Ninth Circuit in Spokeo: Inaccurate Consumer Reports Support Standing in FCRA Cases

by Fenwick & West LLP
Contact

Fenwick & West LLP

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.

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.

© Fenwick & West LLP | Attorney Advertising

Written by:

Fenwick & West LLP
Contact
more
less

Fenwick & West LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):
hide

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.

Security

JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.