More on the Doctrine of Standing: Ninth Circuit Says Inaccurate Credit Reporting Not Sufficient for Standing
In good news for San Diego businesses, the US Ninth Circuit Court of Appeals up in San Francisco recently held that, without more, a claim that credit information was inaccurately reported was not sufficient to confer standing to sue Equifax, a credit reporting company. See Jaras v. Equifax, Inc., Case Nos. Nos. 17-15201, 17-15987, 17-15990, 17-15991, 17-15992 (US 9th Cir. March 25, 2019) (unpublished). As we discussed in our recent article, “standing” is a legal doctrine that limits who may bring lawsuits that make claims about various possible statutory violations by businesses. In the Jaras case, various plaintiffs claimed that Equifax and other companies violated the Fair Credit Reporting Act (“FCRA”) and the California Consumer Credit Report Agencies Act (“CCRAA”). See 15 U.S.C. § 1681, et seq. and Cal. Civ. Code § 1785.25(a). The Jaras appeal consolidated five separate cases.
As we discussed earlier, to have standing, one must have been injured in some way. This is required by the US Supreme Court. See Spokeo, Inc. v. Robins, 36 S. Ct. 1540 (2016). In Spokeo, the Supreme Court held that standing requires a concrete injury even in the context of a statutory violation. This is similar to the idea that, under the Law of Contracts, there must be a breach of the contract to entitle one to bring a lawsuit. The plaintiffs in the Jaras case each had filed bankruptcies and each had been discharged under the Bankruptcy Code. After being discharged, the various plaintiffs requested copies of their credit reports and discovered various account information on the reports that was inaccurate based on how the bankruptcy laws treat discharged debt. Requests were made to the three main credit reporting companies — Experian Information Solutions, Inc., Equifax, Inc., and Transunion, LLC — to update the information to match the confirmed bankruptcy plans. However, when the plaintiffs pulled their reports a second time, inaccuracies remained on their credit reports. Thereafter, the plaintiffs sued the credit reporting agencies (and also the creditors providing the allegedly inaccurate information) for violation of the FCRA and CCRAA.
However, the plaintiffs did not claim any actual harm. They did not, for example, claim that because of the inaccurate information, they were denied credit or were turned down for an apartment lease or that an adverse hiring was made. At the trial level, the trial court dismissed the case on the grounds that the information on the credit reports was not actually inaccurate. The Ninth Circuit affirmed the decisions but for a different reason; the plaintiffs did not have standing to sue absent an injury of some sort. The court went even further and suggested that the plaintiffs could not prove an actual injury of any sort since ” … given that Plaintiffs’ bankruptcies themselves cause them to have lower credit scores with or without the alleged misstatements.”
The Jaras decision has the potential to significantly decrease the number of fair credit reporting cases that are filed here in the Golden State. There are a lot of them. Fewer lawsuits are likely since establishing some sort of harm is a threshold and that will be more difficult for plaintiffs to show. At minimum, plaintiffs will need proof that they applied for credit or for a job or for an apartment.
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For further information, please contact Michael Leonard, Esq. of San Diego Corporate Law. Contact Mr. Leonard via email or by calling (858) 483-9200. Mr. Leonard’s law practice is focused on business, transactional, and corporate matters. Like us on Facebook.