On May 1, 2014, Spokeo, Inc. filed a writ of certiorari in the United States Supreme Court requesting the Court decide whether a plaintiff has Article III standing in a federal court when he or she has suffered no actual harm besides the violation of a statute alone. Resolution of this question could have a significant effect on litigation under numerous consumer protection statutes, including the Fair Credit Reporting Act (FCRA), which often allow for recovery of substantial statutory damages with no accompanying actual harm.
Since Spokeo’s initial petition, the Supreme Court has received numerous amici curiae briefs requesting the Court clarify its standing jurisprudence. Recently, several technology giants, including Facebook, eBay, and Yahoo, filed a brief arguing that a plaintiff must allege actual harm in order to have Article III standing, even if a statute is alleged to have been violated. The risk of “no injury” class actions is particularly acute for these companies because they interact with hundreds of millions of users on a daily basis, with many of those interactions subject to state and federal laws.
According to their brief, if an actual injury – separate and apart from an alleged statutory violation – is not a necessary precursor to a lawsuit in federal court, any of the millions of individuals who interact with these companies could bring a lawsuit alleging technical statutory violations on behalf of hundreds of millions of people, with no accompanying actual injury. Given the potential for substantial class sizes, these lawsuits create the specter of billions, or even trillions, of dollars in damages, when no one has actually been harmed.
Should the Supreme Court accept and decide the Spokeo case, its decision could have far-reaching effects. A decision in favor of Spokeo could drastically limit the prevalence of technical class action lawsuits where no actual harm has occurred. These lawsuits frequently arise under consumer protection statutes like the Fair Credit Reporting Act. On the contrary, a decision against Spokeo would clear a path for bet-the-company litigation to remedy legal injuries, as opposed to factual injuries, alone.