If I'm Not Injured, Does My Lawsuit Make a Sound? The Supreme Court to Review "No Injury" Actions

Despite opposition from the Solicitor General, the Supreme Court of the United States granted certiorari in Spokeo, Inc. v. Robins, No. 13-1339 (U.S. Apr. 27, 2015).  The critical question in Spokeo is whether Congress can confer standing on a plaintiff who suffers no concrete harm, but who instead alleges only a statutory violation. This is actually the second time the Supreme Court will have this issue before it.  In First American Financial Corp. v. Edwards, the Supreme Court granted cert but later dismissed the writ of certiorari as improvidently granted.  Presumably, the Supreme Court will now resolve this issue, which will determine the scope of consumer and workplace-related direct and class-actions for generations, including, as described in a prior Business Advocate post — So you had a data breach – who could you owe? — actions stemming from data breaches and cyber-attacks.

Authorizing a private right of action based on a bare violation of a federal statute — without resulting injury — impacts Article III standing in a wide variety of lawsuits (crossing multiple industries) that are often referred to as “no-injury” direct and class actions.  Using data breaches as an example, courts have been on both sides with respect to what type of injury must be asserted to create standing – usually in cases where personal information has been compromised but the individual has not been actually harmed.  On one side, the First and Third Circuits have rejected standing based on the threat of future harm as too speculative. See Katz v. Pershing, LLC, 672 F.3d 64 (1st Cir. 2012); Reilly v. Ceridian Corp., 664 F.3d 38 (3d Cir. 2011).  On the other, the Seventh and Ninth Circuit allowed data breach class actions based on the threat of future harm, without any actual loss, to proceed. See Krottner v. Starbucks Corp., 628 F.3d 1139 (9th Cir. 2010); Pisciotta v. Old Nat’l Bancorp, 499 F.3d 629 (7th Cir. 2007).

Though a great deal of briefing is to come (including significant amicus briefing), the SCOTUS decision in Clapper v. Amnesty International USA, 133 S. Ct. 1138 (2013) provides insight into the direction the current Court is leaning. In Clapper, human rights organizations and media groups challenged the legitimacy of the Foreign Intelligence Surveillance Act (FISA), which eased government proscriptions on obtaining wiretaps on intelligence targets outside of the United States. The plaintiffs, all U.S. citizens, asserted standing because their future communications could be intercepted.  In a 5-4 decision, the Supreme Court held that the plaintiffs were unable to establish Article III standing because absent speculation, imminent injury that was “fairly traceable” to the FISA amendment could not be established. The Court acknowledged the elasticity of what "imminent" means, but were clear that the concept cannot be “stretched beyond its purpose” so an “alleged injury is not too speculative for Article III purposes.”  Critically for a liability analysis in data breach and other statutory violation cases, the Court determined that while plaintiffs' concerns were not “fanciful, paranoid, or otherwise unreasonable,” the harm sought to be avoided was not “certainly impending.” And standing cannot be created “merely by inflicting harm on themselves based on their fears of hypothetical future harm that is not certainly impending...If the law were otherwise, an enterprising plaintiff would be able to secure a lower standard for Article III standing simply by making an expenditure based on a nonparanoid fear.” 

An extension of this reasoning to the Spokeo matter, which centers on alleged Fair Credit Reporting Act violations, is entirely appropriate.  As the Court has established that "hypothethical future harm" is not actionable, it seems logical to conclude that a person who has not been actually injured as a result of a statutory violation cannot satisfy the injury-in-fact requirement for Article III standing.  Requiring plaintiffs to plead and establish actual injury in addition to a statutory violation would certainly disincentivize potential plaintiffs (and perhaps, more importantly, their counsel) from filing consumer, workplace, and other class actions seeking millions in statutory damages if they have to establish actual damages for individual plaintiffs.  And, of course, the converse is true.