With A Little Help From My Friends: The U.S. Supreme Court’s Grant of Cert in Spokeo

Articles
September

The U.S. Supreme Court’s decision to grant certioriari to review the case of Robins v. Spokeo, Inc., 742 F.3d 409, (9th Cir. 2014) will have enormous impact on American jurisprudence, however the court ultimately rules. The decision will not only, as has been widely reported, impact whether a putative plaintiff has standing to bring a class action lawsuit for “bare” statutory violations, but will also determine the standing issue for virtually all civil causes of action where damages have been set by statute. The petition for certiorari and granting thereof have drawn a remarkable number of friends-of-the-court briefs, almost unanimously in favor of petitioner Spokeo. The constitutional requirement of “injury-in-fact” for standing is at the core of the case, however, which facet of that doctrine is specifically at issue, and what it means, depends on which brief you are reading.

Spokeo describes itself as operating a “people search engine” that aggregates publicly available information regarding individuals. Respondent Robins’ lawsuit alleges that Spokeo’s search results on him included inaccurate information in violation of the Fair Credit Reporting Act (FCRA) by indicating that Robins has more education and professional experience than he actually does, that he is married (although he is not) and that he is better situated financially than he really is. Robins claimed statutory damages and actual damages of “harm to his employment prospects” and emotional injury from anxiety about his “diminished employment prospects.” In addition, Robins alleged that Spokeo violated other FCRA statutes by: (1) failing to issue notices to providers and users of consumer information; (2) failing to ensure that employers who sought consumer reports for purposes of making employment decisions complied with the FCRA’s disclosure requirements; and (3) failing to provide consumers with a toll-free number to request annual reports. 

The trial court dismissed Robins’ lawsuit for lack of standing, but the Ninth Circuit Court held that because Robins has standing by virtue of the alleged violations of his statutory rights, “we do not decide whether harm to his employment prospects or related anxiety could be sufficient injuries in fact.” Despite this limited holding, the following issues are framed in the various briefs as being in play: (1) whether a legal violation without concrete harm (i.e., an injury in law) satisfies the injury-in-fact requirement for standing; (2) whether the availability of statutory damages can substitute for concrete harm; (3) whether a putative plaintiff can avoid the concrete harm requirement by analogizing his claims to a common law defamation action; and (4) whether possible harm to the putative plaintiff’s employment prospects is sufficiently concrete to establish a case or controversy. The friends of the court, and Spokeo’s friends on the issues presented, range from tech giants eBay, Facebook, Google and others, media entities, including heavyweights Time Inc. and PBS, the U.S. Chamber of Commerce, “traditional” credit reporting agency Experian, the American Bankers Association, and many others. Thus far, Robins’ only friend is the United States itself, which filed a brief following invitation from the court. The government argued that no cert should issue, but if it does, the issue should be reframed as: “Whether respondent’s complaint identified an Article III injury-in-fact by alleging that petitioner had willfully violated 15 U.S.C. 1681e(b) by publishing inaccurate personal information about respondent in consumer reports prepared by petitioner without following reasonable procedures to assure the information’s accuracy.”

If I Sang Out of Tune

Individuals do not have standing to sue to enforce laws that are directed to the public good unless they are affected in a personal and individual way. Yet it is also well-settled that Congress may create new causes of action and provide statutory damages. Congress cannot simply authorize a private person to enforce a law, however. The requirement of an injury-in-fact is the “hard floor” of Article III jurisdiction that cannot be removed by statute. In particular, “the public interest in proper administration of laws” cannot “be converted into an individual right by a statute.” But Congress may grant rights that, when violated, confer standing because such rights will be “elevated to the status of legally cognizable injures concrete, de facto injuries that were previously inadequate in law.” As bedrock principles, all of the briefs agree on these points. However, there is wide disagreement on what rises to the level of a de facto injury.
 
