The U.S. Supreme Court Has Spokeo, and Class Action Defendants’ Fondest Hopes Have Been Dashed

Spokeo, Inc. v. Robins, ___ U.S. ___ (2016).  Class action defendants often label cases seeking statutory damages as “no-injury class actions.”  Those defendants do not like statutes such as the Fair Credit Reporting Act, 15 U.S.C. §1681 et seq. (“FCRA”), which was at issue in yesterday’s Supreme Court decision.  Defendants hoped that this case would wipe out statutory damages class actions for lack of standing.  That did not happen.  Instead, by a 6-2 vote, the Supreme Court issued a narrow ruling that remanded the case to the Ninth Circuit for further consideration of the standing issue on the facts of this case.

The majority opinion, by Justice Alito, announced (for the first time, as Justice Ginsburg noted in her dissent) that the requirement of standing that an alleged injury in fact be “concrete and particularized” entails separate inquiries as to each of those words.  Because the Ninth Circuit had not separately determined whether plaintiff’s injury was “concrete,” a remand was required.

In dissent, Justices Ginsburg and Sotomayor contended that it was already clear that plaintiff had alleged a “concrete” injury.  Justice Thomas filed a concurring opinion, which stated that “[a] plaintiff seeking to vindicate a statutorily created private right need not allege actual harm beyond the invasion of that private right” in order to have standing.

Among other things, the FCRA requires a consumer reporting agency that regularly disseminates information regarding a person’s “credit worthiness, credit standing, credit capacity, character, general reputation, personal characteristics, or mode of living” to “follow reasonable procedures to assure maximum possible accuracy of” consumer reports that the consumer reporting agency issues.  Spokeo operates a website through which those who want to find out personal information about someone can get a report as to the subject’s address, phone number, marital status, approximate age, occupation, finances, and other personal information.  Someone asked Spokeo for a report about plaintiff Robins, and Spokeo generated such a report, which stated that Robins “is married, has children, is in his 50’s, has a job, is relatively affluent, and holds a graduate degree.”  Robins alleged that all those statements were in error.  He sued for violations of the FCRA.

The District Court dismissed the case, ruling that Robins lacked standing because he had not properly pleaded an injury in fact.  The Ninth Circuit reversed.  That court stated that Robins had alleged an injury to his own statutory rights, and that his “personal interests in the handling of his credit information are individualized rather than collective,” thus affording standing.  The Supreme Court reversed, however, because the Ninth Circuit’s analysis focused only on whether Robins had a “particularized” injury and did not address whether that alleged injury was also “concrete.”

After a lengthy discussion of the general principles of standing, Justice Alito laid out the distinction between “particularized” and “concrete” injury.  “For an injury to be ‘particularized,’ it  must affect the plaintiff in a personal and individual way.”  The Ninth Circuit had addressed the “particularized” criterion.  But “concrete” injury is a separate requirement.  “A ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.”  It must be “real, and not abstract.”

But here is where the majority dashed the dreams of class action defendants.  Justice Alito carefully clarified that “concrete” is “not necessarily synonymous with ‘tangible.’  Although tangible injuries are perhaps easier to recognize, we have confirmed in many of our prior cases that intangible injuries can nevertheless be concrete.”  Justice Alito then stated some factors that would affect whether and when intangible harm constitutes injury in fact.  For example, “because Congress is well positioned to identify intangible harms that meet minimum Article III requirements, its judgment is also instructive and important.  Thus, we said in Lujan [v. Defenders of Wildlife, 504 U.S. 555 (1992)] that Congress may “elevat[e] to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.”

Alleging “a bare procedural violation, divorced from any concrete harm,” will not suffice.  That “does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.”  Thus, “the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.  In other words, a plaintiff in such a case need not allege any additional harm beyond the one Congress has identified.”

In the context of this particular case, “not all inaccuracies [in consumer reporting agency reports] cause harm or present any material risk of harm.”  Instead of addressing any of the alleged errors in the report on Robins, Justice Alito cited “an incorrect zip code” as an example of an error that has no capacity to cause or constitute harm.  The majority remanded to the Ninth Circuit for a decision as to “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.”

Justices Ginsburg and Sotomayor had no doubt on that score.  Unlike the majority opinion, they actually quoted Robins’ complaint in detail (the majority did take the time, however, to note that Robins did not allege who had commissioned the Spokeo report on him or how he learned of the search and its inaccuracy, facts that have nothing to do with the merits).  Robins alleged that he was “out of work” and “actively seeking employment,” and that the many errors in the Spokeo report, including those involving his education, affluence, and family status, “made him appear overqualified for jobs he might have gained, expectant of a higher salary than employers would be willing to pay, and less mobile because of family responsibilities.”  There was thus “actual harm to [his] employment prospects,” an injury that plainly is concrete, and therefore a remand was unnecessary.  She and Justice Sotomayor were correct.

Though there is language in the majority opinion on which defendants can seize, this decision, though a setback for Robins (a temporary one, since he should win the standing issue on remand) is, overall, a win for plaintiffs.  All eight Justices agreed that the violation of intangible rights created by statute can be sufficient to constitute injury in fact.  Few if any cases are brought to complain about incorrect zip codes, Justice Alito’s example of a statutory right whose violation could not support injury in fact.  Defendants’ effort to cut off at the knees cases, especially class actions, that seek to vindicate such statutory rights has failed.  The Court may have indicated that “no-injury” cases (or, rather, “no concrete injury” cases) cannot proceed, but the definition of “injury” means that few if any are “no-injury” cases.  All who benefit from those statutory rights have reason to be satisfied, if not completely pleased. with the Court’s ruling.