October 18, 2017 Top Story

Where Does Article III Standing Stand Since Spokeo?

Circuit split reconcilable and increase in state court class actions likely

By Jamison Barkley

"Article III standing requires a concrete injury even in the context of a statutory violation," the U.S. Supreme Court held in Spokeo Inc. v. Robins.

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Commentators have opined that class litigation is facing more challenges including Spokeo's requirement of a concrete injury even where there exists a statutory violation. A circuit split seems to increase the potential for confusion, nevertheless consistent patterns are emerging, according to ABA Section of Litigation leaders.

Spokeo and Conflicting Cases

In Spokeo, the Court questioned whether the plaintiff had alleged an adequately concrete injury to establish standing, where he alleged the defendant had disseminated inaccurate information about him on its website in violation of the Fair Credit Reporting Act (FCRA). The inaccuracies were that the plaintiff was married, had children, was in his 50s, employed, was relatively affluent, and had a college degree. The Court held that the Ninth Circuit erred in focusing on the particularization element of injury-in-fact and remanded for it to consider whether the injury was concrete. 

In two subsequent cases, the U.S. Courts of Appeals for the Third and Seventh Circuits each relied on Spokeo in reaching different conclusions on whether and when an alleged statutory violation gives rise to an injury for Article III standing purposes.

In In Re Horizon Healthcare Services, Inc. Data Breach Litigation, the Third Circuit vacated the district court's dismissal of the plaintiffs' putative class action, distinguishing Spokeo and holding that the improper disclosure of personal data in violation of the FCRA is, "in and of itself, an injury in fact." The court reasoned that, because the Spokeo Court did not explicitly state that it was redefining the injury-in-fact requirement, it understood Spokeo to reiterate traditional standing jurisprudence. In any case, the court held, the theft of two laptops with 839,000 customers' personal identifying information was more than "a mere technical or procedural violation of FCRA."

In Gubala v. Time Warner Cable, Inc., Judge Posner of the Seventh Circuit held that the plaintiff lacked standing because he failed to allege any harm from the defendant's retention of his personal data for six years after he cancelled his cable subscription, when the Cable Communications Policy Act (CCPA) required that it be destroyed when "no longer necessary for the purpose for which it was collected . . . ." Because the plaintiff had not alleged that any third party had access to the information, the Gubula court concluded that he had not alleged a concrete injury, but an "implausible and at worst trivial risk of harm."

Patterns Emerging?

Despite these seemingly contrary results, "patterns are emerging post-Spokeo, where there is more consistency than inconsistency," observes Andrew J. McGuiness, Ann Arbor, MI, member of the ABA Section of Litigation's Class Action and Derivative Suits Committee and cochair of the National Institute on Class Action Subcommittee. McGuiness posits that Gubala was not really viewed as a privacy case, and that the risk of harm from violations of FCRA are more likely to be concrete than that from violations of the CCPA. However, practitioners should be aware that any claim characterized as a "bare procedural issue" may be dismissed for lack of standing under Gubala.

"An interesting fallout may be a shift toward state courts," observes Tyler G. Newby, San Francisco, CA, cochair of the Section of Litigation's Privacy and Data Security Committee. "Spokeo could provide a way for a plaintiff to stay out of federal court," Newby explains. In other words, a plaintiff in state court will not be obligated to allege a concrete injury in addition to a statutory violation, as a strict reading of Spokeo would require for federal court litigants. Newby notes Davis v. D-W Tool, Inc., a case from the U.S. District Court for the Western District of Missouri, where the plaintiff moved for remand to state court after the defendant removed the action, arguing that her own complaint did not allege a concrete injury sufficient to establish Article III standing. The motion was granted.

Advice to Counsel

To get a better sense of the context of Spokeo, Horizon Healthcare Services, and Gubala, McGuiness advises practitioners to review several illustrative cases: Clapper v. Amnesty International, a 2013 U.S. Supreme Court opinion on the Foreign Intelligence Surveillance Act decided 5–4 reviewing how the Court has categorized harm for Article III standing for one hundred and fifty years; Galaria v. Nationwide Mutual Insurance Co., a post-Spokeo Sixth Circuit opinion where the court reversed the trial court's order dismissing the plaintiffs' FCRA claims for lack of standing where the plaintiffs alleged risk of harm from the theft of their personal information; Strubel v. Comenity Bank, a Second Circuit Truth in Lending Act case where the court determined the plaintiff did not have standing because she had neither suffered "actual harm" nor established a material risk of concrete injury from the defendant's statutory violations; and Braitberg v. Charter Communications, Inc., an Eighth Circuit case that the Gubala court relied on, also concluding that a cable company's retention of a consumer's personal information contrary to the CCPA did not create Article III standing.

 

Jamison Barkley is the founder of The Law Office of Jamison Barkley in Santa Fe, New Mexico.

Keywords: Article III Standing, privacy, Spokeo, data breach, informational injury

Hashtags: #databreach, #privacy, #spokeo

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