The Fair Credit Reporting Act (FCRA) is not a strict liability statute. To prevail, a plaintiff must prove that the statute was violated willfully or negligently. While plaintiffs typically pursue willfulness claims because of the possibility of statutory and punitive damages, they often include vague allegations of emotional distress and actual damages in order to preserve a claim for negligence. In Sion v. SunRun, Inc., however, the District Court for the Northern District of California found that vague allegations of distress are not enough to prove negligence.
In Sion, the plaintiff sued the defendant for allegedly acquiring her personal credit information without authorization. In her complaint, she alleged that “her privacy had been invaded,” her private information had been disclosed, and she suffered “mental and emotional distress.” She also claimed that, by acquiring additional highly sensitive information about her, the defendant increased the risk that she will be injured if there is a data breach on the defendant’s computer systems. The defendant moved to dismiss the negligence claim, arguing that her allegations of actual damages were far too speculative.
The Court agreed. According to the Court, to prevail on a negligence claim under the FCRA, the plaintiff must allege “specific claims of genuine injury.” Without specific facts, vague allegations of mental and emotional distress are insufficient. The Court also found that allegations of “increased risk of identity theft” could not survive a motion to dismiss. In the Court’s view, the potential for future injury through identity theft was far too speculative to rise to the level of plausible actual damages. As a result, the Court dismissed the plaintiff’s negligence claims.
The Sion decision adds another arrow to a defendant’s FCRA quiver. Plaintiffs often allege negligent and willful violations of the FCRA when they bring a claim. Because willfulness is a much higher standard, defendants frequently attack the willfulness claim at the pleadings stage. Decisions like Sion, however, provide defendants with an opportunity to attack the negligence aspect of a complaint as well. In conjunction with an attack on willfulness, a successful attack on damages could potentially lead to dismissal of the entire case.