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Posted in Consumer Privacy, Privacy & Security Litigation

The Ninth Circuit Revives Consumer Class Action, Finding Intangible Harm Sufficient to Confer Article III Standing

The six-year fight over the type of harm a plaintiff must allege to satisfy the “injury in fact” requirement for lawsuits alleging false reporting of credit information took its latest turn this week.  On Tuesday, August 15, 2017, the U.S. Court of Appeals for the Ninth Circuit, on remand from the United States Supreme Court, issued its opinion in Spokeo, Inc. v. Robins, a highly-watched case challenging whether a plaintiff can satisfy Article III standing based solely on a technical violation of the Fair Credit Reporting Act (FCRA).  Plaintiff Thomas Robins brought a putative class action for willful violations of the FCRA against Spokeo, Inc., a company that generates profiles about people based on publicly available data.  Among other things, Robins averred that Spokeo published an allegedly inaccurate profile about him on its website and therefore harmed his employment prospects at a time when he was out of work.  The Ninth Circuit’s three-judge panel held that the publication of materially inaccurate information about Robins sufficed as concrete injury for purposes of Article III standing, even without specific allegations of tangible harm from that publication.

The Ninth Circuit’s ruling follows the U.S. Supreme Court’s Spokeo decision last year, which left the door open to varying interpretations regarding its application.  In that 6-2 decision, the Supreme Court held that actions based on an alleged technical statutory violation, without a showing of “concrete” and “particularized” harm, do not satisfy the injury-in-fact requirement to establish standing.  Significant to privacy-related actions, the Supreme Court clarified that in some circumstances intangible harms may confer standing, but cautioned that congressional power to elevate such harms into concrete injuries is not without limits.  Emphasizing that particularity and concreteness are two separate inquiries, the Supreme Court remanded the case to the Ninth Circuit to consider whether Robins’ alleged injuries “meet the concreteness requirement imposed by Article III.”

In this go-around, the Ninth Circuit opined that Congress established the FCRA provisions at issue to protect consumers’ concrete interest in accurate credit reporting about themselves.  The panel found that the dissemination of false information in consumer reports carries “real-world implications.”  Thus, the panel held that the allegedly inaccurate reports on a broad range of material facts about Robins’ life could be deemed a harm to his employment prospects, constituting sufficiently “concrete” injury.  The panel noted that while the harm to Robins’ employment prospects could be debated, the alleged inaccuracies published online were not “mere technical violations” that were too insignificant to represent a material risk of harm for purposes of Article III.

The new decision, while (at least for now) broadening the types of injury that can be considered “concrete” under FCRA cases, may have limited impact outside that context.  The court adopted the reasoning of the Second Circuit’s decision in Strubel v. Comenity Bank, 842 F.3d 181 (2d Cir. 2016), which found that the violation of a statute can by itself manifest concrete injury to support a federal claim only where (i) were Congress conferred the procedural right to protect a plaintiff’s concrete interests, and (ii) the procedural violations present actual harm, or present a material risk of harm, to such interests.  Plaintiffs will continue to face the challenge of pleading sufficient facts to show that a concrete harm, or a sufficiently certain risk of concrete harm, results from every purported violation of the particular statute at issue.  And even cases that survive a standing challenge on these grounds risk being later halted at the motion to dismiss stage for failure to state a claim under the merits of the statute – an issue that the Spokeo appellate courts have not yet addressed. In addition, there may be a silver lining for defendants in the opinion’s emphasis on the allegedly inaccurate facts about the named plaintiff: those types of fact-specific inquiries are highly individualized and may present important defenses to class certification.  It is clear that litigation over the contours of the FCRA and other statutes protecting intangible consumer rights remains far from settled.