SCOTUS to decide if ‘unharmed’ plaintiffs have right to sue

April 27, 2015

(Reuters) – Just about a year ago, the U.S. Supreme Court decided not to hear a case involving a class action against a couple of Midwestern banks that didn’t post both of the required notices on its ATM machines. The banks’ petition for certiorari raised the same question that had piqued the Supreme Court’s interest in the 2011 case First American Financial v. Edwards: Can Congress confer constitutional standing on otherwise uninjured consumers by giving them a private right of action? But the justices mysteriously dismissed First American on the last day of their term in 2012 and were unwilling to revisit the tough question of Congress and consumers’ right to sue in the ATM case, prompting me to ask in a column if the Supreme Court had lost its zeal to curb consumer class actions.

That may have been premature. On Monday, the justices granted the search site Spokeo’s petition for certiorari in Spokeo v. Robins, a case in which the 9th U.S. Circuit Court of Appeals upheld the certification of a class of consumers who claimed Spokeo owes them statutory damages for violations of the Fair Credit Reporting Act. Spokeo’s counsel of record, Andrew Pincus of Mayer Brown, framed the question presented as broadly as it was in Edwards and the ATM case: “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?”

As Mayer Brown emphasized in its petition – and as amici including eBay, Facebook and Google underscored – the Supreme Court’s answer to that question will impact not just class actions brought under the Fair Credit Reporting Act but also cases citing the Telephone Consumers Protection Act, the Americans With Disabilities Act, the Truth in Lending Act and a half-dozen other federal laws authorizing consumers to sue for statutory damages. Big businesses have been complaining for years that these laws give plaintiffs and their lawyers an unfair advantage because they can assert statutory damages claims for hundreds of millions of dollars on behalf of thousands of consumers who suffered no concrete harm.

If the Supreme Court sides with Spokeo and holds that otherwise uninjured plaintiffs can’t sue for money damages based on statutory violations, big businesses will have another reason to fete Pincus, whose 2011 high court win in AT&T Mobility v. Concepcion upheld the validity of mandatory arbitration clauses with class action waivers. “This is an important issue that the court should address and now it will,” Pincus told me.

Pincus’ opponent in the Spokeo case is Deepak Gupta of Gupta Beck – who also represented class members in the Concepcion case. In his brief opposing certiorari, Gupta argued both that the Supreme Court need not answer the abstract question Spokeo posed and that the named plaintiff in the class action against the search site had suffered actual harm when Spokeo published inaccurate personal information about him. (Among other things, the site said he was married when he was not.) Gupta was traveling and unavailable for comment but previously told me the distinction between injury-in-fact and injury-in-the-law is “philosophically incoherent.”

In granting certiorari, the Supreme Court overruled the suggestion of the U.S. solicitor general, who argued against review of the case in a brief the justices solicited. The Justice Department – which had previously urged the Supreme Court not to take the 2011 Edwards case that the court ended up dismissing – walked back in the Spokeo brief from its argument that Congress has a broad right to a private right to sue. Instead, the SG’s brief claimed that lawmakers can elevate rights grounded in common law to statutory causes of action. “De facto injuries that were previously inadequate in law” can be transformed by Congress into “legally cognizable injuries,” according to the brief, when the law merely codifies longstanding principles of harm.

I’m expecting to see a lot of amicus firepower on both sides of the Spokeo case. The future of consumer class actions is at stake.

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2 comments

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Well we know that unharmed corporations can sue (and prevail) because their corporate religious feelings are hurt (See Hobby Lobby v. Common Sense). So how high can the hurdle be for showing damages?

Posted by AlkalineState | Report as abusive

The “class action lawsuit” concept has proved to be a great profit opportunity for legal firms but little help to consumers. It is an open question whether consumers save money when companies have to raise prices to cover the legal fees required to defend themselves against law suits. Usually compensation to the consumers is negligible and the lawyers pocket the bulk of the awards. Ralph Nader’s claim to be a “consumer advocate” looks more questionable to me every time I look at the effects of the laws his organizations lobby for.

Posted by MassResident | Report as abusive