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May 17, 2016

Supreme Court Hands Defense A Narrow Class Action Win, But Declines To Require “Real World Injury” To Show Standing In Statutory Violation Cases

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In yet another long-awaited ruling, the Supreme Court yesterday vacated and reversed a Ninth Circuit’s holding in Spokeo, Inc. v. Robins, 742 F.3d 409, 413 (2014), based on that court's "incomplete" standing analysis. This case involved a consumer’s claim under the Fair Credit Reporting Act (FCRA) that the defendant Spokeo, a "people search engine," gathered and disseminated incorrect information about him. Alleging that the site had incorrectly reported that he was in his 50s, married, had children, and was relatively affluent, the named plaintiff, Robins, sued Spokeo on his own behalf and as a putative class representative.

The district court dismissed for lack of standing, but the Ninth Circuit reversed, finding that Robins had adequately alleged standing because he asserted that Spokeo “violated his statutory rights, not just the rights of other people,” and because his “personal interests in the handling of his credit information are individualized rather than collective.” In a 6-2 decision, the Supreme Court held that the Ninth Circuit’s analysis addressed only the “particularized” aspect of Article III case law’s “concrete and particularized” standard and ignored altogether the need to show a “concrete” injury.

While its ruling is generally favorable, the Court declined to go as far as Spokeo and many of its numerous amici had wanted. Many were advocating for a more sweeping pronouncement of a requirement that plaintiffs relying on alleged statutory violations must show a “real-world injury” to support standing. The Court—perhaps due to the lack of Justice Scalia’s voice on the bench—stopped short of that. Instead, the Court confirmed that while a statutory violation can support standing, and even intangible harms may suffice, Article III standing still "requires a concrete injury even in the context of a statutory violation.” Thus, a bare procedural violation without concrete harm does not provide standing.

The Court was quick to clarify, however, that its ruling does not mean “that the risk of real harm cannot satisfy the requirement of concreteness." Ultimately, the Court remanded with instructions for the Ninth Circuit to assess “whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.”

If this result seems like a punt, that’s because it is. Despite this case being watched as potentially impactful on class action jurisprudence and in curbing the filing of class actions based on minimal or non-existent harm, this decision fails to deliver on that level. The Court announced nothing new today—indeed, its opinion repeatedly refers back to its own longstanding precedent on Article III standing.

There are nonetheless some positives that can be taken from this opinion. While its discussion of the “particularized and concrete” injury requirement is not new, the opinion nonetheless provides one of the more detailed and practical discussions of those sometimes nebulous concepts. For that reason, Spokeo should find its way into standing challenges and motions going forward. And in terms of class actions, the requirement to show both particularized and concrete injury—on an individual basis—may help to draw lines between putative class representatives and the individuals they seek to represent, which may help in defeating predominance and in mounting other challenges to class certification.

In addition, as with some more recent class action decisions such as Halliburton v. Erica P. John Fund and Comcast Corp. v. Behrend, the true impact and significance of the Spokeo ruling may take time to work themselves out in the lower courts. But for those who have been disappointed with recent class action decisions (e.g., Tyson Foods, Inc. v. Bouaphakeo; Campbell-Ewald Co. v. Gomez) and were hoping for an opinion with the clear precedential magnitude of a Wal-Mart Stores, Inc. v. Dukes, you will have to keep waiting and wishing.

And speaking of Dukes, if anything, Spokeo serves to reinforce the significance of the loss of Justice Scalia when it comes to class action jurisprudence. As with Tyson Foods, Spokeo shows a Supreme Court which, in Justice Scalia’s absence, is either unwilling or simply unable to move the needle significantly one way or the other on class actions, despite staunch advocacy from both sides. Only time will tell whether, once his replacement is confirmed, the Court will return to the class action “glory days” for the defense . . . or whether instead the bench will shift such that it makes the defense long for decisions like Spokeo.       

For any questions concerning the impact of this decision on your company or its defense of class action matters, contact Rob Wise or visit our class action and multidistrict litigation practice page