Background Checks

The U.S. Supreme Court issued a long-awaited opinion in the Spokeo v. Robins case, which could have significant impact on Barada Associates clients by broadening the definition of “injury” or harm with regard to background screening. The Court remanded the case to the court of appeals for further analysis, but provided some helpful language in combatting the “gotcha” lawsuits that have been filed.

Our trusted colleague, Roz Fulgoni-Britton of Faegre Baker Daniels LLP in Indianapolis, shared her firm’s initial analysis of the court’s language with us and agreed to let us share it on our blog. “Although the language looks promising,” Fulgoni-Britton says, “we’ll be watching to see how it’s actually applied.”

Here is her take:

As you may have heard, the issue in Spokeo is whether a plaintiff alleging a procedural violation of FCRA has standing to sue.  The Supreme Court viewed this question as determining whether the plaintiff had suffered the requisite “injury-in-fact,” which requires concrete and particularized harm.  Ultimately, the Court held that the court of appeals’ analysis of the plaintiff’s standing to bring a claim was incomplete because it analyzed only the particularity requirement of injury-in-fact standing and did not evaluate whether the alleged harm was concrete.  Accordingly, the Court remanded the case back for further consideration of both injury-in-fact requirements.

But onto the good part:  “Article III standing requires a concrete injury even in the context of a statutory violation.  For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”  Further, the Court bluntly explained that the plaintiff “cannot satisfy the demands of Article III by alleging a bare procedural violation.  A violation of one of the FCRA’s procedural requirements may result in no harm.   For example, even if a consumer reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate.”

I am hopeful that the appellate and district courts will read the Spokeo case as underscoring the requirement of actual harm for all the plaintiffs who file putative class actions in hopes of windfall.  We will monitor both this case on remand and how other courts interpret the new case.  While this decision isn’t as perfect as we hoped, it’s a giant step in the right direction to end the “gotcha” litigation.

For additional information on Spokeo v. Robins from another highly respected law firm, Seyfarth Shaw LLP, please click here.