Supreme Court's Spokeo Ruling Could Broadly Impact Consumer Class Actions

by Pepper Hamilton LLP

The Court’s discussion of concrete injuries likely applies to other statutory consumer class actions based solely on technical violations.

On May 16, the U.S. Supreme Court issued its much-anticipated decision in Spokeo, Inc. v. Robins, No. 13-1339, a case that many believed would provide clarity on whether a plaintiff has standing to bring suit for a statutory violation when the claim is based solely on the violation of a statute itself. The Court held that, for a plaintiff to establish injury in fact under Article III’s standing requirement, a plaintiff must plead an injury that is both concrete and particularized. The Court further held that the U.S. Court of Appeals for the Ninth Circuit’s decision, finding that the plaintiff had standing to pursue a statutory violation claim under the Fair Credit Reporting Act, focused solely on whether the injury was “particularized” (meaning it affected the plaintiff in a personal and individual way) and not on whether the injury was also “concrete” (meaning it actually exists). Accordingly, the Court vacated the Ninth Circuit’s decision and remanded the matter for the circuit court to analyze both aspects of the injury-in-fact requirement to determine if the plaintiff has standing to pursue his Fair Credit Reporting Act claim.

In Robins, plaintiff Thomas Robins brought suit against Spokeo based on, among other things, alleged violations of the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (the FCRA). Robins claimed that Spokeo (an online people search engine) maintained a profile on him that erroneously portrayed him as being married with children, in his 50s, with a job and an advanced degree. In reality, he was not married, had no children, was not in his 50s, and was not employed in a professional or technical field. In fact, Robins was unemployed and looking for a job.

Robins claimed that the inaccurate profile that Spokeo maintained on him violated the FCRA’s mandate that consumer reporting agencies follow reasonable procedures to assure maximum possible accuracy of consumer reports. Consequently, Robins filed suit against Spokeo in the U.S. District Court for the Central District of California, seeking to represent a putative class of individuals in the United States whose information relating to “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” was compiled and displayed by Spokeo between July 20, 2006 and the date of trial.

Spokeo responded to the filing by moving to dismiss. It claimed, among other things, that Robins could not show that he was actually harmed by Spokeo’s profile, which portrayed Robins in a more favorable light. The district court agreed with Spokeo and dismissed Robins’ complaint for failing to plead injury in fact as an element of Article III standing. The district court held that Robins failed to establish standing because Robins’ alleged injury — harm to his employment prospects — was “speculative, attenuated and implausible.” Robins v. Spokeo, Inc., No. CV10-05306 ODW (AGRx), 2011 U.S. Dist. LEXIS 158036, at *1 (C.D. Cal. Sep. 19, 2011).

Robins filed an appeal to the Ninth Circuit Court of Appeals, which reversed the district court. The Ninth Circuit held that Robins had adequately established standing because he had alleged that Spokeo violated his statutory rights (and not just the statutory rights of others) and that his “personal interests in the handling of his credit information [were] individualized rather than collective.” Spokeo, No. 13-1339, slip op. at 1-2 (citing Robins v. Spokeo, Inc., 742 F. 3d 409, 413 (9th Cir. 2014)).

Spokeo filed a petition for certiorari, and the Supreme Court granted certiorari on the following question:

Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.

In a 6–2 decision, the Supreme Court vacated the Ninth Circuit’s holding on the basis that the Ninth Circuit’s analysis of standing was incomplete. The Supreme Court held that standing requires three elements: (1) an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision. The Supreme Court then turned its attention to the injury-in-fact element and what it means.

Citing its decision in Lujan v. Defenders of Wildlife, 504 U. S. 555 (1992), the Court noted that “injury in fact” requires a showing that a plaintiff suffered an invasion of a legally protected interest that is concrete and particularized and actual or imminent, not conjectural or hypothetical. The Court went on to hold that, for injury to be particularized, it “must affect the plaintiff in a personal and individual way.” Spokeo, No. 13-1339, slip op. at 7. For injury to be concrete, the Court held that “it must actually exist,” that is, be “real” and not “abstract.” Id. at 8.

With regard to concreteness, the Court recognized that, in some instances, the violation of a statutory right (e.g., denial of access to information to which a party is entitled under the Federal Election Campaign Act, 2 U.S.C.S. § 431, et seq., and the Federal Advisory Committee Act, 5 U.S.C.S. Appx. § 1, et seq.) could satisfy the concreteness element of an injury-in-fact analysis, but noted further that not all instances of statutory violations constitute injury in fact. Spokeo, No. 13-1339, slip op. at 8. For example, the Court recognized that a violation of the FCRA’s procedural requirement that precludes inaccurate dissemination of information would not rise to the level of a concrete injury in instances where there is dissemination of an incorrect ZIP code. The Court noted that “[i]t is difficult to imagine how the dissemination of an incorrect ZIP code, without more, could work any concrete harm.”

Justice Alito’s discussion of the concrete injury aspect of injury in fact in statutory violation cases is instructive. The ZIP code example likely applies to other statutory consumer claims that seek only to address technical violations. Indeed, claims pursued for technical violations of the Fair and Accurate Credit Transactions Act, the Fair Debt Collection Practices Act or the Telephone Consumer Protection Act could fall by the wayside based on the analysis in Spokeo. Moreover, the Court’s holding not only affects individual plaintiffs in these cases, but it also has broad implications for consumer class actions based on technical violations. For example, establishing an injury that is particularized and concrete to an individual, as discussed in Spokeo, may make it more difficult to establish requirements for class certification, such as commonality, predominance and typicality.

Turning to the case at hand, the Court held that the Ninth Circuit incorrectly conflated concreteness with particularization when it found Robins had standing to pursue the claims in his complaint. The Court held that the Ninth Circuit’s Article III standing analysis was incomplete and remanded the matter. Stay tuned for Pepper’s analysis of the Ninth Circuit’s opinion after remand as to the parameters of pleading a concrete injury.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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