On May 16, 2016, the Supreme Court of the United States issued its much-anticipated decision in Spokeo, Inc. v. Robins. Spokeo 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 “real world” harm. The Supreme Court, in a 6-2 decision, vacated and remanded the decision of the Ninth Circuit, the latter of which found the existence of Article III standing in a claim under the Fair Credit Reporting Act (“FCRA”). The Court found that while the Ninth Circuit had considered whether the harm was particularized, the lower court had failed to consider whether the “invasion of a legally protected interest” was “concrete.” After holding that a “violation of one of the FCRA’s procedural requirements may result in no harm,” SCOTUS instructed the Ninth Circuit to decide “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.” Although the case was decided under the FCRA, it has major potential implications for consumer-facing companies of all types and putative class actions generally.
In Spokeo, Inc. v. Robins, Plaintiff Robins sued the “people search engine” for alleged violations of the FCRA. Robins alleged 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 was the fact that the Complaint alleged only statutory violations and no physical injury-in-fact. Spokeo argued that this statutory violation alone was insufficient to confer Article III standing because it does not meet the “irreducible constitutional minimum” to establish standing, which required 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 was sufficient to satisfy Article III’s requirements, regardless of whether the plaintiff can show a separate actual injury. On April 27, 2015, the Supreme Court granted certiorari.
Justice Alito delivered the 6-2 decision of the Court, vacating and remanding the Ninth’s Circuit’s February 2014 decision. The majority held that the Ninth Circuit’s injury-in-fact analysis was “incomplete” because it “focused on the second characteristic (particularity), but it overlooked the first (concreteness).” According to the Court, “a ‘concrete’ injury must be ‘de facto’; that is, it must actually exist” in a “‘real,’ and not ‘abstract’” sense, but is not “necessarily synonymous with tangible.”
While noting Congress’s role in identifying and elevating intangible harms to create standing for statutory violations, the majority made clear that this “does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” More (i.e., a concrete injury) is necessary. Indeed, this is exactly why Robins could not “allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.” The Court provided further guidance as to when such an “intangible harm” might provide standing, stating that “the risk of real harm” may satisfy the requirement of “concreteness” including when those harms “may be difficult to prove or measure,” with the Court then citing certain prior Supreme Court cases where standing has been found to be present.
The majority concluded with certain examples of non-concrete, statutory violations:
A violation of one of the FCRA’s procedural requirements may result in no harm. For example even if a consumer reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate. In additional, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.
Through this analysis, the Supreme Court indicated that a technical violation – or related inaccuracy – is not enough to create particularized, concrete harm. The Court then remanded the case to the Ninth Circuit to make that determination in light of the allegations pled.
In his concurrence, Justice Thomas elaborated on the majority’s injury-in-fact pronouncements via an historical lens, adding: “A plaintiff seeking to vindicate a public right embodied in a federal statute, however, must demonstrate that the violation of that public right has caused him a concrete, individual harm distinct from the general population.”
In their narrow dissent, Justices Ginsburg and Sotomayor noted their disagreement with the “necessity of remand to determine whether Robins’ particularized injury was ‘concrete.’” To them, Spokeo’s misinformation about Robins, as alleged in his complaint, conveyed concretely that his employment prospects were harmed. This misinformation included creating the impression that he was overqualified for the work he was seeking, that he might be unwilling to relocate, and that his salary demands would exceed what employers were prepared to offer.
Implications for FCRA Cases and Other Consumer Lawsuits/Class Actions
While, at its core, Spokeo is an FCRA decision, the ruling will have a broad impact on all consumer lawsuits. The Supreme Court’s analysis will undoubtedly engender future argument by consumer plaintiffs and defendants as to whether a named plaintiff has sufficiently alleged a “concrete” injury sufficient to give rise to constitutional standing. That is true on two fronts: individual lawsuits and proposed class actions.
First, for individual actions, it is evident that a plaintiff will be required to plead something more than just a bare statutory violation, although an intangible harm might suffice. Consumer plaintiffs will thus likely attempt to plead intangible injury that they claim is the type of risk of harm that Congress sought to address by enacting the statutory requirement at issue, and they will further point to the portions of the opinion stating that Congressional judgments in that regard are important and entitled to some measure of deference. On the other hand, defendants will emphasize the language in the opinion that bare procedural violations alone are not enough, and that a procedural violation must actually be in some way concrete in its effect on plaintiff and be the type of harm that relates to the interest sought to be protected by the statute in question.
Second, for class actions, even assuming that standing was sufficiently alleged for the named plaintiff, there will be further debate as to whether these types of consumer class actions are viable and certifiable. The Supreme Court’s decision appears to provide further bases for defendants to argue that procedural, “no harm” class actions cannot proceed. The Supreme Court’s statements that “it is difficult to imagine how a [technical inaccuracy], without more, could work any concrete harm” could be used by defendants to drive a wedge between the alleged harm of a named plaintiff as a result of a procedural violation and the unknown circumstances of putative class members.
Indeed, Justice Thomas in his concurring opinion appeared to focus on the class action implications of the decision, noting that the standing analysis will be more complex and difficult in the context of cases challenging statutory duties owed “to the public collectively.” Justice Thomas also stated as follows, which has class action implications for attempts to expand claims of Article III injury beyond the named plaintiff: “If Congress has created a private duty owed personally to Robins to protect his information, then the violation of the legal duty suffices for Article III injury-in-fact. If that provision, however, vests any and all consumers with the power to police the ‘reasonable procedures’ of Spokeo, without more, then Robins has no standing to sue for its violation absent an allegation that he has suffered individualized harm. On remand, the Court of Appeals can consider the nature of this claim.” Against these types of statements, consumer plaintiffs will likely attempt to claim that the risk of intangible injury remained uniform across the putative class members, but it is not clear that this will be enough.
The Supreme Court ultimately took “no position” as to whether the Ninth Circuit’s decision was correct, leaving the door open for further argument consistent with its guidance. Given the procedural nature of the Court’s holding, the debate over the contours of the decision will play out in the lower courts and further litigation. It is expected that there will be significant guidance on this issue in the relative short term given the number of lower court proceedings that were stayed pending the outcome of the Spokeo decision.
Fundamentally, the decision was a victory for the defendant in the case, but the breadth of that victory will be debated, with the same type of circuit split that gave rise to the Spokeo decision potentially being repeated.