In an odd turn of events, a plaintiff brings a putative class action for alleged violations of the Fair Credit Reporting Act (“FCRA”) but later claims that she has not asserted claims sufficient to allege an “injury in fact.” Defendant contends that Plaintiff has actually asserted claims to demonstrate that she has suffered concrete injuries.  Have the parties gone crazy?  Are we living in a bizarro world? Maybe not.

In Orpilla v. Schenker, Inc., No. 19-cv-08392-BLF, 2020 U.S. Dist. LEXIS 83567 (N.D. Cal. May 12, 2020), the Court granted Plaintiff’s  Motion to Remand the case back to state court, finding  that Plaintiff had not asserted  that she suffered an “injury in fact” and therefore did not have Article III standing to be in federal court.

A Brief Overview

Plaintiff alleged that Defendant performed a background investigation on her when she applied for a job but failed to provide certain clear and unambiguous disclosures in violation of the FCRA.  Plaintiff filed the putative class action against the Defendant in the Superior Court of California, County of Santa Clara.  Defendant removed the matter to federal court based on federal question jurisdiction – that is, Plaintiff brought a claim under the FCRA, a federal statute.  Plaintiff subsequently moved the federal court to remand the matter to state court (ostensibly for strategic and favorable venue reasons), arguing that she had not asserted that she had suffered an “injury in fact” and therefore did not satisfy Article III standing.  The Court granted the Plaintiff’s Motion to Remand and sent the case back to state court.

The Specter of Spokeo

In granting Plaintiff’s Motion, the Court examined the three prongs of Article III standing under Spokeo, namely, to be entitled to Article III standing, a plaintiff must have: “(1) suffered an injury in fact; (2) that is fairly traceable to the challenged conduct of the defendant; and (3) that is likely to be redressed by a favorable judicial decision.” Spokeo Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).  The court in Orpilla focused on the first prong of the test and specifically whether Plaintiff’s FCRA claim was sufficient to allege an “injury in fact.”

The court in Orpilla reasoned that although an alleged procedural violation of a statute could manifest a concrete injury to a plaintiff, Plaintiff’s allegations in the present case did not sufficiently allege an injury in fact.  Most complaints alleging violations of FCRA (including cases cited by the Defendant here) include claims that the plaintiffs had suffered injury (e.g., they were unable to fairly exercise their rights since they did not receive the adequate disclosures). However, as part of what appears to be an intentional strategy by Plaintiff’s counsel to ensure that the case would not be heard in federal court, the Plaintiff notably did not assert that she had suffered an injury in the present case, alleging only a bare procedural violation.  Thus, the court reasoned that Plaintiff did not satisfy the first prong of the Spokeo test and so found that the Plaintiff did not have Article III standing.

Takeaways

For those of us defending FCRA cases, this case highlights how creative plaintiffs’ counsel may try to use Spokeo as a guide for drafting complaints so as to ensure that cases will be heard in more plaintiff-friendly state courts.  In the present case, Defendant concurrently filed a Motion to Transfer Venue to the Eastern District of Virginia, which had recently (September 2019) dismissed a FCRA class action, in part, for lack of Article III standing.  Will Plaintiff’s gamble pay off?  We will have to wait and see.  While some states arguably have less stringent standing requirements than Article III, how will a state court view a plaintiff who has admitted that he has suffered no injury from the purported statutory violation?  And, query as to whether Plaintiff, who admits no injury, is an adequate class representative.

We’ll keep you updated as we learn more.