Ninth Circuit analogized Dutta’s lack of injury to a plaintiff’s lack of injury from the issuance of an unredacted receipt.  See Bassett v. ABM Parking Services, Inc., 883 F.3d 776 (9th Cir. 2018). Dutta therefore lacked Article III standing, and the ruling of the district court was affirmed.

As of the date of this Client Alert, Dutta has not sought a rehearing or en banc determination of the Ninth Circuit’s decision.  His deadline to do so is in August 2018.


Dutta confirms that Plaintiffs do not have a free pass to jurisdiction in federal court.  Certainly, Dutta does not challenge the Ninth Circuit’s prior holding in Robins v. Spokeo, Inc., 867 F.3d 1108 (9th Cir. 2017) (“Spokeo III”) (see Client Alert here) that some intangible harms (such as the violation of consumers’ right to accurate credit reporting about their age, marital status, education background, and employment history) may rise to the level of concrete harm even without actual, monetary injury. However, under Dutta, it is abundantly clear that many procedural violations of the FCRA (such as the timing of providing required notice) do not create standing absent a resulting concrete injury. Plaintiffs must have suffered a real world injury to gain access to federal court.

To this end, Spokeo II clarified and numerous other courts – including Dutta – have subsequently upheld that a mere statutory violation alone does not confer Article III standing if there is not an accompanying concrete injury. In the context of the FCRA, this means that plaintiffs cannot rely on a defendant’s procedural violation of the statute’s procedural requirements – for instance, State Farm’s three day delay in providing the required pre-adverse action notice to Dutta – to provide standing.  Plaintiffs must be able to identify a real harm that resulted from the statutory violation, and a plaintiff will not be able to do so when the alleged violation giving rise to the claim did not cause any real world impact on the plaintiff.  Any inability to identify an injury resulting from the FCRA violation will be fatal and result in dismissal of the claim.

Additionally, the Ninth Circuit’s decision in Dutta is independently significant to employers across the country.  Dutta is the first federal appellate court decision to address Spokeo II and Article III standing in the context of an employer’s alleged violation of Section 1681b(b)(3)(A) of the FCRA, which governs an employer’s pre-adverse action notice to employees or prospective employees. Prior to Dutta, federal district courts across the country have been split regarding whether a statutory violation of Section 1681b(b)(3)(A), without further injury, is sufficiently concrete to confer Article III standing.  While Dutta will be binding only in the Ninth Circuit, the significance of a federal appellate court finally weighing in and finding a violation of the FCRA’s employment adverse action provision does not confer standing is likely to have far reaching consequences that we will see in the coming weeks and months.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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