United States: Supreme Court Rejects Lawsuits by Plaintiffs Who Cannot Show "Real" Injury

On May 16, 2016, the U.S. Supreme Court decided Spokeo Inc. v. Robins, No. 13-1339, a closely watched case addressing whether federal lawsuits can be filed by plaintiffs who have suffered no concrete injury aside from the violation of a federal statute. The case is of particular interest to companies that are subject to federal statutes that provide for statutory damages, because the risk of class-action litigation under such statutes (often involving very large potential claims) turns to a great extent on whether plaintiffs in such cases must show a real-world injury.

The Court's 6–2 decision in Spokeo held that the Constitution requires an injury that is "concrete" and "real"; a claim that a defendant violated the plaintiff's rights under a statute does not, in and of itself, satisfy the "injury in fact" requirement of Article III. This holding is likely to have a significant impact on class action litigation alleging statutory violations, and it presents defendants with opportunities to oppose class actions seeking large damages for technical statutory violations. At the same time, the Court left open important questions about what will satisfy the requirement of a "concrete" injury, and the full impact of Spokeo will therefore depend on how those open questions are answered in subsequent litigation.

Background

Spokeo operates a "people search engine" that lets users search for information about individuals, such as their marital status, financial situation, employment, and age. Claiming that Spokeo's website inaccurately described him as married, employed, wealthy, and highly educated, and that Spokeo failed to comply with a variety of statutory requirements (such as providing certain notices to providers and users of information), plaintiff Thomas Robins brought a putative class action in the Central District of California, alleging that Spokeo willfully violated the Fair Credit Reporting Act ("FCRA"). The Ninth Circuit upheld Robins's standing, reasoning that the mere violation of a statutory right is "usually a sufficient injury in fact to confer standing," and that it was enough that Robins alleged that "Spokeo violated his statutory rights, not just the statutory rights of other people."

The Supreme Court's Decision

Justice Samuel Alito's opinion for the six-justice majority reversed, rejecting the Ninth Circuit's standing analysis because it ignored the Article III requirement of a "concrete" injury. The Court explained that the Ninth Circuit had examined only whether the alleged harm was "particularized" to Robins, and that this was a separate issue from whether the claimed injury was "concrete"—that is, "actually exist[ing]," and "'real' rather than 'abstract.'" The Court made clear that, even if Congress has authorized plaintiffs to sue based on a bare statutory violation, Article III does not permit such lawsuits in the absence of a concrete injury. The Court chose not to address whether Robins had met this standard, instead remanding to the Ninth Circuit to address "whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement."

While not deciding the concreteness issue itself, the Court provided several guideposts for determining what constitutes a "real" injury. Such injuries need not necessarily be tangible: "intangible" injuries and "the risk of real harm" can sometimes be sufficiently concrete to establish injury in fact. As to what types of intangible injuries might qualify, historical practice is significant; courts should ask whether the "alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts." In addition, although the judgment of Congress is "instructive and important," plaintiffs will not "automatically satisf[y] 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."

The Court provided two specific examples of statutory violations that would not amount to concrete harm: (i) if a consumer reporting agency failed to provide required notices to users of a consumer's information, but the information provided was nonetheless "entirely accurate," and (ii) trivial inaccuracies, such as "dissemination of an incorrect zip code."

Justice Ginsburg dissented, in an opinion joined by Justice Sotomayor. Although she agreed with "much of the Court's opinion"—apparently including the key holding that a bare statutory violation does not automatically confer Article III standing—she argued that no remand was necessary, since Robins had sufficiently alleged a concrete injury from "inaccurate representations that could affect his fortune in the job market."

Implications and Takeaways

Spokeo has significant implications for defending against statutory claims. The opinion makes clear that a bare statutory violation does not automatically grant standing to sue—rather, real harm is required. Under the many statutory schemes in which it is possible that violation of a "procedural requirement[] may result in no harm," plaintiffs will be required to show how a statutory violation "cause[d] harm or present[ed] [a] material risk of harm" under the facts of their particular case. Spokeo thus presents defendants with new lines of attack for resisting claims based on alleged statutory violations in the absence of injury.

To be sure, Spokeo leaves unanswered the question of what exactly must be shown to establish concrete harm, inviting litigation over "whether the particular procedural violations alleged in [a] case entail a degree of risk sufficient to meet the concreteness requirement." However, the Court's statements that an injury must be "real," and its citation to Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138 (2013)—which stated that "threatened injury must be certainly impending to constitute injury in fact," id. at 1147 (internal quotation marks omitted)—suggest that plaintiffs alleging only a risk of harm will face a significant hurdle. Further, Spokeo suggests that, when no harm in fact resulted from a procedural violation, standing is lacking—as when "procedures designed to decrease" the risk of inaccuracy are violated, but the information nonetheless turns out to be "entirely accurate."

Spokeo may pose particular obstacles to plaintiffs seeking to certify broad class actions alleging statutory violations. The Court's holding that a bare statutory violation does not suffice removes one of the major theories on which plaintiffs have based statutory damages class actions. Moreover, the Court's focus on whether "the particular procedural violations alleged in [a] case" imposed "real" harm on a plaintiff will often require an individualized factual inquiry that could prevent class certification. For example, even if Thomas Robins can show on remand that the inaccuracies at issue harmed him by affecting his employment prospects, that sort of necessarily individual showing should preclude class certification.

In short, while leaving important open questions, Spokeo at a minimum rejects the approach of the many courts that have assumed that technical violations of the FCRA are actionable in federal court without any inquiry into whether plaintiffs suffered any real harm.

Jones Day filed an amicus brief in the case on behalf of Experian Information Solutions, Inc.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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