June 24, 2016 Practice Points

Spokeo, Inc. v. Robins and Statute-Based Class Actions

The opinion should prove to be a useful argument for counsel facing many types of consumer claims, including in the data-privacy realm, and particularly in the class-action context.

By Frank Nolan

On May 16, the U.S. Supreme Court issued its much-anticipated opinion in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). At issue in Spokeo was whether the plaintiff—in this case a putative class representative—had Article III standing to pursue his statutory claim despite alleging no actual injury. The Court did not decide whether the plaintiff in Spokeo had Article III standing, but it did find that the Ninth Circuit erred when it found that the plaintiff did have standing. Specifically, the Ninth Circuit failed to look at whether the plaintiff alleged a “concrete” injury separate and apart from a naked procedural violation.

In Spokeo, the plaintiff brought his claim under the Fair Credit Reporting Act (FCRA). The FCRA allows for the recovery of statutory damages in the event that a company publishes incorrect credit information about a consumer. The plaintiff alleged that Spokeo had published incorrect information about him, including as to his age, financial status, and marital status. The plaintiff did not allege whether he had suffered any damage separate and apart from the FCRA violation. The Ninth Circuit found that the plaintiff alleged Article III standing, but the court did not look at whether the plaintiff pled a concrete injury.

In reversing and remanding the Ninth Circuit’s decision, the Supreme Court made the following holding, which will undoubtedly be quoted in motions to dismiss statutory claims all over the country in the years to come.

Congress’ role in identifying and elevating intangible harms 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, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.

At 1549.

The Ninth Circuit did not analyze the plaintiff’s allegations of injury-in-fact under this test, but it is likely that when it does so, it will find that the plaintiff lacks Article III standing. Indeed, the plaintiff in Spokeo did not allege any actual injury apart from the statutory violation.

The practical implications of Spokeo will extend to similar suits filed under consumer statutes like the FCRA, the Fair Debt Collections Practices Act (FDCPA), and the Telephone Consumer Protection Act (TCPA), in situations where a plaintiff does not allege any separate injury. The holding should also apply to many data-breach claims where plaintiffs do not allege an injury, but only the prospect of a future injury.

Unfortunately, Spokeo does leave some uncertainty. In some cases, the primary alleged injury (and only form of damages) arises from the alleged statutory injury but the plaintiff also alleges a separate, albeit arguably negligible, form of additional damage. For example, in a TCPA case, the plaintiff could allege damages incurred from printing an unauthorized fax. In a FCRA case, the plaintiff could allege damages incurred from an employer relying on incorrect information and denying him or her a job. While Spokeo will be instructive in those cases, the call is much closer.

In any event, the Spokeo opinion, particularly the holding quoted above, should prove to be a useful argument for counsel facing many types of consumer claims, including in the data-privacy realm, and particularly in the class-action context.

KeywordsSpokeo, Fair Credit Reporting Act, FCRA, standing

— Frank Nolan, Sutherland Asbill & Brennan LLP, New York, NY

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