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Spokeo Saves Lyft From Background Check Lawsuit

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By Casey C. Sullivan, Esq. on October 11, 2016 12:57 PM

The Supreme Court's recent decision in Spokeo v. Robins is already being felt in courts, including in a class action against Lyft over the company's background check procedures. Lyft's drivers alleged that the company broke the law when it conducted background and credit checks without informing them.

But that suit was tossed last Wednesday, largely on the basis of Spokeo. That May, 2016 decision held that plaintiffs must show a concrete injury to gain standing when alleging a violation of their privacy rights.

Defanging the Fair Credit Reporting Act

Both the plaintiff in Spokeo and the drivers suing Lyft alleged violations of the Fair Credit Reporting Act. The FCRA requires covered companies to "follow reasonable procedures to ensure maximum possible accuracy" in the information they make available in credit reports and requires "clear and unambiguous" disclosure when checks are made. Spokeo, a "people search engine," didn't do that, according to Thomas Robins, the lead plaintiff in Spokeo, listing inaccurate information about his education, income, and relationships. Lyft, too, ran afoul of the FCRA, the drivers allege, failing to make necessary disclosures.

If the violations of the law were clear, showing that anyone had been injured by them was not. In Spokeo, the Supreme Court dinged the Ninth Circuit for finding that Robins had standing; the court had "elided" the Article III requirement that a plaintiff show both a concrete and a particularized injury.

The Lyft drivers' case, too, faltered on the same grounds. "While procedural violations that have resulted in real harm-or even a risk of real harm-may be sufficient to meet this requirement, plaintiff in this case has alleged no such injury," Judge Joseph Spero (N.D. Cal.) wrote.

Is There a Future for Privacy Litigation?

Does Spokeo mean an end to privacy lawsuits? Perhaps. It certainly doesn't make them easy. If someone secretly checks your credit or reports false information online, plaintiffs may still have difficulty showing a concrete injury that resulted, one more concrete than the privacy violation itself.

Still, Spokeo didn't reject Robin's suit on the merits, nor did it fully foreclose the possibility of standing in cases such as Robin's, stopping just short of creating a bright line rule against such suits.

The case is currently back before the Ninth Circuit, which will now have to reexamine Robin's standing. If the court finds standing, it could resurrect both Robin's and the Lyft drivers' suits. If it doesn't, it might be the death-knell for most privacy litigation.

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