UNITED STATES – The Supreme Court of the United States issued a 6-2 opinion on Monday, May 16th, in Spokeo, Inc. v. Robins vacating the Ninth Circuit’s prior ruling and remanding the case for further analysis. This was a highly anticipated decision that many practitioners believed could change the landscape for class actions on the question of whether a statutory violation alone, without a resulting injury to the plaintiff, is sufficient to confer standing on a plaintiff to bring litigation. Some practitioners had suspected that the Supreme Court’s opinion would eliminate the practice of class action litigation alleging mere technical violations of statutes creating only a risk of harm in the absence of any actual harm. However, the Supreme Court’s opinion was narrowly focused on the Ninth Circuit’s legal analysis, and did not eliminate the potential for a class action to be brought on a statutory violation that creates a “risk of real harm” or violates a “procedural right.”
As we have presented in a number of webinars on this topic, many legal commentators anticipated that the Court’s decision would be more closely divided, with a potential 4-4 split after the passing of the late Justice Antonin Scalia. In fact, Justice Scalia’s questions at oral argument suggested he may have been leaning against permitting class actions to be brought without allegations of actual harm. Monday’s decision may therefore be interpreted as the Supreme Court passing on the more divisive issue, while reinforcing the well-settled two prong analysis required to show “injury-in-fact”—namely, allegations of a “particularized” and “concrete” injury.
Summary of the Decision
Justice Samuel A. Alito, Jr., writing for the majority, held that the Ninth Circuit’s analysis of the plaintiff’s Article III standing was incomplete because it only considered the plaintiff’s alleged “particularized” harm and did not consider also whether the plaintiff had alleged a “concrete” injury.
The plaintiff, Thomas Robins, alleged that Spokeo published inaccurate information about him, and others like him, in violation of the Fair Credit Reporting Act (“FCRA”). Spokeo moved to dismiss the class action lawsuit, arguing that Mr. Robins failed to plead an injury-in-fact and, therefore, lacked Article III standing to bring the suit. After initially denying the motion, the district court for the Central District of California reconsidered and granted the motion, dismissing the case with prejudice. In its opinion, the district court found that Mr. Robins’s allegations that his employment prospects were hurt by the alleged inaccurate information Spokeo published were too speculative, attenuated, and implausible to substantiate an injury-in-fact. The district court held that merely alleging a violation of the FCRA without properly pleading an injury-in-fact, did not confer Article III standing on Mr. Robins and dismissed the case.
The Ninth Circuit reversed, finding that Mr. Robins had alleged that “Spokeo violated his statutory rights, not just the statutory rights of other people,” and that Mr. “Robins’s personal interests in the handling of his credit information are individualized rather than collective.” Thus, the Ninth Circuit reasoned that Mr. Robins had adequately alleged an injury-in-fact, satisfying the contested element of the test to establish standing under Article III of the Constitution.*1
The Supreme Court disagreed, finding that these two observations only addressed the particularity of the injury, leaving the Ninth Circuit’s analysis incomplete. The Supreme Court emphasized that “the injury-in-fact requirement requires a plaintiff to allege an injury that is both ‘concrete and particularized.’” Because the Ninth Circuit’s analysis only considered the particularity of the injury, overlooking the concreteness prong of the test, the Supreme Court vacated the prior decision and remanded the matter for the Ninth Circuit to consider both aspects of the injury-in-fact requirement. However, the Supreme Court took “no position as to whether the Ninth Circuit’s ultimate conclusion . . . was correct.”
In its discussion on concreteness, the Court noted that “[a] ‘concrete’ injury must be ‘de facto’; that is, it must actually exist.” In other words, it must be a real injury, not merely abstract. However, the Court also cautioned that “concrete” is not necessarily synonymous with “tangible.” Intangible injuries can be concrete, but they are not always as easy to identify.
