Following the U.S. Supreme Court’s grant of certiorari on April 27, 2015 in Spokeo, Inc. v. Robins, No. 13-1339 (which we reported here), the Petitioner has weighed in with their brief.
As you may recall, the question before the Court has the potential to determine the future scope of congressional power, as well as consumer and workplace-related class actions: Does a plaintiff who suffers no concrete harm, but who instead alleges only a statutory violation, have standing to bring a claim on behalf of himself or a class of individuals?
Recall that the Plaintiff, Thomas Robins, brought a purported class action against Spokeo, Inc., accusing the company of violating the Fair Credit Reporting Act (“FCRA”) by presenting inaccurate information about him on the Internet. The Plaintiff sued because the company over-reported his earnings and education level, and reported that he was married with children, even though he was not married and had no children, alleging this information might have a negative impact on his employment prospects. However, the Plaintiff did not allege any actual injury or harm, and thus no actual damages, instead seeking statutory damages.
The U.S. Court of Appeals for the Ninth Circuit reversed the district court’s dismissal, and held that the “violation of a statutory right is usually a sufficient injury in fact to confer standing” and that “a plaintiff can suffer a violation of the statutory right without suffering actual damages.” 742 F.3d 409, 413. After briefing by the parties and various amici curiae, the Supreme Court sought the Solicitor General’s input, who opined that review by the Court was not warranted. The Court disagreed, and granted certiorari anyway.
On July 2, 2015, the company filed its Brief for Petitioner, arguing the merits of the appeal now before the Court. The company first argued that Congress may not override requirement of an actual injury under Article III of the Constitution and established Supreme Court precedent. For instance, the brief pointed out that Warth v. Seldin, 422 U.S. 490 (1975), which the Ninth Circuit relied on below, dealt with Congress’s ability to legislate in light of principles of prudential standing, not Article III standing. Prudential standing, which is comprised of judicially-created principles, places limitations such as prohibiting a party’s ability to sue on behalf of a third party, prohibiting generalized grievances (e.g., there is no “taxpayer standing”), and limiting standing to those who are within the zone of protectable interests. The Petitioner explained that even if Congress can override these principles, it cannot override the Constitution.
This understanding comports with the past several hundred years of legal history, as the Petitioner looked back to medieval England and the evolution of the common law’s causes of action, all of which required an actual harm or injury to redress. With that backdrop, the Petitioner explained, the Framers designed Article III to permit the federal judiciary to hear “Cases” and “Controversies,” thereby limiting the courts’ authority to hear cases lacking a concrete harm, consistent with centuries of the English legal tradition upon which the limitation was based, and dovetailed with the powers of the other branches of the U.S. government. Even with these historical roots, the Petitioner pointed out that the standing requirement is a critical limitation on the modern class action device, which is commonly employed to bring cases seeking “hundreds of millions or billions of dollars” (indeed, Robins is brought on behalf of “millions” of putative class members, for up to $1,000 each — or, “billions” of dollars).
The Petitioner went on to argue that the technical violation of a statute is not the same as an actual harm to a plaintiff, and therefore cannot meet the Article III requirement. Otherwise, the body of law on Constitutional standing would be replaced by the simple inquiry into whether a statute was violated, with a corresponding fine that the private plaintiff could recover. Indeed, even compared to copyright law, where a statutory violation is actionable, the underlying injury is based in a plaintiff’s property right, well-established in the common law. Similarly, the law of defamation recognizes actual harm as a pre-requisite to suit, even if it is difficult to assess the extent of actual damages.
Last, the Petitioner argued that even if a mere statutory violation satisfies the injury-in-fact requirement, the Supreme Court should hold that the FCRA does not recognize a cause of action for plaintiffs who are unable to demonstrate concrete harm because Congress did not specifically express its intent to do so.
Supreme Court’s Decision May Have Wide-Ranging Effects
The Supreme Court’s decision in Spokeo is likely to dramatically affect employers, consumer reporting agencies, and other corporate defendants as well as class actions brought under various federal statutes, such as the FCRA, and potentially the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, and the Employee Retirement Income Security Act, as well as data breach claims. Notably, the Supreme Court first appeared ready to decide this issue several years ago in First American Financial Corp. v. Edwards, No. 10-708 (2010). Nevertheless, after briefing and oral argument, the Supreme Court dismissed action as “improvidently granted.” It appears that the Supreme Court may be ready to tackle the question in Spokeo, as indicated by its rejection of the Solicitor General’s recommendation to deny certiorari or simply avoid the broader question of Congressional power.
Now that the issue is before the Court, a broad Article III ruling could have a significant impact if it addresses whether Article III limits Congressional power to create statutory rights enforceable through a private right of action, without the plaintiff having to first personally suffer a concrete harm. If this Congressional power were limited, the number of viable class actions under the FCRA and other federal statutes (often those seeking millions or billions in damages) may be similarly and substantially limited.
Of course, the Supreme Court may also affirm the Ninth Circuit under a broad Article III ruling, and establish that Congress may create a private right of action based on a mere statutory violation and not a concrete, actual injury. A decision allowing individual and class claims to go forward alleging only statutory damages would embolden potential plaintiffs and encourage more complex class actions. Indeed, private plaintiffs and their counsel would have the ability to find, and potentially recover for, a number of legal violations they might find regardless of whether any actual harm occurred.
Presently, the Respondent is scheduled to file his brief on August 24. As Spokeo unfolds, employers should continue to closely monitor the developments in the case in light of the potential impact on prospective and current workplace and consumer litigation across a variety of federal statutes.
If you have any questions regarding this article, please contact any of the authors, or your Seyfarth attorney.