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May 16, 2016

Stroock Client Alert

By: Julia B. Strickland, Stephen J. Newman, Brian C. Frontino

The United States Supreme Court today issued its much-anticipated ruling in Spokeo, Inc. v. Robins, No. 13–1339, addressing the standing requirement for civil claims asserting violations of the federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. (the “FCRA”). Finding the Ninth Circuit’s constitutional standing analysis “incomplete” for not considering whether plaintiff alleged both a “particularized” injury as well as a “concrete injury in fact,” the Supreme Court vacated and remanded with instructions to consider both aspects of the injury-in-fact requirement.

On the whole, the Spokeo opinion appears to be a victory for the defense, potentially allowing arguments to limit class actions to persons with “concrete” injury. The Supreme Court’s analysis, while based on the FCRA, is general enough to potentially apply to a wide range of statutes that permit statutory damages without expressly requiring proof of actual damages, such as the Telephone Consumer Protection Act, 47 U.S.C. § 227 et seq. (the “TCPA”), the Real Estate Settlement Procedures Act, 12 U.S.C. § 2601 et seq., the Truth in Lending Act, 15 U.S.C. 1601 et seq., and the Drivers Privacy Protection Act, 18 U.S.C. § 2721 et seq.

Of the three well-established prerequisites to standing—(1) injury in fact, (2) traceability to the challenged conduct of the defendant and (3) likelihood of redress by a favorable judicial decision—the Court focused only on injury in fact. To establish an injury in fact, the Court reasoned that a private plaintiff must show that he or she suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”  The “concrete” aspect of the injury-in-fact requirement no doubt will be the focus of ongoing litigation and development in future lower court rulings.

The Supreme Court expressly noted that “concrete” is not necessarily synonymous with “tangible,” and that both history and the judgment of Congress play important roles in determining whether an intangible harm can be concrete enough to qualify as an injury in fact. The Supreme Court explained that courts should examine whether the alleged injury resulting from an “intangible” harm has a close relationship to a harm that traditionally provides grounds for a lawsuit in English or American courts. The Court confirmed that “[i]njury in fact is a constitutional requirement,” and that Congress cannot “statutorily grant[] the right to sue to a plaintiff who would not otherwise have standing.” Thus, while “Congress is well positioned to identify intangible harms that meet minimum Article III requirements, [and] its judgment is also instructive and important,” this  “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.”

Turning specifically to the FCRA, the Supreme Court acknowledged that Congress sought to prevent the dissemination of false information by mandating procedures designed to decrease that risk, but warned that “a plaintiff cannot satisfy the demands of Article III by alleging a bare procedural violation.” Indeed, the Court recognized that a pure violation of one of the FCRA’s procedural requirements “may result in no harm.” For example, while an FCRA-required disclosure may be absent in a particular setting, the information provided without the disclosure may still be accurate, the Court explained. Moreover, “not all inaccuracies cause harm or present any material risk of harm.” To illustrate, the Court noted that it could not think of how dissemination of an inaccurate zip code, “without more, could work any concrete harm.”

Based on the Supreme Court’s comments in Spokeo, plaintiffs’ attorneys can be expected to attempt creative arguments as to what makes a particular injury concrete, and as to how concrete injury can be measured across a class. Specifically, in class actions, a class representative may be able to show that he himself sustained concrete injury, but defendants may argue that concrete injury cannot be shown on a class-wide basis, precluding class certification under Spokeo.

As to implications for litigation filed under other statutes, litigation undoubtedly will remain intense as Spokeo provides little guidance on how to evaluate the harm identified under other statutory regimes. For example, with respect to putative class actions under the TCPA, which prohibits unwanted calls to cellular telephones, plaintiffs will likely argue that Congress enacted the TCPA to protect consumers’ privacy interests, and that invasion of privacy has long been recognized as a “concrete” harm under ordinary tort law. In opposition, defendants will argue that concrete invasion of privacy harm cannot be assumed on a classwide basis. It is difficult to predict with precision how courts will rule, but at the very least Spokeo offers an additional argument for defendants opposing class certification in various kinds of cases.

The attorneys of Stroock’s Financial Services/Class Action Group are well positioned to answer any questions that you may have about the scope and impact of today’s ruling as well as related issues.

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For more information:

Julia B. Strickland

Stephen J. Newman

Brian C. Frontino

Quyen T. Truong

This Stroock publication offers general information and should not be taken or used as legal advice for specific situations, which depend on the evaluation of precise factual circumstances. Please note that Stroock does not undertake to update its publications after their publication date to reflect subsequent developments. This Stroock publication may contain attorney advertising. Prior results do not guarantee a similar outcome.