Yesterday, the Supreme Court heard oral argument in Spokeo, Inc. v. Robins, No. 13-1339 (SCOTUSBlog page). The question presented is “Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.” The case has been highlighted as one that potentially could have a significant impact on class action practice because many class actions involve claims in which the named plaintiff at least arguably did not suffer a concrete harm, and thus may not have standing to sue. The impact on insurance class actions is likely to be in circumstances where: (1) insurers are subject to regulation under federal statutes, such as the Fair Debt Collection Practices Act or Telephone Consumer Protection Act; (2) insurers are subject to state regulation, but the suit is brought in or removed to federal court; or (3) insurers are sued in state court, but the state jurisprudence on standing aligns itself with the Supreme Court’s Article III case law.

Based on my review of the oral argument transcript, the Justices were most concerned about where to draw the line. The case involves allegations that the defendant violated the Fair Credit Reporting Act by publishing personal information about the plaintiff that was grossly inaccurate, but the plaintiff could not identify particularized harm that he suffered beyond the publication of inaccurate information (which may or may not have been seen by anyone). The Ninth Circuit concluded that Congress could, in this context, essentially create standing by statute.

The Court seemed to be largely in agreement that there has to be some concrete harm beyond a mere statutory violation, and thus that the Ninth Circuit’s opinion was incorrect or not well-written in at least some respects. The Justices appeared to disagree about whether, on the allegations in this case (which was decided on a motion to dismiss), there is a harm sufficient to confer standing. Andrew Pincus, arguing for the defendant, asserted that the plaintiff would need to show that something happened to his credit or with an employment opportunity. Justice Kagan responded “that’s a really hard thing to do,” and suggested that it should be sufficient merely that someone was inaccurately represented in a credit report. Justice Breyer appeared to agree with that. Pincus later pointed out how an amicus brief detailed how actual harm can be shown. Justice Kennedy suggested that in the Internet age there “has to be some real injury” in this type of circumstance, and that perhaps Congress was holding credit agencies to a higher standard.  Chief Justice Roberts suggested that “you have to look at whether the plaintiffs have been injured in fact, and that some plaintiffs will be able to proceed if they can make that showing and others may not.” He noted that “the requirement of a case or controversy . . . has always been recognized as at the core of Article III jurisdiction. And we have a legion of cases that say you have to have actual injury.” Justice Breyer seemed to indicate that he read the Fair Credit Reporting Act as requiring a showing that false information was published, not merely that there was a bad practice by the defendant. He later suggested that the statute would need to be construed in that manner to save its constitutionality. Justice Alito asked about whether there was any indication that anyone actually searched the defendant’s database for information about the plaintiff (there was not). He suggested that, in the absence of such a showing, any harm would be speculative. Justice Sotomayor, however, took the view that “I think the breach of any legal right you’re given . . . gives Article III jurisdiction” and “[t]here is a difference between that and whether you’re within the zone of interest of a statute.” That view, however, did not appear likely to command a majority.

My prediction is that this case will be a close call, possibly a 5-4 decision. The decision might turn on the language of the statute at issue and the specific allegations here more than on the broader constitutional principles of standing. If that is the case, it won’t be a blockbuster decision. But you never know.