A “consumer reporting agency” can end up in the wrong key not only by providing inaccurate information regarding the consumer, for which the consumer is entitled to actual and statutory damages if the actions are “willful,” but also through other statutory violations that merely require a consumer reporting agency to take actions that protect consumers generally. Spokeo and its friends argue that the Ninth Circuit holding is essentially that a statutory violation creates its own damages. When framed that way, it would seem that their argument prevails. There is not much question that government agencies frequently rely upon private parties to enforce regulations through the incentive of statutory damages. One commentator noted on the granting of cert in the case that “if the companies have their way, the laws will be effectively unenforceable except by underfunded public agencies.” In fact, somewhat coincidentally, a little over a year after Robins filed suit against Spokeo in California District Court, the Federal Trade Commission (FTC) announced that Spokeo would pay $800,000 to settle charges that it marketed the profiles to companies in the human resources, background screening and recruiting industries without taking steps to protect consumers required under the FCRA. Indeed, a common theme among the friends of the court is that the government has, essentially, ceded executive power to enforce the laws of the country to lawyers seeking private gain rather than public good. As stated in eBay et al.’s brief, “The Ninth Circuit’s rule transforms private litigants into roving attorneys general who operate with vastly different incentives than actual executive officials and a dearth of safeguards to constrain their conduct, and transforms the federal courts into quasi-administrative or advisory tribunals in which uninjured litigants seek to vindicate abstract legal rights.”

Certain That It Happens All the Time

If you are in doubt as to whether there is such a thing as love at first sight, consider the rapidly developing relationship between class-action counsel and a widely-violated technical or trivial statutory violation. There is no doubt that class-action lawsuits frequently claim damages exceeding the net worth of the defendants, and that the information technology industry is a particularly frequent target. The amicus briefs collect the litany of huge dollar lawsuits, and in many cases the defendants are the very amici filing the briefs. The laws complained about include the Telephone Consumer Protection Act and the Wiretap Act, among many others. However, in the case of the former, calls and text messages by computers to cellular phones would seem as intrusive as a call to or from a rotary phone, the only difference appearing to be the technology. In the case of the latter, eBay’s brief decries that “colorable violations of the Wiretap Act” alone suffice for standing “without any independent showing of injury.” It might be replied here that the invasion of privacy, itself, is a de facto injury of the type that Congress may elevate to the level of a cause of action. Is such injury too speculative as a matter of law for Congress to provide a statutory remedy?
 
What Do You See When You Turn Out the Light?

“I can’t tell you but I know it’s mine.” Thus go the lyrics of the song — and also the argument of the putative plaintiff with regard to his or her claim to statutory damages. That is, the standing analysis really runs two ways, (1) whether the injury is sufficiently concrete as a matter of law, and (2) whether the injury is unique, somehow differentiated from that of the public at large. Almost every brief discusses the issue of “presumed damages” in defamation cases as an analog for the “presumed damages” of statutes such as the FCRA. The petitioner and supporting briefs correctly point out that, under defamation law, the statements supporting presumed damages must “expose the plaintiff to hatred, contempt or ridicule.” The “actual damages” alleged by Robins (anxiety regarding his employment prospects) fall short of this standard. They similarly appear to fall short of the standard as articulated in Clapper v. Amnesty Int’l USA where certain persons brought suit to challenge the Foreign Intelligence Surveillance Act. The Supreme Court held that the claimed injuries in Clapper, expenditures to protect the confidentiality of the plaintiffs’ communications, were based on “hypothetical future harm.” But do Robins’ allegations fall short of a de facto injury sufficient to support statutory damages? As the government set out in its brief, whether particular inaccurate information is “favorable” or “unfavorable” often depends on the circumstances under which that information is disclosed. An employer may reject a job applicant if he is “overqualified by virtue of [his education],” Robinson v. Potter (college graduate); Stein v. National City Bank (discussing “policy of not hiring college graduates”), or if it perceives him to be untruthful about any matter because of contrary information in a (potentially inaccurate) consumer report, cf. Lopez v. River Oaks Imaging & Diagnostic Grp., Inc. (discussing “policy against hiring an applicant who lied during the interview process”).
 
Clapper does not involve a statute where Congress has created a right and set damages for violation of that right. And, if the common law is the “hard floor,” many of the self-enforcing statutes mandating privacy or protecting consumer information will almost surely be found wanting. Will the court be able to draw a clear line between “bare” statutory violations and those involving a “de facto injury?” Will legislative determinations of “de facto injury” now be subject to a case-by-case review based upon the plaintiff’s allegations and proof of actual damages? When you turn out the light, do you see a monster under your bed? Oops, wrong song.