Consumer-facing corporations had been hopeful over the past two years that a ruling from the United States Supreme Court, in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), would deter and diminish the prevalence of consumer class actions in the U.S. But, when the Supreme Court issued its decision in May 2016, attorneys representing both plaintiffs and defendants claimed victory, foreshadowing the competing interpretations that lower courts would subsequently have for the decision.
The Supreme Court opined in Spokeo that a consumer did not have the right (or “standing”) to bring a class action by alleging only a bare procedural violation of a statute divorced from any concrete harm. The defendants’ class action bar believed the Spokeo decision would curtail all class actions premised on bare claims of technical violations of consumer protection statutes causing no harm. However, instead of curbing such cases, the decision resulted in a split among the federal courts as to the meaning of “concrete harm.” Thus, the decision spawned an increase in litigation by affording both sides the ability to frame the decision in their favor, with the outcome dependent upon a court’s unpredictable interpretation.
Most recently, the plaintiffs’ bar has utilized Spokeo to execute a new strategy that will likely result in an increased number of class actions being filed in California state court (and potentially other state courts as well). Specifically, the Ninth Circuit ruled in a three-panel decision on Friday, January 13, 2017 that even if a class action must be dismissed from federal court for lack of standing under Spokeo, a plaintiff may file (or in this case, re-file) the claim in state court without the requirement to allege a concrete injury. Medellin v. Ikea U.S. West Inc., No. 15-55174, ______ (9th Cir. 2017). The case at issue was filed by a California consumer alleging that an IKEA store unlawfully requested her private information (a zip code) in violation of California’s Song-Beverly Credit Card Act. IKEA successfully removed the case to federal court and convinced the federal district court that class treatment was inappropriate. On appeal, the Ninth Circuit highlighted the plaintiff’s concession that she had suffered no cognizable harm, and opined that she lacked standing to proceed in federal court under Spokeo. Nevertheless, the court dismissed the case “without prejudice,” affording the consumer the ability to re-file her claim in state court where Spokeo would not apply.
Given the number of class actions filed in California (due to the state’s numerous consumer protection statutes), the Ninth Circuit’s opinion sets the precedent that Spokeo applies more to the “where” than the “what” of class actions – motivating plaintiffs to bring privacy claims in state court rather than federal. Thus, consumer-facing corporations should expect to see a renewed focus from the class action plaintiffs’ bar on state consumer protection statutes, such as the many privacy laws in California. The Medellin opinion may also fuel consumer class actions filed in other states, such as New Jersey under the TCCWNA described below.
For more information, please contact Teresa Michaud or Lothar Determann.