FCRA Claim Provides Article III Standing without Showing of Actual Harm, Ninth Circuit Rules

The U.S. Court of Appeals for the Ninth Circuit has ruled that a plaintiff had Article III standing to sue a website operator for violations of the Fair Credit Reporting Act (FCRA) regardless of whether he could show actual harm resulting from the alleged violations. The decision creates another potential opportunity for this important Article III standing issue to reach the U.S. Supreme Court.

In Robins v. Spokeo, Inc., the plaintiff alleged that the defendant had willfully violated various provisions of the FCRA in its alleged publication of inaccurate personal information about him. After initially denying the defendant’s motion to dismiss based on standing, the district court reconsidered its decision and dismissed the action. The court ruled that the plaintiff had failed to plead an injury in fact, and any injuries pled were not traceable to the defendant’s alleged FCRA violations.

Reversing the district court, the Ninth Circuit ruled, [enhanced version available to lexis.com subscribers], that the defendant’s alleged violation of the plaintiff’s FCRA statutory rights established an injury sufficient to satisfy Article III. According to the court, because the FCRA does not require proof of actual damages when a plaintiff sues for willful violations, a plaintiff’s statutory FCRA rights can be violated without the plaintiff suffering any actual damages. The court concluded that it was constitutionally permissible for Congress to treat violations of such rights as “concrete, de facto injuries” and elevate such injuries “to the status of legally cognizable injuries.”

The Ninth Circuit noted that it was following its own precedent in First American Financial Corp. v. Edwards. The court held in Edwards, [enhanced version available to lexis.com subscribers], that a plaintiff had Article III standing to sue for an alleged violation of the Real Estate Settlement Procedures Act (RESPA) that caused no actual injury. After agreeing to review the Article III issue, the Supreme Court dismissed the appeal with an order stating only that certiorari had been “improvidently granted.” (For more on Edwards, see our prior legal alert.)

In addition to following its precedent in Edwards, the Ninth Circuit noted that its decision was consistent with a 2009 Sixth Circuit decision, [enhanced version available to lexis.com subscribers], that rejected a similar Article III standing challenge to a plaintiff’s claim for statutory damages based on alleged willful FCRA violations. Although not cited by the Ninth Circuit, the Eighth Circuit, [enhanced version available to lexis.com subscribers], similarly held that denial of statutory right was sufficient to confer standing even if the injury was only “informational” and did not include any additional economic injury. The Eighth Circuit’s 2013 decision involved the now eliminated Electronic Fund Transfer Act (EFTA) ATM fee sticker requirement.

The Ninth Circuit’s denial of en banc review in Edwards does not bode well for a request by the defendant in Robins for en banc review. In addition, given the Supreme Court’s dismissal of Edwards, it is unclear how the Court would respond to a petition for certiorari by the defendant. A Supreme Court decision in favor of the defendant could have far-reaching consequences because numerous consumer protection statutes allow consumers to recover statutory damages where actual damages for violations are often difficult to prove or non-existent. In addition to the FCRA, RESPA, and the EFTA, such statutes include the Truth in Lending Act, the Telephone Consumer Protection Act, the Fair Debt Collection Practices Act, the Homeowners Protection Act, and the Credit Repair Organizations Act.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance (including pioneering work in pre-dispute arbitration programs).

For more information, please contact CFS Practice Leader Alan S. Kaplinsky at 215.864.8544 or kaplinsky@ballardspahr.com, John L. Culhane, Jr., at 215.864.8535 or culhane@ballardspahr.com, Burt M. Rublin at 215.864.8116 or rublin@ballardspahr.com, or Christopher J. Willis at 678.420.9436 or willisc@ballardspahr.com.


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