State AGs File Amicus Brief With U.S. Supreme Court in FCRA Standing Case

On September 9, the Massachusetts Attorney General announced that her office, along with 12 other states and the District of Columbia, had filed with the U.S. Supreme Court an amicus brief supporting the plaintiff-respondent in Spokeo v. Robins. (Previous InfoBytes coverage can be seen here). The putative class-action plaintiff in that case claimed that an online data broker published inaccurate information about him in violation of the Fair Credit Reporting Act (FCRA). Reversing the district court, the U.S. Court of Appeals for the Ninth Circuit held that the violation of a statutory right created by FCRA was, in itself, a sufficient injury to confer standing to sue under Article III of the Constitution. In their multistate amicus brief, the AGs argued that the Supreme Court should affirm this holding. The states asserted that businesses frequently rely on consumer data profiles to make important credit, employment, housing, and insurance decisions. However, “the damage done by . . .  an inaccurate data profile is frequently impossible for the affected consumer to detect or quantify,” they argued.  Accordingly, “Congress rightly has authorized statutory damages for a willful violation of the FCRA.” The AGs asserted that, given their limited resources, statutory damage cases and private class actions are needed to supplement their own consumer protection actions.

LinkedInFacebookTwitterGoogle+Share

Special Alert: Disparate Impact Under the Equal Credit Opportunity Act After Inclusive Communities

On June 25, the Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. held that disparate-impact claims are cognizable under the Fair Housing Act (FHA). The Court, in a 5-4 decision, concluded that the FHA permits disparate-impact claims based on its interpretation of the FHA’s language, the amendment history of the FHA, and the purpose of the FHA.

Applicability to ECOA

When certiorari was granted in Inclusive Communities, senior officials from the CFPB and DOJ made clear that they would continue to enforce the disparate impact theory under the Equal Credit Opportunity Act (ECOA) even if the Supreme Court held that disparate-impact claims were not cognizable under the FHA. It is reasonable to expect that the Court’s decision will embolden the agencies, as well as private litigants, to assert even more aggressively the disparate impact theory under ECOA. Read more…

LinkedInFacebookTwitterGoogle+Share

Special Alert: Supreme Court Upholds Disparate Impact Under Fair Housing Act, But Emphasizes Limits on Such Claims

Today, the Supreme Court in Texas Department of Housing and Community Affairs v. Inclusive Communities Project, Inc. held that disparate-impact claims are cognizable under the Fair Housing Act (FHA). In a 5-4 decision, the Court concluded that the use of the phrase “otherwise make available” in Section 804 of the Fair Housing Act supports disparate-impact claims. The Court also held that Section 805 of the Fair Housing Act (which applies to lending) permits disparate impact, reasoning that the Court “has construed statutory language similar to § 805(a) to include disparate-impact liability.” The Court also wrote that the 1988 amendments to the Fair Housing Act support its conclusion because (1) all the federal Courts of Appeals to have considered the issue at that time had held that the FHA permits disparate-impact claims; and (2) the substance of the amendments, which the Court characterized as exceptions from disparate impact, “is convincing support for the conclusion that Congress accepted and ratified the unanimous holdings of the Courts of Appeals finding disparate-impact liability.”

The Court emphasized, however, that “disparate-impact liability has always been properly limited in key respects . . . .” Specifically, the Court explained disparate-impact liability must be limited so companies “are able to make the practical business choices and profit-related decisions that sustain a vibrant and dynamic free-enterprise system.” “Entrepreneurs must be given latitude to consider market factors,” the Court explained. The Court clarified further that a variety of factors, including both “objective” and “subjective” factors, are “legitimate concerns.” Read more…

LinkedInFacebookTwitterGoogle+Share

Supreme Court Grants Cert. to Decide if Offer of Complete Relief Moots Case

On May 18, the Supreme Court granted certiorari to resolve a circuit split as to whether an offer of complete relief to a plaintiff seeking to represent a putative class moots the case. Campbell-Ewald Co. v. Gomez, 2015 WL 246885 (U.S. May 18, 2015). According to the cert. petition, the plaintiff received an unsolicited text message in 2006 from the petitioner, a firm hired by the U.S. Navy to assist with its recruitment efforts. The plaintiff claimed that the text message violated the Telephone Consumer Protection Act, and sought to represent a class of all non-consenting recipients of the recruitment text. Before the plaintiff had moved for class certification, the petitioner tendered an offer of judgment pursuant to Fed. R. Civ. P. 68 and a separate informal settlement offer, both of which would have fully satisfied the plaintiff’s individual claim by offering more than the maximum statutory damages plus reasonable costs and injunctive relief. The plaintiff rejected the offers and moved for class certification. The district court rejected the petitioner’s claim that the claim was moot, but eventually granted the petitioner summary judgment on the merits on the ground that the petitioner was entitled to “derivative sovereign immunity.” The Ninth Circuit reversed, holding that the case was not moot and that the district court had improperly applied the derivative sovereign immunity doctrine. The Supreme Court granted cert. to consider both questions. As to the mootness issue, the Court will also consider whether the resolution depends on whether or not the class has been certified at the time of the offer.

LinkedInFacebookTwitterGoogle+Share
COMMENTS: Comments Off
TAGS: ,
POSTED IN: Courts

Supreme Court to Hear Historic FCRA Standing Case During October 2015 Term

On April 27, the United States Supreme Court granted a petition for a writ of certiorari seeking review of a hotly-debated question with potentially far-reaching implications: whether a mere violation of a federal statute, without more, satisfies the “injury-in-fact” standard required for constitutional standing under Article III.  The case at issue involves a plaintiff alleging violations of the Fair Credit Reporting Act (FCRA); specifically, the plaintiff argued that he suffered actual harm when an online search engine, acting as a credit reporting agency (CRA), published inaccurate information about his background and character in violation of FCRA provisions requiring a CRA to ensure accuracy and provide notice regarding the information it disseminates.  The district court ruled that plaintiff failed to demonstrate injury-in-fact without showing more than mere violations of the FCRA.  The Ninth Circuit reversed, holding that the violation of federal statutory rights is sufficient to show constitutional standing, and that a plaintiff need not demonstrate any actual damages in order to file suit.  Notably, the Ninth Circuit did not opine that the “harm” alleged by the plaintiff – the online search engine portrayed him as wealthier and more educated than he actually was – affected him economically by impeding his employment prospects. Read more…

LinkedInFacebookTwitterGoogle+Share
COMMENTS: Comments Off
TAGS: ,
POSTED IN: Consumer Finance, Courts