In a closely-watched case, the U.S. Supreme Court held that to establish standing to sue, a claimant who alleged that inaccurate information on the Spokeo website about him violated the Fair Credit Reporting Act must show that the supposed FCRA violation caused him “concrete” harm. Defense-side advocates had hoped that the Court would strike down the plaintiffs’ claims in the case and help stem the flow of proliferating “no injury” class action litigation under the FCRA and other federal statutes such as the TCPA and the ADA. However, the Court’s did not strike down the plaintiffs’ claim, but instead remanded the case for the Ninth Circuit to determine whether or not the claimant’s allegations met the “concrete harm” requirements to establish standing. Though the holding is narrow, there is language in the Court’s opinion that may prove helpful for defendants in other cases. A copy of the Court’s May 16, 2016 opinion in Spokeo, Inc. v. Robins can be found here.
Spokeo maintains a website from which background information about individuals can be obtained. Thomas Robins was among the individuals profiled on Spokeo. Robins contends that several pieces of information in the profile (including his marital and job status, age, and educational background) were incorrect. Robins sued Spokeo alleging that the Spokeo profile violated the Fair Credit Reporting Act.
Spokeo argued that the plaintiff lacked standing to assert his claim because he did not allege any concrete harm. The district court agreed and granted Spokeo’s motion to dismiss, holding that the plaintiff had failed to allege an “injury-in-fact” and therefore lacked Article III standing. However, in a February 4, 2014 opinion (here), the Ninth Circuit reversed the district court, holding that the plaintiff’s allegations were sufficient to satisfy Article III’s standing requirement. Spoke filed petition to the U.S. Supreme Court for a writ of certiorari. The Court agreed to take up the case.
The May 16 Opinion
In a 6-2 opinion written by Justice Samuel Alito, the Supreme Court vacated the Ninth Circuit’s opinion and remanded the case for further considerations to determine whether or not the claimant’s allegations were sufficient “concrete” to satisfy the requirements for Article III standing.
Justice Alito began his analysis by noting that in order to establish Article III standing, a claimant must allege an “injury-in-fact.” To establish an injury-in-fact, a plaintiff must show that he or she has suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” The term “concrete” means “real” and not “abstract.” However, “concrete” is not synonymous with “tangible,” as courts have recognized that intangible injuries can be concrete (as for example with violations of free speech or free exercise rights).
Congress, Justice Alito noted, has an “instructive and important” role in identifying intangible harms that meet minimum Article III requirements. However, Congress’ role “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.”
Robins could not “allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III,” as “a violation of one of the FCRA’s procedural requirements may result in no harm.” Justice Alito noted that not all consumer information inaccuracies “cause harm or present any material risk of harm.” For example, an incorrect zip code, without more, would not represent concrete harm.
The Ninth Circuit, Justice Alito said, had concluded that the claimant’s allegations met the requirements for Article III standing because he claimed that Spokeo’s incorrect website information had harmed him individually. This analysis, Justice Alito said, was “incomplete,” because the appellate court “failed to fully appreciate the distinction between the concreteness and particularization.” The Ninth Circuit did not “address whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.” The Supreme Court itself took no position on the question whether or not the Ninth Circuit’s ultimate conclusion that Robins adequately alleged an injury in fact was correct.
Justice Thomas concurred in the judgment. In a dissenting opinion in which Justice Sotomayor joined, Justice Ginsburg said that she believed that the allegations of Robins that the false profile information had harmed his job search efforts was sufficient satisfy the requirements that he allege a “concrete” injury.
Defense advocates and court observers had closely watched this case not only because it promised to address important Article III standing issues, but also because it seemed likely that the Court’s opinion would address the question of what is required in order to establish standing to assert claims alleging statutory violations. This standing requirement question is important not only in connection with claims alleging violations under the Fair Credit Reporting Act, but also for claims based on other remedial federal statutes, such as the Telephone Consumer Protection Act, the Americans with Disabilities Act, the Truth-in- Lending Act and numerous other federal statutes authorizing consumers to file damages actions.