“In determining whether an intangible harm constitutes injury-in-fact, both history and the judgment of Congress play important roles.” But “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statue grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Thus, a plaintiff “could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”
“This does not mean, however, that the risk of real harm cannot satisfy the requirement of concreteness.” By way of analogy, the Court explained that “the law has long permitted recovery by certain tort victims even if their harms may be difficult to prove or measure.” Such cases include claims for libel and slander per se. “Just as the common law permitted suit in such instances, the violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact.” Consequently, in such a case, the plaintiff “need not allege any additional harm beyond the one Congress identified.”
Applying these principles to the case, the Court found that “Congress plainly sought to curb the dissemination of false information by adopting procedures designed to decrease that risk.” But it also found that Mr. “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation.” This is because a bare violation of one of the FCRA’s procedural requirements does not necessarily result in a concrete harm. Two examples the Court gave to support its conclusion are where a consumer reporting agency fails to provide required notice to a user of the agency’s consumer information where the information is entirely accurate or where the inaccurate information provided by the reporting agency is an incorrect zip code.
Assuming the parties do not settle the dispute out of court, on remand, the Ninth Circuit will need to reconsider its injury-in-fact analysis consistent with the Supreme Court’s opinion. Because the Supreme Court took “no position as to whether the Ninth Circuit’s ultimate conclusion—that Robins adequately alleged an injury in in fact—was correct,” the Ninth Circuit could reach the same ultimate conclusion again. But to do so, the Ninth Circuit will need to focus its analysis on the “concrete” injury prong of the test, which the Supreme Court found that the Ninth Circuit had “overlooked.” With the Supreme Court’s finding that the two observations previously relied on by the Ninth Circuit—that Mr. Robins alleged a violation of his statutory rights and that Mr. Robins had a personal interest in the handling of his credit information—only addressed the “particularity” prong of the test, it is unclear what allegation could satisfy the concrete injury prong. When the District Court considered this issue, it found that Mr. Robins’s allegation of harm to his employment prospects was “speculative, attenuated and implausible.” Or put simply, not concrete.
If the Ninth Circuit does find that Mr. Robins sufficiently satisfied both the concrete and particularized injury prongs of the test, the outcome will continue to perpetuate the growing circuit split that the eight member Supreme Court left unresolved on the larger question of whether a “mere statutory violation” can satisfy Article III’s standing requirements. In reaching its original conclusion, the Ninth Circuit relied heavily on Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702 (6th Cir. 2009). In that case, the Sixth Circuit held that the FCRA “permits a recovery when there are no identifiable or measurable actual damages.” By contrast, in the context of ERISA claims, both the Second Circuit and Fourth Circuit have held that mere statutory violations were insufficient to meet the injury-in-fact requirement. In Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d 112 (2d Cir. 2009), the Second Circuit (actually relying on an earlier Sixth Circuit opinion) found that the plaintiff did not state an identifiable and quantifiable injury based on a mere statutory violation because her alleged injury was hypothetical and speculative and therefore did not constitute an injury-in-fact. Similarly, in David v. Alphin, 704 F.3d 327 (4th Cir. 2013), the Fourth Circuit held that plaintiffs’ argument that “they ‘may sue to enforce legal rights vested in them by statute’” was a “non-starter” because “it conflates statutory standing with constitutional standing.”
Thus, because the Supreme Court did not eliminate the ability of plaintiffs to bring class actions for statutory damages and clarified that intangible harm could be incurred by a risk of real harm or the violation of a procedural right, the Spokeo decision leaves relatively intact the existing body of case law on class actions regarding statutory violations, including those on the statutes below, among others:
The Class Action Subgroup of the North American Litigation and Government Enforcement Practice Group has extensive experience successfully defending class actions. We will continue to monitor the Ninth Circuit’s analysis on remand, as well as court activity applying Spokeo in other jurisdictions. Please reach out to us if you have further questions.
*1 Article III standing requires the plaintiff to have “(1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”