Below, Richmond-based litigators Bryan A. Fratkin and Heidi E. Siegmund examine the Seventh Circuit’s recent holding that an employment applicant’s missed opportunity to address a background check constitutes sufficient injury to confer standing. 

On August 29, the Seventh Circuit reentered the multi-front fray that has broken out among lower courts in the wake of the Supreme Court’s 2016 decision in Spokeo v Robins, 136 S. Ct. 1540 (2016).  Robertson v. Allied Solutions began with a familiar fact pattern:  Robertson applied for a job with Allied, and Allied decided not to hire her based on a negative, but accurate, background check.  Robertson then sued on behalf of a putative class, claiming that Allied had made its decision without first providing her with a copy of the background check and an opportunity to address its contents, as required by the FCRA.  15 U.S.C. § 1681b(b)(3).  (Allied allegedly also failed to provide properly formatted pre-background check disclosures, but Robertson did not press that claim on appeal.)  The parties tentatively settled the case and sought the district court’s approval of the settlement.  Rather than rule on the motion, however, the district court dismissed the action of its own accord for lack of subject-matter jurisdiction, finding that Robertson had not suffered concrete harm sufficient to confer standing.

The Seventh Circuit reversed.  Robertson v Allied Solutions LLC, — F.3d –, 2018 WL 4113815 (Aug. 29, 2018).  It began by acknowledging that Robertson had been denied information that, by law, she should have received.  That fact alone, however, was not enough to confer standing:  the Seventh Circuit emphasized that so-called “informational injury” is only concrete where the plaintiff was deprived of the opportunity to use the information for a substantive purpose.  In the context of “pre-adverse action” notices, the court reasoned, that substantive purpose is to give employees the chance to provide context for negative information in their background checks, regardless of the information’s truth.  Because Robertson had been denied that opportunity, her claims could proceed.

Notably, the panel rejected Allied’s argument that Robertson lacked standing because she could not have changed or corrected the report, for two reasons.  First, the court inferred that because the FCRA specifically addresses accuracy of consumer reports in other sections, accuracy is not this subsection’s primary goal.  Rather, § 1681b(b)(3) aims to facilitate dialogue between applicants and employers.  Second, the court noted that Article III’s standing requirements do not require a plaintiff to show that she was deprived of some benefit, but only that she was deprived of the chance to obtain the benefit.

Perhaps the most noteworthy aspect of this decision is its clash with the Ninth Circuit’s recent holding in Dutta v State Farm, 895 F.3d 1166 (9th Cir. 2018).  According to Dutta, State Farm had withdrawn his job offer based on an admittedly inaccurate background check, and had not given him a chance to explain it.  State Farm, like Allied, countered that it would have made the same decision regardless of any explanation Dutta could have offered because it based its decision on a part of the background check that was correct.  The Ninth Circuit acknowledged that Dutta had plausibly pled a violation of § 1681b(b)(3), but nonetheless found standing lacking because he could not have gotten the job.

In light of the Ninth Circuit’s historically high tolerance for comparable claims, this rebuff was surprising—particularly so because both it and the Seventh Circuit reached opposite conclusions regarding standing to contest pre-background check disclosures under 15 U.S.C. § 1681b(b)(2).  See Syed v M-I LLC, 853 F.3d 492 (9th Cir. 2017) (standing); Groshek v Time Warner Cable, Inc, 865 F.3d 884 (7th Cir. 2017) (no standing).  Ultimately, however, all of these decisions merely underscore that the debate over Spokeo’s impact on class actions is far from over.