In May of 2016, the United States Supreme Court issued a game changing decision with an immediate impact on consumer financial litigation cases. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547, (2016) ("Spokeo"). The decision provides a significant barrier to plaintiffs seeking class certification of Fair Credit Reporting Act ("FCRA") and Fair Debt Collection Practices Act ("FDCPA") claims because under Spokeo, a claim of a mere statutory violation of the FDCPA or the FCRA is insufficient to demonstrate Article III standing. Instead, plaintiffs need to contend with the argument that the class representative plaintiff will be unable to demonstrate concrete harm, thereby potentially rendering the putative class action complaint subject to dismissal. In the last several months, following the directive in Spokeo, courts have dismissed putative class action complaints after finding the named plaintiffs lacked Article III standing.
In Spokeo, the defendant owned a website allowing users to search for information about other individuals by name, email address, or phone number. Spokeo at 1546. Robins, the plaintiff, noticed his profile on the defendant's website contained inaccurate information and he brought a claim under the FCRA, which requires consumer reporting agencies to "follow reasonable procedures to assure maximum possible accuracy" of consumer reports. Id. at 1545-46 (citing 15 U.S.C. § 1681e(b)). Remanding the case to the Ninth Circuit, the Supreme Court held Robins could not satisfy the injury-in-fact requirement "by alleging a bare procedural violation" of the FCRA, divorced from any concrete harm. Id. at 1549-50.
In a 6-to-2 opinion written by Justice Samuel Alito, the court held that Congress cannot erase Article III requirements by granting a right to sue for statutory violations unaccompanied by harm. In discussing FCRA, the Supreme Court provided two examples of purely statutory violations. The first example is where a consumer reporting agency fails to provide a required notice to a user of the agency's consumer information, but the information turns out to be entirely accurate. The second example is where a consumer agency reports some trivial inaccurate information, such as an incorrect zip code, which causes no concrete harm to the consumer. The Supreme Court held both of these scenarios, without allegations of additional harm, would not suffice to satisfy the injury-in-fact requirement.
Prior to Spokeo, plaintiffs claiming violations of consumer protection statutes in the class action context sometimes limited their complaints to allegations of purely statutory violations. Spokeo makes putative class actions complaints susceptible to motions to dismiss when only pure statutory violations are alleged.
Following Spokeo, several courts have dismissed putative class action claims alleging statutory violations on this basis. In Hancock v. Urban Outfitters, Inc., 2016 U.S. App. LEXIS 13548, *7 (D.C. Cir., July 26, 2016), the D.C. Circuit remanded a case to the district court with instructions to dismiss a complaint due to lack of standing, finding that the "Supreme Court's decision in Spokeo thus closes the door on [plaintiffs'] claim that the Stores' mere request for a zip code, standing alone, amounted to an Article III injury."
Gubala v. Time Warner Cable, Inc., 2016 U.S. Dist. LEXIS 79820, *1 (E.D. Wis., June 17, 2016), began as a putative class action complaint, but was dismissed based on a lack of standing. The court in Gubala held "[g]iven the clear directive in Spokeo, the court finds that while the second amended complaint alleges a particularized injury, it does not allege a concrete harm, and therefore that the plaintiff does not have Article III standing to bring this suit."
Spokeo has already had a significant impact on putative class actions lawsuits in FCRA, FDCPA, and Telephone Consumer Protection Act cases. Class action defendants facing allegations of violations of these and other statutes will be aided by the standing requirements outlined by the Supreme Court in Spokeo.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
