The U.S. Supreme Court agreed yesterday to hear an important case that will decide whether a plaintiff who cannot show any actual harm from a violation of the Fair Credit Reporting Act nevertheless has standing under Article III of the U.S. Constitution to sue for statutory damages in federal court. The consequences of the Supreme Court’s eventual decision will likely extend significantly beyond FCRA litigation, and affect numerous other statutes and the viability of class actions where alleged technical violations did not cause any actual harm.
In Spokeo, Inc. v. Robins, the plaintiff claimed that the defendant website operator willfully violated the FCRA by allegedly publishing inaccurate personal information about him. After initially denying the defendant’s motion to dismiss based on standing, the district court reconsidered and dismissed the action. The court ruled that the plaintiff had failed to plead an injury in fact, and any injuries pled were not traceable to the defendant’s alleged FCRA violations.
Reversing the district court, the U.S. Court of Appeals for the Ninth Circuit ruled that the defendant’s alleged violation of the plaintiff’s FCRA statutory rights established an injury sufficient to satisfy Article III. According to the Ninth Circuit, because the FCRA does not require proof of actual damages when a plaintiff sues for willful violations, a plaintiff’s statutory FCRA rights can be violated without the plaintiff suffering any actual damages.
In 2011, the Supreme Court granted certiorari in Edwards v. First American Corp., another Ninth Circuit decision in which the court held that a plaintiff had Article III standing to sue for an alleged RESPA violation that caused no actual injury. However, in 2012, the Supreme Court dismissed the appeal after oral argument with an order stating only that certiorari had been “improvidently granted.”
The case will be argued in the Supreme Court’s term that begins in October 2015. A Supreme Court decision in favor of the defendant in Spokeo could have far-reaching consequences because numerous statutes allow plaintiffs to recover statutory damages where actual damages for violations are often difficult to prove or nonexistent. In addition to the FCRA and RESPA, such statutes include the TCPA, TILA, EFTA , FDCPA, and FHA. The FCRA, RESPA and many of the other statutes that allow recovery of statutory damages can be enforced by the CFPB.
A ruling in favor of the defendant would affect state law statutory damages claims that are filed in federal court. And in addition to affecting statutory damages claims under a wide array of statutes, a ruling for the defendant could discourage the filing of class actions under those statutes.
On May 20, Ballard Spahr attorneys will hold a webinar on the potential consequences of the Supreme Court’s eventual ruling in Spokeo from 12 p.m. to 1 p.m. ET. The webinar registration form is available here.
For more on Spokeo, see our legal alert.