Spokeo v. Robins - Supreme Court Limits Consumer Right of Action in Fair Credit Reporting Act Case

This article was co-authored by Joann Needleman and Jonathan Klein. It originally appeared as an Alert on ClarkHill.com, and is republished here with permission.

Joann Needleman

In a 6-2 decision, the United States Supreme Court on Monday sided with an online “people search engine” company, Spokeo.com (“Spokeo”), to provide critical insight as to when and how consumers can sue for privacy violations under the Fair Credit Reporting Act (the “FCRA”).

Thomas Robins filed a proposed class action against Spokeo in 2011, in the United States District Court for the Central District of California, arguing that because the website aggregates publicly available information upon request (from employers or otherwise), it qualifies as a “consumer reporting agency” under the FCRA.  According to the Robins suit, a search result associated with his name contained inaccurate, but generally favorable, information as to his age, marital status, educational background, and professional accomplishments. Robins claimed the false online information contained on Spokeo had caused him harm.

The District Court dismissed the case because Robins had not “properly pled” a “concrete” harm, as required by Article III of the Constitution. On appeal, the Ninth Circuit reversed, holding that because Congress implicitly created a private cause of action to enforce statutory rights, Robins’ “alleged violations of [those] rights [were] sufficient to satisfy the injury-in-fact requirement of Article III.” Thus, Robins did not need to prove he was harmed because Spokeo violated the FCRA law, which allowed Robins to pursue statutory compensation. The Ninth Circuit’s ruling highlighted a growing split amongst the Circuits on this issue.

Jonathan Klein

Today, the Supreme Court, in an opinion written by Justice Samuel Alito, re-affirmed that an injury in fact to confer standing under Article III of the Constitution “must be both concrete and particularized.” After analyzing each requirement in turn and certain types of mistakes that would not qualify (e.g., incorrect zip code without more), the Court held that “Robins cannot satisfy the demands of Article III by alleging a bare procedural violation.” Thus, the Court vacated and remanded for further proceedings, “[b]ecause the Ninth Circuit failed to fully appreciate the distinction between concreteness and particularization, [and] its standing analysis was [,therefore,] incomplete.”

The Spokeo decision is a victory for all defendants who are subject to potential claims under various federal financial consumer protection laws that contain a similar “statutory right” to sue and which now require plaintiffs seeking damages to assert a “concrete and particularized” injury in fact. The decision will have a significant impact on future consumer class actions. Because consumers now cannot solely rely on the penalties set forth in the statute to state a claim of actual harm, it will be harder for plaintiffs to prove damages. Time will tell, however, whether creative consumer attorneys will adjust their pleadings accordingly and whether a new round of motions to dismiss will determine their adequacy.