Supreme Court to decide whether Congress may confer standing on consumers to sue for statutory violations in the absence of actual harm

July 2015 | EXPERT BRIEFING | LITIGATION & DISPUTE RESOLUTION

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In Robins vs. Spokeo, Inc, a case in which the US Supreme Court granted certiorari on 27 April 2015, the Court will address the following question: “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 authorising a private right of action based on a bare violation of a federal statute”. The Court’s decision may have a profound effect on standing to sue for ‘technical’ violations of statutes and, ultimately, the availability of class actions to redress such alleged violations.

Actual injury and the Fair Credit Reporting Act

The specific statute at issue in Spokeo is the Fair Credit Reporting Act, 15 U.S.C. § 1681, et seq. (FCRA). In Spokeo, the plaintiff alleged that the defendant, a ‘consumer reporting agency’ subject to the FCRA, published false and inaccurate information about the plaintiff on its website. Rather than seek actual damages for the alleged harm, the plaintiff relied on the FCRA’s ‘wilful violation’ provision to seek only statutory damages in the range of $100 to $1000 as allowed by that provision. The district court dismissed the complaint with prejudice, holding that the plaintiff failed to allege standing sufficient to maintain the lawsuit. See Robins v. Spokeo, Inc., 2011 WL 11562151 (C.D. Cal. Sept. 19, 2011). Reversing the district court, the Ninth Circuit Court of Appeals held that “alleged violations of Robins’ statutory rights are sufficient to satisfy the injury-in-fact requirement of Article III”. Robins v. Spokeo, Inc., 742 F.3d 409, 413-14 (9th Cir. 2014).

In so holding, the Ninth Circuit joined other circuit courts of appeals – each a proposed class action – holding that consumers seeking the FCRA’s statutory penalty for wilful violations need not prove an actual injury to maintain their claims. In other words, implicit, if not explicit, in these courts’ holdings is the ruling that plaintiffs suing for wilful FCRA violations have standing to maintain their claims for the simple reason that Congress conferred standing on individuals to maintain such lawsuits when it enacted the FCRA and provided for a statutory penalty upon proof of wilful violations of that statute. The Court’s grant of certiorari in Robins has raised hopes from the defence bar that the Court will hold that standing to sue is a constitutional issue that Congress cannot confer merely by enacting a statute that provides for penalties upon proof that the statute was violated.

The Edwards case and 2012 oral argument

In fact, Robins represents the second time that the Supreme Court will consider the ‘actual injury’ issue in the context of standing. In 2012, the Court granted certiorari, and heard oral argument on this question, in First American Financial Corp vs. Edwards, but ultimately dismissed the writ as improvidently granted. The Edwards case also originated within the Ninth Circuit, but involved a different statute, the Real Estate Settlement Procedures Act (RESPA). In that case, the Ninth Circuit held that RESPA granted plaintiffs the right to judicial relief sufficient to confer Article III standing even though the plaintiff did not suffer actual damages. See Edwards v. First American Corp., 610 F.3d 514, 517 (9th Cir. 2010).

The questions of the Supreme Court justices at oral argument in Edwards may provide a clue as to where the Court will land in Robins. For example, responding to an argument that “violation of a statute is injury in fact”, Chief Justice Roberts opined that a violation of a statute “would be called an injury in law”, and that “when you tell me all you’ve got or all that you want to plead is violation of the statute, that doesn’t sound like injury in fact”. Hammer v. Sam’s East, Inc., 754 F.3d 492, 507 (8th Cir. 2014) (Riley, C.J., dissenting) (quoting Edwards oral argument). Similarly, Justice Kennedy commented that it was “circular” to argue that the plaintiff “was denied something that he is entitled to. The question is whether there is an injury. The Constitution requires an injury… if you are to say he is entitled to it and therefore, there is an injury, that’s just – that’s just circular”. Id. (quoting Edwards oral argument).

In other words, the alleged violation of a Congressionally-created statutory right may constitute an injury in law, but the question will be whether that same violation creates an injury in fact sufficient to confer standing to sue. That is the question the Supreme Court can be expected to address, and resolve, in Robins.

The potential impact of Spokeo

While the Spokeo case arose under the FCRA, several other federal statutes provide for statutory damages awards, and thus could be affected by the Court’s decision in Spokeo, including: (i) the Truth in Lending Act; (ii) the Fair Debt Collection Practices Act; (iii) the Telephone Consumer Protection Act; and (iv) RESPA, the statute that was construed in Edwards. Both sides of the Spokeo case are sure to line up an arsenal of amicus curiae briefs in support of their arguments, and a decision presumably will be forthcoming at some point in the Court’s 2015-16 term.

Barry Goheen is a partner at King & Spalding LLP. He can be contacted on +1 (404) 572 4618 or by email: bgoheen@kslaw.com.

Barry Goheen

King & Spalding LLP