Supreme Court Decision in Spokeo Breathes Life Into Standing Defenses
Court holds that plaintiff must allege a concrete injury to have standing to sue for a statutory violation; remands for further proceedings
In its just-issued decision in Spokeo, Inc. v. Robins, No. 13-1339, slip op. (May 16, 2016), the Supreme Court has held that a plaintiff bringing suit under a federal statute must allege the existence of a concrete injury in order to have Article III standing to bring that statutory claim.
This ruling disturbs assumptions that animate federal minimum damages statutory class actions. The conventional wisdom has been that if a defendant violates a statute, plaintiff cashes a check. For years, plaintiffs’ class action lawyers have argued that it’s just that simple. A cottage industry in class action litigation has grown up around a daunting alphabet soup of federal enactments – such as the TCPA, FCRA , FACTA and RESPA — which prescribe minimum money damage awards for statutory violations. Statutory awards ranging from $100 to $1,500 per violation for actions such as failing to truncate credit card numbers on transaction receipts (FACTA) or sending unsolicited texts (TCPA) can add up to astronomic exposure when aggregated over classes of tens of thousands of individuals.
These statutory schemes, however, fail to address the concept of injury. Indeed, the entire rationale for statutory damage provisions is because, for many of the prescribed actions, the resulting injury – if any – is negligible. What injury does a consumer sustain if a retailer prints out a receipt with an insufficiently truncated credit card number – say, showing six instead of the five digits permitted under FACTA – and the discarded receipt goes to the local incinerator without ever being seen or intercepted by another human? Even assuming a risk of credit or identity theft where there has been improper truncation, what is the consequence when that harm does not and cannot materialize? FACTA doesn’t say. The regulatory outsourcing agenda behind enactments like FACTA treats the question of injury as unimportant, instead establishing large minimum damages provisions both as a deterrent to targeted conduct and as an incentive to private enforcement of the statute.
Defendants have questioned whether statutes premising minimum recoveries solely on violations of federal statutes are consistent with Article III of the United States Constitution. Article III limits federal jurisdiction to “cases” or “controversies,” see id., § 2, which the Supreme Court has held to require that a plaintiff has suffered a concrete and particularized injury. In Spokeo, the Supreme Court held that courts must address the question of whether there has been a cognizable injury where cases are brought under federal minimum damages statutes.
Spokeo concerns an alleged failure to engage in procedures mandated under the FCRA to ensure the accuracy of information being reported about the plaintiff. As a result of that purported violation, plaintiff claims that the defendant Spokeo reported false information about him. In its defense, Spokeo argued (among other things) that plaintiff was not injured by any statutory violation because the information Spokeo reported placed the plaintiff in a more positive light – better educated and more highly paid – than was in fact true. The trial court agreed with Spokeo, and dismissed for lack of standing. The Ninth Circuit disagreed, holding that “the violation of a statutory right is usually a sufficient injury in fact to confer standing.” Robins v. Spokeo, Inc., 742 F.3d 409, 412 (9th Cir. 2014). Acknowledging that the Constitution limited the power of Congress to confer standing, the Ninth Circuit nonetheless held that the plaintiff’s FCRA claim satisfied Article III because it concerned his personal claim, and not the claims of other individuals. Id. at 413-14.
The Supreme Court found this rationale insufficient. Writing for the Court, Justice Alito explained that to confer Article III standing, an injury must be both concrete and particularized. The basis for the Ninth Circuit’s holding – that the injury alleged was personal to the plaintiff – satisfied the particularity requirement. But it did not address whether the injury was concrete. For that purpose, the consequences of the alleged wrongdoing matter. Accordingly, the Court vacated the Ninth Circuit’s decision and remanded for further proceedings to address whether there was a concrete injury.
Spokeo’s explanation of the significance of concrete injury requirement could prove to be one of the most important passages ever written in the battle against federal minimum damages class actions:
Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III. See Summers [v. Earth Island Inst.], 555 U.S. , at 496 [(2009)](“[D]eprivation of a procedural right without some concrete interest that is affected by the deprivation . . . is insufficient to create Article III standing”); see also Lujan [v. Defenders of Wildlife], supra, [504 U.S. 555,] at 572 [(1992)].
The Court’s acknowledgement that a statutory violation must have real world consequences to confer standing to sue provides a basis to rein in the private attorney general industrial complex, limiting judicial recourse to individuals who have suffered actual harm. By this common sense pronouncement, the Court has made explicit the constitutional validity of the argument that a claim must be dismissed for lack of standing where the plaintiff does not or cannot allege that a statutory violation resulted in concrete harm.
Spokeo will not be a panacea for class action defendants. The decision in Spokeoacknowledges that sometimes a violation of a statute’s procedural requirements will, standing alone, establish a concrete injury. As examples, Justice Alito cites statutes concerning required public disclosures in voting rights and advocacy contexts. The court cautions, however, that concreteness cannot be presumed based merely on the violation of a statute, but must be assessed on a case by case basis in light of the wording and purpose of the statute.
Initial reactions by some commentators have portrayed Spokeo as deferring a decision on the issue of standing. That take misreads the decision. By holding that the concrete injury requirement applies even where there is a mandated statutory recovery, the Court has definitively addressed the most important issue presented in Spokeo. Whether Spokeo wins or loses on remand will help define what it means to sustain a concrete injury, but will not diminish the principle that a concrete injury must be alleged to have standing to sue. Defendants are now empowered to seek dismissal of statutory claims where a plaintiff does not or cannot show that the alleged statutory violation has resulted in a concrete injury.