Tailford v. Experian Info. Solutions, Inc.

• Decision Date: 01 March 2022
• Docket Number: No. 20-56344,20-56344
• Citation: 26 F.4th 1092
• Parties: Theresa TAILFORD; Sanford Buckles; Jeffrey C. Ruderman, and all similarly situated individuals, Plaintiffs-Appellants, v. EXPERIAN INFORMATION SOLUTIONS, INC., Defendant-Appellee
• Court: U.S. Court of Appeals — Ninth Circuit

26 F.4th 1092

Theresa TAILFORD; Sanford Buckles; Jeffrey C. Ruderman, and all similarly situated individuals, Plaintiffs-Appellants,

v.EXPERIAN INFORMATION SOLUTIONS, INC., Defendant-Appellee

No. 20-56344

United States Court of Appeals, Ninth Circuit.

Argued and Submitted November 18, 2021 Pasadena, California

Filed March 1, 2022

Robert S. Green (argued), James Robert Noblin, and Emrah M. Sumer, Green & Noblin P.C., Larkspur, California, for Plaintiffs-Appellants.

Meir Feder (argued) and Kelly C. Holt, Jones Day, New York, New York; John A. Vogt and Ryan D. Ball, Jones Day, Irvine, California; for Defendant-Appellee.

Before: Richard Linn,^** Jay S. Bybee, and Mark J. Bennett, Circuit Judges.

LINN, Circuit Judge:

Theresa Tailford, Sanford Buckles, and Jeffrey C. Ruderman ("Plaintiffs"), appeal from the denial by the United States District Court for the Central District of California of their motion to remand to state court their class action suit alleging violations of the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. Plaintiffs contend that Experian Information Solutions, Inc. ("Experian") failed to show that Plaintiffs have Article III standing and further contend that the district court erred in dismissing with prejudice Plaintiffs' first amended complaint for failure to state a claim. Because Plaintiffs' pleadings contain sufficient allegations of injury to support Article III standing, we affirm the district court's denial of their motion to remand to state court. Because none of the data alleged by Plaintiffs to be missing from Experian's consumer reports is subject to disclosure under the FCRA, we affirm the district court's dismissal with prejudice of Plaintiffs' first amended complaint.

I

The FCRA is a specifically tailored federal law enacted in 1970 "to ensure fair and accurate credit reporting, promote efficiency in the banking system, and protect consumer privacy." Safeco Ins. Co. of Am. v. Burr , 551 U.S. 47, 52, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007). It created a mechanism "for investigating and evaluating the credit worthiness, credit standing, credit capacity, character, and general reputation of consumers." 15 U.S.C. § 1681(a)(2). It is not intended to provide broad-based federal oversight into data-collection practices in general. It is instead one of several federal and state laws each designed to regulate the collection and dissemination of specifically identified types of credit data for specifically identified purposes. The FCRA limits what credit, employment, and personal information consumer reporting agencies ("CRAs") can collect, how CRAs can obtain such information, and to whom credit reports containing such information may be disseminated. Id. §§ 1681b, 1681a(d). The FCRA also specifies the circumstances under which consumer reports may be distributed by CRAs and the purposes for which such distribution is authorized. See id. §§ 1681a, 1681b.

To give consumers the opportunity to verify the accuracy of data maintained by CRAs, the FCRA requires CRAs to disclose certain information to the consumer upon request. See 15 U.S.C. § 1681g ; TransUnion LLC v. Ramirez , ––– U.S. ––––, 141 S. Ct. 2190, 2213, 210 L.Ed.2d 568 (2021) ("As the plaintiffs note, the disclosure and summary-of-rights requirements are designed to protect consumers' interests in learning of any inaccuracies in their credit files so that they can promptly correct the files before they are disseminated to third parties."). The willful failure to comply with such a disclosure request gives rise to a private cause of action for actual or statutory damages. 15 U.S.C. § 1681n(a). As relevant here, the disclosure must include the following three categories of information:

(1) All information in the consumer's file at the time of the request [subject to some exceptions not relevant on appeal]

...

(3) [E]ach person (including each end-user identified under section 1681e(e)(1) of this title) that procured a consumer report

...

(ii) for any other purpose [than employment purposes], during the 1-year period preceding the date on which the request is made.

...

(5) A record of all inquiries received by the agency during the 1-year period preceding the request that identified the consumer in connection with a credit or insurance transaction that was not initiated by the consumer.

