What Does Supreme Court’s Spokeo Decision Mean in ERISA Litigation Context?
Wednesday, June 29, 2016

ERISA practitioners should be aware of the extent to which the United States Supreme Court’s decision in Spokeo, Inc. v. Robins may touch on ERISA claims and defenses. In Spokeo, decided 6 to 2 last month, the Supreme Court addressed the issue of constitutional standing under the Fair Credit Reporting Act (“FCRA”). However, the Spokeo decision likely will have a unique impact in the ERISA litigation context.

In Spokeo, the plaintiff filed suit under the FCRA when he discovered that the defendant, a “people search engine,” had disseminated inaccurate information about him. The district court dismissed the case for lack of standing because the plaintiff could not show an “injury-in-fact” where the inaccurate information was not demonstrably harmful to the plaintiff. The Ninth Circuit reversed, holding that the harm in question was sufficiently “particularized” to show injury-in-fact because the plaintiff could show his “personal” right had been violated.

In its petition for certiorari, the defendant listed ten federal statutes with private rights of action, including ERISA, and asked the Supreme Court to require plaintiffs suing under these statutes to demonstrate a “palpable injury.” In response, one amici for the plaintiff stated that the defendant’s “unworkably narrow” proposal would “eviscerate ERISA’s comprehensive and reticulated scheme.”

The Supreme Court declined to accept the defendant’s proposal to require demonstration of a “tangible” harm for standing under federal statutes. Justice Alito, writing for the majority, explained that “Congress has the power to define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before.” Spokeo holds that “concrete” harm, which can arise from the violation of tangible or an “intangible” right created by Congress, along with particularization, is all that is required by the standing analysis.

However, Justice Alito also described some clear limitations on the definition of the term “concrete.” Even in the context of a statutory violation, for an injury to be concrete, a plaintiff must allege more than just a “bare procedural violation.” A concrete injury must be de facto, that is, it must be “real” and not “abstract.”

Justice Alito’s definition of the word concrete may offer some possible defenses to ERISA claims that are pled as no more than bare procedural violations or “general grievances.” For example, Spokeo’s concreteness requirement may undercut arguments in favor of associational standing, like those asserted by a healthcare provider association in the recent Second Circuit case New York State Psychiatric Ass’n, Inc. v. UnitedHealth Group. The limits on concreteness could also bolster “equitable tracing” defenses in claims brought against non-fiduciaries who have never possessed, or no longer possess, plan assets. Finally, under Spokeo, a plaintiff might lack standing to bring a claim against a plan administrator for a statutory penalty under ERISA Section 502(c) based on alleged failure to provide plan documents, or for a failure to provide notice of a significant reduction in benefits under ERISA Section 204(h). If the plaintiff suffered no harm by the failure to provide the documents or notice, then the failure might be characterized as a “bare procedural violation” insufficient to meet the concreteness requirement.

 

NLR Logo

We collaborate with the world's leading lawyers to deliver news tailored for you. Sign Up to receive our free e-Newsbulletins

 

Sign Up for e-NewsBulletins