Last month, the Supreme Court of the United States issued its decision in Spokeo, Inc. v. Robins, No. 13–1339 (May 16, 2016). Spokeo involved a lawsuit brought under the Fair Credit Reporting Act of 1970 (FCRA). However, the Court’s opinion in Spokeo may create some new opportunities for defending against a broad range of claims under the Employee Retirement Income Security Act of 1974 (ERISA), including at least some types of fiduciary breach cases and perhaps even claims against plan administrators for a statutory penalty based on an alleged failure to provide copies of plan documents on request.

The Factual Background

Spokeo, Inc. operates an Internet search service that provides various types of information regarding individuals, including their current addresses, educational backgrounds, professional histories, marital status, and financial status. Spokeo’s website allegedly contained inaccurate information about the plaintiff, Thomas Robins, although some of the inaccuracies were trivial (for example, his zip code was wrong) and others could not have affected his credit rating negatively (for example, his educational background and economic status were reported to be greater than they actually were).Nonetheless, Robins sued Spokeo under the FCRA based on these alleged inaccuracies.

The FCRA requires consumer reporting agencies to “follow reasonable procedures to assure maximum possible accuracy” of consumer reports used for purposes of making credit decisions, employment decisions, and other purposes. It also provides that “[a]ny person who willfully fails to comply with any requirement [of the Act] with respect to any [individual] is liable to that [individual]” for, among other things, either “actual damages” or statutory damages of $100 to $1,000 per violation. Robins sought the statutory damages; he did not claim actual damages.

The Standing Doctrine

The district court dismissed the complaint on the grounds that Robins had failed to allege that he had suffered an injury-in-fact from the alleged statutory violations sufficient to give him “standing to sue.” In very simple terms, “standing to sue” (oftentimes shortened to just “standing”) is a doctrine created by courts that speaks to a preliminary question present in every lawsuit: Is it appropriate for this plaintiff to bring the claim asserted in the complaint in the court the plaintiff chose? For the federal courts, the answer to that question depends on whether the court has “jurisdiction” over the case, i.e., whether the court has been authorized by a valid federal law to hear a case of a certain type at the behest of someone like the plaintiff.

The standing doctrine focuses on one specific part of the jurisdictional inquiry, namely whether the plaintiff belongs to the class of litigants that have a right to ask the federal court to decide the claim. Federal court jurisdiction is partly a statutory question because Congress defines the jurisdiction of the lower federal courts and in so doing defines who may sue for what relief. For example, ERISA section 502(a)(1)(B) authorizes a “participant or beneficiary” to bring an action for benefits under the terms of an employee benefit plan. However, there is also a constitutional component to the standing inquiry. The Supreme Court has held that Article III of the U.S. Constitution forbids federal courts to entertain a lawsuit brought by a party unless that party has suffered an injury in fact that is fairly traceable to the challenged conduct of the defendant and that is likely to be redressed by a favorable judicial decision.

Robins appealed the dismissal of his complaint to the Ninth Circuit Court of Appeals. The court of appeals reversed the district court’s ruling, holding that the complaint alleged a sufficient injury in fact for Article III purposes because it alleged that the defendant Spokeo’s alleged violations of the FCRA’s procedural requirements led to the publication of inaccurate information about Robins himself. Spokeo petitioned the Supreme Court to review the Ninth Circuit’s ruling, and the Court agreed to take the case.

The Spokeo Decision

The Supreme Court vacated the judgment of the court of appeals and remanded the case (that is, sent it back to the court of appeals) for further consideration of the Article III standing issue on the grounds that the court of appeals had misapplied the proper standards for determining whether a plaintiff has pled an injury in fact sufficient to satisfy the requirements of Article III. In elaborating the proper standard for the court of appeals to apply on remand, the Court held that an FCRA plaintiff does not necessarily satisfy the injury-in-fact requirement for Article III standing merely because (1) the defendant violated a statutory requirement applicable to the defendant’s conduct vis-à-vis the plaintiff; and (2) Congress created a private right of action for violation of the statutory requirement under which a plaintiff may recover a stated amount in lieu of actual damages.

The Court explained that the injury-in-fact component of the test for Article III standing involves two distinct requirements: the plaintiff’s injury must be both “particularized” and “concrete.” The Court held that the defendant’s violation of a statutory requirement applicable to its conduct vis-à-vis the plaintiff establishes that the plaintiff’s injury is “particularized,” but while “[p]articularization is [merely] necessary to establish injury in fact . . . it is not sufficient. An injury in fact must also be ‘concrete.’” The Court went on to say that a “‘concrete’ injury must be ‘de facto’; that is, it must actually exist. . . . When we have used the adjective ‘concrete,’ we have meant to convey the usual meaning of the term—‘real,’ and not ‘abstract.’”

The Court noted that intangible injuries can satisfy the “concreteness” requirement for Article III standing, and that Congress can identify previously unrecognized intangible injuries by statute. Then, in a passage that has implications for the defense of certain ERISA actions, the Court held that there is a constitutional limitation on Congress’s ability to identify actionable intangible injuries:

Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

(Emphasis added.)

Is There a Spokeo-Based Defense to ERISA Section 502(c) Penalty Claims?

As noted above, there are several contexts in which Spokeo might be useful in the defense of ERISA claims. The first and most obvious example (and the only one discussed in this article) is a claim against a plan administrator for a statutory penalty based on an alleged failure to provide plan documents within 30 days of a written request.

If a plan administrator fails to provide or make available certain plan-related documents within 30 days of a written request from a plan participant or beneficiary, ERISA section 502(c) establishes a discretionary penalty of up to $110 per day per failure that a district court can impose against the plan administrator. Section 502(a)(1)(A) authorizes a participant or beneficiary to bring an action to recover the section 502(c) penalty. Thus, like the FCRA, ERISA includes what might be considered a “statutory damages” provision for violation of a procedural requirement and creates a private cause of action for violation of the procedural requirement.

It is easy to imagine circumstances under which a participant or beneficiary suffers no actual harm because of a plan administrator’s failure to comply with a request for a plan document. For example, a plan participant might submit a written request for a summary plan description (SPD) even though the participant already has a copy of the SPD when the request is made. If the facts show that the plaintiff already had the requested documents in his or her possession, a plan administrator’s failure to provide those documents within 30 days of a written request arguably fits within the category of statutory violations that the Supreme Court called “a bare procedural violation, divorced from any concrete harm.” Thus, the Spokeo opinion at least raises the question whether, despite the language of ERISA section 502(a)(1)(A) authorizing such a lawsuit, a plaintiff might lack standing to seek the penalty under ERISA section 502(c) if the plaintiff fails to allege and prove a “concrete” injury-in-fact other than and in addition to nonreceipt of the requested documents.