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.