On May 16, 2016, the U.S. Supreme Court issued an opinion in the closely watched case Spokeo, Inc. v. Thomas Robins et al., addressing the issue of standing under the Fair Credit Reporting Act (FCRA). The Court held that in order to establish standing to sue, plaintiffs must show “an invasion of a legally protected interest” that is both “particularized and concrete.” In doing so, the Court vacated the Ninth Circuit’s prior holding that a consumer has standing under Article III to bring an action for statutory violations without alleging actual injury. See Spokeo Inc. v. Thomas Robins et al., case number 13-1339.
Spokeo operates a “people search engine” that provides information on contact data, marital status, age, occupation, and wealth level. In June 2013, the Federal Trade Commission (FTC) fined Spokeo for selling consumer profiles to potential employers without fulfilling its reporting obligations under the FCRA. The FTC’s pursuit of Spokeo, a non-traditional consumer reporting agency (CRA), signaled a more expansive application of FCRA provisions at that time, and set the groundwork for a civil action on related claims.
Thomas Robins subsequently brought action against Spokeo, alleging “willful violations” of the FCRA, which he claimed resulted in publication of inaccurate information about his job and wealth level that caused him psychological harm while struggling to find work. The district court dismissed the case, finding that Robins had failed to plead an injury-in-fact that could be traced to Spokeo. In February 2014, the Ninth Circuit reversed, holding that a showing of actual harm is not required for willful FCRA violations and that the suit could go forward under Article III without alleging actual injury.
In the 6-2 decision authored by Justice Samuel Alito, the high court vacated and remanded the Ninth Circuit’s ruling, holding that its Article III analysis was incomplete because an injury must be particularized and concrete, and that the lower court failed to address both prongs of this requirement. “Congress’ role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right,” the Court explained. “Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”
Notably, the Court did not reach the issue whether Robins had adequately alleged an injury-in-fact, and it remanded back to the lower court for further consideration. Accordingly, it remains unresolved whether a plaintiff’s intangible harm alleged from FCRA violations is “concrete” for purposes of Article III standing to allow for a private right of action based on a technical statutory violations. Ultimate resolution of this issue could make it significantly harder, or easier, for potential plaintiffs to satisfy Article III standing requirements in future privacy and consumer related class actions. Thus, this decision is yet another reminder to employers to carefully review their existing background check policies and procedures to ensure compliance.