SHAMECA S. ROBERTSON, on behalf of herself and all others similarly situated, Plaintiff-Appellant, v. ALLIED SOLUTIONS, LLC, Defendant-Appellee.
No. 17-3196
United States Court of Appeals For the Seventh Circuit
Argued February 20, 2018 — Decided August 29, 2018
Before WOOD, Chief Judge, and EASTERBROOK and BARRETT, Circuit Judges.
Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. 1:15-cv-1364-WTL-DML — William T. Lawrence, Judge.
WOOD,
At this juncture we accept Robertson‘s allegations, but we still must examine whether Allied‘s alleged violations of the Act caused her any concrete injury. Because the answer is in part “yes,” we reverse the dismissal for lack of jurisdiction of one of Robertson‘s claims and remand for further proceedings. The district court‘s dismissal of the other claim was proper, because its authority to adjudicate must exist before it can resolve the case, even if that resolution is nothing more than a fairness hearing under
I
Robertson applied for a position with Allied. It offered her the job, but it ran a background check before she reported to work. Ordinary background checks qualify as consumer reports under the FCRA. See
Certain “non-conviction information” (the nature of which is immaterial for present purposes) turned up in the course of Robertson‘s background check. This information prompted Allied to revoke the job offer. A representative from its human resources department passed that word along to Robertson. She alleges that the representative told her only that the offer was being rescinded “because of information in her ‘criminal background check’ report.” An employer that relies in any measure on a background check for an adverse employment decision (including rescinding a job offer, see
She responded with this lawsuit. Her complaint includes two claims, each on behalf of a distinct subclass. First, she sued Allied for failing to furnish clear and conspicuous disclosure forms. We call this the notice claim. Second, she sued Allied for taking an adverse employment action based on her background check without first supplying a copy of the report or a written summary of her FCRA rights. This is her adverse-action claim.
After mediation in April 2016, the parties reached a tentative settlement agreement. A month later, the Supreme Court decided Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), in which it emphasized that federal jurisdiction exists (as relevant here) only if the plaintiff has alleged an injury that is both concrete and particular to herself. Neither Allied nor the court responded immediately to Spokeo. Several months lat- er, Robertson filed an unopposed motion under
Eventually the district court dismissed the entire case for lack of standing. It held that Groshek compelled that result for Robertson‘s notice claim. With respect to the adverse-action claim, the court ruled that because Robertson had not pleaded facts connecting the lost offer with Allied‘s failure to turn over a copy of the background report, it too had to be dismissed. Had Robertson pleaded, for example, that the report was inaccurate or that she favorably could explain the report‘s content, the court indicated that it might have ruled that she sustained an Article III injury. It refused to permit her to amend her complaint because she never indicated what facts she could allege that would support jurisdiction. She now appeals.
II
The Constitution confines “the judicial Power” of the federal courts to “Cases” and “Controversies.”
An Article III injury may exist solely because a defendant infringes a congressionally created right. Lujan v. Defenders of Wildlife, 504 U.S. 555, 578 (1992). Even though not all statutory violations inflict concrete personal harm, Spokeo, 136 S. Ct. at 1549, withholding information when a statute requires its publication—sometimes called an “informational injury“—may do so. See Fed. Election Comm‘n v. Akins, 524 U.S. 11, 24–25 (1998). An informational injury is concrete if the plaintiff establishes that concealing information impaired her ability to use it for a substantive purpose that the statute envisioned. Bensman v. U.S. Forest Serv., 408 F.3d 945, 952–53 (7th Cir. 2005); see also Akins, 524 U.S. at 21–22 (plaintiffs suffered a concrete injury because they wanted to use withheld information to evaluate candidates for public office, which is a substantive reason the Federal Election Campaign Act requires publication); Pub. Citizen v. U.S. Dep‘t of Justice, 491 U.S. 440, 449 (1989) (plaintiffs suffered a concrete injury be- cause they wanted to use withheld information to monitor judicial nominees, which is a substantive reason behind the Federal Advisory Committee Act‘s publication requirement). The concreteness of an injury is also informed by the pedigree of the alleged harm in English and American courts. Spokeo, 136 S. Ct. at 1549; Groshek, 865 F.3d at 887.
