Locke Lord QuickStudy: Spokeo v. Robins: Supreme Court Rejects Article III Standing Based Solely on Statutory Violation

Locke Lord LLP
May 16, 2016
In Spokeo v. Robins, the U.S. Supreme Court (6-2) reversed the Ninth Circuit’s holding that an alleged violation of the Fair Credit Reporting Act was sufficient by itself to create a case or controversy required for a plaintiff to have standing to sue under Article III of the U.S. Constitution. 2016 WL 2842447 (May 16, 2016). The Court remanded for the Ninth Circuit to determine whether the violation caused a concrete injury. The Court’s short opinion provided little guidance as to what makes an injury “concrete,” so significant litigation on that issue is sure to follow. And Article III only limits federal-court jurisdiction; it is not binding on state courts, creating further uncertainty. But the Court’s holding could make it more difficult for plaintiffs to certify classes in “no-injury” class actions based solely on alleged statutory violations.

Plaintiff alleged no tangible harm so the district court dismissed for lack of standing.
Defendant in Spokeo operated a people-search website, and plaintiff alleged the website provided incorrect information about him by describing him as wealthier and more educated than he was, saying he was employed when he wasn’t, and saying he was married with children when he was single. Plaintiff was unable to identify any tangible harm (e.g., loss of credit; diminished job prospects) caused by the false information, but he claimed the inaccuracies created a risk of such harm. 

Plaintiff sued under the FCRA, alleging defendant violated the statute by failing to: (1) provide certain notices and disclosures; (2) follow reasonable procedures to ensure the maximum possible accuracy of information on the website; and, (3) post a toll-free phone number on the website for consumers to request information. Plaintiff did not seek to recover actual damages; he sued under an FCRA provision allowing recovery of between $100 and $1,000 for willful violations even if the violation had not caused plaintiff actual harm. 

The district court dismissed, holding that while plaintiff had statutory standing under the FCRA’s willful-violation provision, plaintiff’s lack of actual damages meant there was no case or controversy and thus no constitutional standing under Article III to support federal-court jurisdiction.

Ninth Circuit: a statutory violation creates Article III standing without regard to further injury.
The Ninth Circuit reversed, finding Congress’s creation of a statutory right and a remedy for violation gave plaintiff constitutional standing to sue in federal court. The Ninth Circuit held plaintiff need not show consequential harm from the violation; the violation of the statute was  the harm that created standing. 

Supreme Court: a statutory violation alone does not create constitutional standing.
In reversing and remanding, the Supreme Court held a federal court only has subject-matter jurisdiction where the plaintiff suffered a “concrete” injury, and the Ninth Circuit had failed to consider whether the plaintiff had shown such a concrete injury. The Court noted Article III limits federal-court jurisdiction to cases or controversies, which requires a plaintiff’s injury to be concrete, meaning “it must actually exist” and be “real and not abstract.” Spokeo, *7. The Court acknowledged intangible injuries can be concrete, and Congress’s decision to create a statutory claim relating to an intangible injury was “instructive and important.” Id. But the Court rejected the Ninth Circuit’s position 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.” Id. 

The Court remanded to the Ninth Circuit to determine whether the plaintiff’s allegations showed a concrete injury, but provided little guidance as to what that means. The Court said a mere “risk of real harm” could be concrete but not all statutory violations created a sufficient risk to support standing. Id. at *8. Under the FCRA, the Court said “not all inaccuracies cause harm or present any material risk of harm,” and noted an incorrect zip code (for example) would be unlikely to “work any concrete harm.” Id. The Court also noted procedural violations (such as failing to provide a toll-free number) “may result in no harm.” Id. 

Spokeo will create uncertainty and generate significant additional litigation.
The Ninth Circuit’s holding created a bright-line rule: an alleged statutory violation created constitutional standing. The Supreme Court rejected that rule and required an individualized inquiry for a plaintiff who alleges a statutory violation but no tangible harm. To demonstrate standing to sue in federal court, a plaintiff must show that the violation creates a concrete harm or material risk of harm. A violation of a purely procedural requirement (e.g., failure to provide required notices) may be insufficient to cause a concrete injury; making repeated and harassing phone calls that are prohibited by law may be sufficient to show a concrete injury. But other “in-between” fact patterns (e.g., a single phone call; immaterial inaccurate information) are less clear and will likely be litigated. 

Further uncertainty will be created because Spokeo only sets limits on federal-court jurisdiction; state-court jurisdiction is not limited by Article III. Thus, a case dismissed from federal court under Spokeo could be re-filed in state court, although some (but not all) state courts find federal Article III cases instructive when interpreting limits on state-court subject-matter jurisdiction. And, because defendants often prefer to litigate in federal court, will it be defendants who are arguing for an expansive reading of Spokeo’s definition of “concrete injury” to support federal-court jurisdiction?

Spokeo may limit no-injury class actions.
Finally, the impact of Spokeo on federal-court class-action litigation could be significant. Plaintiffs in so-called “no-injury” class actions (based solely on statutory violations) often argue predominance is shown because no individualized showing of injury is needed. But if federal courts can only adjudicate claims involving a concrete injury, defendants may argue that individualized inquiries regarding whether class members suffered concrete injuries predominate over any common questions. Related arguments could also be made regarding numerosity, superiority, and possibly ascertainability. Thus, defendants in no-injury class actions may have new arguments to defeat class certification.