The Ninth Circuit Court of Appeals (the Court) applied the standing criteria it adopted in Spokeo III to grant Article III standing to the plaintiffs in a Fair Credit Reporting Act (FCRA) case when identifiable, concrete harm had not yet occurred. However, it denied their claims based on asserted nondisclosure, ruling that the credit reporting agency was not required to disclose the information sought. Tailford v. Experian Information Solutions, Inc., 2022 WL 599318 (9th Cir. 3/1/22).
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Plaintiffs Theresa Tailford and others (plaintiffs) filed a class action suit in California state court against Experian Information Solutions (Experian), a credit reporting agency (CRA) regulated by the FCRA, alleging violations of § 1681g of the Act. Upon request by a consumer, § 1681g requires a CRA to disclose all information in the consumer’s file, each person that procured a consumer report in the past year for other than employment purposes, and a record of all inquiries received by the agency during that one year that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer. Plaintiffs alleged Experian did not disclose behavioral data, certain “soft inquiries” not initiated by plaintiffs, the dates upon which employers reported plaintiffs’ employment histories, and the identity of parties procuring consumer reports, all of which they asserted must be disclosed.
Experian removed the case to federal court and then filed a motion to dismiss for failure to state a claim. Plaintiffs filed a remand motion, alleging among other things that Experian had not borne the burden of showing the plaintiffs had Article III standing. Through procedural steps not pertinent to this review, the district court overruled the standing argument, denied remand, and eventually dismissed the claims with prejudice on the merits.
The plaintiffs appealed to the Court, which addressed Article III standing to determine its own subject matter jurisdiction, ruling that the plaintiffs had alleged sufficient injury to maintain standing. It then turned to the merits, affirming the district court’s decision that no disclosure violations had occurred and that dismissal was appropriate.
Notwithstanding the odd procedural manner in which the standing argument was raised below (by the plaintiffs in their remand motion), the Court was compelled the consider standing as a constitutional requirement for the exercise of subject matter jurisdiction. It analyzed plaintiffs’ standing with reference to the Supreme Court’s decision in Spokeo, Inc. v. Robins, 578 U.S. 330, 339 (2016), (Spokeo I). A key component of standing is satisfaction of the injury-in-fact requirement that plaintiff has “suffered an invasion of a legally protected interest that is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’” The Court first concluded that the pleadings adequately alleged particularized injuries to the plaintiffs’ individual privacy and informational interests, leaving only the question of whether the injuries were sufficiently concrete.
The Court had adopted a two-step framework to determine whether alleged violations of FCRA provisions are sufficiently concrete to confer standing in Robins v Spokeo, Inc., 867 F. 3d 1108, 1113 (9th Cir. 2017) (Spokeo III): “(1) whether the statutory provisions at issue were established to protect [a plaintiff’s] concrete interests (as opposed to purely procedural rights), and if so, (2) whether the specific procedural violations alleged in this case actually harm, or present a material risk of harm to, such interests.” As to the first prong, the Court observed that the FCRA was enacted to protect concrete interests of privacy and accuracy in the reporting of consumer credit information, which were not merely procedural rights, so that prong was satisfied.
To satisfy the second prong, the plaintiffs alleged that the failure to disclose was a violation of a right to privacy “because while their PII [‘personal identifiable information”] was made readily available…., Plaintiffs had no knowledge of or opportunity to disagree with the provision of their PII to third parties. This violated Plaintiffs’ right to privacy, which, once lost, can never be regained.” The Court ruled this allegation was sufficiently concrete. It distinguished this case from the lack of standing found in TransUnion v. Ramirez, 141 S. Ct. 2190 (2021) because the plaintiffs there only alleged non-disclosure based on improper formatting of the information, which was merely a procedural violation. Specifically, the Court found a sufficiently concrete injury because plaintiffs had alleged “that without complete information in their § 1681g disclosures, they are unable to adequately opt out of certain disclosures to other parties and ensure fair and accurate reporting of their credit information.”
Having confirmed it had subject matter jurisdiction, the Court turned to the substantive allegations and ruled that none of the four categories of alleged nondisclosures were required by the statute, paralleling the conclusions of the district court.
As the above review shows, my interest in this case centers on the continuing saga of what is sufficient “concrete injury” to satisfy the Spokeo I standard in FCRA cases, rather than the specific disclosures sought by the plaintiffs. I quoted the Court much more extensively than I normally do because I wanted readers to know the exact allegations which it found sufficient for particularized and concrete harm. To be certain: no harm had yet occurred. To me it seems speculative that particularized harm and concrete injury is imminent when the substance of the alleged nondisclosures is not information in the plaintiffs’ files (none of the four categories of documents would be in a credit file itself, as opposed to somewhere else in Experian’s files) and the purported privacy violations are at most theoretical. Is this the “actual or imminent, not conjectural or hypothetical” injury-in-fact that the Supreme Court was looking for to establish Article III standing? I would venture to guess that other circuits would say “no, not enough.” Because class actions proliferate these days and many have been thwarted by lack of Article III standing, I predict this tussle will continue throughout the country for a while. For now, the Ninth Circuit has left the door ajar for more class plaintiffs to initiate FCRA lawsuits.
This review was written by the Hon. Meredith Jury (U.S. Bankruptcy Judge, C.D. CA., Ret.), a member of the ad hoc group. Thomson Reuters holds the copyright to these materials and has permitted the Insolvency Law Committee to reprint them. This material may not be further transmitted without the consent of Thomson Reuters.