Corporate > AG Deal Diary > Supreme Court Hears Argument in Spokeo, a Case That Could Impact Many Statutory-Damages Class Actions
23 Nov '15

Article III of the U.S. Constitution extends the federal judicial power only to “Cases” and “Controversies.”  The Supreme Court has long held that no case or controversy exists unless the party invoking federal jurisdiction suffered an “injury in fact.”  On November 2, 2015, in Spokeo v. Robins, the Supreme Court heard oral argument concerning whether that injury exists whenever there is “a bare violation of a federal statute” for which Congress has authorized a private lawsuit. 

The case arises from a lawsuit that Thomas Robins filed against Spokeo, Inc., alleging that Spokeo had willfully violated the Fair Credit Reporting Act (FCRA) by posting inaccurate information about Robins on its website.  Spokeo and various amici emphasized the enormous ramifications of allowing so called “no injury” suits like Robins’ to proceed:  if a plaintiff need show only a statutory violation, without any inquiry concerning individualized harm, class actions seeking statutory damages would loom large.  As Justice Ginsburg put it, “the brief suggests that the real danger of allowing this kind of action is that it -- it will be brought on behalf of a class, and you could get millions of plaintiffs and billions of dollars.” 

Oral argument focused on three main issues: (1) whether the right to sue over “a bare violation of a federal statute” is sufficient; (2) what proving a violation of the FCRA requires; and (3) whether the Court could craft a ruling holding that Robins had standing, even if other plaintiffs might not.

First, a majority of the Court seemed uncomfortable holding that a “bare violation” was sufficient.  Chief Justice Roberts, in particular, pressed Robins’ counsel on whether a plaintiff could bring an action for statutory damage if a company publishes false information about you “but you have no injury whatever.”  Justice Alito, concerned about “quintessential speculative harm,” wondered whether there was “anything here to indicate that anybody other than Mr. Robins ever did a search for him.”  And Justice Scalia hypothesized “a statute that says everybody has a right to sue for exorbitant expenditures by the Department of Defense,” which he thought “clearly would not be allowable.”  Justices Kagan and Breyer (at least) seemed similarly skeptical. 

Second, perhaps in response to the Court’s skepticism, Robins’ counsel spent much of the argument contending that the FCRA could be construed narrowly.  Counsel stressed that “every lower court to reach [the] question has held that” the FCRA provision at issue “requires falsity of an allegation.”  It is not enough, in other words, that certain statutorily required procedures were violated, unless false information about a plaintiff resulted.  Justice Breyer suggested that the statute would have to be construed that way “in order to save the constitutionality of the statute” in general.  But Justice Scalia thought it “impossible to read [the statute] that way because it’s simply not true.”  “You could fail to -- to follow the procedures” required by statute, he reasoned, “and still come up with accurate information.”   

Third, several members of the Court, including Justice Breyer, asked whether it was enough that Robins had suffered an injury in fact, even if that would not be true of all FCRA plaintiffs.  The Chief Justice objected, “that’s not what the Ninth Circuit based its decision on.  The Ninth Circuit says he had standing by virtue of the alleged violations of his statutory rights, without respect to whether there was harm to his employment process or related anxiety.”  Justice Kagan thought the Ninth Circuit’s opinion was “not a good” one, but suggested that it was narrower than the Chief Justice had suggested.  Justice Sotomayor pointedly asked counsel for Spokeo, “[s]o are we ruling on the outcome or are we ruling on the reasoning?” 

Although it is always difficult to predict the outcome of a case based on oral argument, the tea leaves indicate that the Court is not likely to hold that a bare violation of a federal statute is sufficient to demonstrate an “injury in fact.”  If the Court finds standing here, it will probably do so based on the dissemination of false information about Robins.  That result might stretch the scope of the question presented, but if oral argument is any guide, it seems far more likely than five Justices finding standing in response to the question posed.