Class Actions Brief Blog

Experian recently petitioned the Fourth Circuit to immediately review a district court’s order certifying an 88,000-member, nationwide class of consumers who requested Experian credit reports that listed accounts with the now-defunct Advanta Bank. In this case, Dreher v. Experian Information Solutions Inc., No. 14-325 (4th Cir. July 3, 2014), Experian requested an interlocutory appeal under Rule 23(f), contending that, among other things, the district court’s order that certified a class with members that had suffered no injury and found Rule 23’s predominance requirement to be satisfied was “manifestly erroneous.”

In January 2012, the plaintiff filed a class-action complaint in the Eastern District of Virginia, alleging Experian had committed multiple violations of the Fair Credit Reporting Act (“FCRA”) by failing to provide notice and accurate information about accounts with the defunct Advanta Bank listed on his and other consumers’ credit reports. Specifically, the plaintiff claimed that Experian erroneously reported that Advanta had supplied the credit-report information, when, in fact, Cardworks, a newly appointed servicer of the Advanta accounts, had given Experian this information. For these violations, the plaintiff sought statutory damages and attorneys’ fees and costs.

Upon the plaintiff’s motion, the district court, in June 2014, issued an order and opinion finding that the plaintiff had satisfied the class-action requirements of Rule 23 and certifying a class of individuals who had received a credit report from Experian after August 1, 2010, that identified Advanta as the sole source of information for an account entry. The district court rejected Experian’s arguments that issues of individual statutory damages would predominate over common issues of liability, concluding that the damages calculation for each class member would simply be based on the number of discrete statutory violations, and not, as Experian contended, based on each member’s individualized actual harm. The district court did not address Experian’s argument that most of the potential class members lacked Article III standing because they had not suffered an injury-in-fact.

Experian’s petition to the Fourth Circuit for interlocutory review focused on these two issues: Article III standing and predominance. Experian first argued that interlocutory review was appropriate because the district court—despite recognizing that “it is unlikely that anyone suffered actual injury”— ignored Experian’s Article III standing argument. The Fourth Circuit, Experian said, recently held that “deprivation of [a] statutory right” was not “sufficient to constitute injury-in-fact for Article III standing.” David v. Alphin, 704 F.3d 327, 338 (4th Cir. 2013). Thus, Experian contended that the district court’s admission about the lack of actual injury meant the class members did not have Article III standing and the class should not have been certified.

Second, Experian claimed that the certification order erroneously found that common issues predominated over individual members’ issues. Experian said the district court justified this conclusion by improperly adopting a “Trial by Formula” approach—using a mathematical calculation based on the FCRA’s statutory-damages limits to determine the class’s total damages. Again, Experian argued that the district court’s decision conflicted with a previous Fourth Circuit decision, this time Soutter v. Equifax Information Services, LLC, 498 F. App’x 267 (4th Cir. 2010). Instead of using a math formula to determine a class’s statutory damages under FCRA, Experian asserted that Soutter requires a court to typically do an “individualized inquiry” to determine damages. Further, Experian said the district court’s “Trial by Formula” approach was improper under Wal-Mart Stores Inc. v. Dukes, 131 S. Ct. 2541 (2011), because the Dukes Court had rejected using such formulas to adjudicate class actions.

The plaintiff’s response to Experian’s petition is due in August. Then, it will be up to the Fourth Circuit to decide whether to allow an interlocutory appeal. We’ll continue to monitor and report on this case as it progresses in the courts.