Media, tech companies ask SCOTUS to restrict class actions in Spokeo

July 15, 2015

It would have been shocking if big business hadn’t turned out in force to back the search engine Spokeo at the U.S. Supreme Court, in a case with potentially huge consequences for class action defendants. And since the business lobby isn’t one to ignore an opportunity like Spokeo, the questions last week at the filing deadline were how many amicus briefs would come in and whether new industries would add to the chorus urging the justices to restrict class actions claiming statutory damages for violations of federal laws. The answers: More than three dozen companies, trade groups and state attorneys general spoke up for Spokeo in 17 amicus briefs, including filings from media, banking and retail businesses that hadn’t previously been involved in the case. It looks like corporate defendants do indeed regard Spokeo as a potential blockbuster.

The case presents the question of whether Congress can confer constitutional standing on plaintiffs who haven’t suffered a concrete injury but have been granted the right to bring private actions for violations of federal statutes. As Spokeo’s lawyers from Mayer Brown discuss in their merits brief, dozens of federal consumer statutes include such provisions, and plaintiffs lawyers have become adept at turning one client’s claim for small statutory damages into class actions involving thousands or even millions of class members.

Spokeo argued that the 9th U.S. Circuit Court of Appeals ignored Supreme Court precedent on constitutional standing when it held in 2014 that a violation of name plaintiff Thomas Robins’ statutory rights under the Fair Credit Reporting Act was enough to satisfy Article III’s requirement that a plaintiff show injury in order to sue in federal court.

Spokeo’s brief also suggested that the Supreme Court can sidestep the constitutional question by finding that Congress did not clearly state in the FCRA that otherwise uninjured plaintiffs have a right to sue. According to Spokeo – and to amicus filings by the Retail Litigation Center and by the U.S. Chamber of Commerce and several other trade groups – the Supreme Court should interpret the FCRA to permit the recovery of statutory damages only if a plaintiff can demonstrate a concrete injury from the defendant’s violation of the law.

The most interesting amicus briefs are by companies describing the impact on their businesses of class actions based on statutory damages. The tech industry, for instance, has been complaining for years about cases brought under the Wiretap Act, the Stored Communications Act, the Video Privacy Protection Act and the Telephone Consumer Protection Act. In a joint Spokeo brief, Facebook, Google, Netflix and other tech companies and trade groups argue that the 9th Circuit’s ruling in Spokeo puts them at special risk because their “huge volume of daily interactions with millions of different people renders them particularly vulnerable to putative class actions that allege bare statutory violations and claim statutory damages for enormous putative classes.” (The brief includes a long recounting of class actions tech companies have supposedly been terrorized into settling by the threat of crippling statutory damages to million-member classes.)

Banking groups claim in their Spokeo brief that they have been victimized by opportunistic plaintiffs lawyers wielding statutory damages claims for ATM notification and credit reporting violations. And Time Inc and media trade groups assert in a Spokeo amicus brief that privacy class actions against increasingly diversified media businesses are threatening free speech. “The fear of large civil damages awards, and the mere cost of waging a defense against numerous specious claims, inhibits the development of content by media companies, and thus indirectly chills speech,” the brief said. “This is especially true in the case of statutes such as the Video Privacy Protection Act, where the delivery of content itself (digital video) may trigger a claim.”

Robins, the class action plaintiff who triggered this fight over constitutional standing and statutory claims, was represented at the certiorari stage by Deepak Gupta of Gupta Wessler. Gupta has now been replaced by Robins’ original class action counsel from Edelson, the Chicago plaintiffs firm. I spoke on Wednesday with name partner Jay Edelson, who is planning to argue the Spokeo case, about Spokeo’s amici. Edelson, who is known for his brash style and ambitious legal theories, said he is neither surprised nor worried that so many businesses have sided with Spokeo.

“This is a big issue for a lot of companies,” he said. “They are looking out for their own self-interest.” Edelson said he is expecting amicus support from a broad array of consumer, civil rights and employment rights groups in August, after his firm files Robins’ brief on the merits. He also said the Justice Department, which unsuccessfully argued against Supreme Court review of the case, is expected to file an amicus brief, though he declined to comment on what the solicitor general may say.

Edelson said his firm decided to handle the Supreme Court briefing and argument itself because “we feel like we have a unique voice and understand these issues deeply from litigating hundreds of these cases over a decade.” Among other points he intends to make is that businesses are vastly exaggerating the existential threat from class actions for statutory violations. Of all of the cases mentioned by Spokeo’s amicus supporters, he said, there’s not a single example of a verdict or settlement for hundreds of millions of dollars.

“It’s just not true that (plaintiffs) lawyers are flocking to statutory damages cases,” he said. “They’re hard cases.”

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