November 30, 2017 Practice Points

SCOTUS Skips a Spokeo Review. But Should You?

By Allison Semaya

The United States Supreme Court recently announced that it would not hear a challenge to the Ninth Circuit’s decision in Sarmad Syed v. M-I, LLC, No. 14-17186 (9th Cir. Jan. 20, 2017) (amended Mar. 20, 2017), in which the appellate court found that the Fair Credit Reporting Act (FCRA) requires that a disclosure form must “solely consist” of the disclosure and that inclusion of a liability waiver is a willful violation of the statute. The Ninth Circuit panel subsequently denied a petition for rehearing and amended their decision to clarify that the plaintiff’s allegations were sufficient to establish standing under Spokeo Inc. v. Robins, 136 S. Ct. 1540 (2016). The Supreme Court’s refusal to take up the appeal means that, for now, the highest court will not be providing any further direction or clarity on how to evaluate standing under its landmark decision in Spokeo.

By way of review, in Spokeo, the Supreme Court held that a plaintiff cannot merely rely on statutory violations of the FCRA to establish Article III standing, but instead must allege a tangible or intangible concrete harm. See Spokeo, 136 S. Ct. at 1550. The Court found that because the Ninth Circuit failed to consider both aspects of the injury-in-fact requirements—an injury-in-fact must be both concrete and particularized—its Article III standing analysis was incomplete and remanded the case back to the Ninth Circuit. Id

Like Spokeo, Syed v. M-I also arises from a suit initiated by plaintiff under the FCRA. After Mr. Syed applied for a job with M-I in 2011, M-I provided him with a disclosure release that informed him that his credit history could be collected and used as a basis for the employment decision and stipulated that, by signing the document, Mr. Syed would be waiving his rights to sue M-I for violations of the FCRA. See Sarmad Syed v. M-I, LLC, No. 14-17186, at 8. On May 19, 2014, Mr. Syed commenced a putative class action, claiming that M-I’s inclusion of the liability waiver violated the statutory requirement that the disclosure document consist “solely” of the disclosure. Id.

In October 2014, the district court granted M-I’s motion to dismiss for failure to state a claim, finding that Mr. Syed had not sufficiently pleaded willfulness, as is required under the FCRA. Id. at 10. On appeal, in a matter of first impression, the Ninth Circuit panel held that a prospective employer violates the FCRA when it “procures a job applicant’s consumer report after including a liability waiver in the same document as the statutorily mandated disclosure.” Id. at 2.  Importantly, in so holding, the Ninth Circuit also found that the plaintiff had established Article III standing. Id. at 12. Citing the Supreme Court’s decision in Spokeo, the Ninth Circuit explained, “A plaintiff who alleges a ‘bare procedural violation’ of the FCRA, ‘divorced from any concrete harm,’ fails to satisfy Article III’s injury-in-fact requirement.” Id. at 12. The Ninth Circuit found, however, that Mr. Syed had alleged more than a “bare procedural violation” since Congress has recognized a real-world harm in being denied a statutory right, and that the violation by M-I was willful. Id. at 14.

In its petition to the Supreme Court, M-I asserted that the Ninth Circuit panel’s decision “directly contravened” Spokeo, and argued that Mr. Syed lacks Article III standing because there was no concrete injury. See M-I, LLC v. Syed, No. 16-1524 (Petition for a Writ of Certiorari) (June 19, 2017). Yet, because the Supreme Court has denied M-I’s petition, at this time, the Court will not provide any further guidance “to resolve the conflict and dispel the confusion about whether so-called ‘informational injuries’ arising from bare procedural violations are sufficient to satisfy Spokeo’s real-world-harm requirement.” Id. at 4.

It is important for young lawyers to remember that, under Spokeo, injury-in-fact must be shown to establish Article III standing and that consumers cannot rely solely on a mere statutory violation to establish standing. It is equally important to remember that the decisions interpreting and applying Spokeo in the year since it was issued have been somewhat inconsistent. Therefore, while the Court denied certiorari here, practitioners can expect that it is only a matter of time before the Supreme Court weighs in on the conflicting holdings coming out of the circuit courts. But in the interim, young lawyers should continue to monitor cases like Syed v. M-I, in which Spokeo is interpreted and applied.   

Allison Semaya is an associate with Weil, Gotshal, & Manges LLP in New York City, New York.


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