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If a law is broken, can someone sue and possibly bring a class-action lawsuit, even if that person hasn’t suffered any actual harm?
That’s the question before the U.S. Supreme Court in a Fair Credit Reporting Act (FCRA) case that had oral arguments Nov. 2. 2015.
Even if the justices decide the plaintiff cannot file a lawsuit or bring a class action, the battle over whether individuals can sue companies even when they have incurred no apparent injuries will continue in state courts, predicted Rod Fliegel, an attorney with Littler in San Francisco.
If the Supreme Court decides there are grounds for a lawsuit or class action in this case, the door will be opened to more such class actions, said Derin Dickerson, an attorney with Alston & Bird in Atlanta.
“Depending on the outcome, we could see a significant uptick in no-injury class actions, which may in turn open up businesses to significant risk,” Dickerson observed.
This case also raises issues that are relevant in data-breach class actions, said Bill Nolan, an attorney with Barnes & Thornburg in Columbus, Ohio, in an interview with SHRM Online. Like FCRA plaintiffs, the plaintiffs in data-breach cases are concerned about what will happen with their information.
HR, meanwhile, is looking for some relief from FCRA class actions, Fliegel said: “HR is terrified of FCRA. There have been so many multimillion-dollar settlements. If business wins at the Supreme Court, it would be helpful, but it may not be the end of the story.”
In the case before the court, plaintiff Thomas Robins is claiming that Spokeo, a people search engine that organizes white pages listings, public records and social network information, was issuing consumer reports in violation of the FCRA.
At oral argument, Justice Stephen Breyer noted that Robins alleged in his complaint that Spokeo had matched his name with “a photograph of the wrong person.” Breyer pointed out that Spokeo’s mistakes regarding Robins included: “A statement that he’s in his 50s; he isn’t. That he’s married; he isn’t. He’s employed in a professional or technical field; he isn’t. That he has children; he doesn’t. That he has a graduate degree; he doesn’t. That his economic health is very strong; it isn’t. And his wealth level is in the top 10 percent; it isn’t.”
The district court had dismissed the case, ruling that despite the mistakes, Robins had suffered no injury. The court paraphrased his allegations as stating “that he has been unsuccessful in seeking employment, and that he is concerned that the inaccuracies in his report will affect his ability to obtain credit, employment insurance and the like.” But the district court asserted that allegations of possible future injury do not satisfy the requirements to sue.
However, the 9th U.S. Circuit Court of Appeals reversed this decision, holding that “the violation of a statutory right is usually a sufficient injury in fact” to sue. Robins claimed the false information about him violated his statutory right to not have inaccurate, incomplete or unverifiable information in consumer reporting agency records, and also included some technical violations.
Arguing for Spokeo, Andrew Pincus, an attorney with Mayer Brown in Washington, D.C., said the 9th Circuit did not rely on the false information to determine that there was standing to sue. (‘Standing to sue” refers to whether a plaintiff has been injured as such that he or she may bring suit.) Instead, the appeals court “relied on statutory violations, period, including the violations that say nothing about falsity.” These statutory violations were the the technical violations of the FCRA.
Nevertheless, during the oral argument, Justices Breyer, Ruth Bader Ginsburg, Sonia Sotomayor and Elena Kagan tried to focus on the FCRA’s provisions dealing with inaccurate information, rather than some of its very technical provisions, said Fliegel, who has significant expertise in class-action defense and the intersection of federal and state background check laws. He said he believes Chief Justice John Roberts Jr. and Justices Antonin Scalia, Clarence Thomas and Samuel Alito Jr. want to rein in class actions and that the other, liberal justices are trying to reach a compromise decision. Fliegel said that Justice Anthony Kennedy seems to be on the fence.
Fliegel explained that the view of Breyer, Ginsburg, Sotomayor and Kagan seemed to be that a violation of a statute equals presumptive harm, while the view of Roberts, Scalia, Thomas and Alito is that there must be consequences in addition to a violation of the statute for someone to be able to sue.
Referring to the inaccuracies in Spokeo’s report on Robins, Kagan said, “These are not unimportant details. … They basically got everything wrong about him. … They basically portrayed a different person.”
Sotomayor also was concerned about the inaccuracy of Spokeo’s information. “I will tell you that I know plenty of single people who look at whether someone who’s proposed to date is married or not. So if you’re not married and there’s a report out there saying you are, that’s a potential injury,” she said.
‘Quintessential Speculative Harm’?
Roberts asked Robins’ lawyer, William Consovoy, an attorney with Consovoy McCarthy Park in Arlington, Va., to clarify what is an injury in fact sufficient to bring a lawsuit.
Consovoy responded that the harm must not be speculative, and it must not be a generalized grievance.
When pressed further to explain what he meant, Consovoy said the harm must be “concrete and particularized.”
Alito asked, “Is there anything here to indicate that anybody other than Mr. Robins ever did a search for him?”
“Not in the record that I’m aware of,” Consovoy answered.
“Then isn’t that quintessential speculative harm?” Alito asked.
“It is almost impossible to know” whether anybody searched for him and ran across the Spokeo information, Consovoy emphasized. “If he applied for a job at a major employer in this country who had 5,000 job applicants and they pulled his report, here is what Spokeo is selling: We are the arbiter of truth. If it says he went to College A on his resume and we tell you he went to College B, he is a liar. If he says he is 30 years old and we say he is 55 years old, he is a liar.”
But Roberts said, “I thought they had some disclaimer that Spokeo does not verify or evaluate each piece of data. It makes no warranties or guarantees about any of the information offered.”
Consovoy noted there were “big-picture questions,” but said the case could be “resolved on a much narrower issue. This court has always held that if the cause of action you allege can be found in the common law and is developed from the common law … you have standing,” and can bring suit. “This claim for false information follows directly from the common-law defamation,” and pre-empts defamation claims, he emphasized.
Fliegel said the outcome of the case may ultimately depend on how Justice Kennedy votes, noting that Kennedy didn’t say much during the oral argument.
This case is Spokeo v. Robins, No. 13-1339.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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