Sep 14

Third Circuit Finds Plaintiffs Have Standing to Sue SEPTA for Only One of Two Claimed Violations of the Fair Credit Reporting Act

Earlier this week, the Third Circuit issued its decision in Long v. SEPTA, No. 17-1889, 2018 WL 4290046 (3d Cir. Sept. 10, 2018)—another in a series of decisions from that court on Article III standing in cases where plaintiffs allege that a defendant’s violation of a regulatory statute injured them.  However, unlike most of the recent Third Circuit decisions in this type of case, this time the court concluded that the plaintiffs did not have standing to sue for one of the alleged statutory violations.

Since the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), reminded lower courts to separately address whether a claimed injury was “concrete,” the Third Circuit’s Article III standing opinions—at least in cases arising under privacy statutes—have been, in its own words, “decidedly in favor of allowing individuals to sue to remedy violations of their statutory rights, even without additional injury.”  Long, 2018 WL 4290046, at *6.  Those decisions include Susinno v. Work Out World, Inc., 862 F.3d 346 (3d Cir. 2018) (finding standing to assert violation of Telephone Consumer Protection Act based on plaintiff’s receipt of a single unsolicited call on her cell phone); In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625 (3d Cir. 2017) (finding standing to assert claims under Fair Credit Reporting Act based on alleged unauthorized disclosure of plaintiffs’ personal health information); and In re Nickelodeon Consumer Privacy Litig., 827 F.3d 262 (3d Cir. 2016) (finding standing for alleged violations of the Wiretap Act, the Stored Communications Act, and the Video Privacy Protection Act based on alleged unlawful use of cookies to track children’s internet history).

In Long v. SEPTA, the three plaintiffs each applied for a job at SEPTA, disclosed their criminal history on a form each submitted, including convictions of drug offenses, and authorized SEPTA to obtain a background check.  Initially, each received an offer or was told when to start training, but when SEPTA received the background checks, each was denied employment.  2018 WL 4290046, at *1.  Despite requirements in the Fair Credit Reporting Act (“FCRA”) that an employer send job applicants a notice of their rights under the FCRA and a copy of a background check before denying employment based on such a consumer report, see 15 U.S.C. § 1681b(b)(3), SEPTA did not send these materials to any of the three plaintiffs.  2018 WL 4290046, at *1.  Plaintiffs sued, but the district court dismissed the lawsuit, concluding that plaintiffs had alleged only a “bare procedural violation,” not a concrete injury because plaintiffs had already disclosed their criminal history before SEPTA obtained the background checks and because the plaintiffs did not allege that there was anything inaccurate in the background reports SEPTA got.  Id. (quoting district court opinion).

The Third Circuit affirmed in part and reversed in part—finding that plaintiffs had alleged facts to show a concrete injury from their not receiving a copy of the background check but no facts to show a concrete injury from not receiving a notice of their rights under the FCRA.  As to the background checks, the court noted that plaintiffs alleged that “SEPTA might have changed its mind if they had the chance to respond to their background checks.”  2018 WL 4290046, at *4.  Indeed, the court faulted the district court for failing to construe this allegation in the light most favorable to the plaintiffs, as a court must do on a motion to dismiss.  Id.   The Third Circuit held that this type of alleged injury—which the court described as “use of Plaintiffs’ personal information—their consumer reports—without Plaintiffs being able to see or respond to it”—was analogous to common law privacy tort claims for interference with an individual’s ability to control his personal information and was the type of intangible harm that Congress could elevate to an injury in fact.  Id. at *8.

But as to SEPTA’s failure to provide plaintiffs with the required notice of rights, the plaintiffs asserted only that it “increased the risk that … individuals would not know of their FCRA rights and have their claims lapse before they could bring suit.”  2018 WL 4290046, at *9 (quoting plaintiffs’ appeal brief).  The Third Circuit concluded that this failure was a “bare procedural violation, divorced from any concrete harm” (quoting Spokeo, 136 S. Ct. at 1549) because plaintiffs “were able to file this lawsuit within the prescribed limitations period, so they were not injured.”  2018 WL 4290046, at *9.

Perhaps the lesson to be drawn from Long is that the Third Circuit is looking to see if the complaint alleges any factual consequence from the statutory violation a plaintiff is alleging.  A violation of a statutory right to receive a required disclosure or document will not suffice unless the plaintiff can identify some consequence that actually ensued from that failure to receive the disclosure or document.

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