In May of 2016, the United States Supreme Court issued a game
changing decision with an immediate impact on consumer financial
litigation cases. Spokeo, Inc. v. Robins, 136 S. Ct.
1540, 1547, (2016) ("Spokeo"). The decision provides a
significant barrier to plaintiffs seeking class certification of
Fair Credit Reporting Act ("FCRA") and Fair Debt
Collection Practices Act ("FDCPA") claims because
under Spokeo, a claim of a mere statutory violation of the
FDCPA or the FCRA is insufficient to demonstrate Article III
standing. Instead, plaintiffs need to contend with the argument
that the class representative plaintiff will be unable to
demonstrate concrete harm, thereby potentially rendering the
putative class action complaint subject to dismissal. In the last
several months, following the directive in Spokeo,
courts have dismissed putative class action complaints after
finding the named plaintiffs lacked Article III standing.
In Spokeo, the defendant owned a website allowing users
to search for information about other individuals by name, email
address, or phone number. Spokeo at 1546. Robins, the
plaintiff, noticed his profile on the defendant's website
contained inaccurate information and he brought a claim under the
FCRA, which requires consumer reporting agencies to "follow
reasonable procedures to assure maximum possible accuracy" of
consumer reports. Id. at 1545-46 (citing 15 U.S.C. §
1681e(b)). Remanding the case to the Ninth Circuit, the Supreme
Court held Robins could not satisfy the injury-in-fact requirement
"by alleging a bare procedural violation" of the FCRA,
divorced from any concrete harm. Id. at 1549-50.
In a 6-to-2 opinion written by Justice Samuel Alito, the court
held that Congress cannot erase Article III requirements by
granting a right to sue for statutory violations unaccompanied by
harm. In discussing FCRA, the Supreme Court provided two examples
of purely statutory violations. The first example is where a
consumer reporting agency fails to provide a required notice to a
user of the agency's consumer information, but the information
turns out to be entirely accurate. The second example is where a
consumer agency reports some trivial inaccurate information, such
as an incorrect zip code, which causes no concrete harm to the
consumer. The Supreme Court held both of these scenarios, without
allegations of additional harm, would not suffice to satisfy the
Prior to Spokeo, plaintiffs claiming violations of
consumer protection statutes in the class action context sometimes
limited their complaints to allegations of purely statutory
violations. Spokeo makes putative class actions complaints
susceptible to motions to dismiss when only pure statutory
violations are alleged.
Following Spokeo, several courts have dismissed
putative class action claims alleging statutory violations on this
basis. In Hancock v. Urban Outfitters, Inc., 2016 U.S.
App. LEXIS 13548, *7 (D.C. Cir., July 26, 2016), the D.C. Circuit
remanded a case to the district court with instructions to dismiss
a complaint due to lack of standing, finding that the "Supreme
Court's decision in Spokeo thus closes the door on
[plaintiffs'] claim that the Stores' mere request for a zip
code, standing alone, amounted to an Article III injury."
Gubala v. Time Warner Cable, Inc., 2016 U.S. Dist.
LEXIS 79820, *1 (E.D. Wis., June 17, 2016), began as a putative
class action complaint, but was dismissed based on a lack of
standing. The court in Gubala held "[g]iven the clear
directive in Spokeo, the court finds that while the second
amended complaint alleges a particularized injury, it does not
allege a concrete harm, and therefore that the plaintiff does not
have Article III standing to bring this suit."
Spokeo has already had a significant impact on putative
class actions lawsuits in FCRA, FDCPA, and Telephone Consumer
Protection Act cases. Class action defendants facing allegations of
violations of these and other statutes will be aided by the
standing requirements outlined by the Supreme Court in
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guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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