On April 27, 2015, the U.S. Supreme Court granted a petition for writ of certiorari in Spokeo, Inc. v. Robbins, an appeal from the ruling of the 9th Circuit Court of Appeals. The issue on appeal is whether Article III of the U.S. Constitution allows a plaintiff who has suffered no actual harm to bring a lawsuit based on a violation of a federal statute. The case is based on a lawsuit filed under the Fair Credit Reporting Act (FCRA).
In that lawsuit, the plaintiff could not prove actual harm, but could prove that the Act (which provides individuals with a right to sue) was violated. The Ninth Circuit held that a violation of statutory rights was sufficient to give Robins standing to sue...he did not need to prove actual harm.
Spokeo, Inc.'s petition for writ (available here) notes that there is a split amongst the federal appellate circuits on this issue. The Ninth, Sixth, and Seventh Circuits agree that a statutory violation by itself is sufficient to give a consumer standing to sue under the FCRA. The Fourth and Second circuits have not addressed the issue in an FCRA context, but have addressed it in the context of other federal statutes (e.g. ERISA).
Spokeo, Inc's brief also notes that a determination of the issue on appeal would have an effect on other federal consumer-protection statutes. For example the Truth In Lending Act, the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act, and the Fair Housing Act all provide for statutory damages, but don't necessarily require actual harm to the consumer.
For our clients, this is an exceptionally important issue because our circuit (the 7th) currently allows for purely statutory damages in these types of cases.
For consumers overall, this is a highly important case. If the SCOTUS rules in favor of Spokeo, Inc., then it will gut the main deterrent effect of these consumer protection statutes. By allowing consumers to claim statutory damages (even when not personally harmed) and then allowing them to recover their attorney's fees, the federal consumer protection statutes increase the likelihood that companies are held accountable for their bad acts.
Without this statutory liability, then the majority of these statutes will go largely unenforced--the federal regulatory entities have a finite amount of resources and cannot possibly pursue each and every claim.
As this case develops (likely a year or more from now), I'll be sure to update the blog.