This blog post is the second in a series of posts that Baker & Hostetler LLP is devoting to the significant decision Robins v. Spokeo, No. 13-1339, 537 U.S. ___ (2016) (Spokeo). Monday's post focused on Spokeo's effect on privacy class actions and big data. Today's post focuses on the decision's impact on class actions.
On May 16, 2016, the Supreme Court issued its long-awaited decision in Spokeo. In the 6-2 decision, the Supreme Court held that the Ninth Circuit's Article III standing analysis did not consider both injury-in-fact elements – the Ninth Circuit addressed whether the injury was particularized, but did not analyze whether the injury was "concrete."
Spokeo concerned allegations that Spokeo, Inc., an operator of a "people search engine," gathered and disseminated inaccurate information about the plaintiff in violation of the Fair Credit Reporting Act (FCRA). 15 U.S.C. § 1681 et seq. (slip op. at 4-5). Upon learning about the inaccurate information (through means not detailed in the complaint), the plaintiff filed a class-action complaint against Spokeo. But the district court dismissed the complaint, holding that plaintiff did not properly plead an injury-in-fact as required under Article III. (slip op. at syllabus).
On appeal, the Ninth Circuit reversed on grounds that the plaintiff had alleged injury-in-fact due to his allegation that "Spokeo violated his statutory rights" and because Mr. Robins' "personal interests in the handling of his credit information are individualized." Id.
The Supreme Court vacated and reversed the Ninth Circuit's ruling. Justice Alito, writing on behalf of the majority, held that a court must separately determine whether a plaintiff's injury is both concrete and particularized to establish standing under Article III. The Court declined to opine on the Ninth Circuit's injury-in-fact conclusion; instead, the Court stated that the concreteness of the plaintiff's alleged injury must be evaluated. (slip op. at 1, 11).
As provided in Monday's post, the Court gave significant consideration to the concept of an injury in relation to standing and focused on standing's first requirement – that to establish an injury in fact, a plaintiff must demonstrate "an invasion of a legally protected interest" that is "concrete and particularized." (slip op. at 7, citing Lujan Defenders of Wildlife, 504 U.S. 555, 560) (internal citations omitted).
The Court took issue with the Ninth Circuit's lack of analysis regarding the "concreteness" requirement. (slip op. at 9-10). Looking to prior jurisprudence, the Court acknowledged that a concrete injury does not have to be tangible. Id. But, the Court also recognized that while Congress may create a statutory right and "elevate" "intangible harms" that were previously "inadequate at law" (Id. at 9), Article III standing requires a concrete injury "even in the context of a statutory violation." (Id.). And it does not follow that a person with a bare allegation that a statute was violated can establish Article III standing. Id. at 10-11. For example, the Court noted it would be difficult to "imagine" how a consumer reporting agency's dissemination of an incorrect zip code, "without more," could "work any concrete harm." Id. at 11.
But how a plaintiff will have to allege and establish injury in fact remains to be seen. Perhaps the clearest guidance from the Court, beyond the FCRA-specific examples regarding notice and zip codes, are the references to Federal Election Comm'n v. Akins, 524 U.S. 11 (1998) and Public Citizen v. Dep't of Justice, 491 U.S. 440 (1989), which the Court cited as examples of instances where a plaintiff "need not allege any additional harm beyond the one Congress has identified." (Id. at 10).
Both of these cases generally hold that a plaintiff suffers an injury-in-fact when the plaintiff fails to obtain information that must be publicly disclosed pursuant to a statute. Thus, perhaps the Court is signaling that whether an injury is concrete, in the context of a violation of a procedural right, depends on whether a violation of the statute necessarily results in the specific harm the statute is designed to protect, or right it seeks to guaranty. For example, FCRA is designed to prevent harm resulting from a lack of "fair and accurate credit reporting," but inaccurate reporting is not a harm, in and of itself, because the incorrect information may not impact, or create a material risk of impact to, the consumer. But an agency's failure to disclose information, which must be disclosed by statute, however, immediately violates the very right (i.e. access) the statute was designed to protect, and therefore constitutes injury-in-fact.
At least in some cases, a "bare procedural violation" is no longer sufficient for standing. Thus, Spokeo may prove useful in defending the increasing number of suits alleging technical violations of federal statutes, which provide for statutory damages. And those litigating statutory claims will surely delve into the "traditional" "intangible harm[s]" referenced by the Court, and analogous statutes where a plaintiff need or need not allege harm beyond the procedural right itself, to determine whether a plaintiff has standing. Also, it should be noted that, while Spokeo's primary focus was standing at the pleadings stage, standing (jurisdiction) must exist at all stages of an action. Thus, even if a plaintiff properly alleges standing, if it is later determined that a plaintiff lacks an actual concrete injury, then the case should be dismissed.
Moreover, for those statutes when a concrete injury, beyond the mere violation of a procedural right, must be alleged, putative class action plaintiffs may have difficulty demonstrating that absent class members suffered injury. For example, even if the plaintiff in Spokeo can identify a concrete harm, it does not follow that other alleged class members suffered any injury or, if they did, that their injury is similar to the named plaintiff's harm. In class-action speak, Spokeo may raise the bar on certification, particularly with respect to the predominance and (depending on your Circuit jurisdiction) ascertainability elements of the Rule 23 analysis.
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