On May 16, 2016 the Supreme Court of the United States handed down the opinion for Spokeo, Inc. v. Robins, No. 13-1339, a case addressing the constitutional requirement of “standing,” – the floor requirement for a plaintiff to file a claim in federal court. Spokeo, Inc. v. Robins, Standing, and How Your Business is Affected
Article III Standing
The question in Spokeo was whether a plaintiff who suffers no concrete harm, but who instead alleges only a bare statutory violation, has standing under Article III of the United States Constitution to file a lawsuit in federal court.
Article III of the U.S. Constitution specifically limits the jurisdiction of the federal courts to actual “cases and controversies.” For there to be an actual case or controversy, courts demand a plaintiff to show he has “standing” to sue. “Standing” requires a plaintiff to prove he has suffered an “injury in fact,” caused by the defendant, which the courts can redress with a favorable decision. If the plaintiff cannot show an injury in fact, he has no standing to sue and the federal courts have no jurisdiction to hear the case. Congress may not circumvent the standing requirement by granting a plaintiff the right to sue by statute when he would otherwise not satisfy the standing requirement. Therefore, a problem arises when Congress creates a cause of action for violation of a statute when such a violation may, but importantly, may not cause an injury in fact to the plaintiff.
The Spokeo case arose when a data broker, Spokeo, Inc., published inaccurate information about a man’s personal and professional life, including his age, marital status, education, and professional experience. Although inaccurate, the misinformation did not harm the man.
The man, Thomas Robins, sued Spokeo, Inc. in federal court, alleging Spokeo violated the Fair Credit Reporting Act (FCRA). The FCRA, among its many requirements, requires consumer reporting agencies to follow reasonable procedures to assure maximum possible accuracy of their consumer reports. If a consumer reporting agency fails to do so, the FCRA grants consumers a statutory right to sue the agency. Although Robins claimed Spokeo violated the FCRA by posting the inaccurate information, he did not allege he suffered any actual damage by the post. Robins merely argued Spokeo’s alleged violation of the FCRA was “willful” which entitled him to statutory damages in the range of $100 to $1000.
The trial court dismissed the case, holding that a plaintiff has no standing to sue when he has not properly pled any injury in fact. Robins appealed to the United States Court of Appeals for the Ninth Circuit which reversed the District Court’s ruling, holding that “violation of a statutory right is usually sufficient injury in fact to confer standing.”
The Supreme Court of the United States granted certiorari, deciding to hear the case. At the time of the appeal, the federal appeals courts were split on the issue (a “circuit split”), with the Fifth, Sixth, and Seventh Circuits in agreeance with the Ninth Circuit, while the Second, Third, and Fourth Circuits had required more than mere statutory standing.
Unfortunately, the Supreme Court did not fully answer the question. Instead, the court held the Ninth Circuit failed to properly address whether the plaintiff’s injury was concrete, a necessary requirement for standing, and remanded the case to the Ninth Circuit to complete the analysis. The Court stated that “injury-in-fact” requires a plaintiff to show an injury that is both “concrete and particularized,” and the Ninth Circuit neglected to address whether Robins’ injury was concrete.
Because the Supreme Court did not squarely address the issue on the merits, statutory standing is still uncertain around the country. However, the Court did supply guidance on determining whether a plaintiff’s injury is “concrete” and established that a mere statutory violation is not enough to establish standing. The Court also provided guidance in the context of the FCRA, stating, “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm. For example, even if a consumer reporting agency fails to provide the required notice to a user of the agency’s consumer information, that information regardless may be entirely accurate. In addition, not all inaccuracies cause harm or present any material risk of harm. An example that comes readily to mind is an incorrect zip code. It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.” For business owners located in the Second, Third, and Fourth Circuits, this ruling is a victory as it preserves and bolsters the business-friendly law of their respective circuits.
How This Affects Maryland and Virginia Businesses
Many businesses are subject to suit under federal statutes that if violated, create a right to sue for the plaintiff, without requiring actual concrete injury. Many of these statutory rights of action exist under the Fair Credit Reporting Act (FCRA), the Fair Debt Collection Practices Act (FDCPA), the Real Estate Settlement Procedures Act (RESPA), the Telephone Consumer Protection Act (TCPA), the Employee Retirement Income Security Act (ERISA), and other similar federal statutory schemes. Many of these laws provide monetary penalties recoverable by consumers and are often brought as class action lawsuits, exposing businesses to unwarranted liability when the consumers in fact were never harmed by the alleged statutory violations.
The Court’s holding and its guidance are positives for Maryland and Virginia businesses, as well as business located in many other states in the mid-Atlantic region. Maryland and Virginia are located within the Fourth Circuit. Since 2013, businesses previously subjected to bare statutory rights of action without concrete injury have been protected by the Fourth Circuit’s holding in David v. Alphin, 704 F.3d 327 (4th Cir. 2013). The Fourth Circuit decided the same standing question that the Supreme Court considered in Spokeo in the context of an ERISA violation, holding that a plaintiff must have Article III standing, or a concrete injury, for the federal courts to hear the case.
The Supreme Court’s decision in Spokeo, Inc. v. Robins preserves the Fourth Circuit’s decision in David v. Alphin, continuing to allow businesses in the Fourth Circuit subject to federal statutory rights of action to file a motion to dismiss for lack of subject matter jurisdiction whenever a plaintiff files a lawsuit alleging statutory standing without alleging Article III standing (injury in fact). Businesses that are usually subject to statutory rights of action include credit reporting agencies, debt collection agencies, and many other online businesses that publish individuals’ personal information. Potentially being able to dismiss certain claims early in litigation saves businesses time and money while also minimizing the stress that comes with a prolonged lawsuit. Sometimes knowing this rule can be useful prior to litigation when responding to demand letters. A simple assertion of the rule in a response may prevent potential plaintiffs from filing claims in federal court from the outset.
Although the Supreme Court did not squarely address what constitutes concrete injury, the Court’s determination that “Article III standing requires a concrete injury even in the context of a statutory violation” is a victory for businesses across the country in that it sets a threshold requirement that some Circuits have ignored. The decision is a victory for businesses within the Second, Third, and Fourth Circuits because it nonetheless maintains and bolsters the law of those jurisdictions, which preserves a tool for businesses to defend themselves from unwarranted litigation.