On August 15, 2017, the Ninth Circuit Court of Appeals decided Robins v. Spokeo, Inc. (No 11-56843), a case addressing the standing necessary to maintain an action in federal court that had been remanded to the court by the Supreme Court of the United States. In Spokeo, an individual claimed that a search engine company (which the court presumed to be a consumer reporting agency (CRA)) willfully failed to comply with the Fair Credit Reporting Act (FCRA) by providing inaccurate information about him. According to the Ninth Circuit’s decision, because Robins suffered an intangible injury under the FCRA, he established a concrete harm sufficient to give him standing. Although the case deals with alleged injuries resulting from a CRA’s alleged failure to comply with the FCRA, its holding may impact injury allegations against employers brought under the act.   

Background 

Spokeo, Inc. operates a search engine that obtains, compiles, and distributes information on people at the request of visitors to its site. Robins discovered that the profile that Spokeo generated on him contained a large number of inaccuracies (e.g., claiming that he was: (1) married with children, (2)  in his 50s, (3) employed, (4) relatively affluent, and (5) a holder of a graduate degree—none of which was accurate, according to Robins). As a result, Robins filed a complaint on his own behalf and on behalf of a class of similarly-situated individuals, alleging that Spokeo willfully failed to comply with the FCRA’s requirements to follow reasonable procedures to assure the maximum possible accuracy of the background check reports that it provided.

A lower federal district court dismissed the case for lack of standing. On appeal, the Ninth Circuit reversed the lower court’s decision and ruled that Robins had adequately alleged an injury in fact. However, on further appeal, the Supreme Court of the United States held that the Ninth Circuit failed to properly assess whether Robins had alleged an injury in fact. According to the Supreme Court, such an analysis requires a court to examine both the concreteness and the particularization of the alleged injury. The Ninth Circuit had erred because it did not consider concreteness. Thus its standing analysis was incomplete and the case was remanded back to the Ninth Circuit. 

The Ninth Circuit’s Decision 

Because the Supreme Court did not call into question the Ninth Circuit’s previous analysis on particularity, the Ninth Circuit limited its analysis to the concreteness requirement for an Article III injury. The Ninth Circuit recognized that an alleged procedural violation of a statute can by itself manifest a concrete injury if (1) Congress confers a procedural right to protect a plaintiff’s concrete interests, and (2) an alleged procedural violation presents “a risk of real harm” to that concrete interest. The analysis for determining if a procedural violation establishes a concrete injury involves two inquiries:

(1) whether the statutory provisions at issue were established to protect concrete interests (as opposed to purely procedural rights), and if so,

(2) whether the specific procedural violations alleged in the case actually harm, or present a material risk of harm to, such interests.

In addressing the first prong of the inquiry, the Ninth Circuit had little trouble concluding that the FCRA requirement for CRAs to follow reasonable procedures to assure maximum possible accuracy was established to protect consumers’ concrete interests in accurate consumer reporting about themselves. The court noted that several pages of legislative history demonstrate how inaccuracies in reports may harm consumers.  

Next, the court focused on whether the alleged FCRA violation actually harmed Robins, or at least created a “material risk of harm.” For this analysis, the court recognized that a plaintiff will not be able to show concreteness simply by alleging a CRA failed to comply with one of the FCRA’s procedural requirements. Likewise, the court disagreed with Robins who argued that any FCRA violation premised on some inaccurate disclosure of his information was sufficient to establish concreteness (the court gave the example of how it would be difficult to prove a concrete injury if someone’s zip code was reported incorrectly). Ultimately, the court concluded that the allegedly incorrect information reported on Robins did result in real harm, or at least a material risk of harm, to Robins because the errors he alleged were substantially more likely to harm his concrete interests than providing an incorrect zip code. 

Employer Takeaways 

Although Spokeo does not specifically address FCRA liability by employers, because the standard for damages and standing are similar for employers and background check companies, the case has some significant takeaways for employers:

• The decision does not overrule the Ninth Circuit’s earlier ruling on standing in an employer FCRA disclosure and authorization case, Syed v. M-I, LLC
• We can expect plaintiffs’ lawyers to use Spokeo to argue that FCRA procedural violations can provide sufficient standing to bring suit.
• Spokeo does not diminish state and local background check requirements.