United States: Spokeo And "No-Injury" Class Actions In Wisconsin Courts

In the wake of the decision from the Supreme Court in the United States on Spokeo, Inc. v. Robins, courts are grappling with how to apply the injury requirement for standing under Article III to "no-injury" class actions. "No-injury" class actions are those brought by plaintiffs who rely on technical violations of statutory requirements to support their claims for automatic damages under the statute. While Spokeo did not definitively address the standing question in "no-injury" class actions, the decision has renewed interest in challenging the sufficiency of the injury alleged in these cases and beyond.

The Spokeo Decision

In Spokeo, Inc. v. Robins, 578 U.S. __ , 136 S.Ct. 1540 (2016), the Supreme Court analyzed whether the plaintiff could bring a claim under the Fair Credit Reporting Act (FCRA). The FCRA provides automatic damages for any violation of the statute. The plaintiff based his claim solely on the publishing of inaccurate information, an alleged technical violation of the FCRA, but without evidence of any actual injury stemming from the dissemination of inaccurate information. Spokeo argued that the lack of actual injury meant that the plaintiff lacked standing to sue.

The Supreme Court did not directly address the standing issue for all "no-injury" class actions. However, the court did determine that the Ninth Circuit failed to apply one of the requirements for standing — a concrete injury — and remanded the case back to the Ninth Circuit to examine whether the alleged injury was sufficiently "concrete" to confer standing on the plaintiff.

The decision in Spokeo sparked a range of discussions as to whether it makes assertion of class actions based on statutory violations more difficult, whether it simply avoided making it easier, or whether it avoided the issue entirely. While the decision could have gone further, it is notable in that it expressly articulated that bare procedural violations alone will not be sufficient to confer standing without a showing of concrete injury — a notion that was only implied in previous precedent.

Spokeo's Impact on Wisconsin Courts

Despite the criticism of the decision and the uncertainty over its implications, the Spokeo ruling is already having an impact on class actions brought by plaintiffs in Wisconsin federal courts. This summer, a Wisconsin federal judge tossed out two proposed class actions against Time Warner Cable (Time Warner), finding that the named plaintiffs lacked standing under Spokeo.

In Gubala v. Time Warner Cable, Inc., No. 15-cv-1078-pp, 2016 U.S. Dist. LEXIS 79820 (E.D. Wis. June 17, 2016), appeal docketed, No. 16-2613 (7th Cir.), U.S. District Judge Pamela Pepper dismissed a putative class action accusing Time Warner of retaining subscribers' personal identification information after they ended their service, ruling the former customer who brought the suit lacked standing under Spokeo.1

In granting Time Warner's motion to dismiss, the court explained that the plaintiff, a former customer who accused Time Warner of putting customers at risk of identity theft and other dangers, lacked standing under Spokeo because the consumer did not allege that Time Warner disclosed his information to a third party or that any such disclosure caused him any harm. The court found that:

In fact, one might argue that the Spokeo plaintiff was a bit closer to alleging a concrete injury, because the defendant wasn't just keeping his information; it was publishing, to anyone who viewed the website, inaccurate information. The plaintiff in this case does not allege that the information the defendant retains is inaccurate, nor does he allege that the defendant has published it, or made it available, to anyone.

Id. at *14

Likewise, in August of this year, Judge Pepper again relied on Spokeo and dismissed another proposed class action against Time Warner for conducting credit checks on job applicants. In Groshek v. Time Warner Cable, Inc., No. 15-cv-00157-pp, 2016 Dist. LEXIS 104952 (E.D. Wis. Aug. 9, 2016), appeal docketed, No. 16-3355 (7th Cir.), the court dismissed the plaintiff's FCRA claim, finding that the job applicant could not show he suffered actual injury because the company checked his credit without his express permission during the job application process.2

The plaintiff, who has allegedly threatened some 50 companies with litigation for FCRA violations, did not plead that Time Warner publicized his credit information to embarrass him, that his credit report prevented him from getting the job, or that Time Warner used the consumer report against him. Id. at *7. The court found that Spokeo called for a showing of real harm, and Groshek's suit did not clear that hurdle. Id. at *7-8.

On the other hand, other courts within the Seventh Circuit have been less inclined to use Spokeo to support a lack of standing argument. For example, in Saenz v. Buckeye Check Cashing of Ill., No. 16-CV-6052, 2016 U.S. Dist. LEXIS 127784, at *4-5 (N.D. Ill. Sept. 20, 2016), a case alleging violations of the Fair Debt Collections Practices Act, the court found that standing existed where the plaintiff alleged he suffered a concrete informational injury due to the failure of the defendant to provide truthful information in a collection letter to the plaintiff. The court held that because Congress gave consumers a legally protected interest in certain information about debts, a deprivation of that information constitutes a cognizable injury, making the violations alleged distinct from the bare procedural violation contemplated in Spokeo. Id. at *5.

Similarly, in Phys. Healthsource v. A-S Medication Sols., No. 12-cv-05105, 2016 U.S. Dist. LEXIS 132037 (N.D. Ill. Sept. 27, 2016), the court summarily rejected the defendants' argument that certain putative class members lacked standing because they did not suffer a concrete injury. Plaintiffs alleged violations of the Telephone Consumer Protection Act (TCPA), claiming that defendants sent 11,422 unsolicited faxes, advertising the availability and quality of certain pharmaceutical products and services. With no analysis, the court stated that the defendants' reliance on Spokeo was misplaced as a violation of the TCPA is a concrete harm. Id. at *16 n.3; see also Fauley v. Drug Depot, Inc., No. 15-C-10735, 2016 U.S. Dist. LEXIS 120252 (N.D. Ill. Aug. 31, 2016) (finding concrete injury alleged in a TCPA case, where the plaintiff alleged loss of paper and toner consumed in the printing of the fax, loss of use of his telephone line and fax machine during receipt of the unsolicited fax, and loss of time receiving, reviewing, and disposing of the fax).

Conclusion

These decisions have particular import for Wisconsin businesses handling personal data or otherwise facing the threat of "no-injury" class actions from plaintiffs who rely on technical violations of statutory requirements for laws such as the FCRA, the TCPA, the Fair and Accurate Credit Transactions Act, or the Truth in Consumer Contract and Warranty and Notice Act. Spokeo can serve as an effective tool in achieving dismissal of these types of putative class actions at the outset of the case, when specific injury is not alleged.

Spokeo also serves as a reminder to assess standing throughout litigation to determine if a plaintiff has suffered a concrete and particularized harm. Indeed, the standing principles articulated in Spokeo have already been used in Wisconsin courts outside of the "no-injury" class action context. See, e.g., One Wisconsin Inst., Inc. v. Thomsen, No. 15-cv-324-jdp, 2016 U.S. Dist. LEXIS 100178 (W.D. Wis. July 29, 2016) (relying on Spokeo to find standing for plaintiffs in an action regarding Wisconsin's newly enacted voter ID law).

Footnotes

1. Briefing on appeal is set to be complete in November of 2016.

2. Judge Pepper put the suit on hold while the high court determined Spokeo. Briefing on appeal is set to be complete in December of 2016.

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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