Spokeo Heading for an Encore in the Supreme Court

August 22, 2017

Before the death of Justice Antonin Scalia, the Supreme Court granted certiorari in Spokeo Inc. v. Robins, ostensibly to decide whether Congress can confer Article III (or “constitutional”) standing to sue in federal court based on a bare violation of a federal statute when the plaintiff suffers no “concrete” harm.

Because there was no existing split of circuits, the Supreme Court’s decision to hear the case prompted speculation that a majority intended to disable consumers from mounting lawsuits to recover damages for violations created by acts of Congress, if there would be no cause of action under common law.

Perhaps because the justices would have been split 4-4 on the larger question given Justice Scalia’s death before the case was decided, the Court remanded the case by a 6-2 vote to the Ninth Circuit in May 2016 to analyze the narrow question of whether the plaintiff satisfied the “concreteness” aspect of the standing requirements.

Spokeo involves the federal Fair Credit Reporting Act of 1970, under which a violation of the statute entitles a plaintiff to actual damages or statutory damages of $100 to $1,000 per violation. In addition, the plaintiff can recover costs, attorneys’ fees, and possibly punitive damages.

The defendant is Spokeo Inc., a search engine that aggregates data about individuals. Spokeo reported that the plaintiff was wealthy, employed, married with children, and had an advanced degree. To the contrary, he was unemployed, unmarried and without children. In his complaint, the plaintiff contended that he was injured because the report made him appear overqualified for the jobs he was seeking and implied that he might be unwilling to move given family ties.

The district court dismissed the complaint for lack of constitutional standing, but the Ninth Circuit reversed. Remanding the case in the majority opinion by Justice Samuel A. Alito Jr., the Supreme Court laid out the Court’s traditional jurisprudence on the constitutional aspects of standing. Employing the Supreme Court’s admonitions on remand, the Ninth Circuit handed down its new opinion on Aug. 15, again reversing the district court, finding the plaintiff had constitutional standing and reinstating the lawsuit a second time.

Presumably, the case is now positioned for another certioraripetition. Since there is still no split of circuits, Spokeo does not seem like a prime candidate for review in the high court. However, there was no circuit split when the Court first granted certiorari in 2015. With another conservative justice now on the Supreme Court, a new grant of certiorari might indicate that a majority of the Court is bent on trimming back federal consumer protection laws.

Finding no standing under the FCRA might have a similar effect on claims under the Bankruptcy Code. For instance, some judges will not tolerate the slightest transgression of the automatic bankruptcy stay. Similarly, courts sometimes impose sanctions for violating the automatic stay even though the debtor can point to no injury aside from time spent or emotional upset.

Perhaps to head off a second review in Washington, the Ninth Circuit crafted its opinion to find constitutional standing under existing Supreme Court precedent, including the Spokeoopinion from 2016. The California-based appeals court also adopted a post-Spokeo test from the Fifth Circuit, Strubel v. Comenity Bank, 842 F.3d 181, 190 (2d Cir. 2016). In Strubel, the New Orleans-based court held that a “procedural violation” can result in “concrete injury” when the “procedural violation presents ‘a risk of real harm.’”

The Ninth Circuit’s opinion by Circuit Judge Diarmuid F. O’Scannlain said that “Strubel best elucidates the concreteness standards articulated by the Supreme Court in Spokeo.” Consequently, to grant certiorari again in Spokeo and reverse, the Supreme Court would be required to believe that two courts of appeals misinterpreted Spokeo.

The Ninth Circuit even addressed the notion that Congress cannot create a remedy without an underlying claim under common law. “Even if there are differences between” a federal statute and causes of action “recognized at common law,” Judge O’Scannlain said that Congress chose “to protect against a harm that is at least closely similar in kind [emphasis in original] to others that have traditionally served as the basis for a lawsuit.”

Having laid out its understanding of the Supreme Court’s standards, Judge O’Scannlain found a “material risk” to the plaintiff’s “concrete interest” because the misinformation “may be important to employers.” He said the misinformation would be “substantially more likely to harm [the plaintiff’s] concrete interests than the Supreme Court’s example of an incorrect zip code.”

So, sit back, relax, and see whether the Supreme Court grants certiorari again. Putting the case back on the calendar will not bode well for consumers and might end up limiting relief to debtors alleging violations of the automatic stay.

The Supreme Court’s Spokeo opinion is reported at 136 S. Ct. 1540, 194 L. Ed. 2d 635, 84 U.S.L.W. 4263. To read ABI’s discussion, click here.

The opinion is Robins v. Spokeo Inc., 11-15843 (9th Cir. Aug. 15, 2017).

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