Groshek v. Time Warner Cable, Inc.

In the

United States Court of Appeals

For the Seventh Circuit

No. 16-3355

CORY GROSHEK,

Plaintiff-Appellant,

v.

TIME WARNER CABLE, INC.,

Defendant-Appellee.

Appeal from the United States District Court for the

Eastern District of Wisconsin.

No. 2:15-cv-00157-pp — Pamela Pepper, Judge.

No. 16-3711

CORY GROSHEK, and all others

similarly situated,

Plaintiff-Appellant,

v.

GREAT LAKES HIGHER EDUCATION

CORPORATION,

Defendant-Appellee.

2 Nos. 16-3355 & 16-3711

Appeal from the United States District Court for the

Western District of Wisconsin.

No. 3:15-cv-00143-jdp — James D. Peterson, Chief Judge.

ARGUED FEBRUARY 22, 2017 — DECIDED AUGUST 1, 2017

Before BAUER and WILLIAMS, Circuit Judges, and DEGUILIO,*

District Judge.

BAUER, Circuit Judge. Over the course of a year and a half,

Appellant Cory Groshek submitted 562 job applications to

various employers, including Appellees Time Warner Cable,

Inc. and Great Lakes Higher Education Corporation (collec-

tively, “Appellees”).1 The job application, which Appellees

provided to Groshek, included a disclosure and authorization

form informing him that a consumer report may be procured

in making the employment decision; the form also contained

other information, such as a liability release. After Groshek

submitted the job application, along with the signed disclosure

and authorization form, Appellees requested and obtained a

consumer report on him from a third party.

*

Of the United States District Court for the Northern District of Indiana,

sitting by designation.

1

We consolidated Groshek’s appeals; and we need not discuss the specifics

for each individual case because the underlying facts are consistent, except

where noted.

Nos. 16-3355 & 16-3711 3

Shortly thereafter, Groshek filed a class-action suit against

Appellees under the Fair Credit Reporting Act, 15 U.S.C. § 1681

et seq., seeking statutory and punitive damages for alleged

violations of 15 U.S.C. § 1681b(b)(2)(A).2 This section prohibits

a prospective employer from procuring a consumer report for

employment purposes unless certain procedures are followed:

(i) a clear and conspicuous disclosure has been made in writing

to the job applicant at any time before the report is procured,

in a document that consists solely of the disclosure, that a

consumer report may be obtained for employment purposes

(commonly known as the “stand-alone disclosure require-

ment”); and, (ii) the job applicant has authorized in writing the

procurement of the report. See id. § 1681b(b)(2)(A)(i)-(ii).

In his complaint, Groshek alleged that Appellees violated

§ 1681b(b)(2)(A)(i). As the predicate for his claimed statutory

and punitive damages, he alleged that this violation was

willful. See id. § 1681n. Additionally, he alleged that, as a result

of the violation of § 1681b(b)(2)(A)(i), Appellees failed to obtain

a valid authorization from him before procuring a consumer

report, in violation of § 1681b(b)(2)(A)(ii).

2

We will note the timing of the events leading up to the filing of the

complaint: Groshek applied to Time Warner on September 22, 2014, worked

his first day as an employee on October 24, 2014, resigned voluntarily on

January 28, 2015, requested settlement negotiations on January 30, 2015, and

filed a class-action complaint on February 6, 2015. As for Great Lakes,

Groshek had an in-person interview on February 6, 2014, submitted the job

application before February 11, 2014, and filed a class-action complaint on

March 5, 2014.

4 Nos. 16-3355 & 16-3711

Appellees moved to dismiss for lack of subject matter

jurisdiction, arguing that Groshek lacked Article III standing

because he did not suffer a concrete injury; Groshek responded

that he suffered concrete informational and privacy injuries.

The district court granted Appellees’ motion. This appeal

followed.

Article III of the Constitution limits our review to actual

“Cases” and “Controversies” brought by litigants who demon-

strate standing. The “irreducible constitutional minimum of

standing” consists of three elements: injury in fact, causation,

and redressability. Lujan v. Defenders of Wildlife, 504 U.S. 555,

560–61 (1992). The plaintiff bears the burden of establishing

each element. Id. at 561. In order to survive a challenge to

standing, a plaintiff must plead sufficient factual allegations,

that “plausibly suggest” each of these elements. Silha v. ACT,

Inc., 807 F.3d 169, 174 (7th Cir. 2015).

To establish injury in fact, Groshek must show that he

“suffered ‘an invasion of a legally protected interest’ that is

‘concrete and particularized’ and ‘actual or imminent, not

conjectural or hypothetical.’” Spokeo, Inc. v. Robins, 136 S. Ct.

