In Kellie Gadomski vs. Patelco Credit Union, no. 2:17-cv-00695-TLN-AC, 2020 WL 223878, 2022 US Dist. LEXIS 13741 (ED Cal. Jan. 24, 2022), Plaintiff, a California consumer, brought an action against Defendant, an information provider, alleging two causes of action for violation of the Fair Credit Reporting Act (“FCRA”) and the California Consumer Credit Reporting Agencies Act (“CCCRAA”) with respect to a consumer credit card debt (the “Debt”) owed by Plaintiff to Defendant.
Plaintiff asserted that Defendant incorrectly reported that the debt was “charged” or otherwise past due/unpaid, as opposed to “discharged from bankruptcy”, after Plaintiff’s Chapter 7 bankruptcy “without assets”, in which the debt would have been foreseen, has been discharged. . Further, the plaintiff asserted that the defendant’s failure to meet the Metro 2 reporting standard constituted misrepresentation or misrepresentation.
Defendant proposed to dismiss Plaintiff’s claims in their entirety because Plaintiff lacked standing and did not allege damage. The Court first considered the Plaintiff’s claim for actual damages, finding that the Plaintiff’s alleged actual damages were insufficient to establish actual standing because she did not allege actual damages. beyond court costs. Next, the Court analyzed the plaintiff’s claim for emotional distress, finding that the allegations were vague and conclusive, and were therefore insufficient to establish standing.
Much of the Court’s analysis focused on the damage done to the plaintiff’s solvency and the alleged “chilling effect” of the defendant’s reports. The defendant argued that the plaintiff’s claims of harm were insufficient to state a claim based on the decision in Jaras v. Equifax766 F. App’x 492 (9and Cir. 2019). In opposition, the plaintiff argued that the Court should rely on Robins vs. Spokeo, Inc.867 F.3d 1108 (9and Cir. 2017)(“Spokeo III”).
In Jarasthe court concluded in the absence of allegations showing that an inaccurate credit report affected a attempted or imminent transaction, an inaccurate credit report alone was insufficient to allege concrete harm in fact. In Spokeo IIIthe court held that a plaintiff need not allege additional harm because an inaccurate credit report alone constitutes factual harm.
In addressing these two conflicting positions, the Court said “there is no clear authority on whether an inaccurate credit report alone is sufficient to establish concrete harm in fact.” The Court recognized that Jaras distinguished himself from Spokeo III pointing out that the Spokeo III the plaintiff’s credit report “had already been requested and obtained by at least one third party, and that they were of a type sufficiently likely to adversely affect his employment prospects at a time when he was unemployed and actively seeking employment work”. In Gadomskythe Eastern District of California finally uncovered the facts of Jaras reflected the facts of this case, namely that, as for Jaras, “Plaintiff did not allege concrete harm in fact because she did not provide any facts alleging that the inaccurate credit report adversely affected her ability to complete a transaction in the past or in the imminent future.” Instead, the Court rejected the plaintiff’s claim that an inaccurate credit report had a “chilling effect”. excluding prevent it from establishing new positive accounts and improving its credit”, concluding that the allegations of solvency damage and chilling effect are insufficient to establish standing under Article III.
Finding that the plaintiff did not have standing, the Court granted the defendant’s motion to dismiss but granted leave to amend. Defendant also proposed to strike Plaintiff’s group allegations for both claims. The Court dismissed Defendant’s motion to strike Plaintiff’s class claims as premature and moot because the Court dismissed the applications with leave to amend.
Although the motions in Gadomsky were informed before the Supreme Court TransUnion LLC vs. Ramirez decision, Gadomsky demonstrates that Ramirez has not resolved the division of competences for all matters under Article III. Practitioners should continue to assess whether Article III standing exists in Fair Credit Reporting Act claims filed in federal courts.