Ninth Circuit Holds that Plaintiff has Alleged Adequate Constitutional Standing Under FCRA Based on Claimed Statutory Violations

On February 4, 2014, the United States Court of Appeals for the Ninth Circuit reversed the decision of the district court, which had previously dismissed a lawsuit under the Fair Credit Reporting Act (FCRA) due to the plaintiff’s lack of Article III standing. If adopted more widely, the Ninth Circuit’s decision could create an additional obstacle for defendants to advance the argument that an allegation of statutory injury alone under the FCRA is insufficient to meet constitutional requirements of standing.

The Procedural History of Robins v. Spokeo, Inc.

Spokeo, Inc. operates a website that provides users with information about other individuals, including contact data, marital status, age, occupation, economic health, and wealth level. Thomas Robins (Robins) sued Spokeo for willful violations of the FCRA, 15 U.S.C. § 1681 et seq., related to its website. Although Robins asserted that Spokeo’s website contained false information about him, Robins’s allegations of actual injury were sparse. Spokeo moved to dismiss Robins’s original complaint for lack of subject-matter jurisdiction on the ground that Robins lacked standing sufficient under Article III of the United States Constitution.

On January 27, 2011, the district court ruled that Robins had failed to allege an injury in fact because he had not alleged “any actual or imminent harm.” The court characterized Robins’s allegations as simply “that he has been unsuccessful in seeking employment, and that he is concerned that the inaccuracies in his report will affect his ability to obtain credit, employment, insurance, and the like.” The district court noted that “[a]llegations of possible future injury do not satisfy the [standing] requirements of Article III” and dismissed the complaint without prejudice.

Robins thereafter filed his First Amended Complaint (FAC). Similar to the original complaint, the FAC alleged willful violations of the FCRA. For example, the website allegedly described Robins as holding a graduate degree and as wealthy, both of which were alleged to be untrue. Robins, who was unemployed, described the misinformation as “caus[ing] actual harm to [his] employment prospects.” Remaining unemployed had allegedly cost Robins money as well as caused “anxiety, stress, concern, and/or worry about his diminished employment prospects.”

Again, Spokeo moved to dismiss for lack of subject matter jurisdiction on the ground that Robins lacked standing under Article III. On May 11, 2011, the district court denied the motion and concluded that Robins had alleged a sufficient injury in fact, namely Spokeo’s “marketing of inaccurate consumer reporting information about” Robins. The district court also ruled that the injury was traceable to Spokeo’s alleged violations of the FCRA and that the injury was redressable through a favorable court decision.

On September 19, 2011, after Spokeo moved to certify an interlocutory appeal, the district court reconsidered its previous ruling on standing. It then ruled, contrary to its May 11 order, that Robins failed to plead an injury in fact and that any injuries pled were not traceable to Spokeo’s alleged violations, dismissing the action. Robins then appealed.

The Ninth Circuit’s Decision

The Ninth Circuit began its analysis by acknowledging that “Congress’s creation of a private cause of action to enforce a statutory provision implies that Congress intended the enforceable provision to create a statutory right,” and that “the violation of a statutory right is usually a sufficient injury in fact to confer standing.” The court also recognized, however, that the Constitution limits the power of Congress to confer standing. With these principles in mind, the court held that the issue before it was “whether violations of statutory rights created by the FCRA are ‘concrete, de facto injuries’ that Congress can so elevate.”

In overruling the decision of the district court, the Ninth Circuit noted that, consistent with a recent decision by the Sixth Circuit, FCRA plaintiffs possess adequate standing when: (1) they are “among the injured, in the sense that she alleges the defendants violated her statutory rights;” and (2) the statutory right at issue protects against “individual, rather than collective, harm.” The Ninth Circuit held that Robins readily met both criteria. Additionally, the court held that Robins had established “causation and redressability” sufficient to confer standing, as “there is little doubt that a defendant’s alleged violation of a statutory provision ‘caused’ the violation of a right created by that provision.”

Implications of the Spokeo Decision

Within the Ninth Circuit, the decision in Spokeo poses an additional obstacle for defendants that seek the dismissal of FCRA claims due to a lack of constitutional standing. Although some divergent authority exists at the district court level, the two appellate courts to have considered the issue have now affirmed a finding of Article III standing in the context of claims of statutory violations that are coupled with highly-attenuated claims of actual injury. The Ninth Circuit’s decision in Spokeo positions the issue for potential en banc review, as well as for additional adjudication by other circuit courts nationwide. In the interim, however, and until the issue is resolved by other courts, defendants should be aware of the varying authority on the issue.

The editors and contributors of this update, include; David N. Anthony, John C. Lynch, Victoria Holstein-Childress, Alan D. Wingfield, Chad Fuller, and Tim St. George.