Locke Lord QuickStudy: Plaintiff’s Motion to Remand Biometric Information Privacy Act Case Shows Risks of No-Injury Argument in Federal Court

January 16, 2018

Defense counsel are generally trained to remove cases to federal court, and to then seek dismissal of those cases, wherever possible. But those strategies can conflict where a defendant’s motion to dismiss argues that plaintiff lacks injury because the U.S. Supreme Court’s 2016 Spokeo decision (discussed more below) limits federal-court jurisdiction to cases involving a “concrete harm.” Thus, arguing that plaintiff lacks injury can cause a federal court to remand a case to state court rather than dismiss the case on the merits. This conflict can arise in cases under Illinois’s Biometric Information Privacy Act (“BIPA”) because a recent Illinois appellate-court decision gives defendants a strong argument that plaintiffs who were not injured by a BIPA violation cannot sue under the statute. A BIPA plaintiff has recently tried to use this conflict to their advantage by moving to remand a removed case after defendants moved to dismiss based on a lack of injury. Smith v. Pineapple Hospitality Company et al., No. 17-8106 (N.D. Ill.). The motion in Smith, which is pending, illustrates the tension between federal jurisdiction and substantive dismissal arguments, and a ruling will help defendants determine whether they can thread this needle.

BIPA creates substantial potential liability, but plaintiffs must be injured to sue.
BIPA imposes strict requirements (including written consent) on any private company that collects or uses a customer’s or employee’s biometric information (i.e., retina or iris scan, fingerprint, voiceprint, or hand or face geometry). 740 ILCS 14/15. Any company that violates the statute can face statutory damages of between $1,000 and $5,000 per violation, though only a “person aggrieved” by a violation can sue to collect damages. 740 ILCS 14/20. BIPA also provides for reasonable attorneys’ fees and injunctive relief. Id.

Given the availability of statutory damages and attorneys’ fees, plaintiffs have filed dozens of BIPA class actions in Illinois state courts over the last several months, alleging their employers collected and used their biometric information (typically through fingerprint-based timeclocks) without providing the disclosure and obtaining the written consent that BIPA requires.

A recent Illinois appellate decision, Rosenbach v. Six Flags Entertainment Corp., et al., 2017 IL App (2d) 170317, gives defendants a strong weapon to push back. The court in Rosenbach affirmed the dismissal of a BIPA case where a plaintiff alleged a violation but no injury; the court found such a plaintiff was not “aggrieved” under BIPA and thus had no right to sue. Id., ¶ 23 (“a plaintiff who alleges only a technical violation of the statute without alleging some injury or adverse effect is not an aggrieved person under” BIPA).

Federal courts lack jurisdiction over cases involving no concrete injury.
BIPA’s requirement that a plaintiff be “aggrieved” to sue is at least facially similar to the requirement that plaintiff suffer a “concrete” harm to support federal-court jurisdiction. The U.S. Supreme Court articulated that requirement in the 2016 decision, Spokeo v Robins, 135 S. Ct. 1540 (2016). Under Spokeo, even where a statute authorizes an individual to sue and collect statutory damages for alleged violations, federal courts lack subject-matter jurisdiction unless the plaintiff can show the violation caused the plaintiff a concrete harm.

Critically, Spokeo’s concrete-injury requirement is based on Article III of the U.S. Constitution, so it only applies to federal-court jurisdiction; Spokeo does not apply to state-court jurisdiction. As a result, a federal dismissal under Spokeo may not be a complete victory because plaintiff is free to refile the case in state court. Some state courts impose Spokeo-like restrictions on subject-matter jurisdiction, and some do not.

In Smith, defendant removed and then moved to dismiss arguing no injury, leading plaintiff to seek remand.
Plaintiff in Smith is a former hotel employee alleging her employer collected and used her fingerprints without disclosure and consent. Plaintiff filed the case in Illinois state court. Defendant then removed the case to federal court and moved to dismiss under Rosenbach, arguing plaintiff alleged no injury and thus was not an “aggrieved person” under BIPA.

Based on defendant’s motion, plaintiff has moved to remand, arguing defendant had “fatally undermined” federal-court jurisdiction by contending plaintiff “had failed to allege any cognizable injury.” In other words, plaintiff claimed that defendant had shown the federal court (to which defendant had removed the case) lacked subject-matter jurisdiction by arguing that plaintiff suffered no injury. That motion is currently pending.

A decision in Smith will offer guidance on whether defendants can argue lack of injury in federal court.
Plaintiff’s motion to remand shows the tension defendants can feel in BIPA cases or other cases involving alleged statutory violations that cause no injury: defendants want to be in federal court and want to argue plaintiff lacks an injury, but Spokeo makes it hard to do both.

A BIPA defendant can try to resolve this tension in two ways. First, a defendant can argue a BIPA violation satisfies Spokeo’s requirement for subject-matter jurisdiction but does not, without some discernible consequence, satisfy BIPA’s separate, statutory requirement that a BIPA plaintiff be “aggrieved” by the violation. Support for this argument could be found in Spokeo’s broad definition of “concrete” harm, which can include “intangible” injuries and a mere risk of harm Spokeo, 136 S. Ct. at 1549. Defendant can argue that a BIPA violation crosses that threshold but does not render a plaintiff aggrieved without some tangible, financial harm.

Second, a defendant can argue that if a court remands under Spokeo, it should include in the remand order an express finding of no injury. Once the case is remanded to state court, defendant can then move to dismiss, arguing that the federal-court remand shows plaintiff suffered no injury and is therefore not aggrieved under BIPA and Rosenbach. In other words, defendant can argue that plaintiff can’t both have the case remanded based on a lack of injury and argue in state court that an injury exists.

The outcome in Smith will be instructive in BIPA cases and other statutory-violation cases to see if defendants can successfully remove to federal court and also seek dismissal under a no-injury argument.