The United States Supreme Court may have finally offered employers some cover in their ongoing battle against Fair Credit Reporting Act (“FCRA”) class actions. On May 16, 2016, the Court handed down its decision in Spokeo, Inc. v. Robins, which vacated and reversed a Ninth Circuit ruling on the grounds that the lower court did not properly analyze both elements of the “injury-in-fact” required to confer Article III standing on a plaintiff.
Spokeo operates a “people search engine” that aggregates information on individuals from a broad range of internet databases. Named Plaintiff Thomas Robins’ class action complaint alleged that Spokeo’s business model makes it a “consumer reporting agency” and thus subject to the FCRA’s detailed compliance procedures. The FCRA requires, among other things, that consumer reporting agencies “follow reasonable procedures to assure maximum possible accuracy of consumer reports” and also that “users” of consumer reports (e.g. employers who utilize background checks to determine eligibility for employment): (1) disclose that fact to individuals prior to obtaining such a report and (2) gain the individuals’ prior authorization to do so.
Robins claimed that Spokeo willfully violated the FCRA when it disseminated inaccurate information regarding him – namely, that he held a graduate degree, was married with children, and was in his 50s. The Court’s opinion, authored by Justice Alito, noted that an injury-in-fact must be both “concrete” and “particularized,” and held that the Ninth Circuit’s decision properly considered the latter while neglecting to address whether plaintiffs adequately alleged “concreteness.”
Though plaintiffs’ attorneys will rush to point out that the Court merely remanded back to the Ninth Circuit with instructions to analyze the concrete injury, employers can read the tea leaves and be heartened by the Court’s seeming disapproval of lawsuits based on “harmless” procedural violations:
- “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm.”
- “In addition, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.”
In the past few years, employers have seen a rise in situations where plaintiffs point out an alleged technical deficiency in an employer’s FCRA compliance procedure and claim a class populated by every individual who applied for employment in a given timeframe, regardless of whether even a single individual actually suffered an adverse employment action as a result. Although it is too early to tell whether Spokeo will have broad implications for cases of this type, it is a safe bet that both employers and plaintiffs’ attorneys will be closely watching the Ninth Circuit’s response in wake of the remand.