United States: Spokeo: On Remand From The U.S. Supreme Court, The Ninth Circuit Finds Plaintiff Has Standing, Again

Last Updated: August 23 2017
Article by Gerald L. Maatman Jr., Pamela Devata and Robert T. Szyba

Seyfarth Synopsis: Following remand from the U.S. Supreme Court, the Ninth Circuit found that the plaintiff suing Spokeo, Inc. under the Fair Credit Reporting Act alleged sufficient injury to establish standing to proceed in federal court and to proceed with his class action.

On August 15, 2017, the U.S. Court of Appeals for the Ninth Circuit issued the latest opinion in the Robins v. Spokeo, Inc. litigation that gave us last year's U.S. Supreme Court opinion on Article III standing (which we discussed here). After the Supreme Court found that the Ninth Circuit, in its prior February 2014 opinion (found here), had analyzed only whether the alleged injury was particular to Plaintiff, it remanded the case back for the second part of the analysis to determine whether Plaintiff alleged a concrete injury-in-fact, as required by Article III.

This new ruling is a "must read" for employers, as it has the potential to allow plaintiffs to launch more workplace class actions.

Case Background

The case was originally filed in the U.S. District Court for the Central District of California in 2010 against Spokeo, Inc., which operates an online search engine by the same name that compiles publicly available information on individuals into a searchable database on the internet. The plaintiff alleged that Spokeo's database showed inaccurate information about him, such as that he had a greater level of education and more professional experience than he in fact had, that he was financially better off than he actually was, and that he was married (he was not) with children (he did not have any). Instead of any actual damages, the plaintiff alleged that Spokeo, as a consumer reporting agency, failed to "follow reasonable procedures to assure maximum possible accuracy of the information concerning" Plaintiff, and that its violation of section 1681e(b) of the Fair Credit Reporting Act (FCRA) was "willful" in order to seek statutory damages of between $100 and $1,000 for himself, as well as for each member of a putative nationwide class.

U.S. Supreme Court Decision

The issue of whether the plaintiff had standing to sue for the alleged statutory violation made its way to the U.S. Supreme Court, which in 2016 (in a 6 to 2 opinion by Justice Samuel A. Alito, Jr.) explained that "an invasion of a legally protected interest" that is both "concrete and particularized" is required to establish standing to proceed in federal court. To be concrete, the alleged injury must "actually exist" and must be "real" and not "abstract." The Court further discussed that plaintiffs do not "automatically" meet the injury-in-fact requirement where the violation of a statutory right provides a private right of action. The plaintiff here, therefore, "could not, for example, allege a bare procedural violation divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III." Because the Ninth Circuit had not completed both parts of the standing analysis, however, the case was remanded for further review.

Ninth Circuit's Standing Analysis

In light of the Supreme Court's directive, the Ninth Circuit opened by affirming the threshold principle that "even when a statute has allegedly been violated, Article III requires such violation to have caused some real—as opposed to purely legal—harm to Plaintiff." The Court explained that intangible harms, such as restrictions on First Amendment freedoms and harm to one's reputation, can be concrete enough for standing, though the Court noted this is a "murky area." Either way, Plaintiff cannot simply point to a statutory cause of action to establish an injury-in-fact.

Turning to its standing analysis of the plaintiff's particular allegations, the Ninth Circuit conducted a two-step inquiry:

  1. "whether the statutory provisions at issue were established to protect [the plaintiff's] concrete interests (as opposed to purely procedural rights)"; and, if so
  2. "whether the specific procedural violations alleged in [the] case actually harm, or present a material risk of harm to, such interests."

First, the Ninth Circuit cited a long history of protections against dissemination of false information about individuals that underlies the FCRA, including common law protections against defamation and libel, to find that the interests protected by the FCRA are real and concrete. The harm alleged in the case, the Ninth Circuit concluded, "has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit," even if it is not the exact historical harm itself.

In the second step, the Ninth Circuit reasoned that in many cases, "a plaintiff will not be able to show a concrete injury simply by alleging that a consumer-reporting agency failed to comply with one of the FCRA's procedures." The statute may be violated, but the violation alone is not enough. Here, however, the plaintiff pointed to multiple examples of information (e.g., his education level, etc.) that might be relevant to a prospective employer. A court also has to look at the nature of the inaccuracy as part of its analysis. Even if the inaccuracy has a debatable negative impact (e.g., a greater level of education could make a plaintiff deemed to be overqualified and passed over for a job), the information is nevertheless relevant, and the Court held, its dissemination is not simply a technical statutory violation. The Ninth Circuit also pointed out that the injury alleged in this case was not speculative because the dissemination of information already occurred, and the dissemination itself was the harm. The Court commented that further alleged harm, such as being able to point to an actual missed job, was not required.

Outlook

Overall, the Ninth Circuit's decision adopted an expansive interpretation of the type of harm that will suffice for Article III standing, though indicating that this interpretation will not extend so far as to find standing to sue for bare statutory or procedural violations. In the present case, however, the Ninth Circuit focused on the specific allegedly inaccurate information to find harm, in line with Justice Ginsburg's dissent (found here) to the Supreme Court's majority, which was concerned more with the reporting of allegedly false information that "could affect [the plaintiff's] fortune in the job market." Further allegations of actual injury, according to the Ninth Circuit, were not required to establish standing. However, the Ninth Circuit stopped from opining on other specific circumstances and noted that the specific facts will need to be considered to determine if the threshold of "concrete harm" is satisfied.

Thus, the Ninth Circuit provides further guidance on standing, affirming that bare statutory violations continue to be insufficient. The specific factual allegations of such cases, however, may present courts with greater latitude to find standing in civil litigation alleging violations of the FCRA, as well as cases under ERISA, the Americans With Disabilities Act, and a host of other workplace statutes. As courts address similar inquiries, we are likely to see increased guidance regarding standing. Additionally, with this decision, there seems to be more evidence of a potential split among the federal Courts of Appeals, which could result in another petition to the U.S. Supreme Court.

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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Gerald L. Maatman Jr.
 
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