United States: Supreme Court Decision Hasn't Helped To Clarify Standing In Privacy Cases

In May 2016, the U.S. Supreme Court issued its long-awaited opinion in Spokeo v. Robins, addressing the Article III standing requirement. In Spokeo, the Supreme Court found that, in order to have standing, a plaintiff must allege "a concrete injury even in the context of a statutory violation" and not merely a "bare procedural violation, divorced from any concrete harm." A "concrete injury" must be "real, and not abstract." Moreover, a "concrete injury" may be intangible where the alleged harm "has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit." In the eight months since Spokeo's issuance, several appellate courts have interpreted and applied the case in the privacy context, arriving at different conclusions.

The U.S. Court of Appeals for the Eleventh Circuit was the first appellate court to apply Spokeo in the privacy context in Church v. Accretive Health, Inc. There, the plaintiff alleged that Accretive Health, Inc., a debt collector for Providence Hospital, had violated the Fair Debt Collection Practices Act when it failed to include certain statutorily required disclosures in a letter that the plaintiff received advising her that she owed a debt to the hospital. The plaintiff did not allege that she suffered actual damages from Accretive's failure to include the required disclosures. Instead, she alleged that, upon receiving the letter, she was "angry" and "cried a lot." The district court granted Accretive's summary judgment motion, which asserted that the FDCPA did not apply to the debt. The Eleventh Circuit affirmed the district court's decision but first addressed the question of whether the plaintiff had standing under Spokeo. The Eleventh Circuit held that the plaintiff had suffered a concrete injury and had standing because "Congress provided [the plaintiff] with a substantive right to receive certain disclosures and [the plaintiff] has alleged that Accretive Health violated that substantive right."

The U.S. Court of Appeals for the District of Columbia Circuit, the next appellate court to apply Spokeo in the privacy context, adopted a different approach. In Hancock v. Urban Outfitters, Inc., the plaintiffs alleged that two retail stores had violated the District of Columbia's Use of Consumer Identification Information Act by requesting that the plaintiffs provide their zip codes before processing the plaintiffs' credit card purchases. The district court dismissed the complaint with prejudice. The D.C. Circuit vacated the district court's decision and remanded the case for dismissal based on the plaintiffs' lack of standing. The D.C. Circuit found that the plaintiffs' "naked assertion that a zip code was requested and recorded without any concrete consequences" did not constitute a concrete injury sufficient to confer standing.

The U.S. Court of Appeals for the Eighth Circuit has adopted both approaches, applying Spokeo inconsistently. In Carlsen v. GameStop, Inc., the Eighth Circuit interpreted Spokeo broadly to expand standing to sue for violations of privacy policies. In Carlsen, the plaintiff, who had subscribed to Game Informer Magazine and the additional online enhanced content available on the Game Informer website, sued GameStop (the owner of Game Informer) for sharing his personal information with Facebook in violation of GameStop's privacy policy, which stated that GameStop would not share its customers' personal information with anyone. Specifically, the plaintiff alleged that the Game Informer website transmitted a user's Facebook ID and browsing history to Facebook if the user logged in to the Game Informer website through Facebook. The plaintiff alleged that, had he known about the sharing of information, he would not have paid as much for his subscription or would have refrained from accessing the online content. The district court dismissed the plaintiff's complaint for lack of subject matter jurisdiction, holding that the plaintiff had failed to establish that he had suffered a cognizable injury. The Eighth Circuit affirmed the dismissal on the grounds that a user's Facebook ID and browsing history did not constitute personal information covered by the privacy policy. However, the court found that the plaintiff's allegation that he suffered damages "in the form of devaluation of his Game Informer subscription in an amount equal to the difference between the value of the subscription that he paid for and the value of the subscription that he received, i.e., a subscription with compromised privacy protections," constituted an "'actual' injury."

In contrast, in Braitberg v. Charter Communications, Inc., the Eighth Circuit interpreted Spokeo narrowly to reject standing for a technical violation of the Cable Communications Policy Act. In Braitberg, the plaintiff sued Charter Communications for retaining his personal information (i.e., his address, telephone number and Social Security number) after he had canceled his subscription for cable services. The plaintiff alleged that doing so violated the CCPA, which required cable operators to destroy personally identifiable information if the information was no longer necessary for the purpose for which it was collected. The plaintiff alleged that Charter's retention of his personal information deprived him of the full value of the services for which he paid and violated his federally protected privacy rights. The district court dismissed the complaint, finding that the plaintiff had not alleged a concrete injury sufficient to confer standing. The Eighth Circuit affirmed the dismissal, finding that the plaintiff had alleged only a "bare procedural violation, divorced from any concrete harm." In particular, the Eighth Circuit noted that the plaintiff had failed to allege that the personal information that Charter had retained had been disclosed or accessed by a third party or that Charter had even used the information itself during the period in question. The plaintiff had failed to identify a "material risk of harm from the retention," and the "speculative or hypothetical risk" he identified was insufficient.

Just a few days later, the U.S. Court of Appeals for the Sixth Circuit reached the opposite conclusion in a data breach case. In Galaria v. Nationwide Mutual Insurance Co., the plaintiffs sued Nationwide Mutual Insurance Co. for its alleged failure to adopt adequate procedures and measures to protect the plaintiffs' personal information. The plaintiffs alleged that the Nationwide data breach had created an "imminent, immediate and continuing increased risk" of identity theft and that the plaintiffs had suffered and would continue to suffer both "financial and temporal" costs, such as having to purchase credit reporting services, credit and/or internet monitoring, and/or instituting credit freezes and closing or modifying financial accounts. The district court dismissed the complaints, finding that the plaintiffs lacked Article III standing. The Sixth Circuit reversed the dismissal and remanded the case, concluding that the plaintiffs' allegations that the theft of their personal information subjected them to a heightened risk of identity theft and caused them to incur mitigation costs, such as credit monitoring, was sufficient to establish standing at the pleading stage. The Sixth Circuit found that "[w]here a data breach targets personal information ... inference[s] can be drawn that the hacker[] will use the victims' data for ... fraudulent purposes," and "although it might not be 'literally certain' that Plaintiffs' data will be misused ... there is a sufficiently substantial risk of harm that incurring mitigation costs is reasonable."

Most recently, the U.S. Court of Appeals for the Seventh Circuit applied Spokeo restrictively to limit standing to bring lawsuits under the Fair and Accurate Credit Transactions Act. In Meyers v. Nicolet Restaurant of de Pere, LLC, the plaintiff alleged that the defendant had violated FACTA because it failed to truncate the credit card expiration data on its receipts. The district court denied the plaintiff's motion for class certification, finding that the plaintiff failed to establish that classwide issues would "predominate" over issues affecting individual class members. The Seventh Circuit did not address the class certification question. Instead, it vacated the district court's order and remanded the case with instructions to dismiss. The Seventh Circuit found that the plaintiff had fallen short of the Spokeo standard and failed to allege any harm, or even any "appreciable risk of harm," arising from the defendant printing credit card expiration dates on its receipts. The plaintiff had only alleged a statutory violation without any actual injury from that violation. Indeed, the Seventh Circuit observed that it was "hard to imagine" how the expiration date on the receipt could have increased the risk of identity theft.

Spokeo provides only limited guidance concerning the standard for Article III standing in actions in which statutory violations or damages are alleged, which is often the situation with privacy and data breach cases. As illustrated above, this lack of specific direction by the Supreme Court has led to varying applications of Spokeo in different circuits. Definitive guidance on the requirements of standing in the privacy context may not be possible unless and until the Supreme Court provides further guidance on the issue.

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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