The Supreme Court yesterday heard arguments in Robins v. Spokeo Inc., a key case dealing with standing based solely on statutory violations as opposed to direct harm. Based on the questioning and comments of the justices in this and in another case under a similar statutory scheme, the Court may very well be on the cusp of finding that statutory violations without more no longer supply standing.

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 suffers an injury in fact – injury or damage that is concrete and which the law recognizes – in order to maintain an action. We had previously reported on this case in the posts “On the Brink of a Class Action Sea Change? SCOTUS to Hear Robins and Critical Standing Issues” and “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.”

The importance of the decision facing the Supreme Court cannot be overstated. 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.

In Robins, the act in question – the Fair Credit Reporting Act – imposed penalties collectible by affected consumers of not less than $100 and no more than $1000 per violation for publishing inaccurate personal information.  Spokeo operated a website that provided users with information about individuals.  Unfortunately, it published inaccurate information about Mr. Robins, who brought suit on his own behalf and on behalf of a class of allegedly similarly situated individuals.

Robins was originally decided by the 9th Circuit, which 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 would open the floodgates for data breach and other class actions, which are commonly referred to as “non injury” actions.

Based on this “no injury” concept, 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.          

But based on yesterday’s oral argument, such claims may be facing extinction. The Court’s conservative majority appeared to express doubt that Robins had suffered the type of concrete injury necessary for federal courts to hear his claims. “We have a legion of cases that say you have to have actual injury,” Chief Justice John Roberts said. Justice Samuel Alito asked “isn’t that quintessential speculative harm?”

Not surprisingly, Robins did get some support from the more liberal block of the Court – the four Democratic appointees. Referring to Spokeo’s publication of inaccurate personally identifiable information about Robins, Justice Kagan said “It seems like a concrete injury to me. If somebody did it to me, I’d feel harmed. And I think that if you went out on the street and you did a survey, most people would feel harmed.” Justice Sotomayor appeared to agree.

As in many cases, the swing vote appears to be Justice Kennedy. But at one point, he referred to Robins’ arguments as “circular.” On the other hand, he mused that credit reporting agencies like Spokeo may have less latitude than other entities to argue there was no harm, perhaps suggesting a middle ground.

As previously stated, it’s always hard to predict what the Court will do. Clearly the conservatives should easily find no standing, while the more liberal wing will disagree, which leaves us with Kennedy. If his statements here and in another case give any indication, Kennedy may side with the conservatives on this one. In Campbell-Ewald Co. v. Gomez, which involved whether an offer to confess judgment for the entire amount of his claim moots the class action the plaintiff has brought, Justice Kennedy asked:

“You’re saying that the plaintiff has an interest in the judgment quite separate from obtaining all the relief that he requests? Let’s assume the case in which plaintiff asked for $10,000 and $10,000 is deposited in a bank with irrevocable instructions to pay it. What is the concrete injury…that results in adversity?

Emphasis added. And at another point, Justice Kennedy reiterated that there has to be adversity for there to be standing. So based on this, it would seem Kennedy falls into the traditional standing camp as trumpeted  by Justice Roberts and the other conservatives.

A ruling is expected in the spring.