The Supreme Court is poised next Term to clarify the reach of the constitutional Article III standing requirement limiting the jurisdiction of federal courts to actual “cases or controversies.” The standing requirement comes up frequently in consumer protection and privacy class action cases where there is no claimed actual injury and plaintiff is suing on behalf of putative classes of thousands, if not millions, of consumers. These lawsuits are frequently brought based solely on an alleged violation of a federal law giving rise to statutory injury and, if proven, enable named plaintiffs to seek minimum statutory damages remedies on a class-wide basis, leading to large potential exposure.
Background of Spokeo v. Robins
On April 27, 2015, the Court granted certiorari in Spokeo, Inc. v. Robins, No. 13-1339. In Spokeo, plaintiff alleged that Spokeo, “a website that provides users with information about other individuals,” violated the Fair
Credit Reporting Act (FCRA). Robins v. Spokeo, Inc., 742 F.3d 409, 410 (9th Cir. 2014). Plaintiff further alleged he was harmed when Spokeo published false information about him, including that he was married, more educated, wealthier and older than he actually was. Id. at 411. According to Plaintiff, “he [was] concerned that the inaccuracies in his [Spokeo] report will affect his ability to obtain credit, employment, insurance, and the like.” Id.
The district court rejected plaintiff’s argument that the potential reliance of future employers on this information could cause actual harm and held that a violation of the FCRA itself is insufficient to satisfy Article III standing requirements. The Ninth Circuit reversed the decision and held that “creation of a private cause of action to enforce a statutory provision implies that Congress intended the enforceable provision to create a statutory right,” the violation of which “is usually a sufficient injury in fact to confer standing.” Id. at 412. Defendant petitioned for a writ of certiorari.
Upon reviewing the petition, the Supreme Court requested input from the Solicitor General on whether it should hear the case. The Solicitor General argued that the Supreme Court should decline to do so, reasoning that the Ninth Circuit ruling should stand because publication of allegedly inaccurate information could cause “concrete harm,” even if plaintiff cannot prove actual damages. Brief for the U.S. as Amicus Curiae at 7, Spokeo, U.S. (No. 13-1339). In contrast to the Solicitor General, a number of amici weighed in requesting that the Supreme Court grant certiorari to curb the wave of class action lawsuits that consume extensive amounts of time and money where consumers have not suffered any actual harm.
Circuit Split on Article III Standing in No Actual Injury Cases?
The Supreme Court seemingly elected to hear the case to resolve the perceived growing circuit split as to whether the availability of statutory damages alone is sufficient to confer Article III standing. Spokeo argued that, on the one side are the Sixth and Ninth Circuits, which held that a plaintiff can bring an FCRA action without showing actual harm (Petition for a Writ of Certiorari at 9, Spokeo, U.S. (No. 13-1339) (citing Beaudry v. TeleCheck Svs., Inc., 579 F.3d 702 (6th Cir. 2009))); the Seventh Circuit, which upheld the availability of statutory damages in an FCRA suit where plaintiff could not prove injury (id. (citing Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006))); and the Eighth Circuit, which held that a plaintiff had standing to bring an action under a different federal law, the Electronic Funds Transfer Act,
for statutory damages without demonstrating actual injury (id. at 12 (citing Charvat v. Mutual First Credit Union, 725 F.3d 819 (8th Cir. 2013))). On the other side, according to Spokeo, are the Second and Fourth Circuits, which held that plaintiffs do not have standing to bring Employee Retirement Income Security Act (ERISA) actions – that, like FCRA actions, allow for statutory damages – in the absence of a showing of actual injury. Id. at 10 (citing David v. Alphin, 704 F.3d 327 (4th Cir. 2009) and Kendall v. Employees Retirement Plan of Avon Prods., 561 F.3d 112 (2nd Cir. 2009))), along with the Third Circuit, where Justice Alito held that a plaintiff lacked standing to bring an action under the Lanham Act in the absence of actual injury (id. at 11 (citing Joint Stock Soc’y v. UDV N.A., Inc., 266 F.3d 164 (3d Cir. 2001))).1
Spokeo Could Have a Major Impact on Consumer Protection and Privacy Class Action Lawsuits
The Supreme Court’s resolution of this issue could affect the ability of plaintiffs to bring putative class actions beyond the FCRA where there is no claimed actual injury in order to seek statutory damages simply for a claimed violation of federal law. A number of federal laws could be affected, including the Truth in Lending Act, Fair Debt Collection Practices Act, Telephone Consumer Protection Act, ERISA, and the Real Estate Settlement Procedures Act. Petition for a Writ of Certiorari at 6-18, Spokeo , U.S. (No. 13-1339).
If the Supreme Court holds that a statutory injury, standing alone without any claimed actual injury, is sufficient to satisfy Article III’s standing requirements, companies will continue to face a growing number of consumer protection and privacy class action lawsuits with large potential exposure for alleged technical violations of federal law. If the Supreme Court holds that a statutory injury based solely on an alleged violation of federal law, in and of itself, is not sufficient to satisfy Article III’s standing requirements, the ruling would meaningfully curtail these types of lawsuits. The case will be heard next Term, and a decision will likely be issued by June, 2016. Given the wide-ranging implications of the Supreme Court’s decision, numerous companies and interest groups will likely submit amicus curiae briefs.