On November 2, 2015, a sharply divided Supreme Court of the United States heard oral arguments in Spokeo, Inc. v. Robins, where it considered whether Congress may confer Article III standing by authorizing a private right of action based on the violation of a federal statute alone, despite a plaintiff having suffered no concrete harm. This closely-watched case has major potential implications for consumer-facing companies of all types, as it may result either in a “green light” for no-damage class actions based on technical liability theories, or could result in a requirement that plaintiffs plead and prove some concrete harm, which would create a major new roadblock for consumer claims, particularly class actions. Based on questioning and comments during argument, the Court appears divided 4-4, with Justice Anthony Kennedy largely mum and appearing to hold the deciding vote.
In Spokeo, Inc. v. Robins, Plaintiff Robins sued the “people search engine” for alleged violations of the Fair Credit Reporting Act (FCRA). Specifically Robins alleges that Spokeo published inaccurate (though not harmful per se) information about him, including that Robins had a graduate degree and was married and had children. At issue on appeal is the fact that the Complaint alleges only statutory violations and no physical injury in fact. Spokeo argues that this statutory violation alone is insufficient to confer Article III standing because it does not meet the “irreducible constitutional minimum” to establish standing, which requires a plaintiff to have suffered an injury in fact by sustaining an “actual or imminent” harm that is “concrete and particularized.”
The district court for the Central District of California originally dismissed the case, holding that Robins failed to allege any injury-in-fact and, therefore, did not have Article III standing. The Ninth Circuit reversed, holding that the alleged violation of Robins’ statutory rights alone is sufficient to satisfy Article III’s injury-in-fact requirement, regardless of whether the plaintiff can show a separate actual injury.
On April 27, 2015, the Supreme Court granted certiorari.
As expected, many of the court’s conservative justices appeared hostile to Robins’ claims, while the liberal justices were critical of Spokeo’s arguments.
Chief Justice Roberts stated on the record, “We have a legion of cases that say you have to have actual injury.” Roberts posited a hypothetical statute that would allow damages of $10,000 for the publication of false information about an individual. He questioned: “Can a person whose unlisted phone number is published by a company, albeit published incorrectly, bring an action for statutory damages?”
Justice Scalia posed a similar example regarding the failure of a credit report agency to provide a “1-800” number as required by the FCRA. Would this failure allow anyone to sue, even if it did not affect them at all?
On the other side of the spectrum, Justice Kagan appeared to be Robins’ most vehement supporter, arguing that Robins was actually injured when Spokeo published false information about him. She declared that Spokeo “basically got everything wrong about [Robins]. You know, they got his marital status wrong. They got his income wrong. They got his education wrong. They basically portrayed a different person.” Justice Kagan found that “these are not unimportant details” and she would “feel harmed” if a company posted false information about her.
Justice Breyer agreed, stating that “there could be all different kinds of harm,” including “one kind of harm . . . suffered when somebody tells a lie about you or gives false information.”
Justice Kagan further contended that Congress recognized a concrete injury when it enacted the FCRA to prohibit the dissemination of false information about a particular person: “Congress recognized that, thought it was a significant problem, passed a statute to deal with that problem.” She questioned, “Don’t we owe [Congress] a little bit of respect that they identified a real-world harm . . . ?”
Based on the argument, it appears that a clear majority of Justices would agree that standing requires a showing of harm to establish an injury-in-fact. Indeed, the only judge who appeared to accept the plaintiff’s argument that Congress can create a right and then provide for a cause of action regardless of harm was Justice Sonia Sotomayor. However, the liberal wing judges, and particularly Justice Kagan, appear to believe that Congress’ determination of harm is due deference. Those judges also appeared to agree that Robins pleaded sufficient facts to show harm. The conservative judges, on the other hand, appear concerned that the FCRA was so broadly written that enforcing it as written as is could undercut the concept that there needs to be concrete harm particular to a plaintiff. Questions during the argument indicate that the conservative judges read the particular section of the FCRA at issue – 15 U.S.C. § 1681e(b) – as allowing private lawsuits for procedural errors that resulted in no impact whatsoever on a consumer. These judges seem apprehensive about a ruling that would open the doors to lawsuits to enforce general rights. These judges also seemed unimpressed with the allegations of harm by the plaintiff.
In sum, the oral argument intimates that the Supreme Court’s decision may be fact-specific as to how the claims were plead, and possibly even narrowly tailored to the FCRA, given the conservative justices concern with how the FCRA provisions at issue were drafted.
A decision from the Supreme Court is expected by June 2016. While the decision is pending, various district courts have granted stays in pending cases. These courts have recognized the potential significant impact Spokeo could have on consumer litigation where no actual harm has occurred. While the Court’s decision may have a specific impact on consumer litigation as a whole, some specific areas of the law – including data breach and cyber attack scenarios – may be greatly affected by this decision.
Troutman Sanders LLP will continue to monitor Spokeo-related developments and report on the Supreme Court’s ultimate decision.