Ninth Circuit rulings in the two years following the U.S. Supreme Court's Fair Credit Reporting Act (FCRA) decision in TransUnion LLC v. Ramirez are good news for financial institutions. Ramirez addressed whether inaccuracies in consumers' credit reports constitute sufficient concrete harm to give a plaintiff standing to sue.
Since then, the Westlaw database reflects more than 4,700 FCRA lawsuits filed nationwide — including more than 1,500 in California alone — affording 9th Circuit courts opportunities to determine what constitutes sufficient "injury in fact" and provide guidance to financial institutions seeking to successfully defend FCRA lawsuits.
In Ramirez, the Supreme Court held that a plaintiff must plead that they suffered an injury in fact. Simply alleging violation of a statute without more is insufficient to establish actual injury and thus is not enough to give a plaintiff what is known as Article III standing to sue. For Article III standing, plaintiffs must allege and ultimately prove a genuine stake in the case's outcome because they personally suffered a concrete and particularized injury. Put another way, a mere statutory violation is too abstract and does not create a sufficient stake in the outcome to support standing.
The Supreme Court determined that plaintiffs have standing to pursue FCRA claims only if they have "suffered a concrete harm that qualifies as an injury in fact" that has a "close relationship" to a harm "traditionally recognized as providing a basis for a lawsuit," such as physical, monetary or reputational harm. In other words, the alleged injury must be real, specific, actual or imminent, and similar to injuries like physical, financial or reputational harm that courts typically recognize.
A bare technical violation of the FCRA is not sufficient to confer standing. Nor is the fear or risk of future harm (such as the potential inability to obtain credit or a potentially lower credit score) sufficient to constitute injury in fact.
The Ramirez putative class members whose erroneous credit reports were disseminated to third parties were deemed to have suffered concrete harm. The remaining putative class members, whose erroneous credit reports were simply maintained by TransUnion but had not been disseminated to third parties, were deemed to have suffered no concrete harm; therefore, they had no standing.
FCRA cases addressing standing in the 9th Circuit post-Ramirez have characteristically involved one of two categories of allegations. The first involves credit reports containing inaccurate information, confusion with individuals having similar names or incorrect bankruptcy-related information. The second concerns noncompliance with FCRA technical authorization and disclosure requirements.
With respect to the first category, 9th Circuit courts have regularly found concrete injury in fact for Article III standing purposes when a consumer's credit report contains false or erroneous statements that are akin to torts such as defamation (i.e., reputational harm) or intrusion upon seclusion (i.e., invasion of privacy). In many instances, the harm alleged is that inaccurate credit reports were disclosed to third parties.
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Those cases are highly fact intensive and standing turns on proving an accompanying concrete harm that has a close relationship to a traditionally recognized actionable injury. But one thing is certain: A simple error in the plaintiff's credit file is not a concrete injury in fact. This is known as informational injury. Without more, it is nonactionable.
In Jones v. Ford Motor Co., a published opinion in a privacy case issued Oct. 27, the plaintiffs claimed that Ford's vehicle infotainment system downloads and permanently stores consumers' cell phone text messages and call logs without their knowledge or consent. The 9th Circuit applied the Ramirez standing analysis to hold that such allegations plausibly articulate an Article III injury because they ostensibly violate a substantive privacy right. This extends Ramirez to privacy cases. It also confirms that in any case, FCRA or otherwise, the plaintiff must allege more than just a statutory violation. There must be some injury to one's business, person or reputation.
As to the second category of cases routinely brought under the FCRA, courts in the 9th Circuit have found allegations of noncompliance with the technical authorization and disclosure requirements to constitute injury in fact only when plaintiffs allege missing information. Information presented in an improper format, or when a party was confused by the provided disclosures and would have acted differently had the information been properly presented, does not create an injury in fact.
The 9th Circuit courts' application of Ramirez to subsequent FCRA and other statutory cases has been fairly consistent. In FCRA cases, consumers must show they have suffered tangible harm as a result of inaccuracies in their credit reports or as a result of information missing from the statutorily required disclosures. Because consumers cannot recover for mere technical statutory violations, fear of future harm, potential inability to obtain credit or the possibility of increased borrowing costs, financial institutions should see a decline in FCRA cases over time following the initial post-Ramirez boom as courts apply the more stringent Article III standing analysis. State courts within the 9th Circuit are likely to impose similar standing requirements.
FCRA class actions, in particular, are much more difficult to certify (i.e., achieve class action status) post-Ramirez because federal courts must apply the Article III standing analysis to all putative class members and not just the lead representative plaintiff. Each individual putative class member must be able to demonstrate injury in fact to become a class member.
All of this is very good news for financial institutions, which now have more weapons in their arsenal to defeat FCRA lawsuits.
