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The Spokeo Decision Closes the Courthouse Door, Partly

June 2016

The Supreme Court of the United States’ May 16 decision in Spokeo, Inc. v. Robins (No. 13-1339; 136 S. Ct. 1540) appears to have reduced the risk that businesses maintaining large personal information databases will face consumer class actions based solely on non-compliance with government regulations, but the requirements for a plaintiff to have Article III standing in cases arising from the distribution of erroneous information remain unclear. There is ample basis for continuing business concern.

Case Background

The underlying case was brought by an individual, Thomas Robins, in the U.S. District Court for the Central District of California against Spokeo, Inc. alleging willful violations of the Fair Credit Reporting Act (FCRA) and seeking statutory damages and injunctive relief. The FCRA provides for such private cations. Robins complained that Spokeo had issued reports to third parties that contained inaccurate information about him. As later understood by the Supreme Court, his profile “states that he is married, has children, is in his 50’s, has a job, is relatively affluent, and holds a graduate degree,” all of which Robins alleged to be incorrect. The complaint asserted that such inaccuracies reflected Spokeo’s willful failure to follow practices required of credit reporting agencies designed to assure the accuracy of information provided to users such as potential lenders, employers, and insurers. The complaint proposed a class action.

The district court dismissed the complaint on the ground that Robins had not alleged injury sufficient to constitute a case or controversy, and, thus, the federal court lacked jurisdiction under Article III of the Constitution. On appeal, the U.S. Court of Appeals for the Ninth Circuit reversed, ruling that there was Article III standing. It rejected Spokeo’s contention that “Robins cannot sue under the FCRA without showing actual harm,” and, instead determined that “Robins has standing by virtue of the alleged violations of his statutory rights.”

Spokeo was granted review by the Supreme Court, which specified the question presented as 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?” Because of this broad statement, and the fact that it was not expressly limited to FCRA, the business community understandably has been concerned that the case held the potential for the Supreme Court to invite class actions seeking huge amounts of statutory damages for violations of various statutory requirements.

The Supreme Court’s Decision

By a 6-2 majority, the Supreme Court reversed the Ninth Circuit’s decision and remanded the case to the Court of Appeals for additional analysis of whether Robins had pleaded facts sufficient to established Article III standing.

Justice Alito’s opinion of the Court was joined by Chief Justice Roberts and Justices Kennedy, Thomas, Breyer, and Kagan. Justice Alito’s analysis answered the question presented in the negative, reading prior Supreme Court decisions as establishing that “Congress cannot erase Article III’s standing requirements by statutorily granting the right to sue to a plaintiff who would not otherwise have standing.” To establish standing, a plaintiff must have suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”

Here the issue focused on whether the Ninth Circuit had correctly found that facts meeting the “concrete and particularized” standards had been adequately pleaded by Robins. Justice Alito’s opinion emphasized that “particularized” and “concrete” are two separate standards, and particularization is necessary but not sufficient. To be “particularized,” an injury “must affect, the plaintiff in a personal and individual way,” rather than merely being an injury to the general public. The Ninth Circuit had correctly found that “Robins’ personal interests in the handling of his credit information are individualized rather than collective” and, thus, met the particularization requirement. However, the majority found that, in the Ninth Circuit’s analysis, the concreteness requirement “was elided.”

The majority discussed in general terms what it means for an injury to be concrete, but it did not attempt to apply those principles to the facts alleged by Robins. Thus, Justice Alito wrote that, to be concrete, an injury “must be ‘de facto’; that is, it must actually exist,” and be “’real,’ and not ‘abstract.’”  A concrete injury may be “intangible,” in which event “it is instructive to consider whether an 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.”

Justice Alito explained that a “bare procedural violation” such as a failure to provide “notice” of agency consumer information would not suffice. Nor would “dissemination of an incorrect zip code, without more” “work any concrete harm.”

Justice Thomas filed a concurring opinion discussing how “the injury-in-fact requirement applies to different types of rights,” using historical examples and concluding that “Congress cannot authorize private plaintiffs to enforce public rights in their own names, absent someshowing that the plaintiff has suffered a concrete harm particular to him.” He did not discuss the alleged Spokeo inaccurate representations in that context.

Justice Ginsburg, joined by Justice Sotomayor, dissented, finding that the Ninth Circuit should have been affirmed, because “Robins’ allegations carry him across the threshold” of concreteness. The dissenters concluded that false information that could adversely affect Robins’ “fortune in the job market” was sufficiently concrete and noted with approval statements by amici that Spokeo’s inaccuracies created the “erroneous impression that he was overqualified for the work he was seeking, that he might be unwilling to relocate for a job due to family commitments, or that his salary demands would be excessive.”

Implications

The remand to the Ninth Circuit for application of imprecise “concreteness” standards in the context of a broad range of alleged inaccurate fact representations by Spokeo would seem to open the door for consideration of multiple injury theories. The dissenters clearly signal that adverse impacts on a plaintiff’s ability to secure employment may be sufficient for standing purposes, but there are numerous other potential arguments as well. In addition to arguments that given false statements adversely affect a consumer’s ability to obtain a loan, insurance or other business benefits, there are more personal possibilities. For example, during the oral argument, Justice Sotomayor noted that, “If you’re not married and there’s a report out there saying you are, that’s a potential injury,” because single people “look at whether someone who’s proposed to date is married or not.”

Given the breadth of interest in the Spokeo litigation, as evidenced by the large number of amici before the Supreme Court, it is readily foreseeable that plaintiff-oriented advocates will see the remand before the previously sympathetic Ninth Circuit as an inviting opportunity to develop numerous theories of concrete injury claimed to be sufficient to open the courthouse door. Stay tuned.