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U.S. justices divided over class action suit against Spokeo

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(Reuters) — The U.S. Supreme Court on Monday appeared closely divided as it considered online people-search service Spokeo Inc.’s bid to avoid a class action lawsuit for including incorrect information in its database.

The legal issue before the nine justices was whether a plaintiff can sue for a technical violation of a federal consumer law even when there is a question about whether the person has been directly harmed. Some of the court’s conservatives appeared hostile to the plaintiff’s claims but the liberal justices pushed back against Spokeo.

The case gives the conservative-leaning Supreme Court another shot at limiting class action litigation as it has done in a series of decisions including a 2011 victory for Wal Mart Stores Inc.

But Justice Anthony Kennedy, who often casts the deciding vote in close cases, was less outspoken than several of his conservative colleagues, giving little indication of how he would vote.

In 2010, plaintiff Thomas Robins filed suit in California on behalf of himself and other people potentially harmed by incorrect information about them that Spokeo might disseminate.

The suit was filed under the federal Fair Credit Reporting Act, which requires consumer reporting agencies to provide correct information. Spokeo, which says it is not a consumer reporting agency, is seeking to have the lawsuit thrown out.

Mr. Robins’ lawsuit was filed two years before Spokeo agreed to pay $800,000 to settle U.S. Federal Trade Commission claims that it had violated the Fair Credit Reporting Act when attempting to sell data to other companies.

Mr. Robins, who is unemployed, asserted that his Spokeo entry had damaged his job-seeking prospects because it contained inaccurate information. The entry, for example, stated Mr. Robins has a graduate degree, which he said is incorrect.

Chief Justice John Roberts was among the conservative members of the court who appeared sympathetic to Spokeo.

“We have a legion of cases that say you have to have actual injury” in order to sue, Justice Roberts said.

Liberal Justice Elena Kagan contested Spokeo’s assumption that Mr. Robins was not harmed. Justice Kagan said Mr. Robins’ claim “seems like a concrete injury to me” and that if a company distributed incorrect information about her, “I would feel harmed.”

A ruling is due by the end of June.

Facebook, Google and Yahoo have all faced similar lawsuits over violations of different federal laws. As many online companies have millions of users, a case can quickly become a multimillion-dollar class action.