On Monday, the Supreme Court issued its decision in Spokeo
v. Robins, which posed the question of whether Article III
standing requires a plaintiff to have a concrete injury when
alleging a statutory violation under the Fair Credit Reporting Act
("FCRA"). The decision is likely to have broad
implications for financial services companies and others who face
civil actions alleging bare statutory violations under the FCRA and
other laws.
In the case, Thomas Robins alleged that Spokeo, an online
people-search database, had gathered and disseminated incorrect
information about him in violation of the FCRA, which imposes
certain requirements on "consumer reporting
agencies"—including numerous procedural
requirements—concerning the creation and use of
"consumer reports." The FCRA provides for per-violation
statutory and other civil damages under some circumstances. After
his claim was dismissed by the district court, the Ninth Circuit
held that Robins's alleged violations of the FCRA were
sufficient to meet the "injury-in-fact" requirement for
Article III standing.
The Supreme Court reversed, holding that the Ninth Circuit had
improperly failed to consider whether Robins's alleged injury
was "concrete." To meet Article III's injury-in-fact
requirement, the Court explained, a plaintiff must allege a
violation that is both "particularized" and
"concrete": "[A] bare procedural violation, divorced
from any concrete harm" does not suffice. The Court further
explained, however, that "intangible injuries can nevertheless
be concrete," and the "risk of real harm" may
satisfy the concreteness requirement. The Court cited libel,
slander per se, and actions involving voters'
"inability to obtain information" to which they were
statutorily entitled as examples of injuries sufficiently concrete
to confer standing. The Court remanded for the Ninth Circuit to
decide in the first instance whether Robins's alleged injury
met the test of concreteness. The Court provided guidance,
observing that "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" and thus would cause no concrete harm sufficient to
create Article III standing. "In addition," the Court
continued, "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."
While it remains for the Ninth Circuit and other courts to
implement Spokeo,1 the decision appears likely
to have a significant effect on future civil litigation under
consumer financial laws. In addition to the FCRA, numerous other
federal banking statutes, as well as some state consumer protection
laws, provide for both detailed procedural requirements and private
rights of action with potential statutory damages for
violations—federal examples include the Real Estate
Settlement Procedures Act, Truth In Lending Act, Telephone Consumer
Protection Act, Electronic Fund Transfer Act, and Fair Debt
Collection Practices Act. Spokeo is likely to curtail
significantly the ability of plaintiffs to pursue class actions for
mere procedural or other "technical" violations under
such laws and to reduce the in terrorem effect such suits
can frequently have.
1 See Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 707 (6th Cir. 2009); Murray v. GMAC Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006); Hammer v. Sam's East, Inc., 754 F.3d 492, 500 (8th Cir. 2014). The Second, Third, and Fourth Circuits, by contrast, have denied standing for claims involving statutory violations, but no actual injury, under federal statutes such as ERISA and the Lanham Act. See Kendall v. Empls. Retirement Plan of Avon Prods., 561 F.3d 112, 121 (2nd Cir. 2009) (ERISA), abrogated on other grounds by Am. Psychiatric Ass'n v. Anthem Health Plans, Inc., No. 14-3993, 2016 WL 2772853, at *4 (2d Cir. May 13, 2016); Joint Stock Soc'y v. UDV N. Am., Inc., 266 F.3d 164, 176 (3d Cir. 2001) (Lanham Act); David v. Alphin, 704 F.3d 327, 338-39 (4th Cir. 2013) (ERISA).
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