In the United States Supreme Court’s 2011 term, after briefing and oral argument in First Americans v. Edwards, the Court dismissed the writ as “improvidently granted.” First Am. Fin. v. Edwards, 132 S.Ct. 2536 (2012) (per curiam). First American asked whether the Real Estate Settlement Procedures Act conferred standing upon a plaintiff who alleged no personal financial injury resulting from the alleged violation of law. The case was closely watched because it raised the possibility that “no injury” class action lawsuits – sometimes more colorfully called “zombie” actions – could be barred at the federal courthouse door on constitutional standing grounds. For whatever reasons, the Court found that First American did not properly present the question of “statutory” standing to sue under Article III, § 2 of the United States Constitution.
This April 27th, the Court agreed to hear an appeal of the Ninth Circuit’s decision in Robins v. Spokeo, Inc. Spokeo’s business involves profiling consumers based upon data from various sources, including social networks, and selling the results to human resources professionals and others. Robins alleged willful violations of the Fair Credit Reporting Act (“FCRA”) in connection with Spokeo’s description of him. Robins, who was unemployed, alleged that Spokeo’s misinformation harmed his employment prospects. He sought to represent a putative class. The FCRA provides statutory damages for willful violations, apparently in the absence of actual financial injury. 15 U.S.C. § 1681n. The qualifier “apparently” denotes that one circuit court of appeals, in dicta, observed that § 1681n could be read to require actual damages “but simply substitute statutory rather than actual damages for the purpose of calculating the damage award.” See Dowell v. Wells Fargo Bank, NA, 517 F.3d 1024, 1026 (8th Cir. 2008) (per curiam). In any event, most plaintiffs alleging “willfulness” will not also allege actual damages, for reasons that bear upon class certification. And, as has been said about fraud, willfulness is easy to allege and difficult to prove. But most class actions settle before trial.
The district court, after some vacillation, dismissed Robins’ suit for lack of Article III standing. The Ninth Circuit reversed, liberally citing to its earlier decision in the First American case for the proposition that the violation of a statutory right alone can confer standing. Robins v. Spokeo, Inc., 742 F.3d 409, 412-14 (9th Cir. 2014) (citing Edwards v. First Am. Corp., 610 F.3d 514, 517 (9th Cir. 2010)). According to the Court of Appeals, Robins alleged an injury to an “individual” right that was sufficiently “concrete and particularized” to pass the test of Lujan v. Defenders of Wildlife. See id. (citing 504 U.S. 555, 578 (1992) (Congress may elevate to the status of legally cognizable injuries “concrete, de facto injuries that were previously inadequate in law.”)). In so holding, the Ninth Circuit rejected the alternative reading of § 1681n proposed in Dowell. Id. at 413 n.2.
Whether Robins v. Spokeo satisfactorily presents the question observers expected the Court to decide in First American remains to be seen. While Spokeo will enjoy wide support from amici who see a threat that “technical” statutory violations can result in ruinous damages, Spokeo itself may be less than the ideal petitioner. On June 12, 2012, the Federal Trade Commission announced a settlement of what it called “the first [FTC] case to address the sale of Internet and social media data in the employment screening context,” in which Spokeo agreed to pay $800,000 to settle charges that it marketed information without protecting consumers as required by the FCRA. This fact cuts both ways, of course. The fact that the FTC acted against Spokeo tends to undermine the argument that a robust private right of action for statutory damages is necessary to police FCRA violations.
The Spokeo case warrants close attention from the business community and the class action bar. Robins seeks to represent literally millions of Americans seeking a minimum of $100 in statutory damages. Statutory damages are also available under the Telephone Consumer Protection Act, RESPA and other federal statutes. A ruling favoring Spokeo would presumably curtail numerous future lawsuits.