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Supreme Court ruling creates burden to prove actual injury

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Last month's ruling in which the U.S. Supreme Court said plaintiffs must show evidence of “concrete” injury to successfully file suit, will help businesses defend themselves against class action litigation, many experts say.

These experts say the court's 6-2 ruling in Spokeo Inc. v. Robins will discourage class action litigation that is filed only on the basis of statutory, or technical, violations.

While the ruling focused on the Fair Credit Reporting Act, experts say it will affect a wide swath of other litigation, including employment, data breach and privacy and Employee Retirement Income Security Act cases.

The plaintiff in the Spokeo case was Thomas Robins, who claimed that inaccurate information provided by Pasadena, California-based Spokeo, which describes itself on its website as a “people search engine,” harmed his employment prospects.

The website allegedly inaccurately described Mr. Robins as holding a graduate degree, being relatively affluent and in his 50s, all of which were untrue. His lawsuit charged Spokeo with violating the Fair Credit Reporting Act and sought class action status.

Hear Andrew J. Pincus, a partner with Mayer Brown L.L.C. weigh in:

In its ruling overturning a 2014 decision by the 9th U.S. Circuit Court of Appeals in San Francisco, the Supreme Court held that even if there is a technical violation, the plaintiff must allege an injury that is “concrete and particularized” to have standing to sue under the Constitution's Article III. It said Mr. Robins' injury was particularized, but not concrete.

The high court, however, did not issue a final ruling in the case but instead sent it back to the 9th Circuit to reconsider whether Mr. Robins had adequately alleged an “injury-in-fact.”

Defense attorneys “were hoping for a decision that would categorically undercut the ability of the plaintiffs' bar” to file litigation where there was only a statutory violation of the law, said Kevin LaCroix, executive vice president of RT ProExec, a division of R-T Specialty L.L.C., who was not involved in the litigation. However, “it is still a defense-friendly decision,” he said.

“I would describe it as a clear victory on the issue we asked the court to decide, and the court has given some guidance now on what comes next,” said Andrew J. Pincus, a partner with Mayer Brown L.L.P. in Washington, who represented Spokeo in the case.

The ruling will keep some cases from being filed, and cause others to be dismissed. “Unless plaintiffs can really allege how they were impacted in a concrete way, these cases should go away,” said Michael L. Mallow, a partner with Sidley Austin L.L.P. in Los Angeles.

A. Jeff Ifrah, founding member of Ifrah Law in Washington, said: “The really outrageous aspect of these class actions” is plaintiff attorneys' ability to leverage “huge” settlements for themselves when there has been no injury. This ruling could have a chilling effect on such lawsuits, he said. The Supreme Court ruling notes, for instance, that FCRA statutory fines can range from $100 to $1,000 per violation.

In data breach cases in particular, Spokeo's affect will be based on how it lines up with the Neiman Marcus ruling, said Scott Sweeney, of counsel at Wilson, Elser, Moskowitz, Edelman & Dicker L.L.P. in Denver.

In its July 2015 ruling in Remijas v. Neiman Marcus Group L.L.C., the 7th U.S. Circuit Court of Appeals in Chicago held that plaintiffs had met the standard set by the U.S. Supreme Court by showing there was a “substantial risk of harm” from a 2013 data breach.

The Spokeo ruling has already been cited in several data breach cases, said Scott L. Vernick, a partner with Fox Rothschild L.L.P. in Philadelphia.

And it has been cited by plaintiffs and defense to support their position in litigation filed in U.S. District Court in Chicago against New York-based Barnes & Noble Inc. in connection with a 2012 data breach, In re: Barnes & Noble Pen Pad litigation.

One area of litigation in which the Spokeo ruling is expected to favor employers in particular is cases filed in connection with criminal background checks.

One of the grounds for this litigation is plaintiff attorneys' claims that contrary to the statute's requirement, employers have been including “extraneous” information in their criminal background notices, such as statements that their policies are nondiscriminatory.

“Properly interpreted, the Spokeo decision says these kinds of claims, that are purely on a statutory violation are not going to succeed,” said James A. McKenna, a principal with Jackson Lewis L.L.P. in Chicago.