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No Injury? No Problem. - Spokeo v. Robins

The Supreme Court recently granted certiorari in Spokeo v. Robins, a case that has the potential to redefine standing in federal court. The Ninth Circuit’s February 2014 decision permitted plaintiff Thomas Robins to establish standing under the Fair Credit Reporting Act (“FCRA”) with nothing more than a speculative injury. This contravenes Supreme Court precedent, which finds standing when a plaintiff suffers a harm that is actual, distinct, palpable, and concrete; attenuated and hypothetical injuries do not constitute an injury-in-fact. The implications of the Ninth Circuit’s holding in Spokeo v. Robins has grabbed the attention of companies in nearly every industry. Their concern, as expressed by the U.S. Chamber of Commerce – granting standing to plaintiffs who have not suffered an injury-in-fact will open the flood gates to no-injury class actions brought under statutes that authorize a private right of action. But, in truth, the implications to businesses could extend beyond this.

Robins initiated a putative class action against Spokeo for violating the FCRA. Spokeo aggregates data from phone books, social networks, marketing surveys, real estate listings, business websites, and other sources into an online database. The FCRA regulates consumer information – including consumer credit information – that is collected, disseminated, and used in consumer reports. Spokeo allegedly posted false information about Robins’ wealth, education, and marital status. Robins claims that these misrepresentations will negatively affect his credit, insurance and employment prospects. While the Ninth Circuit found that Robins had not suffered actual damages, it ultimately held that the statutory FCRA violation satisfied Article III’s injury-in-fact requirement. The Supreme Court has granted cert to determine “[w]hether Congress can create Article III standing by authorizing a remedy for a bare statutory violation.”

The FCRA engenders dozens of federal class actions each year. That number has jumped since the Ninth Circuit’s decision — 29 FCRA class actions were filed in the first four months of 2014. Many federal statutes authorize a private right of action. For example, internet firms interact with millions of individuals and are subject to numerous federal statutes with private rights of action. Facebook, eBay, Google, and Yahoo! expressed concern in their amicus brief that, under the Ninth Circuit’s holding, if any of these users was “willing (or enticed by a plaintiff’s attorney) to allege that a generalized practice or act violated a law providing a private cause of action and statutory damages, then she could launch a putative class action on behalf of herself and millions of other ‘similarly situated’ users . . . [and] pursue a multi-billion dollar statutory damages claim despite the lack of injury . . . .”

What do no-injury class actions mean for manufacturers? It could mean lawsuits based on “defective products” that allegedly violate a state or federal statute but have not caused any harm. For example, the food and beverage and cosmetic industries are often accused of misleading consumers through false advertising, labeling, and packaging. ConAgra was sued under the Magnuson-Moss Warranty Act and state consumer protection laws for advertising its cooking oils, which were made from GMOs, were 100% natural. And Maybelline was sued under state consumer fraud and consumer protection acts because its “Super Stay” lipstick allegedly didn’t stay on the advertised 10-14 hours. Under Robins, plaintiffs in these no-injury, statutory-based class actions would not need to establish that they were physically injured to survive a standing challenge. Will creative plaintiff lawyers be able to craft an argument that extends the no-injury standing rule in Robins to non-statutory violations?

The Sixth, Eighth, and Ninth Circuits permit statutory violations to confer standing whereas the Second, Fourth, and Federal Circuits require plaintiffs to prove an injury-in-fact. Tune in for oral arguments this Fall.

© 2019 Schiff Hardin LLP

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About this Author

Paul Scudato, LItigation Attorney, Schiff Hardin Law Firm
Partner

Paul A. Scrudato has been a member of Schiff Hardin's Executive Committee since 2015. He has tried numerous successful cases in the New York state and federal courts, and has also been lead trial counsel in federal and state actions in Illinois, Wisconsin, Maryland, Texas, Kentucky, Pennsylvania, and Indiana. Mr. Scrudato focuses his practice in complex litigation, with particular emphasis in product liability and government investigations. He serves as national trial counsel to multiple companies with high-profile litigation and trial exposure, and he has extensive...

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Thomas M. Crispi  complex litigation, and products liability legal specialist
Partner

Thomas M. Crispi focuses his practice on complex litigation, with a concentration on products liability, mass tort and pattern litigation. He has experience managing and coordinating all aspects of complex litigation, including analysis of claims, negotiating global settlement criteria and approaches, conducting trials, depositions and conferences, drafting legal memoranda, briefs and appeals, arguing motions and overseeing and directing associates during complicated discovery projects.

He has prepared presentations for clients regarding litigation strategies and advised on appropriate courses of action. In addition, Mr. Crispi has acted as national and regional counsel for corporations and has coordinated and managed local counsel regarding the implementation of litigation strategy.

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