Last week, a Ninth Circuit panel held that plaintiffs in five related cases lacked standing to pursue their FCRA claims. Specifically, the Ninth Circuit held that the allegation that a credit report contained misleading information, absent any indication that a consumer tried to engage in or was imminently planning to engage in any transactions for which the alleged misstatements in the credit reports made or would make any material difference, does not constitute a concrete injury. A copy of the opinion can be found here.
The decision concerned five separate cases filed against the National Credit Reporting Agencies. In each of these cases, the plaintiffs had filed for Chapter 13 bankruptcy. After the bankruptcies were confirmed, the plaintiffs requested copies of their credit reports and claimed that certain information was being reported in a manner that was inconsistent with the treatment of the claims in the confirmed bankruptcy plans. The plaintiffs allege that those inaccuracies remained on their reports, even after the National Credit Reporting Agencies reinvestigated their disputes. Based on these facts, the plaintiffs asserted claims based on the Federal and California credit reporting acts.
The trial courts dismissed each of the cases based on findings that the notations on the credit reports were accurate and not misleading. The Ninth Circuit panel, however, did not reach the merits of the cases. Instead, the majority held, pursuant to the United States Supreme Court’s precedent in Spokeo v. Robins, that the plaintiffs lacked standing to bring suit.
The Ninth Circuit’s analysis focused on the fact that the plaintiffs had not alleged that they tried to enter into any financial transaction for which their credit reports or scores were viewed at all or that they imminently planned to do so. The Court further explained that it was not obvious that the alleged misstatements would have affected any potential credit transaction because other explanations might exist for the lower credit scores alleged by the plaintiffs, namely that the bankruptcies themselves caused the plaintiffs’ lower credit scores, with or without the alleged misstatements. The Court explained that the plaintiffs did not even specify what kind of harm they were concerned about, other than making broad generalizations about how lower FICO scores can impact lending decisions generally. The Ninth Circuit concluded that “[w]ithout any allegation of the credit report harming Plaintiffs’ ability to enter a transaction with a third party in the past or imminent future, Plaintiffs have failed to allege a concrete injury for standing.” The Court noted that the plaintiffs’ claims should be dismissed without prejudice.
Judge Berzon dissented, noting that the plaintiffs are not required to allege that inaccuracies in their credit reports affected a specific previous or imminent transaction. Instead, he stated that the allegation that the conduct at issue lowered a plaintiff’s credit score is sufficient to satisfy the concrete harm requirement. Judge Berzon further explained that it can be difficult for individuals to predict when and how their credit reports may be used or accessed and that credit reports are inherently important to a consumer’s life and livelihood. He concluded that “adverse information on a credit report, often resulting in a lower credit rating, constitutes a reputational injury creating a material risk of harm, whether or not an individual contemplates a specific, imminent transaction.”
Troutman Sanders will continue to monitor developments in consumer credit reporting law, including how courts interpret the standing requirements set forth in Spokeo v. Robins.