Out-Standing: The Supremes Grant Cert Review of Spokeo v. Robins, 742 F.3d (9th Cir. 2014): Guidance Coming on Article III Standing and Statutory Damages Claims
In a development that could have huge class action implications not only for Missouri and Kansas, but also the rest of the nation, the United States Supreme Court on April 27, 2015 granted certiorari review of the Ninth Circuit’s decision in Spokeo v. Robins, 742 F.3d 409 (9th Cir. 2014). This case raises the critical issue of whether the mere violation of a federal statute can supply Article III standing to an unharmed private litigant seeking only statutory (not actual) damages under the Fair Credit Reporting Act (FCRA) – or any of a host of other federal statutes like it.
By way of background, we all know that in order to maintain Article III standing in federal court, the plaintiff must show: 1) injury in fact, ie injury in fact that is both concrete and particularized and actual and imminent, as opposed to conjectural or hypothetical; 2) causation, ie the injury is fairly traceable to the challenged action of the defendant; and 3) redressability, ie. the likelihood that a favorable decision will redress the injury.
The question is, then, how do these constitutional requirements square with congressional enactments that provide for statutory damages (as opposed or in addition to actual damages) for the willful violation of certain statutory requirements? In other words, what happens when a plaintiff pleads willful violation of a statutory provision providing for a private cause of action for statutory damages, such as FRCA Section 1681(n)(a)(1) and (2), which provide for statutory damages from $100-$1000 as well as punitive damages for the willful violation of its requirements? Without showing actual damages, how can a plaintiff pleading violation of such statutory provisions in the abstract meet the Article III threshold? What if such a plaintiff pleads a willful violation, but pleads no concrete injury to himself fairly traceable to the violation and redressable by his claim?
That is the issue raised by the petition in Spokeo, or as, framed by the petitioner Spokeo, whether “a mere statutory injury-in-law – standing alone – is sufficient to satisfy the Article III injury-in-fact requirement even when the plaintiff did not sustain any tangible harm.” The facts of the case below, however, are not as clear-cut as they could be. Spokeo is a website that provides users with information about other individuals, including contact data, age occupation, economic health, and wealth level. The plaintiff, Thomas Robins, alleged willful violation of the FCRA because Spokeo’s website described him inaccurately (interestingly, the website described him as better-educated and wealthier than he claims to have been), and alleged that this insidious misinformation caused “actual harm to [his] employment prospects” as well as “anxiety, stress, concern, and/or worry about his diminished employment prospects.” (I’m sure we can all commiserate at the worry we endure when people assume we are wealthier and better-educated than we are. This happens to me often). This pleading raises the issue of whether Robins even tried to plead actual injury. First the district court ruled that he had, then reversed itself and ruled he had not, and dismissed the case for lack of Article III standing.
Robins appealed, and the Ninth Circuit reversed. As a preliminary matter, the Ninth Circuit panel was unclear as to whether Robins had really tried to plead actual injury to himself, characterizing his allegations of injury as “sparse,” which is hardly a legal term of art. Regardless, the panel rejected Spokeo’s position that Article III standing requires a showing of actual harm, concluding instead that a cause of action for a violation of a statute like FCRA does not require a showing of actual harm when a plaintiff sues for willful violations. The Ninth Circuit concluded that such a claim satisfies Article III so long as the plaintiff is “among the injured” in the sense that he or she alleges that the defendant violated “her statutory rights,” and the statutory right at issue protects against “individual rather than collective harm.” The Ninth Circuit characterized the issue not so much as whether Congress was creating a right to sue that potentially violated Article III, but as Congress “elevating to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.” In doing so, the panel candidly recognized that their analysis of statutory claims essentially collapsed the three-part standing analysis into the injury-in-fact step, and assumed redressability and causation would follow.
Spokeo’s cert petition points out the need to resolve a circuit split on this issue. The Sixth Circuit in Beaudry v. Telecheck Services, Inc., 579 F.3d 702 (6th Cir. 2009) came out the same way as the Ninth on a similar FCRA claim, and Judge Easterbrook authored a decision for a Seventh Circuit panel reversing the district court’s denial of a motion to certify a FCRA class based on similar claims in Murray v. GMAC Mortgage Corp., 434 F.3d 948 (7th Cir. 2006), although the opinion doesn’t really address the issue of standing. In contrast, both the Second and Fourth Circuits in Kendall v. Employees Retirement Plan of Avon, 561 F.3d 112 (2nd Cir. 2009), and David v. Alphin, 704 F.3d 327 (4th Cir. 2013), respectively, have rejected the concept that violation of a statutory right can confer sufficient Article III standing in the absence of showing actual injury to the plaintiff as a result of the breach, such as an actual denial of retirement benefits, in the similar context of ERISA actions.
Spokeo’s petition also notes the need to resolve this issue due to the profound implications it holds for class certification. As we know, standing and injury are key issues in most class certification fights. As Spokeo’s petition notes, more and more putative class actions based on violations of statutes such as the FCRA are being filed. These actions pose tremendous litigation risks. To now eliminate the requirement that class members show some level of actual injury would practically lower the bar to Rule 23 certification by effectively eliminating the injury and causation requirements – two of the sharpest arrows in defense counsel’s quiver – and facilitate the certification of massive classes based on common proof that the defendant did nothing more than fail to meet a statutory standard, whether or not that failure actually affected the plaintiff, class members, or anyone else.
This issue goes well beyond the FCRA, and applies to any federal statute creating a statutory private right of recovery, such as the Telephone Consumer Protection Act (TCPA) (which has recently given rise to a burgeoning docket of class actions), the Truth in Lending Act (TLA), the Fair Debt Collections Act (FDCA), the Employment Retirement Income Security Act (ERISA), the Real Estate Settlement Procedures Act (RSPA), the Fair Housing Act (FHA), the Americans with Disabilities Act (ADA), the Lanham Act, the Video Piracy Act, and more. In other words, this is an important decision we’ll need to monitor closely.
So what’s the answer? Do these statutory provisions really just create laws to redress de facto injuries, or do they unconstitutionally attempt to fiat standing for inchoate violations of statutory rights? Is there a middle ground? Once the fact of injury is proven, can these statutory private rights of action be used to short-circuit the calculus of the amount of damages? Or is the issue moot because Robins really did plead an actual injury?