The U.S. Supreme Court recently granted certiorari in Spokeo, Inc. v. Robins, No. 13-1339 (SCOTUSblog page), to decide whether a plaintiff who does not suffer any injury has Article III standing to sue for violation of a federal statute. The case will not be argued until the next Supreme Court Term, likely in October. It potentially could have a very significant impact on class action practice.
The Court will review Robins v. Spokeo, Inc., 742 F.3d 409 (9th Cir. 2014), in which the plaintiff alleges that that defendant violated the Fair Credit Reporting Act by publishing inaccurate personal information about him potentially relevant to his creditworthiness. The district court initially dismissed the complaint because the plaintiff failed to allege any actual or imminent harm, and the possibility of future injury does not satisfy Article III standing requirements. After the complaint was amended, the district court initially found that allegations of harm to the plaintiff’s employment prospects were sufficient to satisfy the standing requirement, but then reconsidered and found that those alleged injuries were not traceable to the defendant’s conduct, and dismissed the complaint. On appeal, the Ninth Circuit reversed. It cited a 1975 Supreme Court decision stating that “The actual or threatened injury required by Art[icle] III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.” Warth v. Seldin, 422 U.S. 490, 500 (1975). The Ninth Circuit further explained that “the violation of a statutory right is usually a sufficient injury in fact to confer standing,” and that “the statutory cause of action does not require a showing of actual harm when a plaintiff sues for willful violations.” Robins, 742 F.3d at 412. The Ninth Circuit further concluded that Congress had the power to confer standing because “the interests protected by the statutory rights at issue,” related to the plaintiff’s credit information, ”are sufficiently concrete and particularized that Congress can elevate them.” Id. at 413.
The opposition to the petition for certiorari argued that the plaintiff has in fact suffered concrete injuries – reputational harm akin to defamation. The plaintiff will likely press that point in the merits briefing as well, and argue for a broad concept of “harm.” The Court invited the Solicitor General to file a brief at the certiorari stage. The United States supported the plaintiff’s position and argued that certiorari should be denied. It also suggested, in the alternative, that the question presented be reformulated more narrowly, but the Court did not do that.
The decision in this case could potentially have a broad impact on class actions brought under various federal statutes, such as the Fair Debt Collection Practices Act, Telephone Consumer Protection Act, Employee Retirement Income Security Act, etc. Class actions arising from data breaches have often turned on standing issues as well. This decision could potentially have a substantial impact on insurers to the extent that their businesses are regulated by federal statutes.
But insurers are much more heavily regulated at the state level, and insurance class actions often focus on state statutes. So how might this case impact state law class actions? The state courts are not constrained by Article III, but the vast majority of class actions are removable to federal court under the Class Action Fairness Act. Suppose a state statute creates a cause of action without requiring a showing of actual injury, and the Supreme Court rules that a federal court cannot hear such a case under Article III. But federal jurisdiction exists under the Class Action Fairness Act. Defendants will argue for dismissal, and plaintiffs will argue for remand to a state court that can hear that case. If Spokeo comes down in favor of the defendant’s position, that could be the next battleground, but we’re a year or two away from that.