The Supreme Court Hates Your No-Damage Class Action: Spokeo Decision Likely to End Big-Dollar TCPA Class Actions

Dorsey & Whitney LLP

The world changed on May 16, 2016. Many sorts of predatory consumer class actions—you know the kind where the lawyers make millions and the consumers receive nickels?—likely just met their demise. And with the recent passing of conservative-stalwart, Justice Scalia, no one really expected it to happen like this. But it happened just the same.

In its latest landmark decision, Spokeo, Inc. v. Robins, the United States Supreme Court ruled definitively on May 16, 2016—and in “once and for all” fashion—that Congress cannot create an “injury in fact” out of thin air by enacting a statute.

Why does this matter? Well at the threshold it means that the high court is adhering to its “injury in fact” formulation for Article III standing, even though the Constitution really only requires a “case” or “controversy,” which certainly seems to be afoot when a Plaintiff claims a federal statute was violated and a Defendant denies it. But obviously there’s more to it than that.

For individual Plaintiffs bringing suit under a federal statute, it means that he or she must now plead that a de facto injury has been suffered; an injury that is “real” and “concrete.”  And, seemingly this means that each statutory violation must have caused a “real” and “concrete” injury to justify a statutory recovery. While that might not sound like much of a hurdle, it is certain to skin a few knees. In the case of a suit brought under the TCPA, for instance, a civil litigant might be able to show that some of the challenged calls caused a “real” injury, but many likely did not. At a minimum, therefore, Spokeo will cut down on the per-call recoveries that TCPA Plaintiffs are getting so used to seeing.

But the real change is in the class action context.  In the old days (like yesterday) a class representative could file suit asserting a bare statutory violation and then claim to represent everyone else that was the “victim” of a similar violation. It mattered not whether that violation actually caused “real” harm to the class member. Hence, there was no need for the class representative to make any showing of “concrete” individualized harm for each class member; the violation of the statute was the sole nexus defining class membership. But now, the class representative must do more. He or she must show that each class member suffered the same de facto concrete (i.e. individualized) harm that he or she did. But, by definition, an individualized and concrete harm cannot be shown across a class, except in the narrowest circumstances. And that is a very big deal. A monstrous, Great-Wall-of-China-sort barrier to no-damage class action practitioners.

While Spokeo was a FCRA case, it seems clear that its ruling will have the biggest impact in the TCPA context.  These suits have skyrocketed over the last few years as Plaintiffs’ attorneys have sought to take advantage of massive statutory damage penalties and an ever-expanding right of action afforded by a generous FCC. (More on that in other articles.) But Spokeo seems to put that genie right back into its bottle. Why? Because the primary right protected by the TCPA is individual privacy. But privacy is a highly individualized interest impacted in different ways and felt subjectively. For instance, just because I did not expressly consent to receive a call from my bank or mortgage servicer that does not necessarily mean that I do not want their correspondence, find it useful, or otherwise feel that my privacy was degraded or damaged by the call. No longer, therefore, can a Plaintiff simply seek to represent “everyone” that received a call “without express consent.” Rather he or she can only represent a class of individuals who felt the sting of their privacy being invaded—who responded, subjectively, to the call in the same way he or she did—rather than just the vibration of a text message.

Importantly, courts have long held that classes defined by the subjective impact of challenged conduct on class members are not certifiable. How can they be? The map to class membership lies inside of class members heads and cannot be discerned by any human means. In legal parlance, the class definition is not based on objective criteria and class membership is not ascertainable (not even in the Seventh Circuit.)

So there you have it. The world changed today, got better even. And on a Monday even.

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Dorsey & Whitney LLP

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