1540, 1548 (2016) (quoting Lujan, 504 U.S. at 560). To be

“concrete,” an injury “must actually exist;” it must be “real,”

not “abstract,” but not necessarily tangible. Id. at 1548–49. In

determining whether an alleged intangible harm constitutes a

concrete injury in fact, both history and Congress’ judgment

are important. Id. at 1549.

First, we consider whether the common law permitted suit

in analogous circumstances. Id. We also recognize that Con-

gress is well positioned to identify intangible harms that will

Nos. 16-3355 & 16-3711 5

give rise to concrete injuries, which were previously inade-

quate in law. Id. Nevertheless, “Congress’ judgment that there

should be a legal remedy for the violation of a statute does not

mean each statutory violation creates an Article III injury.”

Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724, 727 (7th Cir.

2016). For instance, a plaintiff cannot satisfy the injury-in-fact

element by alleging a “bare procedural violation” that is

“divorced from any concrete harm.” Spokeo, 136 S. Ct. at 1549.

Instead, the plaintiff must show that the statutory violation

presented an “appreciable risk of harm” to the underlying

concrete interest that Congress sought to protect by enacting

the statute. Meyers, 843 F.3d at 727; see also Spokeo, 136 S. Ct. at

1549–50.

In enacting the FCRA, Congress identified the need to

“ensure fair and accurate credit reporting,” and “protect

consumer privacy.” Safeco Ins. Co. v. Burr, 551 U.S. 47, 52 (2007).

“Congress plainly sought to curb the dissemination of false

information by adopting procedures designed to decrease

that risk.” Spokeo, 136 S. Ct. at 1550. The stand-alone disclosure

and authorization requirements are procedures closely tied

to FCRA’s overarching goals. Congress was concerned that

employers’ authority to obtain consumer reports on job

applicants “may create an improper invasion of privacy.”

S. Rep. No. 104-185 at 35 (1995). Section 1681b(b)(2)(A)(i),

the stand-alone disclosure requirement, is clearly designed

to decrease the risk of a job applicant unknowingly providing

consent to the dissemination of his or her private information.

Section 1681b(b)(2)(A)(ii), the authorization requirement,

further protects consumer privacy by providing the job

applicant the ability to prevent a prospective employer from

6 Nos. 16-3355 & 16-3711

procuring a consumer report, i.e., by withholding consent.

S. Rep. No. 104-185 at 35 (1995).

Here, Groshek did not allege that Appellees failed to

provide him with a disclosure that informed him that a

consumer report may be obtained for employment purposes.

His complaint contained no allegation that any of the addi-

tional information caused him to not understand the consent

he was giving; no allegation that he would not have provided

consent but for the extraneous information on the form; no

allegation that additional information caused him to be

confused; and, no allegation that he was unaware that a

consumer report would be procured. Instead, he simply

alleged that Appellees’ disclosure form contained extraneous

information. We conclude that Groshek has alleged a statutory

violation completely removed from any concrete harm or

appreciable risk of harm.

First, Groshek argues that he suffered a concrete informa-

tional injury as a result of Appellees’ failure to provide a

disclosure compliant with § 1681b(b)(2)(A)(i). As support, he

relies on the general rule arising out of Federal Election Commis-

sion v. Akins, 524 U.S. 11 (1998) and Public Citizen v. Department

of Justice, 491 U.S. 440 (1989), two cases that Spokeo referenced

as instances where a violation of a procedural right was

sufficient to constitute an injury in fact. See Spokeo, 136 S. Ct. at

1549.

In both Akins and Public Citizen, the Supreme Court held

generally that “a plaintiff suffers an ‘injury in fact’ when the

plaintiff fails to obtain information which must be publicly

disclosed pursuant to a statute.” Akins, 524 U.S. at 22 (citing

Nos. 16-3355 & 16-3711 7

Pub. Citizen, 491 U.S. at 449). In Public Citizen, the plaintiff

specifically requested, and had been refused, information. 491

U.S. at 449. The plaintiff filed suit against the defendant under

the Federal Advisory Committee Act, in an attempt to compel

the defendant to publicly disclose information as required by

FACA. Id. The Supreme Court held that the inability to

scrutinize the withheld information to the extent FACA

allowed constituted an injury in fact. Id. The Supreme Court

reasoned that the plaintiff’s injury was akin to when “an

agency denies requests for information under the Freedom

of Information Act … .” Id. As the Supreme Court noted, the

plaintiff’s injury was not simply the inability to obtain informa-

tion, but also the inability to monitor and participate effectively

in the judicial selection process without such information.

See id.

Similarly, the plaintiffs in Akins, after a failed request for

information, filed suit to compel the defendant to provide

information that was required to be disclosed under the

Federal Election Campaign Act of 1971. 524 U.S. at 19–20. The

Supreme Court held that the plaintiffs’ inability to procure

information under FECA qualified as a concrete injury. Id. The

Supreme Court noted that the plaintiffs’ harm was not simply

the inability to obtain information, but also mentioned their

inability to evaluate candidates for public office without such

information—an informational injury “directly related to

voting, the most basic of political rights … .” Id. at 24–25.