As this blog’s readers well know, class action litigation under many of these kinds of statutes has proliferated in recent years. Defense side advocates had hoped that the Court’s opinion would establish that it was not sufficient for plaintiffs asserting claims under these various statutes to allege violations of the statutory requirements, but that rather in order to assert these claims the claimants had to show that they had actually been harmed.
Justice Alito’s opinion states that the allegation of a mere procedural violation alone is not sufficient. Rather, in order to meet Article III’s “injury-in-fact” requirement, the claimant must establish that he or she suffered “concrete” harm.” The Court’s provided the zip code error as an example of the kind of technical violation that by itself would be insufficient to establish standing.
For defense side advocates, the Court’s statement that an allegation of a mere procedural violation alone is not sufficient to meet standing requirements represents a potentially significant development. Many of the current hot areas of class action litigation raise this very issue. For example, in the current onslaught of FRPA litigation in which claimants contend that prospective employers did not employ proper procedures disclosing the employers’ background check processes, many of the named plaintiffs do not allege that they been harmed. Similarly, in the current wave of TCPA litigation, in which plaintiffs purport to represent claimants who received unauthorized text messages, the claimants do not always allege that they have been harmed.
Defense advocates that had hoped that the Spokeo case would help suppress so-called “no injury” class likely will welcome the Court’s suggestion that mere statutory violations alone will not support standing. Plaintiffs, on the other hand, will argue that the language in the opinion about mere statutory violations is dicta and not part of the Court’s holding. Plaintiffs also will likely argue that even if a de minimus violation like a zip code error is not sufficient to establish standing, their claims, they will argue, do not represent this type of “foot fault” violation.
Plaintiffs will also try to rely on the part of the Justice Alito’s confirmation that intangible injuries can be sufficient to meet the injury-in-fact requirement. Adam Klein contends in his post about the Spokeo decision on the Lawfare blog (here) that the Court’s affirmation that intangible injuries can be sufficient to establish standing may be the most important part of this otherwise narrow decision.
The extent to which Spokeo will be useful for defendants and provide a way to get the cases dismissed on the grounds of lack of standing will depend on what the courts conclude suffices to establish “concrete” harm. The Spokeo majority did not conclude that Robins had not alleged a “concrete” injury; they merely remanded the case to the Ninth Circuit for further consideration of the issue. Justices Ginsburg and Sotomayor said that they believed that the claimant’s allegations that the incorrect profile information on the Spokeo website harmed his job search efforts were sufficiently “concrete” to satisfy the “injury-in-fact” requirement.
So while the Court’s decision in Spokeo gives defendants a basis on which to argue that an allegation of a statutory violation alone is not sufficient to establish standing, that may or may not be enough to allow them to get the case dismissed. They will still have to fight about whether or not the plaintiff has pled harm that is sufficiently “concrete” – which in turn raises the question about what is sufficient to establish that the harm is “concrete.” The battle lines have been moved to a different dispute. The extent to which defendants in other cases will be able to win dismissal based on a lack of standing will depend on the extent to which they are able to show that the alleged harm on which the plaintiff seeks to rely is not sufficiently “concrete.”
As Alison Frankel noted in her post about the Spokeo decision on her On the Case blog (here), the likeliest outcome of the Court’s decision will be more litigation.
Plaintiffs Can Pursue State Law Securities Suits in State Court: In a separate May 16, 2016 opinion (here), the Supreme Court unanimously held in Merrill Lynch Pierce Fenner & Smith Inc. v. Manning that federal securities laws do not prevent claimants from bringing state law securities claims in state court. The case involves claims that shareholders had filed in New Jersey state court against Merrill Lynch, alleging violations of the state’s securities laws and anti-racketeering laws. The defendants had argued the Section 27 of the Securities Exchange Act of 1934, which confers federal jurisdiction over all cases “brought to enforce any liability or duty created by” the statute, required the plaintiff to pursue their claims in federal court.
In an opinion by Justice Kagan for a unanimous court, the Court held that the jurisdictional requirements of Section 27 do not generally extend to claims brought under state law even if the complaint refers to purported Exchange Act violations. The practical result of this ruling is that plaintiffs will be able to pursue state law securities claims in state court, as long as they do not assert causes of action under the federal securities laws.