On May 16, 2015, the U.S. Supreme Court issued an opinion casting doubt on the continued viability of the long-held assumption that federal courts have jurisdiction whenever a consumer alleges the defendant violated a federal consumer law statute, no matter how minor or technical the violation.
In Spokeo, Inc. v. Robins, plaintiff asserted Spokeo violated the FCRA by, among other things, failing to take adequate steps to ensure the accuracy of a "people search" report. Plaintiff alleged that Spokeo's report incorrectly stated he was married with children, employed, and in far better financial position than was the case, allegedly resulting in harm to his employment prospects. Spokeo argued that plaintiff did not have standing in federal court because there was no injury allegedly caused by the inaccuracies in the report.
Writing for the majority in a 6 to 2 decision, Justice Alito determined the Ninth Circuit had improperly reversed the lower court's finding that plaintiff did not have standing to sue Spokeo based on the allegations in his Complaint. Justice Alito began by noting a plaintiff only has standing to sue in federal court if the party alleges an injury that is (1) particular to him - as opposed to the public, generally - and (2) sufficiently "concrete," i.e., an injury that is not simply speculative or hypothetical. The Court further explained that Congress, by statute, can declare certain types of injuries as "concrete" that previously were not.
Justice Alito then stated Congress's role in declaring certain harms as concrete "does not mean a plaintiff automatically satisfies the [concrete injury] requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right." That is, a plaintiff still must allege he suffered the type of injury Congress deemed concrete; plaintiff may not simply allege the defendant violated the statute intended to prevent such injuries. Ultimately, the court remanded the case to the Ninth Circuit to determine whether plaintiff had adequately alleged a concrete injury.
The most significant aspect of the Spokeo decision appears to be the Court's conclusion that a simple violation of a federal statute, without some resulting harm, is insufficient to create federal court standing.
The appellate court's opinion arguably failed to directly address the concrete injury requirement. As such, it is difficult to determine whether the majority would have determined plaintiff's allegations satisfied the requirement, as the two dissenting justices emphatically did. That being said, taken at face value, the majority's decision signals a new requirement for a plaintiff seeking to invoke federal court jurisdiction to allege more than just a statutory violation. This requirement should make it more difficult for a consumer to get into federal court, by for instance, showing that a third-party actually read the letter or saw an account number on a letter that is the subject of aDouglas claim.
Finally, it is critical to note that the Court remanded the case to the Ninth Circuit for further disposition. Accordingly, the Court's ruling does not stand for the proposition that federal courts are barred from hearing statutory claims where the plaintiff seeks statutory damages but not actual damages, for instance, most FCRA, TCPA and some FDCPA claims. Instead, it merely holds that consumers may only have access to state courts to hear claims where the "concrete" injury requirement is not met. As such, it is our view that the Spokeodecision is not as helpful to creditors, debt collectors, debt buyers and other companies subject to the federal consumer statutes, as it may appear at first glance.
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