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Did Congress Go Too Far?

Risk Settlements > Blogs & Articles  > Did Congress Go Too Far?

Did Congress Go Too Far?

The federal Fair Credit Reporting Act (FCRA), like a host of other federal statutes, provides for a private right to recover damages in a lawsuit that may be asserted by an individual in a class action on behalf of others similarly situated. The purpose of the FCRA is to promote the accuracy, fairness, and privacy of information in the files of consumer reporting agencies. The FCRA states that “[a]ny person who willfully fails to comply with any requirement imposed [by the FCRA ] with respect to any consumer is liable to that consumer in an amount equal to the sum of … any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 and not more than $1,000.” 15 U.S.C. § 1681n(a).

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Thomas Robins has filed a putative class action under the FCRA against Spokeo, Inc., the operator of a website that provides users with certain information about individuals, including contact data, marital status, age, occupation, economic health, and wealth level. Robins asserts that Spokeo’s website contained false information about him. For example, the website allegedly described Robins as holding a graduate degree and as wealthy, both of which are alleged to be untrue. Robins, who is unemployed, described the misinformation as causing harm to his employment prospects. Robins seeks to pursue claims on behalf of all “millions of individuals” on whose behalf he hopes to recover “the maximum statutory damages available under” FCRA—i.e., $1000 per violation. According to Spokeo, if a class were certified in this case, the potential exposure reaches into the billions of dollars.

Spokeo argued, and the district court agreed, that the case should be dismissed because Robins had not suffered any “concrete” injury. However, the Ninth Circuit Court of Appeals then reversed the dismissal and ruled that Robin’s case should go forward. Now, the Supreme Court has granted Spokeo’s request to review the case. Given the broadly-framed question raised by Spokeo, a decision by the Supreme Court in the case could potentially cause a dramatic reduction in both individual and class claims under not only the FCRA but any number of federal statutes.

A decision by the Supreme Court in the case could potentially cause a dramatic reduction in both individual and class claims under not only the FCRA but any number of federal statutes.

A plaintiff must have “standing” to assert a claim in a lawsuit. The basic idea of “standing” is that our courts will only hear cases involving real (not hypothetical) disputes by a person actually involved in the dispute (as opposed to, for example, a person wanting to complain about something that happened to someone else). Among the requirements to establish “standing,” the Supreme Court has said that a plaintiff must show that he has suffered an “injury in fact.” Friends of the Earth, Inc. v. Laidlaw Envtl. Servs, Inc., 528 U.S. 167, 180–81 (2000). Spokeo argues that Robins has not suffered any “injury in fact” and, furthermore, that Congress is prevented by the Constitution from purporting to authorize a person to being a lawsuit even where that person has not suffered “an “injury in fact.”

The Ninth Circuit rejected Spokeo’s argument. First, the court of appeals noted that Robins has alleged willful violations of the FCRA, and “the statutory cause of action does not require a showing of actual harm when a plaintiff sues for willful violations.” See, Robins v. Spokeo, Inc.,742 F.3d 409 (9th Cir. 2014), quoting 15 U.S.C. § 1681n(a) (“Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer in an amount equal to … damages of not less than $100 and not more than $1,000 ….”); and citing Beaudry v. TeleCheck Servs., Inc., 579 F.3d 702, 705–07 (6th Cir.2009) (ruling that the FCRA “permits a recovery when there are no identifiable or measurable actual damages”);Murray v. GMAC Mortg. Corp., 434 F.3d 948, 952–53 (7th Cir.2006) (ruling that the FCRA “provide[s] for modest damages without proof of injury”). The court of appeals noted that “[t]he scope of the cause of action determines the scope of the implied statutory right.” Id. “When, as here, the statutory cause of action does not require proof of actual damages, a plaintiff can suffer a violation of the statutory right without suffering actual damages.” Id.

The Ninth Circuit acknowledged that the Constitution limits the power of Congress to confer standing. See, e.g., Robins, 742 F.3d 409, citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 577 (1992 (refusing “[t]o permit Congress to convert the undifferentiated public interest in executive officers’ compliance with the law into an ‘individual right’ vindicable in the courts”); id. at 580 (Kennedy, J., concurring in part and concurring in the judgment) (“The Court’s holding that there is an outer limit to the power of Congress to confer rights of action is a direct and necessary consequence of the case and controversy limitations found in Article III.”). This constitutional limit, however, does not prohibit Congress from “elevating to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate in law.” Id. at 578 (majority opinion).

