Alan Kaplinsky

Alan Kaplinsky

The U.S. Supreme Court has agreed 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 (FCRA) 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, No. 13-1339 (cert. granted, April 27, 2015), 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. The court concluded that it was constitutionally permissible for Congress to treat violations of such rights as “concrete, de facto injuries” and elevate such injuries “to the status of legally cognizable injuries.”

The Ninth Circuit noted that it was following its own precedent in Edwards v. First American Corp., 610 F.3d 514 (9th Cir. 2010). The court held in Edwards that a plaintiff had Article III standing to sue for an alleged violation of the Real Estate Settlement Procedures Act (RESPA) that caused no actual injury.

After agreeing to review the Article III issue in Edwards, the Supreme Court ultimately dismissed the appeal after oral argument with an order stating only that certiorari had been “improvidently granted.” As it also did in Edwards, the U.S. Solicitor General submitted an amicus brief in Spokeo supporting the plaintiff’s position and urging that the certiorari petition be denied.

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 Truth in Lending Act, the Telephone Consumer Protection Act (TCPA), the Electronic Fund Transfer Act, the Fair Debt Collection Practices Act (FDCPA), the Homeowners Protection Act, the Fair Housing Act, the Credit Repair Organizations Act, the Employee Retirement Income Security Act, the Lanham Act, the Americans with Disabilities Act, and the Video Privacy Protection Act.  Also, a ruling in favor of the defendant would affect state law statutory damages claims that are filed in federal court.

Not only could a Supreme Court victory for the defendant in Spokeo affect statutory damages claims under a wide array of statutes, it could also discourage the filing of class actions under those statutes. In countless class actions in federal court, the plaintiffs’ class action bar has obtained massive recoveries despite the absence of actual injury to the named plaintiffs and class members.

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.

Ballard Spahr’s Consumer Financial Services Group is nationally recognized for its guidance in structuring and documenting new consumer financial services products, its experience with the full range of federal and state consumer credit laws, and its skill in litigation defense and avoidance.

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