By remanding, the Supreme Court for the time being avoided deciding a case that could preclude bankrupts and consumers generally from suing companies that violate their statutory rights absent proof of “concrete” injury. For example, individual debtors might be disabled from suing for a willful violation of the automatic stay under Section 362(k) without proving “concrete” injury, depending on how the justices eventually rule on the issue.
The high court granted certiorari in Spokeo Inc. v. Robbins, ostensibly to decide whether Congress can confer standing to sue in federal court based on a bare violation of a federal statute when the plaintiff suffers no concrete harm. Perhaps because the justices would have been split 4-4 on the outcome had they reached the merits, the Court remanded the case for the Ninth Circuit to analyze whether the plaintiff satisfied the “concreteness” aspect of the standing requirements.
The Facts
An individual filed a class suit under the federal Fair Credit Reporting Act of 1970. The statute requires credit reporting agencies to “follow reasonable procedures to assure maximum possible accuracy.” For any willful violation, a plaintiff is entitled to actual damages or statutory damages of $100 to $1,000 per violation. In addition, the plaintiff can recover costs, attorneys’ fees, and possibly punitive damages.
The defendant, Spokeo Inc., a search engine that aggregates data about individuals, reported that the plaintiff was wealthy, employed and married with children, and had an advanced degree. In fact, the plaintiff was unemployed, unmarried and without children. The plaintiff contended in his complaint that he was injured because the report made him appear overqualified for the jobs he was seeking and implied that he might be unwilling to move given family ties.
The district court dismissed the complaint for lack of standing, but the Ninth Circuit reversed.
Certiorari Granted Without a Circuit Split
The Supreme Court granted certiorari, although no circuit court had held to the contrary, according to the plaintiff and amici filing briefs in his support. The Supreme Court’s decision to hear the case led to speculation that a majority were bent on further restricting the ability of consumers to mount lawsuits for the recovery of damages for violations created by acts of Congress, when there would have been no cause of action under common law.
The case was argued in November, before the death of Justice Antonin Scalia in February.
The Majority Opinion
Without reaching the merits, the Supreme Court remanded the case to the circuit court by a 6-2 decision handed down on May 16, in the process giving no hint of how a majority of justices would rule on the ultimate question.
The majority opinion, written by Justice Samuel A. Alito Jr., was joined by Justices Anthony M. Kennedy, Clarence Thomas, Stephen G. Breyer, Elena Kagan, and Chief Justice John G. Roberts Jr. Justice Thomas filed a concurring opinion. Justice Ruth Bader Ginsburg dissented in an opinion that was joined by Justice Sonia Sotomayor.
Justice Alito’s opinion purports to lay out the Court’s traditional jurisprudence on the constitutional aspects of standing, ostensibly to aid the Ninth Circuit on remand. Standing, he said, is rooted in the constitutional requirement for the existence of a case or controversy. Among the three constitutional requirements, there must be “injury in fact.” Congress, according to Justice Alito, cannot create standing by statute when none would exist in a constitutional sense.
To establish “injury in fact,” the plaintiff must show invasion of a legally protected right that is “concrete and particularized.” To be “particularized,” it “must affect the plaintiff in a personal and individual way.” Particularization is necessary but not enough in itself. The injury, he said, must also be “concrete.” To be “concrete,” the injury “must actually exist.” Nonetheless, “intangible injuries can nevertheless be concrete,” Judge Alito said.
Although “Congress is well positioned to identify intangible harms,” Justice Alito said that injury-in-fact is not automatically satisfied “whenever a statute grants a person a statutory right and purports to authorize that person to sue.” Significantly, he said that constitutional “standing requires a concrete injury even in the context of a statutory violation.”
Faulting the circuit court for not analyzing the “concreteness” requirement, Justice Alito remanded the case. The plaintiff, he said, cannot show “concreteness” by proving a “bare procedural violation,” such as an incorrect zip code. “It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm,” he said.
The Dissenters
Justice Ginsburg wrote a dissenting opinion, joined by Justice Sotomayor. Although Justice Ginsburg agreed “with much of the Court’s opinion,” she disagreed about the need for remand.
The plaintiff’s allegations “carry him across the threshold” of “concreteness,” Justice Ginsburg said, because the Court’s “particularity” precedents bar “complaints raising generalized grievances, seeking relief that no more benefits the plaintiff than it does the public at large.”
For Justice Ginsburg, the plaintiff’s complaint was adequate because he did not “seek redress for harm to the citizenry, but for Spokeo’s spread of misinformation specifically about him.”
After Remand
Although it is clear that Justices Ginsburg and Sotomayor believe there is standing, nothing in Justice Alito’s majority opinion reveals how he and the other five justices see the outcome, nor does it imply that the Ninth Circuit misunderstood the law. Consequently, the circuit court is likely to stand by its prior reversal and uphold the plaintiff’s standing to sue, giving rise to another petition for certiorari.
There is no assurance that the high court will grant certiorari a second time. Before Justice Scalia’s death, there may have been a majority to reverse the Ninth Circuit and find no standing. The outcome now may depend on the inclinations of whoever replaces Justice Scalia.
If it becomes clear that the new member of the court would form a majority to hold that the plaintiff had constitutional standing, the court might not grant certiorari a second time in the continuing absence of a circuit split. Still, the vote of only four justices is required to grant certiorari, leaving open the possibility of another argument and a decision on the merits next year in the Supreme Court. In sum, a ruling in 2017 could be the opposite of what it might have been were Justice Scalia still alive, if the new member of the Court does not have Justice Scalia’s inclinations.
Implications for Bankruptcy
An ultimate victory for Spokeo could end many lawsuits by consumers and claims by bankrupts for violations of the automatic stay. For example, some judges do not tolerate the slightest transgression of the automatic bankruptcy stay before finding a violation of the Fair Debt Collection Practices Act, or FDCPA.
The question of whether the Bankruptcy Code is the exclusive remedy for many debtors suing under the FDCPA is now on appeal in several circuits. Even assuming FDCPA suits by bankrupts are allowed to stand, a lack of standing could bar a debtor from suing a creditor under the FDCPA for filing a time-barred claim, absent a showing of concrete damages.
When it comes to filing claims barred by the statute of limitations, other creditors or a trustee might have standing, but not a debtor who enjoys a discharge of the debt in any event.
Likewise, a debtor might be unable to claim damages for violation of the automatic stay without proof of injury.