On appeal, Robertson challenges the district court‘s standing decision only with respect to her adverse-action claim, which arises under section 1681b(b)(3)(A). (We
We review the legal arguments about Robertson‘s Article III standing de novo. Lewert v. P.F. Chang‘s China Bistro, Inc., 819 F.3d 963, 966 (7th Cir. 2016). Before proceeding to the heart of the appeal we must dispense with some preliminary matters. Allied argues that Robertson has waived the injury argument she now advances. This is a baseless position. Robertson advanced this argument in response to the district court‘s Order to Show Cause, and so it was properly preserved. Allied also maintains that Robertson‘s injury theory has been “ad-libbed” on appeal. But it is asking for too much detail. If litigation proceeds, Robertson will have to substantiate her allegations. Yet, “[i]n order to survive dismissal for lack of standing, the plaintiffs’ complaint must contain sufficient factual allegations of an injury resulting from the defendants’ conduct, accepted as true, to state a claim for relief that is plausible on its face.” Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 583, 588 (7th Cir. 2016). Robertson adequately pleaded her adverse-action injury. She alleged that Allied made her an offer, then rescinded it. Between the offer and rescission, Allied ran a background check, but it never gave her a copy of the report it obtained and concededly relied on when it decided not to hire her. Complaints need not delineate every detail of the plaintiff‘s legal theory. Because Robertson pleaded facts showing a plausible injury, she “receives the benefit of imagination, so long as the hypotheses are consistent with the complaint.” Chapman v. Yellow Cab Coop., 875 F.3d 846, 848 (7th Cir. 2017) (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563 (2007)). In this case, they are.
The FCRA regulates the use of materials such as these background reports. Robertson relies on section 1681b(b)(3)(A) for her adverse-action claim. That subsection (to which we refer as “subpart A“) provides:
[B]efore taking any adverse action based in whole or in part on [a consumer report used for employment purposes], the person intending to take such adverse action shall provide to the consumer to whom the report relates—
(i) a copy of the report; and
(ii) a description in writing of the rights of the consumer under this subchapter … .
As one can see, there is no reference to potential inaccuracies or any other specific reason for the disclosure. This contrasts markedly with the following paragraph, section 1681b(b)(3)(B) (“subpart B“), which creates an exception from subpart A for employers taking an adverse action against an applicant who applies by mail, telephone, or computer for a position regulated by the Secretary of Transportation (e.g., truck drivers). An employer of would-be
Only subpart (A) compels disclosure of the report itself, and that provision requires disclosure prior to any adverse action. This unique pre-adverse action requirement assures that the applicant will have a chance to review the actual document on which the employer relied, and that she can do so with time to respond to unfavorable information. Unlike subpart (B), which explicitly limits the range of disputes to “accuracy or completeness,” subpart (A) contemplates a broad opportunity to respond.
Subparts (A) and (B), read together, indicate that an employer‘s disclosure obligations under (A) exist to serve interests beyond the problem of inaccurate reports. Other parts of the Act corroborate that conclusion. In order to see why this is so, it is helpful to recall that the Act identifies at least three distinct actors with respect to any consumer report. A consumer reporting agency aggregates data and creates the report. Agencies then supply reports to users (e.g., employers), which rely on them to decide the fate of consumers (e.g., job applicants).
The interests protected by the Act‘s disclosure rules reflect the distinctive roles played by the three types of actors. Agencies’ disclosure obligations protect consumers’ interest in accurate reporting. The Act‘s agency-specific compliance procedures instruct that reports must be compiled to “assure maximum possible accuracy.”
The Act does not similarly link accuracy concerns and the disclosure obligations imposed on “users.” Quite the opposite. The section of the Act entitled “Requirements on users of consumer reports” refers to accuracy only to require that users instruct consumers to lodge accuracy-based disputes with the agency.
Providing context may be more valuable than contesting accuracy. Some consumers may collect supporting documents quickly enough to corroborate an accuracy challenge before the employer makes its decision. Yet in a swearing contest, the employer might not be likely to side with the consumer (applicant) over the agency. But information that seems damning at first glance might not be so bad in context. A person with a spotted record might convince an employer to revisit its decision if she can explain what happened.
That Robertson has not pleaded what she may have said if given the chance to respond, or that she may not have convinced Allied to honor its offer, is immaterial to the sub- stance of her interest in responding. Article III‘s strictures are met not only when a plaintiff complains of being deprived of some benefit, but also when a plaintiff complains that she was deprived of a chance to obtain a benefit. Czyzewski v. Jevic Holding Corp., 137 S. Ct. 973, 983 (2017); Ne. Fla. Chapter of Associated Gen. Contractors of Am. v. City of Jacksonville, 508 U.S. 656, 666 (1993). An informational injury can be concrete when the plaintiff is entitled to receive and review substantive information. The Supreme Court recognized as much in Akins, where it held that “[t]here is no reason to doubt [that plaintiffs‘] claim that the information would help them (and others to whom they would communicate it) to evaluate candidates for public office, especially candidates who received assistance from AIPAC, and to evaluate the role that AIPAC‘s financial assistance might play in a specific election. Respondents’ injury consequently seems concrete and particular.” 524 U.S. at 21. Applying that principle to our case, what matters is that Robertson was denied information that could have helped her craft a response to Allied‘s concerns.
