On April 27, 2015, the U.S. Supreme Court granted a petition for writ of
Spokeo, Inc. v. Robbins, an appeal from the ruling of the 9th Circuit Court of Appeals. The issue
on appeal is whether Article III of the U.S. Constitution allows a plaintiff
who has suffered no actual harm to bring a lawsuit based on a violation
of a federal statute. The case is based on a lawsuit filed under the Fair
Credit Reporting Act (FCRA).
In that lawsuit, the plaintiff could not prove actual harm, but could prove
that the Act (which provides individuals with a right to sue) was violated.
The Ninth Circuit held that a violation of statutory rights was sufficient
to give Robins standing to sue...he did not need to prove actual harm.
Spokeo, Inc.'s petition for writ (available
here) notes that there is a split amongst the federal appellate circuits on
this issue. The Ninth, Sixth, and Seventh Circuits agree that a statutory
violation by itself is sufficient to give a consumer standing to sue under
the FCRA. The Fourth and Second circuits have not addressed the issue
in an FCRA context, but have addressed it in the context of other federal
statutes (e.g. ERISA).
Spokeo, Inc's brief also notes that a determination of the issue on
appeal would have an effect on other federal consumer-protection statutes.
For example the Truth In Lending Act, the Fair Debt Collection Practices
Act, the Telephone Consumer Protection Act, and the Fair Housing Act all
provide for statutory damages, but don't necessarily require actual
harm to the consumer.
For our clients, this is an exceptionally important issue because our circuit
(the 7th) currently allows for purely statutory damages in these types of cases.
For consumers overall, this is a highly important case. If the SCOTUS rules
in favor of Spokeo, Inc., then it will gut the main deterrent effect of
these consumer protection statutes. By allowing consumers to claim statutory
damages (even when not personally harmed) and then allowing them to recover
their attorney's fees, the federal consumer protection statutes increase
the likelihood that companies are held accountable for their bad acts.
Without this statutory liability, then the majority of these statutes will
go largely unenforced--the federal regulatory entities have a finite amount
of resources and cannot possibly pursue each and every claim.
As this case develops (likely a year or more from now), I'll be sure
to update the blog.