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Tuesday, February 25, 2020

Two federal courts deliver differing decisions in lawsuits with Spokeo defense on same day

By Tara Mapes | Nov 18, 2016

SAN FRANCISCO (Legal Newsline) - In October, two U.S. district courts came to opposite conclusions regarding Spokeo’s interpretation regarding the disclosure requirements of proving concrete injury under the Fair Credit Reporting Act’s (FCRA).

The U.S. District Court for the Southern District of Florida and the Northern District of California issued conflicting rulings in similar cases arguing standing under Spokeo. The legal standing under Article III of the U.S. Constitution requires an injury that is traceable to the challenged conduct of the defendant and likely to be redressed by a favorable judicial decision.

The Spokeo defense continues to be raised in cases surrounding the plaintiffs proving they suffered an “injury in fact.”

The U.S. Supreme Court, in Spokeo, Inc. v. Robins, ruled that to grant standing, an injury must be both particularized and affect the plaintiff in a “personal and individual” way and must be “concrete.”

Although defendants and plaintiffs alike tend to use the case, decisions from courts continue to conflict in their interpretation of injury to achieve standing under Spokeo.

Shortly after Spokeo’s ruling, in Yershov V. Gannett, Gannett argued Yershov didn't prove a concrete injury to achieve standing under Spokeo. However, the court ruled under the law that Yershov argued, the Video Privacy Protection Action (VPPA) “plainly” provides plaintiffs who allege wrongful disclosure of their personally identifiable information (PII) with standing and a right to relief. 

In other words, the intangible harm allegedly suffered by Yershov from Gannett’s alleged disclosure of his PII was considered by the court a concrete injury in fact.

Along similar lines, both recent cases this month argue intangible harm and relate to privacy under but under the FCRA.

The Southern District of Florida’s ruling

In Moody v. Ascenda USA Inc., the plaintiffs alleged Ascenda, their employer, failed to comply with FCRA disclosure requirements by not providing a stand-alone disclosure, although they acknowledged that a “disclosure and authority to release information” document had been provided and signed.

The FCRA permits pre-hire background checks only when a clear and conspicuous written disclosure is made to the applicant before the report is procured, in a stand-alone document that “consists solely of the disclosure”; and the applicant authorizes the procurement of the report in writing.

The complaint argued plaintiffs suffered a concrete informational injury because Ascenda failed to provide them with information to which they were entitled to by statute, which was a disclosure form required by the FCRA.

“Through the FCRA, Congress has created a new right — the right to receive the required disclosure as required by law. The required disclosures were not made, causing plaintiffs an informational injury,” the Southern District of Florida’s ruling read.

The court reasoned that the plaintiffs’ consumer reports contained a wealth of private information, which Ascenda had no right to access absent a specific congressional license to do so. It ruled that by Ascenda procuring reports containing private information without complying with the FCRA’s disclosure requirements, Ascenda illegally invaded the plaintiffs’ right to privacy.

“Based on the foregoing, the court holds the plaintiffs have sufficiently alleged a concrete and particularized injury and thus have standing to sue pursuant to Spokeo,” the decision states in its denial of Ascenda’s motion to dismiss.

However, the same day, revealing the continued conflicting decisions relating to Spokeo, the Northern District of California dismissed similar claims in Nokchan v. Lyft, Inc.

The Northern District of California’s ruling

Nokchan alleged he was employed by Lyft and when he applied for employment, he was required to "fill out and sign a document requiring background check." He contended the disclosures required under the FCRA were embedded in the document, which contained "extraneous information," and therefore, Lyft failed to comply with the FCRA and other state laws.

Nokchan argued Lyft procured his credit, background reports based on these inadequate disclosures and that in doing so, it injured him by violating his privacy and statutory rights under the FCRA and state law.

Referencing Spokeo, Lyft argued in its motion to dismiss Nokchan had failed to demonstrate concrete harm that resulted from its alleged failure to provide disclosures in a stand-alone document or failure to provide a summary of rights stating he failed to show how these actions "affected him in any way, much less caused him concrete harm."

The court also referenced Spokeo to support its decision, writing, “Under Spokeo, a plaintiff who seeks to assert a claim under the FCRA is required to allege facts showing a concrete injury. While procedural violations that have resulted in real harm — or even a risk of real harm — may be sufficient to meet this requirement, Plaintiff in this case has alleged no such injury.”

In Spokeo, the court "implicitly recognized" that certain types of "informational" injuries are "sufficient to support Article III standing," however, the court also rejected Nokchan’s "informational injury" claims were sufficiently concrete to meet the requirements of Spokeo.

The differences in each ruling

Regarding the inconsistencies in these two recent rulings, Tiffany Woo, an attorney with Proskauer Law Firm, told Legal Newsline, “Spokeo clarified the requirement that in order to have Article III standing, a plaintiff must have suffered a 'concrete' and 'particularized' injury in fact. 

"The Supreme Court in Spokeo made two statements about when statutory violations can give rise to a concrete and particularized injury-in-fact sufficient to confer standing on a plaintiff that are relevant here.”

Woo said the Northern District of California found that Nokchan’s allegations that Lyft’s pre-employment background check materials failed to meet the requirements of a section of the FCRA fell into the first category, “bare procedural violation, divorced from any concrete harm.” 

While the Southern District of Florida found that the Moody plaintiffs’ allegations fell into the second category, “violation of the statute that is itself sufficient to constitute injury in fact.”

“The Northern District of California and the Southern District of Florida disagreed on where the line is between statutory violations that are not themselves sufficient to confer standing on one hand, and statutory violations that are sufficient to confer standing on the other,” Woo said.

The mix of injury interpretations across the nation

Woo said there is a possibility of conflict between appellate courts if these two plaintiffs and similar cases are appealed. 

“There is a fair amount of disagreement on this topic," she told Legal Newsline. "The 11th Circuit has already taken the position that ‘informational’ injury is broad: where the plaintiff received a letter from a hospital that did not include certain disclosures required under the Fair Debt Collection Practices Act, the 11th Circuit found ‘informational’ injury based on plaintiff’s allegations that she was ‘very angry’ and ‘cried a lot’ upon receiving the letter, although the plaintiff did not allege that she suffered any ‘actual’ damages as a result of the failure to include the FDCPA disclosures.” 

Other courts have decided similar cases differently too. 

“Courts that have found standing in similar factual circumstances include, in addition to the Southern District of Florida in Moody, the Eastern District of California, the Western District of Texas, and the Eastern District of Virginia, while courts that have found no standing in similar cases include, in addition to the Northern District of California in Nokchan and one other case, the Southern District of Ohio and the Eastern District of Missouri,” Woo said.

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U.S. District Court for the Northern District of California