On Wednesday, as expected and predicted, SCOTUS granted certiorari in Spokeo v. Robins case. This case was the subject of our previous discussion in the February 20 post “Robins v. Spokeo Inc: the Light at the End of the Tunnel for Rule 23 Privacy Class Actions...or the Headlights of an Oncoming Train.” As we noted there, this case has enormous significance in both data breach litigation and in class action litigation generally.
The key issue facing the Court in Robins is whether Article III standing can be conferred when a plaintiff suffers no injury, but can instead only recover statutorily imposed penalties. Article III of the U.S. Constitution requires that a plaintiff suffer an injury in fact – injury or damage that is concrete and which the law recognizes – in order to maintain an action.
Robins was originally decided by the 9th Circuit in February 2014. Not surprisingly, the 9th Circuit determined that statutory penalties were alone sufficient without other injury or damage to provide Article III standing. In doing so, the 9th Circuit joined the 6th, 10th and D.C Circuits and a number of other courts.
See: In re Adobe Sys. Privacy Litig., 2014 U.S. Dist. LEXIS 124126, at *27-28 (N.D. Cal. Sept. 4, 2014); Moyer v. Michaels Stores, Inc., 2014 U.S. Dist. LEXIS 96588, at *19 (N.D. Ill. July 14, 2014); In re Sony Gaming Networks & Customer Data Sec. Breach Litig., 996 F. Supp. 2d 942, 962 (S.D. Cal. 2014);see also Memorandum and Order, In re Target Corp. Customer Data Sec. Breach Litigation, No. 14-mdl-2522, slip op. at 3-4 (D. Minn Dec. 18, 2014);cf.Tierney v. Advocate Health & Hosps. Corp., 2014 U.S. Dist. LEXIS 158750, at *4-6 (N.D. Ill. Sept. 4, 2014).
The 2nd and 4th Circuits and other lower courts have found directly to the contrary.
See: e.g., Galaria v. Nationwide Mut. Ins. Co., 998 F. Supp. 2d 646, 655-60 (S.D. Ohio 2014); In re Sci. Applications Int'l Corp. (SAIC) Backup Tape Data Theft Litig., 45 F. Supp. 3d 14, 26-28 (D.D.C. 2014); In re Barnes & Noble Pin Pad, 2013 U.S. Dist. LEXIS 125730, at *8-9, 12 (N.D. Ill. Sept. 3, 2013);Lewert v. P.F. Chang's China Bistro, Inc., 2014 U.S. Dist. LEXIS 171142, at *7-8 (N.D. Ill. Dec. 10, 2014); Remijas v. Neiman Marcus Group, LLC, 2014 U.S. Dist. LEXIS 129574, at *9-10 (N.D. Ill. Sept. 16, 2014).
As we previously noted, should the SCOTUS side with the 9th Circuit, this will open the floodgates for data breach and other class actions which are commonly referred to as “non injury” actions.
In its most recent standing analysis, however, the Supreme Court held that Article III standing is not a speculative or conjectural concept; mere concern or fear of future harm does not suffice to confer standing. Rather, a plaintiff must demonstrate he has suffered a "concrete, particularized, and actual or imminent" injury, meaning the harm has either occurred or is "certainly impending." (SeeClapper v. Amnesty Int’l USA.) This could suggest that SCOTUS is getting ready to reject the non injury concept and the 9th Circuit’s view. On the other hand, the Court had the opportunity to do just that in 2010 in First American Financial Corp. v. Edwards and effectively punted the issue by dismissing the petition as improvidently granted.
Robins involved the use of the penalties imposed by the Fair Credit Reporting Act. These monetary penalties, collectible by affected consumers, were not less than $100 or more than $1000 per violation for publishing inaccurate personal information. Spokeo operated a website that provided users with credit information about individuals. Unfortunately, it published inaccurate information about Robins, who then brought suit on his own behalf and on behalf of a class of allegedly similarly situated individuals.
The importance of the decision facing the Supreme Court cannot be overstated. (Nearly a dozen amicus briefs were filed just in support of the certiorari request itself and SCOTUS requested an amicus brief from the Solicitor General.) Most privacy-related statutes contain monetary penalties recoverable by affected consumers or users; it is the compounding effect of such penalties across a class of individuals that have the plaintiffs’ class action bar salivating. The Telephone Consumer Protection Act (TCPA), the Video Privacy Protection Act (VPPA), the Stored Communications Act (SCA), the Electronic Communications Privacy Act (ECPA) – not to mention a whole slew of more traditional consumer protection acts – are just a few of the statutes that contain such penalties.
Based on this no injury concept affirmed by the 9th, 6th, 10th and D.C. Circuits, plaintiffs’ attorneys have and are bringing class actions that net millions of dollars in settlements due to the enormous exposure presented by these claims. For example, Netflix recently faced class claims in the billions of dollars and Google in the trillions. Facebook was presented with claims of a class composed of over 3.6 million people whose statutory claims each ranged from $2500 to $10,000 per violation.
As noted, the settlements of class claims brought under the TCPA are also legendary. Indeed, the in terrorem effect of such claims makes settlement the only viable option. And yet often the only real injury is irritation and disclosure of facts that really make little difference to anyone.
Whether this trend and practice will continue hinges almost entirely on what the Supreme Court decides. If it affirms the 9th Circuit, then these cases may proliferate at an alarming rate, as new and novel arguments will be made to fit new technology into statutes that were designed to prohibit other harms. If the Court overturns Robins, then an entire practice area could very well vanish overnight. And a decision affirming the 9th Circuit could also impact class action litigation in a number of other areas as well.