September 7, 2017, Trial News

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Ninth Circuit finds Spokeo plaintiff has standing

Diane M. Zhang

photo of keyboard key titled Online Reputation

The Ninth Circuit, on remand, has ruled that a plaintiff has Article III standing to bring a claim against Spokeo, Inc., for violating various procedural requirements under the Fair Credit Reporting Act that resulted in inaccurate information about the plaintiff being published online.
 

The Ninth Circuit, on remand, has ruled that a plaintiff has standing under Article III of the U.S. Constitution to bring a claim against Spokeo, Inc., for violating various procedural requirements under the Fair Credit Reporting Act (FCRA) that resulted in inaccurate information about the plaintiff being published online. (Robins v. Spokeo, Inc., 2017 WL 3480695 (9th Cir. Aug. 15, 2017).) Finding that the statutory provisions were established to protect the plaintiff’s concrete interests and that the violations of those provisions presented harm or a material risk of harm to the plaintiff’s concrete interests, the court ruled that the lawsuit against Spokeo can proceed.

Spokeo, Inc., is a website that compiles consumer data and builds profiles. The company markets this service to businesses, which can use the website to find information on potential employees. Thomas Robins became aware that Spokeo had published a profile that misrepresented him as being married with children, in his 50s, employed in a professional field, and more educated than he actually was. Claiming that this impacted his employment prospects and that he suffered emotional distress, Robins sued Spokeo, alleging that the company willfully violated procedural requirements under FCRA—including failure to follow reasonable procedures to assure accuracy in its published information.

The district court dismissed Robins’s complaint, determining that he lacked Article III standing because he alleged only a violation of the statute rather than adequately pleading that the violation caused an injury-in-fact. The Ninth Circuit reversed, holding that Robins’s complaint established a “concrete and particularized” injury, which was caused by Spokeo’s alleged violations of FCRA.

As Trial News previously reported, the U.S. Supreme Court vacated the Ninth Circuit’s original opinion in 2016. Holding that the appeals court had failed to fully analyze Article III standing because it did not thoroughly address whether Robins’s alleged injury was “concrete” in addition to “particularized,” the Court remanded the issue to the Ninth Circuit.

In its opinion, the Supreme Court emphasized that a statutory right to sue does not automatically give rise to Article III standing and that congressional intent is important to consider when evaluating the concreteness of the alleged harm. Some statutory violations, the Supreme Court noted, do establish concrete harm. Looking to other circuits and Supreme Court precedent to examine whether the statutory violations here established concrete harm, the Ninth Circuit posed two questions to resolve the issue on remand: Were the FCRA provisions at issue established by Congress to protect Robins’s concrete interests? And were Spokeo’s violations the cause of actual harm—or material risk of harm—to Robins?

Addressing the first question, the Ninth Circuit held that Congress established the FCRA provisions to protect consumers’ concrete interests. And further, those protected interests are “‘real,’ rather than purely legal creations.” Citing the importance of consumer reports in things such as employment decisions and home purchases, the Ninth Circuit noted, “The threat to a consumer’s livelihood is caused by the very existence of inaccurate information in his credit report and the likelihood that such information will be important to one of the many entities who make use of such reports.” The court also pointed out that the interests FCRA protects resemble other reputational interests that the law protects, such as in cases of defamation and libel.

Turning to the second question, the court concluded that the FCRA violations Robins alleged caused actual harm—or at least a material risk of harm—to his protected interests. According to the Supreme Court opinion, Robins “must allege more than a bare procedural violation of the statute that is ‘divorced from’ the real harms that FCRA is designed to prevent.” Although the Ninth Circuit disagreed with the plaintiff’s argument that any FCRA violation premised on some inaccurate disclosure of his information is sufficient for Article III standing, it agreed with Robins that his allegations concern inaccuracies that are substantially likely to harm his interests.

Age, marital status, educational background, and employment history, the Ninth Circuit found, are the types of facts that would be important to employers. It does not matter that the inaccuracies overstated Robins’s salary and education level—even flattering misinformation could be damaging, as employers could find him overqualified or use the inaccuracies to question his truthfulness. It is not dispositive that Robins could not allege that these harms had already happened, the Ninth Circuit found, because concrete injuries could be intangible. It is enough that both the “challenged conduct” (the FCRA violations) and the “attendant injury” (the publication of inaccurate material online about Robins) had already occurred.

Importantly, the Ninth Circuit noted that the Supreme Court had failed to give examples of FCRA violations that would not give rise to Article III standing beyond one example of an inaccurate zip code, which the Court characterized as being unlikely to adversely affect the consumer. “The Court suggested that even if Congress determined that inaccurate credit reporting generally causes real harm to consumers, it cannot be the case that every trivial or meaningless inaccuracy does so,” the Ninth Circuit said. However, it is unnecessary to determine what types of inaccurate information would be “trivial or meaningless,” as the court determined that the type of information Spokeo misrepresented about Robins was clearly more substantially likely to cause harm than an incorrect zip code.

Chicago attorney Jay Edelson, who represented the plaintiff, explained, “There likely are some examples of misinformation which would not lead to Article III standing, but the type of misinformation that we allege is squarely the type of harm that Congress cared about—and that’s really the test under Spokeo.”

He added: “This was always the law, and the Ninth Circuit reaffirmed the law. Spokeo was trying to significantly limit our access to federal court by coming up with a new standard that no court has ever accepted before, and they called it different things, like a ‘real-world injury.’ The Supreme Court rejected that, and then the Ninth Circuit—in a very clear decision—rejected that as well.”