July 7, 2015

Can Congress deem someone injured?

By Deborah J. La Fetra Senior Attorney

Article III of the United States Constitution allows federal courts to hear only “cases or controversies,” defined as cases brought by plaintiffs who have suffered actual (not speculative) harm that can be redressed by court action. What if a plaintiff’s asserted injury, however, is nothing more than that the defendant violated a statute? That is, can Congress pass a law that allows people to sue for violations of that law, even if the plaintiffs can show no harm from the violation? In Spokeo, Inc. v. Robins, Thomas Robins, an unemployed man, sued Spokeo, which runs a website that collects and publishes information about individuals, for willful violations of the Fair Credit Reporting Act (FCRA), because it published false information—specifically, that Robins was married, had a graduate degree, and was wealthy. The statute prohibits publication of false information, but the trial court held that publication of these particular “facts” did not cause Robins any real injury that gave him Article III standing. The Ninth Circuit Court of Appeals reversed on the theory that any statutory violation sufficed to confer standing. The Supreme Court granted certiorari, and today PLF filed its amicus brief in favor of the constitutional limitation on federal lawsuits.

PLF’s brief argues that Congress cannot unilaterally expand Article III standing. Not only does the language of the constitution provide the minimum requirements for any federal lawsuit, but the Ninth Circuit’s expansive approach to standing would have serious adverse consequences. Robins does not merely seek statutory damages for Spokeo’s publication of his own information. He purports to represent an entire class of people allegedly “injured.” By leveraging his own non-injury into a class action, Robins is seeking substantial statutory damages—potentially running to tens or hundreds of millions of dollars—for technical violations that caused no harm. Of course, a significant portion of those damages, or settlement, will be paid to Robins’ lawyers. As one defense-side attorney phrased it, “the sharks are circling.” Given the potential for exorbitant damage awards and attorneys’ fees, these actions impose massive transaction costs and are difficult to defeat early in the litigation process. “No harm” lawsuits—particularly “no harm” class actions—are a drain on both economic and judicial resources, to no one’s benefit except the plaintiffs’ bar.

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