9th Circuit Ruling on FCRA Class Action Case Impacts Insurance Industry

On January 9, the U.S. Court of Appeals for the 9th Circuit overturned a previous district court decision regarding a class action lawsuit under the Fair Credit Reporting Act (FCRA). The appeal focused on whether all class members, whether identified or unidentified, need to establish standing during the summary judgment phase when seeking monetary compensation. The 9th Circuit ruled that class members must demonstrate standing at this stage, although not necessarily proving a jury decision in their favor.

The lawsuit began after a consumer’s life insurance application was rejected on October 5, 2020. The plaintiff accused a risk management benefits company of inaccurately including his medical information in a report, resulting in the denial—an alleged FCRA violation requiring consumer reporting agencies to ensure maximum report accuracy. This case has significant implications for the insurance industry, particularly in regulatory compliance and procedural aspects of class action lawsuits.

During the appeal, the 9th Circuit reaffirmed that class members need to establish standing, in line with summary judgment rules that require the presentation of a genuine material fact dispute. The case returns to district court to assess whether the plaintiff can demonstrate class-wide standing through circumstantial evidence. This development highlights the critical importance for insurance companies and legal teams to remain vigilant about FCRA compliance and reporting accuracy to meet regulatory requirements.