Evaluating and Challenging Standing in Fair Credit Reporting Act Actions
The Ninth Circuit’s recent ruling in Dutta v. State Farm Mutual Automobile Insurance Company highlights the importance of evaluating and potentially challenging a plaintiff’s standing in a Fair Credit Reporting Act (“FCRA”) action.
Dutta alleged that, in violation of § 1681b of the FCRA, State Farm failed to provide him with notice of his FCRA rights and a copy of his consumer report prior to denying his employment application on the basis of information contained in the report. Specifically, State Farm disqualified candidates who had a charged-off debt exceeding $1,000 in the preceding 2-year period. Dutta’s credit report, which State Farm obtained, showed that he had a charged-off debt exceeding $1,000. As a result, State Farm informed Dutta that his employment application was denied. State Farm did not send Dutta a pre-adverse-action notice until a few days later, after which Dutta called State Farm to challenge some other inaccuracies in the report.
The district court granted State Farm’s motion for summary judgment on the ground that Dutta failed to establish an injury-in-fact and thus lacked standing. The record of debt shown in Dutta’s credit report was accurate, and State Farm would have terminated Dutta regardless of the other alleged inaccuracies in the report. On appeal, the Ninth Circuit affirmed the district court’s ruling, stating that Dutta failed to show how State Farm’s technical violation of the FCRA either presented a material risk of harm or caused actual harm to him. The Ninth Circuit reiterated the standard in Robins v. Spokeo, Inc. for evaluating whether a concrete harm exists based on a procedural statutory violation: (1) whether the statutory provision at issue was established to protect the plaintiff’s concrete interests; and, if so, (2) whether the alleged specific procedural violations actually harm or present a material risk of harm to such interests.
Dutta highlights the Ninth Circuit’s position that, if an employer bases its adverse employment decision on accurate data in a credit report, a plaintiff may very well fail to establish concrete harm and therefore standing then even if there is a technical violation of FCRA.