After Remand, Ninth Circuit Once More Reinstates FCRA Claims Against Spokeo

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by: Colin E. Flora

Today, we finally return to the Supreme Court of the United States’ decision in Spokeo, Inc. v. Robins. In our prior discussion, we covered the SCOTUS decision that determined the Ninth Circuit had not applied the proper, well-settled standard for determining Article III standing and remanded the case for further consideration. The two-justice dissent agreed with the majority that the Ninth Circuit had not applied the correct standard, but thought it was apparent that the claims were sufficient to establish standing and would have ordered the district court, which had dismissed the case, to reinstate it.

As I noted before, the SCOTUS sending the case back to the Ninth Circuit is, due to the procedural posture, an odd result. The review of the dismissal was de novo, which, as is always the case in the relationship between the Supreme Court and Courts of Appeals vis-à-vis the district courts, meant that the Ninth Circuit is in no different a position to resolve the matter than the Supreme Court. Nevertheless, here we are to discuss the Ninth Circuit’s decision earlier this week.

The case was brought for alleged violations of the Fair Credit Reporting Act (“FCRA”) for the posting of what is claimed to be inaccurate information about the plaintiff on Spokeo’s website. In order for him to be permitted to bring a case in federal court–but not true for all state courts–he needed to show that he suffered both a “particularized” and “concrete” injury from the posting. The original Ninth Circuit decision found that there was particularized harm, but did not tease out concreteness.

On remand, the Ninth Circuit set to address concreteness. And, as I had long predicted, the Ninth Circuit agreed with the Supreme Court dissent and found concrete harm. Remember, the Supreme Court majority did not say that there wasn’t. Now let us look at the specifics.

The first part of the analysis was to understand when concrete injury may be found as a result of a mere violation of a statutory right. Looking to the Supreme Court’s decision and cases from circuit courts applying that decision, the Ninth Circuit recognized “that 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.” So the inquiry turned to whether the FCRA was meant to protect Robins’s concrete interests.

As to the Congressional purpose of the FCRA, the Ninth Circuit wrote:

[W]e agree with Robins that Congress established the FCRA provisions at issue to protect consumers’ concrete interests. We have previously observed that [the] FCRA “was crafted to protect consumers from the transmission of inaccurate information about them” in consumer reports. Put differently, [the] FCRA aims “to ensure fair and accurate credit reporting” and to “protect consumer privacy.” “To achieve this end,” [the] FCRA imposes on consumer-reporting agencies “a host of [procedural] requirements concerning the creation and use of consumer reports” and, as mentioned, allows individuals to sue those which are non-compliant. Relevant to Robins’s claims, § 1681e(b) of the statute specifically requires reporting agencies to “follow reasonable procedures to assure maximum possible accuracy” of the information contained in an individual’s consumer report.

     With that purpose in mind, the court “ha[d] little difficulty concluding that these interests protected by FCRA’s procedural requirements are ‘real,’ rather than purely legal creations.” The court further noted that the Supreme Court’s decision appears “to have assumed that, at least in general, the dissemination of false information in consumer reports can itself constitute concrete harm.” Further, that the ubiquity of consumer reports in American society provides very real dangers when inaccurate. “Indeed, the legislative record includes pages of discussion of how such inaccuracies may harm consumers in light of the increasing importance of consumer reporting nearly fifty years ago.”

After further considering the analogous privacy interests in defamation and distinguishing those interests in part–mind you, the closer the injury is to an intangible injury recognized at common law, the more likely it is to be “concrete,” so distinguishing the injury is not helpful to Robins–the court summarized its conclusion: “In short, guided by both Congress’s judgment and historical practice, we conclude that the FCRA procedures at issue in this case were crafted to protect consumers’ (like Robins’s) concrete interest in accurate credit reporting about themselves.”

