Another Good Day for Class Actions before the Eight-Member Supreme Court

In a continuation of what is starting to look like a trend before the ideologically split, eight-member Supreme Court, on Monday morning a majority of the Justices signed on to a narrow procedural ruling in Spokeo v. Robins, which had the practical effect of preserving consumer class actions based on statutory, non-pocketbook injuries. Had the Court ruled in favor of Spokeo, the ability of consumers to bring class action lawsuits for harms such as the privacy rights at stake in this case would have been severely limited.

Thomas Robins sued Spokeo, the self-described “people search engine,” under the Fair Credit Reporting Act (“FCRA”), on behalf of a class of consumers, for publishing inaccurate reports concerning his age, marital status, education, and employment history. Mr. Robins alleged that the misinformation had negatively interfered with his job search efforts. The FCRA, an attempt by Congress to address widespread inaccuracies in consumer credit reporting and the significant challenges consumers face in trying to correct such information, requires that consumer reporting agencies take certain steps to ensure the accuracy of consumer data and grants injured consumers a right to sue for negligent or willful noncompliance with the Act.

The district court had granted Spokeo’s motion to dismiss on the basis that Robins lacked Constitutional standing to sue because he had not adequately pleaded an injury-in-fact. The injury-in-fact requirement demands that a plaintiff has suffered a harm that is both individualized and concrete. The Supreme Court has aggressively enforced this and other components of standing doctrine in the past three decades, making it more difficult for individuals to challenge corporate or government misconduct. For example, in an influential but extremely troubling 1984 decision, the Supreme Court held that the parents of African-American school children lacked standing to challenge the unlawful granting of tax-exempt status to racially discriminatory private schools, because they lacked an injury-in-fact.

Mr. Robins appealed to the Ninth Circuit, which ruled in his favor, finding that he had satisfied the injury-in-fact requirement by alleging that Spokeo had violated his statutory rights granted by FCRA and that he had a personal (rather than collective) stake in the handling of his own credit information.

Prior to Justice Scalia’s death, Spokeo seemed destined to continue the efforts of the Court’s conservative majority to weaken the ability of employees and consumers (amongst others) to recover against corporations through class action lawsuits. The conservatives Justices’ previous successes in this realm include two infamous decisions handed down five years ago: AT&T Mobility LLC v. Concepcion (2011) 563 U.S. 333 (upholding class-action waivers in consumer arbitration agreements) and Wal-Mart Stores Inc. v. Dukes (2011) 131 S. Ct. 2541 (de-certifying a nationwide class of female employees who relied on statistics to prove rampant sex discrimination). These decisions led to increasingly aggressive attempts by corporations to immunize themselves from class actions. Spokeo’s assertion that Mr. Robins lacked standing to sue Spokeo for violations of the FCRA reflected one such attempt, this time relying on the modern standing doctrine, described above, to strip consumers of an essential remedy for the widespread abuses in credit reporting.

However, without a fifth conservative vote, the high court instead sent the case back to the Ninth Circuit for further consideration of whether Mr. Robins’s injury was sufficiently concrete to satisfy the injury-in-fact requirement. Justice Alito, writing for a six-Justice majority, expounded on the concreteness element and noted that standing requires something more than “a bare procedural violation” of a statute. As an example, Justice Alito hypothesized that the incorrect reporting of an individual’s zip code likely would not result in concrete harm. Justice Alito added that a risk of future concrete harm could also satisfy the injury-in-fact requirement.

Justice Ginsburg, in an opinion joined by Justice Sotomayor, dissented to opine that remand to the Ninth Circuit was unnecessary because Mr. Robins’ allegations met the concreteness requirement. Therefore, all eight Justices appeared to agree that Congress may confer standing by creating statutory rights and remedies, so long as the plaintiff bringing suit has suffered an individualized harm resulting from something more than a bare procedural violation of a statute.

This issue is likely to return before a nine-member Court, but by preserving the status quo with respect to standing and class actions, the result was a clear win for consumers, employees, and those who advocate on their behalf.