The Supreme Court determined that FECA sought to protect

the plaintiffs “from the kind of harm they say they have

suffered … .” Id. at 22.

8 Nos. 16-3355 & 16-3711

Groshek’s reliance on Akins and Public Citizen is misplaced

for two reasons. First, unlike the plaintiffs in Akins and Public

Citizen, Groshek is not seeking to compel Appellees to provide

him with information. Groshek has not alleged that, after

realizing he was provided with a non-compliant disclosure,

he requested that Appellees provide him with a compliant

disclosure and was denied. Because Groshek has not “fail[ed]”

to obtain information, he has not suffered an informational

injury as illustrated in Akins and Public Citizen.

The second reason is that, unlike the statutes at issue in

Akins and Public Citizen, the statute here does not seek to

protect Groshek from the kind of harm he claims he has

suffered, i.e., receipt of a non-compliant disclosure. See Akins,

524 U.S. at 21–25.3 Congress did not enact § 1681b(b)(2)(A)(i)

to protect job applicants from disclosures that do not satisfy

the requirements of that section; it did so to decrease the risk

that a job applicant would unknowingly consent to allowing

a prospective employer to procure a consumer report. Under

the circumstances here, Akins and Public Citizen are inapposite.

Groshek has failed to demonstrate that he has suffered a

concrete informational injury.

3

For this same reason, Groshek’s reliance stemming from Havens Realty

Corp. v. Coleman, 455 U.S. 363 (1982), a case that was cited in Spokeo’s

concurring and dissenting opinions, is also misplaced. See Spokeo, 136 S. Ct.

at 1553 (Thomas, J. concurring); id. at 1555 (Ginsburg, J. dissenting). Havens

Realty also demonstrates that, in order to have an informational-based

injury, the injury must be “precisely the form the statute was intended to

guard against … .” 455 U.S. at 373.

Nos. 16-3355 & 16-3711 9

Next, Groshek contends that he suffered a privacy injury

as a result of the violation of § 1681b(b)(2)(A). Sec-

tion 1681b(b)(2)(A)(ii)’s authorization requirement does

implicate privacy interests. S. Rep. No. 104-185 at 35 (1995).

It is also well established that “[v]iolations of rights of privacy

are actionable … .” Gubala v. Time Warner Cable, Inc., 846 F.3d

909, 912 (7th Cir. 2017).

As mentioned above, Groshek alleged that, as a result of

Appellees’ failure to provide him with a compliant disclosure,

Appellees failed to obtain a valid authorization from him to

procure a consumer report, in violation of § 1681b(b)(2)(A)(ii).

But, this is a conclusory allegation which we discard when

considering well-pleaded factual allegations. See Diedrich v.

Ocwen Loan Servicing, LLC, 839 F.3d 583, 589 (7th Cir. 2016).

Because Groshek admits that he signed the disclosure and

authorization form, he cannot maintain that he suffered a

concrete privacy injury.

Lastly, we briefly highlight the Ninth Circuit’s opinion in

Syed v. M-I, LLC, 853 F.3d 492 (9th Cir. 2017), which was

decided after briefing but was a topic of discussion at oral

argument and in supplemental briefing. There, the plaintiff

alleged in his complaint that he discovered, within the previ-

ous two years, that the defendant obtained a consumer report

for employment purposes based on an illegal disclosure and

authorization form. Id. at 499. The court held that this allega-

tion was sufficient to confer standing because it inferred that

the plaintiff was “deprived of the right to information and the

right to privacy” under 15 U.S.C. §1681b(b)(2)(A)(i)-(ii). Id. The

court, drawing all reasonable inferences in plaintiff’s favor

10 Nos. 16-3355 & 16-3711

determined that the plaintiff was “confused by the inclusion of

the liability waiver with the disclosure and would not have

signed it had it contained a sufficiently clear disclosure, as

required by the statute.” Id. at 499–500.

Syed is inapposite. The Ninth Circuit had factual allegations

from which it could infer harm, whereas Groshek alleges none.

Unlike the plaintiff in Syed, Groshek presents no factual

allegations plausibly suggesting that he was confused by the

disclosure form or the form’s inclusion of a liability release, or

that he would not have signed it had the disclosure complied

with 15 U.S.C. § 1681b(b)(2)(A)(i).

We conclude that Groshek has not alleged facts demonstrat-

ing a real, concrete appreciable risk of harm. Because he has

failed to demonstrate that he suffered a concrete injury, he

lacks Article III standing. Accordingly, the judgments of the

district courts are AFFIRMED.