Spokeo does not require a contrary result. There the Court hypothesized that there might not be any concrete harm when “a consumer reporting agency fails to provide the required notice to a user of the agent‘s consumer information, [but] that information … may be entirely accurate.” Spokeo, 136 S. Ct. at 1550. We put to one side the fact that this passage is probably dicta, because the case before the Court concerned inaccurate information. Id. at 1545. The Court never decided whether a concrete injury had been alleged. Id. at 1550. Furthermore, Spokeo was discussing a different point in the process—the relationship between an agency and a user (i.e. employer), not the relationship between the user and the consumer (i.e. the job applicant). The statutory duties that apply to each of these situations differ in important respects, as we noted earlier.
We conclude, therefore, that Robertson has alleged enough at this stage to demonstrate standing under Article III. Her injury is concrete and particular to her, and the remaining criteria for standing (causation, redressability) are also present. This is not to say that she is home-free, of course. We express no opinion at this point on questions such as her suitability to serve as the class representative, the propriety of class certification, or the adequacy of the proposed settlement. We hold only that she has adequately alleged that what Allied divulged was insufficient under the Act, and that she is entitled from an
III
Although Robertson does not argue that she has standing to bring her notice claim, she takes the position that the district court was nonetheless empowered to approve the settlement agreement, as it pertains to notice, because the parties reached their tentative settlement before the Article III issue was noticed. She would like us to order the district court to resume the Rule 23(e) process and consider whether to approve the settlement. This is an ambitious claim, given that the district court‘s subject-matter jurisdiction must be secure before it can do anything to resolve a case. That rule applies with just as much force to a court‘s approval of a settlement under Rule 23 as it does for anything else. See Synfuel Techs., Inc. v. DHL Express (USA), Inc., 463 F.3d 646, 650 (7th Cir. 2006).
Robertson offers two reasons why the general rule should not apply here, notwithstanding the notice claim‘s Article III problems. The first is that her concrete interest in the agreement supports jurisdiction. See Schumacher v. SC Data Ctr., Inc., No. 2:16-CV-04078-NKL, 2016 WL 7007539, at *1 (W.D. Mo. Nov. 29, 2016) (“[B]ecause the parties entered into a settlement agreement … the issue is not whether the Court has subject matter jurisdiction over her FCRA claims. Instead, the issue is whether the Court has subject matter jurisdiction to enforce the parties’ settlement agreement.“). With all due respect to the district court in Schumacher, however, that analysis cannot get off the ground. An approved settlement takes the form of a judgment of the court, and without both Article III power and proper subject-matter jurisdiction, the court cannot act. The district court here correctly saw the problem and took the issues in the right order.
Robertson‘s second argument is that post-agreement legal changes do not warrant unsettling a valid agreement. This argument also falls apart for several reasons. Spokeo did not change the law of standing and thus was not a post-agreement change in the law. It merely reiterated that an Article III injury must be both particular and concrete. 136 S. Ct. at 1458; see also Lujan, 504 U.S. at 560 (compiling cases holding that injury in fact must be concrete and particularized). The district court was duty-bound to look into its jurisdiction the minute the question arose. Article III‘s requirements must be continuously met throughout the life of a case. See Walters v. Edgar, 163 F.3d 430, 432 (7th Cir. 1998). That this was a class action makes no difference: nothing in the Rules of Civil Procedure may “abridge, modify, or enlarge any substantive right.”
IV
That leaves only the question whether Robertson should have been permitted
V
Based on information discovered in a background check, Allied rescinded Robertson‘s job offer without furnishing Robertson a copy of that report on which it relied. By failing to do so, Allied deprived her of the chance to review it and present her side of the story. That is the very reason why the FCRA obligates employers to produce a copy of the report before taking adverse action. Because the alleged injury is concrete and Robertson otherwise alleged enough to support her Article III standing on her adverse-action claim, we REVERSE the judgment of the district court dismissing that claim for lack of standing and REMAND for further proceedings. In all other respects, the judgment of the district court is AFFIRMED.