A California District court has approved a motion for a class-action settlement. The case alleged violations of the Fair Credit Reporting Act (FCRA) by one of the major credit reporting agencies (CRA). This case disagreed with a ruling by the Supreme Court last year regarding the standing of the class members, which found that a significant portion of the class members lacked Article III standing to sue.

The plaintiff filed on behalf of himself and a putative class that allegedly suffered from three distinct violations of the FCRA by the defendant. The case, which started in 2011, claims the violations span over six months of 2011. According to the lawsuit, the CRA had violated Section 1681e(b), Section 1681g(a), and 1681g(c) of the FCRA. These laws require the following:

• CRAs establish reasonable procedures to ensure the maximum possible accuracy of the information reported about consumers.
• CRAs must clearly and accurately disclose all information in consumers’ files upon request.
• CRAs must provide consumers with a statement of rights with all disclosures.

Earlier in the case, the jury ruled in favor of the plaintiff, which the CRA appealed. The Ninth Circuit Court of Appeals followed up with a ruling affirming the verdict except for the punitive damages, followed by the parties appealing to the Supreme Court.

This appeal resulted in a landmark ruling by the Supreme Court, which had significant implications for determining if class members hold Article III standing and, more broadly, on class certification Federal Rule of Civil Procedure 23. The Supreme Court found that, of the 8,185 class members certified by the district court, only the 1,853 whose inaccurate credit reports went to third parties had suffered concrete harm due to the damage to their reputations.

After this decision, the case was sent back to the district court for further proceedings, upon which the parties engaged in mediation. This decision resulted in the now approved settlement agreement. The agreement provides a $9 million settlement fund, with half going toward attorneys’ fees.

For employers, this case is significant because it establishes that plaintiffs must show how they have suffered concrete harm to have Article lll standing in matters of FCRA violations. A simple procedural violation in performing background checks, credit checks, and other consumer reports may not be enough to establish standing in a federal court.

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