Relying on Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), the U.S. Court of Appeals for the Fourth Circuit recently vacated and remanded for dismissal a trial court’s summary judgment ruling in favor of the plaintiff in an $11 million, 69,000 member class action under the federal Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq., where the defendant credit reporting agency listed the name of a defunct credit card issuer instead of the name of the servicer as the source of information on the plaintiff’s credit report.
In so ruling, the Fourth Circuit held that the plaintiff had not suffered an injury-in-fact arising from alleged incomplete or incorrect credit report information, and thus had not satisfied the constitutional standing requirements to pursue a claim.
A copy of the opinion in Dreher v. Experian Information Solutions, Inc. is available at: Link to Opinion.
During a background check for security clearance the plaintiff claimed that he first discovered that his cousin had opened a credit card in his name and had run up a substantial balance. The plaintiff requested credit reports from three credit reporting agencies to clear up the problem.
One of those reports listed the tradeline under the name of the original creditor with a P.O. Box address. Plaintiff sent letters to the original creditor requesting verification of the debt and received a response on the creditor’s letterhead along with a statement showing the outstanding balance and a copy of the online credit card application with his name and social security number.
The plaintiff then wrote to the creditor requesting that it stop reporting the account as inaccurate but did not receive a response. He then contacted the credit reporting agency directly to make the same request but without result.
The plaintiff alleged that caused him stress and wasted his time, but the credit reporting error did not affect his security clearance, which was approved.
Later, the account was deleted from his credit file. The original creditor had gone out of business during the 2008 financial crisis and the FDIC had become the receiver and appointed a servicing company to collect the outstanding balances on the portfolio of accounts. The servicer conducted its work using the original creditor’s name, phone number, and website and furnished account information to credit reporting agencies under the original creditor’s name so as not to be confusing to account holders who might not recognize the name of the servicer but would know the name of the creditor with whom they had opened their accounts.
The plaintiff sued the servicer and the credit reporting agency asserting class claims and individual claims alleging that they violated the FCRA by failing to include the servicer’s name in the tradelines as the source of the information.
The trial court certified the class, and granted the plaintiff’s motion for summary judgment explaining that it was objectively unreasonable to exclude the servicer’s name from the tradeline. The trial court denied the credit reporting agency’s motion for summary judgment reasoning that the FCRA created “a statutory right to receive the sources of information for one’s credit report” so that if a source is not disclosed, the violated right creates “a sufficient injury-in-fact for constitutional standing.” The parties stipulated to damages of $11.7 million for the class and the credit reporting agency appealed.
On appeal, the Fourth Circuit pointed out that the trial court failed to analyze whether the injury was specific and concrete, as Spokeo requires, but merely concluded that any violation of the statute was sufficient to create an injury-in-fact.
The Appellate Court analyzed the holding in Spokeo explaining that the injury-in-fact requirement is not automatically satisfied where a statute grants a right and authorizes a person to “vindicate that right” but the person does not have any concrete harm. Put another way, a plaintiff cannot allege a “bare procedural violation, divorced from any concrete harm” and still gain standing. The Appellate Court concluded, based on Spokeo, that “a technical violation of the FCRA may not rise to the level of an injury in fact for constitutional purposes.”
The Fourth Circuit pointed out that this conclusion was in agreement with the D.C. Circuit’s conclusion that “a plaintiff suffers a concrete informational injury where he is denied access to information required to be disclosed by statute, and he suffers, by being denied access to that information, the type of harm Congress sought to prevent by requiring disclosure.”
Applying the reasoning in Spokeo, the Fourth Circuit found that the plaintiff had not suffered a cognizable and specific injury, even an intangible “informational injury,” where the credit reporting agency did not report the name of the servicer for the tradeline in addition to the creditor.
The Appellate Court also pointed out that the plaintiff had failed to demonstrate how the exclusion of the servicer’s name would have made any difference in the fairness or accuracy of his credit report or the efficiency of resolving his credit dispute, and rejected the plaintiff’s argument that there was value in “knowing who it is you’re dealing with” or that the servicer was hiding who it really was.
Instead, the Fourth Circuit found that the servicer name missing from the credit report did not have any practical effect on the plaintiff. Thus, the Appellate Court concluded that the plaintiff had merely alleged a statutory violation without concrete harm.
The Fourth Circuit held, contrary to the trial court’s holding, that “a statutory violation alone does not create a concrete informational injury sufficient to support standing,” rather, it must create a “real harm with an adverse effect.”
Therefore, the Appellate Court held that the plaintiff failed to assert Article III standing, and the trial court’s holding in favor of the plaintiff was vacated and the case was remanded to the trial court for dismissal.