According to the Ninth Circuit, the question was whether violations of the rights created by the FCRA are “concrete, de facto injuries” that Congress may properly “elevat[e] to the status of legally cognizable injuries.” To decide, the court followed a test outlined previously by the Sixth Circuit of Appeals in Beaudry, 579 F.3d at 707. First, a plaintiff “must be ‘among the injured,’ in the sense that she alleges the defendants violated her statutory rights.” Id. Second, the statutory right at issue must protect against “individual, rather than collective, harm.” Id. The Ninth Circuit determined that Robins satisfied both elements. First, the court noted that Robins alleges that Spokeo violated his statutory rights, not just the statutory rights of other people, so he is “among the injured.” Second, the court found that interests protected by the statutory rights at issue are sufficiently concrete and particularized that Congress can elevate them. “Like ‘an individual’s personal interest in living in a racially integrated community’ or ‘a company’s interest in marketing its product free from competition,’ Robins’s personal interests in the handling of his credit information are individualized rather than collective.” Id., quoting Lujan, 504 U .S. at 578 (describing two “concrete, de facto injuries” that Congress could “elevat[e] to the status of legally cognizable injuries”). Thus, the court of appeals determined that Robins’s statutory rights were sufficient to satisfy the “injury-in-fact” requirement.

The Supreme Court has now granted review of the following question posed by Spokeo:

Whether Congress may confer Article III standing upon a plaintiff who suffers no concrete harm, and who therefore could not otherwise invoke the jurisdiction of a federal court, by authorizing a private right of action based on a bare violation of a federal statute.

Spokeo argues that a “technical” violation of a federal statute should not “ipso facto satisfy the injury-in-fact requirement”; rather, a plaintiff should be obligated to show “actual damages” even to recover “statutory” damages under the statute.

Spokeo’s Petition for a Writ of Certiorari to the Supreme Court emphasized that class actions invoking the FCRA are being filed with great frequency. “In the 40 years since FCRA was enacted, litigation has skyrocketed.” Jonathan D. Jerison & Bradley A. Marcus, A Brief History of the FCRA and the Potential for New Litigation After Dodd- Frank, Consumer Fin. Services L. Rep., Apr. 13, 2011, at 3, 4. According to Spokeo’s petition, “at least 29 putative class actions claiming statutory damages under FCRA have been filed in the first four months of this year alone” and “those lawsuits target a broad range of businesses.” Spokeo asserts that, if a statutory violation alone is sufficient to confer standing, “class actions presenting huge damages exposure based on harmless conduct will proliferate.” Id.

Spokeo’s petition suggests that a decision in the case “would have the additional practical benefit of resolving the same constitutional issue as it arises under many more federal statutes.”Id. The petition lists several statutes that might be impacted:

  • The Truth in Lending Act, which imposes requirements on financial institutions that extend credit to consumers (and provides for awards of actual and statutory damages.
  • The Fair Debt Collection Practices Act, which prohibits using certain “means to collect or attempt to collect any debt” and imposes liability for actual and statutory damages.
  • The Telephone Consumer Protection Act, which regulates telephone solicitations and provides for statutory damages.
  • The Employee Retirement Income Security Act, which imposes fiduciary duties on sponsors of retirement plans, including a duty to act in accordance with plan terms that are consistent with ERISA’s requirements and authorizes plan participants to bring civil actions against plan fiduciaries for breaches of those duties.
  • The Real Estate Settlement Procedures Act, which prohibits kickbacks in certain mortgage-loan transactions.
  • The Lanham Act, which prohibits false advertising and authorizes civil actions for violations. See 15 U.S.C. § 1125.13
  • The Fair Housing Act, which forbids discriminatory advertising for apartments and creates a private right of action to challenge discriminatory housing practices in federal court.
  • The Americans with Disabilities Act, which prohibits discrimination on the basis of disability in public accommodations and authorizes suits by private persons to enjoin such discrimination.
  • The Video Privacy Protection Act, which prohibits a “video tape service provider” from knowingly disclosing personally identifiable information concerning any consumer, and authorizes consumer lawsuits.

The United States filed a brief opposing Spokeo’s petition and arguing the Ninth Circuit was correct to reinstate to lawsuit. The parties have yet to file briefs on the merits and the Supreme Court has yet to hear argument in the case.

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