Granting certiorari in Spokeo, Inc. v. Robins, the United States Supreme Court will consider whether Congress can confer standing to sue upon consumers who allege violations of federal statutory rights, without any actual injury, in order to seek awards of statutory penalties. 135 S. Ct. 1892 (Apr. 27, 2015). This is an issue of potentially far-reaching significance to consumer lenders, as these types of high-exposure class actions have proliferated in federal courts over the past decade.

To establish standing and federal jurisdiction under Article III of the United States Constitution, a plaintiff must show that he (1) “has suffered an ‘injury in fact’ that is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical,” (2) caused by the defendant, and (3) that it is likely that “the injury will be redressed by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw Envt’l. Servs. Inc., 528 U.S. 167, 180-81 (2000). The Supreme Court has described the injury–in–fact requirement as the “irreducible constitutional minimum” for standing. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).

Spokeo, Inc. operates a “people search engine,” which aggregates data from various public sources, including social networks. Robins filed a putative class action against Spokeo in the United States District Court for the Central District of California, alleging that it is a “consumer reporting agency” that issues “consumer reports” in violation of the Fair Credit Reporting Act. Robins alleged that the search results for him contain inaccurate information indicating that he has more education and professional experience than he really has, that he is employed while he is not, and that he is married while he is not. The amended complaint alleged that Spokeo’s search results had caused actual harm to Robins’ “employment prospects,” and that his continued unemployment had cost him money and caused “anxiety, stress, concern and/or worry about his diminished employment prospects.” These can fairly be called strained allegations of “injury-in-fact” caused by the inaccurate reports.

The district court dismissed the amended complaint for lack of standing due to failure to allege actual injury. The Ninth Circuit reversed, reasoning that the creation of a private cause of action to enforce a statutory provision evidences Congressional intent to create a statutory right. Robins v. Spokeo, Inc., 742 F.3d 409, 412-13 (9th Cir. 2014). And, “the violation of a statutory right is usually a sufficient injury in fact to confer standing.” Id. at 412 (citing Edwards v. First American Corp., 610 F.3d 514, 517 (9th Cir. 2010).) In other words, the statutory violation is the injury. In this manner, Congress can expand standing to sue in federal court merely by enacting a statute, even where the plaintiff suffers no actual harm from its violation. Actual, concrete injury has transformed into the ephemeral deprivation of a statutory right: here the right to be free of an allegedly inaccurate credit report, even if the inaccuracies may be immaterial or advantageous, and untethered to any harm.

Assuming the Supreme Court addresses the issue it has accepted, its decision could have far-reaching impact for consumer lenders. Federal statutes with statutory penalties that have given rise to no-injury class actions include not only the Fair Credit Reporting Act, but also the Truth-In-Lending Act, the Fair Debt Collection Practices Act, the Telephone Consumer Protection Act and the Real Estate Settlement Procedures Act. Needless to say, we will be watching Spokeo closely in the coming months.

For more information about Spokeo specifically, or standing to sue in federal court in general, contact Michael J. Steiner at