Statutes such as the Telephone Consumer Protection Act (“TCPA”), Fair Debt Collection Practices Act (“FDCPA”), and Fair Credit Reporting Act (“FCRA”) long have been favorites for class-action lawyers.  Plaintiffs’ attorneys leverage significant statutory damages to generate large judgments or settlements for persons who often experience nothing more than the inconvenience of receiving an unwanted call or text – in other words, no actual damages are present.  The United States Supreme Court recently granted certiorari in Spokeo, Inc. v. Robins to decide whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who, therefore, could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.  The case has widespread implications for lawsuits based on statutes that offer statutory damages (see our TCPA Update for a list of recent lawsuits).

Spokeo, Inc. v. Robins was filed in the United States District Court for the Central District of California under the FCRA.  The plaintiff alleged that Spokeo, Inc., a credit reporting agency, had published inaccurate information that potentially could affect his creditworthiness.  The district court dismissed his complaint, holding that the plaintiff failed to allege an injury or actual harm, characterizing the allegations as simply that the plaintiff had been unable to obtain employment.  According to the court, “allegations of possible future injury” do not satisfy Article III standing requirements.  

On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed, finding that “the statutory cause of action does not require a showing of actual harm when a plaintiff sues for willful violations.”  The court emphasized that Congress’s decision to create a private cause of action under the statute demonstrated an intent to create an enforceable statutory right.  Further, the court pointed to the language of FCRA itself, which states that “any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to . . . damages of not less than $100 and not more than $1,000.”  The court cited other decisions where the FCRA provided for damages without proof of injury.  The Ninth Circuit stated that, to have standing, (1) a plaintiff must be among the injured in that his or her statutory rights were violated, and (2) that the statutory right must protect against individual, rather than collective harm.  The court also found that both of these constitutional requirements were met as the plaintiff’s personal interests in the handling of his credit information was an individualized harm rather than a collective one.

Despite the holding in the Ninth Circuit, the Courts of Appeals are split on this issue, likely contributing to the Supreme Court’s decision to grant certiorari.  More specifically, the Ninth, Sixth, Seventh, and Eighth Circuits have found no injury-in-fact is needed to confer Article III standing where statutory damages are recoverable, while the Second and Fourth Circuits have found that injury-in-fact is necessary for standing.

This is not the first time that the Supreme Court has accepted a case concerning Article III standing for a plaintiff who suffers no actual harm.  In 2012, the Supreme Court was set to determine whether a plaintiff must allege actual damages under the Real Estate Settlement Procedures Act in First American Corp. v.  Edwards.  However, the Supreme Court did not reach the merits – dismissing it as “improvidently granted.”  The Court dismissed the appeal in one sentence with no explanation as to its reasoning.  Commentators, such as Scotus Blog, have offered a number of possible reasons to explain why the Supreme Court changed its mind, including that (i) there was not a sufficient conflict between the Courts of Appeals at the time, (ii) there was no regimented way to make distinctions between what private rights of actions are sufficient for Article III standing and those that are not, and (iii) the Court simply decided that Edwards was not the right case to address the Article III standing question.

Regardless, the Supreme Court now appears poised to address the important Article III standing issue at hand in Spokeo