15 U.S.C. § 1681g(a)(1), (3), (5). We refer herein to the disclosure required under the FCRA as a " § 1681g disclosure."

II

Experian is a credit reporting agency that collects traditional consumer credit data. Experian stores the collected consumer credit data in a database called "File One." This data includes information about credit accounts, creditors, debts, and credit inquiries. Experian uses its File One database to respond to credit inquiries made under § 1681g of the FCRA, but in doing so does not include information from its internal-only "Admin Reports." The Admin Report summarizes all the information Experian has on each consumer, including, inter alia , dates that employers reported employees' employment information, certain soft credit inquiries, and non-traditional "behavioral data" such as "household income, purchase history, whether an individual is a ‘dog’ or ‘cat’ person," and thousands of other marketing attributes. Experian also gathers this behavioral data in a marketing database called "ConsumerView."

"The ConsumerView database contains data on thousands of attributes on more than 300 million consumers and 126 million households, including age, gender, marital status, presence of children, homeowner status, education, and occupation." Tailford v. Experian Info. Sols., Inc. , No. CV 19-02191-CJC (KESx), 2020 WL 6867157, at *1 (C.D. Cal. Nov. 18, 2020) (order granting motion to dismiss) ("Dismissal Order") (quotation marks omitted). Experian sells this information to affiliates and third parties through a product called "OmniView." Experian's marketing materials indicate that OmniView may be used to "[t]arget candidates for invitations to apply for credit." Tailford v. Experian Info. Sols., Inc. , No. SACV 19-02191JVS (KESx), 2020 WL 2464797, at *2 (C.D. Cal. May 12, 2020) (order denying motion to remand and granting motion to dismiss) ("Remand Order"). OmniView also includes credit statistics aggregated by zip code, the raw data for which Plaintiffs allege is sourced from the File One database. Experian does not include the information in its ConsumerView database in its § 1681g disclosures. Experian additionally collects information about consumers' employers and dates of employment. This information is used in another product called "Employment Insight."

In late 2017, a data breach in an Amazon cloud storage location revealed information on millions of households in a spreadsheet titled "ConsumerView_10_2013.yxdb." Plaintiffs allege that this information was placed in cloud storage by data analytics company Alteryx, Inc. that allegedly bought it from Experian. Following this breach, each of the three Plaintiffs requested and received from Experian various § 1681g disclosures. Plaintiffs contend these disclosures were incomplete. Plaintiffs do not allege that Experian failed to include in its § 1681g disclosures any the information in its File One database responsive to Plaintiffs' requests. Plaintiffs do contend, however, that Experian failed to include in its § 1681g disclosures several pieces of information they allege Experian was required by the FCRA to provide, including behavioral data from its ConsumerView database, inquiries from third parties and affiliates, the identity of certain parties who procured consumer reports, and the date on which employment data was reported.

III

Plaintiffs sought to remedy Experian's alleged violation of the FCRA by joining a putative class action initially filed by Terry Carson before the United States District Court for the Central District of California, alleging violations of § 1681g(a)(1), (3), (5), and § 1681e(b) of the FCRA. Carson v. Experian Info. Sols., Inc. , No. 8:17-cv-02232-JVS-KES, 2019 WL 3073993, 2019 U.S. Dist. LEXIS 118387 (C.D. Cal. July 9, 2019). In that action, Experian filed a motion to dismiss, a motion for judgment on the pleadings, and a motion to stay discovery. Id. at 1–2, 2019 U.S. Dist. LEXIS 118387 at *3–4. Plaintiffs opposed the motions. The district court, Judge Selna, granted the motion to dismiss, holding that "Plaintiffs fail[ed] to show how Defendant's alleged violation of the FCRA amount[ed] to more than a ‘bare procedural violation,’ " and thus did not plead "a concrete injury sufficient to confer Article III standing to bring their § 1681g claims." Id. at *7, 2019 U.S. Dist. LEXIS 118387 at *20–21. The district court also granted in part the motion for judgment on the pleadings and dismissed the motion to stay discovery as moot. Plaintiffs did not appeal Carson .

Instead, Plaintiffs filed a separate class action suit in state court, again alleging violations of § 1681g. Experian, in a turnabout from the position it took in Carson , removed the case to the Central District. Experian then filed a motion to dismiss the Original Complaint for failure to state a claim. Plaintiffs countered with a motion for remand to state court. Plaintiffs argued in their remand motion that Experian had not met its burden of establishing Article III standing, but did not expressly argue, as they did in Carson , that standing was lacking. Judge Selna denied Plaintiffs' motion, holding that removal under § 1441 was proper because "[t]there [was] no question that Plaintiffs' complaint raised issue[s] under the FCRA, a federal law," and that there was no initial requirement for Experian to prove subject matter jurisdiction in order to remove an action. Remand Order, 2020 WL 2464797, at *4. Judge Selna also granted Experian's motion to dismiss, holding that none of the information missing from the § 1681g disclosures sent to Plaintiffs was required to be disclosed under the FCRA. Id....