The second part of the analysis asked “whether Robins has alleged FCRA violations that actually harm, or at least that actually create a ‘material risk of harm’ to, this concrete interest.” This part of the analysis turned the focus from the FCRA as a whole, to the specific circumstances alleged by Robins. The court found that there is a line to be drawn between the Supreme Court’s analogy of a merely technical violation by misreporting a zip code, though some circumstances suggest even a zip code could be important. (Imagine that the zip code is all that is reported for location and shows a person as residing in New York City when he lives and is applying for a job in Texas; that report may lead an employer who prefers his picante sauce from Texas to pass on the applicant.)

We need not conduct a searching review for where that line should be drawn in this case, however, because it is clear to us that Robins’s allegations relate facts that are substantially more likely to harm his concrete interests than the Supreme Court’s example of an incorrect zip code. Robins specifically alleged that Spokeo falsely reported that he is married with children, that he is in his 50s, that he is employed in a professional or technical field, that he has a graduate degree, and that his wealth level is higher than it is. It does not take much imagination to understand how inaccurate reports on such a broad range of material facts about Robins’s life could be deemed a real harm. For example, Robins alleged that he is out of work and looking for a job, but that Spokeo’s inaccurate reports have “caused actual harm to [his] employment prospects” by misrepresenting facts that would be relevant to employers, and that he suffers from “anxiety, stress, concern, and/or worry about his diminished employment prospects” as a result. We acknowledge that the alleged misrepresentations could seem worse—for example, Spokeo could have reported that Robins had less education or money than he has. But we agree with Robins that information of this sort (age, marital status, educational background, and employment history) is the type that may be important to employers or others making use of a consumer report. Ensuring the accuracy of this sort of information thus seems directly and substantially related to FCRA’s goals.

Further, determining whether any given inaccuracy in a credit report would help or harm an individual (or perhaps both) is not always easily done. For example, in support of Robins, the Consumer Financial Protection Bureau has argued that even seemingly flattering inaccuracies can hurt an individual’s employment prospects as they may cause a prospective employer to question the applicant’s truthfulness or to determine that he is overqualified for the position sought. Even if their likelihood actually to harm Robins’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 interests that Congress chose to protect with FCRA. Robins’s complaint thus sufficiently alleges that he suffered a concrete injury.

     The court added a caution to that conclusion, however:

We caution that our conclusion on Robins’s allegations does not mean that every inaccuracy in these categories of information (age, marital status, economic standing, etc.) will necessarily establish concrete injury under FCRA. There may be times that a violation leads to a seemingly trivial inaccuracy in such information (for example, misreporting a person’s age by a day or a person’s wealth by a dollar). We express no opinion on the circumstances in which alleged inaccuracies of this nature would or would not cause a concrete harm.

     Finally, the court had to consider Spokeo’s argument that the injuries were too speculative. The Ninth Circuit disagreed. Spokeo contended that Robins did nothing more than indicate injuries that “might” occur. But the court found, “both the challenged conduct and the attendant injury have already occurred. As alleged in the complaint, Spokeo has indeed published a materially inaccurate consumer report about Robins. And, as we have discussed, the alleged intangible injury caused by that inaccurate report has also occurred.” And, although he may suffer future “additional concrete harm,” that harm is of “no consequence” to his present standing.

Early signs show that both the defense and plaintiffs bars are going to claim that this case actually favors each, as both did after the Supreme Court’s decision. Indeed, the defense bar has already started to do so. This case was a win for plaintiffs, to be sure. There are certainly some arguments to be made that it shows facts matter, but the focus of the analysis on congressional intent will be cited by plaintiffs for years to come.

Join us again next time for further discussion of developments in the law.


*Disclaimer: The author is licensed to practice in the state of Indiana. The information contained above is provided for informational purposes only and should not be construed as legal advice on any subject matter. Laws vary by state and region. Furthermore, the law is constantly changing. Thus, the information above may no longer be accurate at this time. No reader of this content, clients or otherwise, should act or refrain from acting on the basis of any content included herein without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue.

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