Statutory Injury Case Divides Supreme Court

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By Perry Cooper

Nov. 2 — The U.S. Supreme Court appeared to be divided along ideological lines at oral arguments on the question of whether violation of a statute alone, without other “concrete” injury, can give a plaintiff access to federal court.

The court's more liberal arm insisted that a right granted by Congress is enough to confer standing on a plaintiff to sue for a statutory violation.

But the conservative justices said that there must also be an “actual” injury. Justice Anthony M. Kennedy, who is often a swing vote in close cases, gave little indication of which way he was leaning.

Thomas Robins filed a class action against Spokeo Inc. alleging the website violated the Fair Credit Reporting Act, 15 U.S.C. § 1681, by posting inaccurate, but not necessarily negative, information about him (16 CLASS 520, 5/8/15).

Not Unimportant Details

Justice Elena Kagan led much of the questioning, arguing that she would feel harmed if she knew a website was posting inaccurate information about her.

“I think that if you went out on the street and you did a survey, most people would feel harmed,” she said. “Most people would feel as though they had some interest that had been invaded.”

The details Spokeo got wrong about Robins “are not unimportant details,” Kagan said. “They basically got everything wrong about him,” she said: marital status, income, education. “They basically portrayed a different person.”

But attorney Andrew J. Pincus, of Mayer Brown LLP in Washington, who argued for Spokeo, said those inaccuracies didn't constitute a concrete injury as required by Article III of the U.S. Constitution.

How much more would the plaintiff in this case have to allege to show an injury-in-fact?, Justice Samuel A. Alito Jr. asked.

Pincus answered that he'd have to show some consequence of Spokeo's inaccurate statements.

“But that's a really hard thing to do, Mr. Pincus,” Kagan said. “It's actually the quintessential kind of injury that you will never be able to detect and surely not to prove.”

But “quintessential” harm is in the eye of the beholder.

Justice Samuel A. Alito Jr. asked if there was anything to indicate that anybody other than Robins ever searched for him on Spokeo. If not, this is the “quintessential speculative harm,” he said.

Deputy Solicitor General Malcolm L. Stewart, who argued for the government on behalf of Robins, said, as pleaded, Robins' injuries aren't speculative. It would be speculative if Robins alleged that “Spokeo is circulating a lot of inaccurate consumer reports and I'm afraid they'll do one about me.”

“That wouldn't be good enough,” Stewart said.

Listing a (Wrong) Unlisted Number

Kagan expressed concern that Spokeo is asking the court to second-guess Congress.

“The one thing that we have to say Congress is better at than we are, is identifying concrete harms,” she said. The FCRA is about preventing the dissemination of inaccurate information in credit reports, which Congress seems “to think is both something that harms the individual personally and also causes larger systemic issues.”

“Don't we owe them a little bit of respect that they've actually identified a real-world harm that's out there?” Kagan asked.

But Chief Justice John G. Roberts Jr. argued that statutory injuries like the one Robins alleged aren't “real-world harms.”

He presented William S. Consovoy, of Consovoy McCarthy Park PLLC in Arlington, Va., who argued for Robins, with a hypothetical: There is a law that says plaintiffs can recover $10,000 in statutory damages if a company publishes inaccurate information about them. “You have an unlisted phone number. You don't want people calling you. The company publishes your phone number, but it's wrong,” Roberts said.

“That is inaccurate information about you, but you have no injury whatever,” he said. “Can that person bring an action for statutory damages?”

Consovoy rejected the term Roberts used for this situation: “injury-in-law.” In the hypothetical, the statute creates a legally vested interest, which is itself a concrete injury, he said.

The injury isn't speculative or generalized when a person has had incorrect information published about them, Consovoy argued.

What About Class Actions?

Once again, the justices spent very little time discussing class actions, even though their decision could have major implications on the use of the device in a whole host of other types of consumer and privacy cases involving statutory violations.

The import of the justices' ruling on class, versus individual, claims also received little attention at oral argument Oct. 14 in Campbell-Ewald Co. v. Gomez, U.S., No. 14-857, argued 10/14/15. That case asks whether an individual plaintiff can continue with his suit—and a proposed class action—after he has rejected an offer of what defendants characterize as “everything he asked for” (16 CLASS 1161, 10/23/15).

Justice Ruth Bader Ginsburg noted here that many of the amicus briefs in support of Spokeo argued that, if allowed to proceed on a class basis, statutory damages claims like Robins' can be brought on behalf of millions of plaintiffs for billions of dollars.

If the Supreme Court were to find here, as the Ninth Circuit did, that Robins' allegations were enough to give him standing to proceed with his statutory violation suit, Ginsburg asked, would Spokeo be able to fight class certification?

If that were the rule, then it would create a fairly clear pathway to class certification because it concerns only common issues, Pincus answered. But “if falsity has to be proven, then obviously, that is an individualized issue that might make it more difficult.”

If the information has to be inaccurate to have standing, the class as defined isn't going to be certified, Kagan said. “And I think that's the right answer.”

Consovoy responded: “This is going to come up later, this term, in the Tyson case.” He referred to Tyson Foods Inc. v. Bouaphakeo, No. 14-1146, a labor case challenging the class status of a group of meat-processing workers, which is slated for argument Nov. 10. Tyson argues that certain workers weren't injured because they didn't work any overtime, and therefore shouldn't be included in the class.

The class definition will have to be narrowed to avoid the problem of a fail-safe class, Consovoy said. Fail-safe class definitions incorporate a legal conclusion, and set up a situation in which class members are only bound by a judgment that finds the defendant liable.

To contact the reporter on this story: Perry Cooper in Washington at pcooper@bna.com

To contact the editor responsible for this story: Steven Patrick at spatrick@bna.com

For More Information

The transcript is at http://src.bna.com/Sc.