Is An Inaccurate Credit Report Alone Enough To Establish Article III Standing?

• Published date: 23 February 2022
• Subject Matter: Consumer Protection, Litigation, Mediation & Arbitration, Insolvency/Bankruptcy/Re-structuring, Insolvency/Bankruptcy, Consumer Credit, Trials & Appeals & Compensation
• Law Firm: Womble Bond Dickinson
• Author: Ms Nikku Khalifian

A recent case out of the Eastern District of California addressed the split in authority on whether an inaccurate credit report alone is enough to establish a concrete injury in fact for purposes of Article III standing.

In Kellie Gadomski v. Patelco Credit Union, No. 2:17-cv-00695-TLN-AC, 2020 WL 223878, 2022 U.S. Dist. LEXIS 13741 (E.D. Cal. Jan. 24, 2022), Plaintiff, a California consumer, filed suit against Defendant, a furnisher of information, alleging two causes of action for violations of the Fair Credit Reporting Act ('FCRA') and the California Consumer Credit Reporting Agencies Act ('CCCRAA') in regards to a consumer credit card debt (the 'Debt') owed by Plaintiff to Defendant.

Plaintiff claimed that Defendant inaccurately reported the Debt as being 'charged off' or otherwise past due/unpaid, as opposed to 'Discharged in Bankruptcy,' after Plaintiff's 'no asset' Chapter 7 bankruptcy, in which the Debt was allegedly scheduled, was discharged. Additionally, Plaintiff claimed that Defendant's failure to comply with the Metro 2 reporting standard constituted an inaccurate or misleading statement.

Defendant moved to dismiss Plaintiff's claims in their entirety because Plaintiff lacked standing and failed to allege she was damaged. The Court first addressed Plaintiff's claim for actual damages, finding Plaintiff's alleged actual damages were insufficient to establish actual standing because she failed to allege actual damages beyond the costs of litigation. Next, the Court analyzed Plaintiff's claim for emotional distress, finding the allegations were vague and conclusory, and were thus insufficient to establish standing.

The bulk of the Court's analysis focused on the damage to Plaintiff's creditworthiness and the alleged 'chilling effect' of Defendant's reporting. Defendant argued Plaintiff's allegations of harm were insufficient to state a claim based on the ruling in Jaras v. Equifax, 766 F.App'x 492 (9^th Cir. 2019). In Opposition, Plaintiff argued the Court should rely on Robins v. Spokeo, Inc., 867 F.3d 1108 (9^th Cir. 2017)('Spokeo III').

In Jaras, the court concluded absent allegations showing that an inaccurate credit report affected an attempted or imminent transaction, an inaccurate credit report alone was not enough to allege a concrete injury in fact. In Spokeo III, the court held a plaintiff need not allege any additional harm because an inaccurate credit report standing alone constitutes an injury in fact.

In addressing these two...