High court still needs to settle constitutional standing issue

On Monday, the U.S. Supreme Court found for Spokeo, a "people search engine," in a case arising out of the 9th U.S. Circuit Court of Appeals. At issue in Spokeo Inc. v. Robins, 2016 DJDAR 4566, was whether Congress may confer Article III standing upon a plaintiff who has suffered no concrete harm, and who therefore could not otherwise invoke federal jurisdiction, by authorizing a private right of action based on a minor or technical statutory violation. The breadth of the decision was limited, however, and it remains to be seen just how great of an impact the case will have.

The Fair Credit Reporting Act (FRCA) limits the circumstances in which consumer credit agencies may provide reports in response to employment-related inquiries, requires agencies to take reasonable steps to ensure the accuracy of consumer reports, to issue certain notices along with the credit information, and to publish toll-free telephone numbers consumers can use to request the reports. A reporting agency that violates any of those provisions, even negligently, could be liable for actual damages, attorney fees and costs. A consumer who suffers a "willful" violation, however, may seek either actual damages or statutory damages of $100 to $1,000, as well as punitive damages. In other words, a consumer who alleges a willful violation of the FCRA could theoretically obtain statutory damages without proving actual harm.

At some point in time, an individual made a Spokeo search request for information about Thomas Robins, the plaintiff in the underlying action. Robins became aware of the contents of that profile and discovered that it contained inaccurate information. Robins filed a class action complaint in 2011 in the U.S. District Court for the Central District of California, claiming that Spokeo willfully failed to comply with the FCRA.

Spokeo moved to dismiss the complaint for lack of jurisdiction. The district court denied the motion, finding that Spokeo's marketing of inaccurate information about Robins could have caused an injury- in-fact. After Spokeo sought to file an interlocutory appeal, however, the district court reconsidered and dismissed the case with prejudice, finding that Robins had not "properly pled" an injury in fact.

The 9th Circuit reversed, stating that "the violation of a statutory right is usually a sufficient injury in fact to confer standing." Robins "allege[d] that Spokeo violated his statutory rights, not just the statutory rights of other people," the court added. "Robins' personal interests in the handling of his credit information are individualized rather than collective." The court thus concluded that Robins' "alleged violations of [his] statutory rights [were] sufficient to satisfy the injury-in-fact requirement of Article III."

In a 6-2 decision authored by Justice Samuel Alito, the Supreme Court found that the 9th Circuit's analysis was incomplete and remanded the case for further proceedings. The court noted that to establish an injury in fact, a plaintiff must show that he suffered an injury that is both concrete and particular. The court ruled that the 9th Circuit addressed only the particularization requirement and elided the independent concreteness requirement.

The court further noted that a "concrete" injury must be "de facto"; that is, it must actually exist. Intangible injuries can sometimes be concrete. The court directed litigants to both history and the judgment of Congress in determining whether an intangible harm constitutes an injury in fact. Congress, the court said, is "well positioned to identify intangible harms that meet minimum Article III requirements." This, however, 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. Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, the court held, 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 noted that the risk of a real harm may sometimes satisfy the requirement of concreteness. "[T]he violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact," the court wrote. "In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has intended." The court, however, took no position as to whether the FCRA is such a statute or whether Robins adequately alleged a concrete harm.

Spokeo was poised to send ripples far beyond the FCRA litigation context. Other laws, such as the Telephone Consumer Protection Act and the Fair Debt Collection Practices Act, provide for statutory damages irrespective of whether a plaintiff suffered actual harm. In recent years, the plaintiffs' bar has pursued a strategy of aggregating statutory damages in these cases into huge recoveries through class actions.

Despite the 6-2 ruling, Spokeo may not clarify the propriety of these suits as much as litigants' would have hoped. On one hand, plaintiffs suing under these federal statutes will now have to show a concrete injury. In addition to toughening pleading standards, this requirement may implicate individual issues of proof and create obstacles to class certification. On the other hand, a plaintiff can still plausibly allege a concrete injury (i.e., the one the statute was intended to protect) in the absence of tangible harm).

Thus, while the Supreme Court was clear that statutory damages are not in and of themselves a substitute for constitutional standing, in some circumstances, they don't end the conversation either. Parties should expect continued litigation of this issue and, perhaps, the Supreme Court may revisit the issue in the near future.

Ana Tagvoryan is a partner in Blank Rome's Los Angeles office. She focuses her practice on class action defense, with an emphasis on consumer fraud and data privacy claims. You can reach her at ATagvoryan@BlankRome.com.

Harrison Brown is an attorney in Blank Rome's Los Angeles office. His practice encompasses a wide range of business litigation and class action defense, with an emphasis on consumer fraud and data privacy claims. You can reach him at HBrown@BlankRome.com.