Spokeo Wipes Out FCRA Lawsuit Over “Improper” Mandatory Disclosures–Nokchan v. Lyft

As you recall, both the plaintiffs’ bar and defense bar declared that the Supreme Court’s Spokeo v. Robins ruling was a win for their side. Optimists might interpret that as a sign the Supreme Court found a magical win-win solution; pessimists might conclude that it’s a sign the Supreme Court opinion was defectively ambiguous. Subsequent jurisprudence has supported the pessimists’ view, as courts continue to fracture over when a statutory violation creates Article III standing for access to federal courts.

Today’s ruling isn’t a definitive resolution of the topic, but it shows Spokeo’s defense-favorable tilt. Nokchan applied to become a Lyft driver. Lyft runs a credit check as part of the process. Nokchan alleged that Lyft’s Fair Credit Reporting Act (FCRA) disclosures were presented improperly–such as not making the disclosures “stand-alone” as required by the statute. Nokchan offered no evidence of any adverse consequence attributable to the improperly presented disclosures; and he was accepted as a Lyft driver.

So how do you feel about this situation? I feel mixed. On the one hand, if Lyft really didn’t follow the FCRA’s presentation rules, that’s an unforced/avoidable error that should have some consequences. (I’m deliberately ignoring the voluminous literature that mandatory disclosures are rarely helpful to consumers, so the FCRA’s mandatory disclosures almost certainly would not have made any meaningful difference). On the other hand, if Nokchan suffered no adverse consequence, is this really the kind of thing that warrants the time and expense of a federal class action lawsuit? More generally, are these really the kind of violations the plaintiff’s bar plans to pursue?

Perhaps those questions will become moot if the courts screen out these cases quickly enough to discourage future ones. Unless the plaintiff comes up with better evidence of how Lyft’s allegedly defective disclosures hurt him, Spokeo will wipe out this case. The court says: “the facts alleged in this case appear to be similar to the example offered in Spokeo, where the Court opined that failure to provide the required notice to users of the consumer information provided would not be sufficient to meet Article III‘s injury-in-fact requirement.”

The plaintiff tried some workarounds. First, the plaintiff said “invasion of privacy is an injury that traditionally has been recognized and that he has established such an injury for the purposes of Article III standing based on his allegation that the authorization he gave Lyft to obtain his personal information was not proper.” This is just a wordier way of alleging that Lyft didn’t follow the statute, and the court implies that fraud or deceit on Lyft’s part would be required to get some traction.

Second, the plaintiff alleged he suffered an “informational injury” as contemplated by the Spokeo ruling. The court responds that “The case law is not consistent with respect to how broadly to read the language in Spokeo with respect to informational injury.” (Surprise!) Pre-Spokeo caselaw had indicated that “violation of a disclosure requirement under the FCRA, by itself, is sufficient to confer Article III standing on a plaintiff.” This court concludes that Spokeo changed that law.

In my comments on the Supreme Court’s Spokeo ruling, I said:

First, we’ve seen cases where the plaintiff didn’t actually attempt to show any harm from a statutory violation. Those cases should lack standing. Second, plaintiffs will be required to do more work to identify sufficient harms that they suffered. Obviously saying “the statutory violation made me mad/upset/frustrated or caused me angst” won’t cut it…So I think this opinion will make plaintiffs say more in their complaint, work harder to show they suffered cognizable harms, and fail to have standing when they don’t do both.

This ruling nicely illustrates what I was talking about.

Case citation: Nokchan v. Lyft, Inc., 3:15-cv-03008-JCS (N.D. Cal. Oct. 5, 2016)