This article, written by Jay Varon and Jennifer Keas of Foley & Lardner, was originally published on February 18, 2016 in the Foley & Lardner LLP CFSL Bulletin. It is reprinted with the authors’ permission.
The consumer financial services industry is wondering how the sudden passing of United States Supreme Court Justice Antonin Scalia will affect the pending Spokeo, Inc. v. Thomas Robins case. Spokeo is a key case dealing with whether a class action lawsuit may be brought by a consumer who suffered no actual injury, based solely on a claimed technical statutory violation.
This issue affects providers operating under the Fair Credit Reporting Act (FCRA), the Real Estate Settlement Procedures Act (RESPA), the Telephone Consumer Protection Act (TCPA), and other similar statutes. Because many such laws provide for monetary penalties recoverable by affected consumers, the claims are often brought as class action lawsuits, exposing businesses to the threat of overwhelming liability—even if no one can point to any harm caused by the supposed violation.
The federal appeals courts have issued conflicting rulings on this issue. Some courts have held that the U.S. Constitution requires a plaintiff to allege an actual concrete injury to have “standing” to sue in federal court. Other courts—including the Ninth Circuit Court of Appeals in the Spokeo case—have held that Congress, by creating laws that provide for statutory rights or penalties, can authorize uninjured consumers to sue.
The Supreme Court previously took up this issue in 2011, when it agreed to review Edwards v. First American, a no-injury class action arising under RESPA. However, after holding oral argument, the Supreme Court determined that its review of that case was improvidently granted, and therefore it did not decide Edwards after all.
When the Supreme Court took the Spokeo case in 2015, it presented a new opportunity for the high court to offer clarity to businesses and consumers on minimum standing requirements.
Before the sudden passing of Justice Scalia, many of those who followed the Spokeo case and watched the oral argument believed that there was a good chance that the Supreme Court would reverse the Ninth Circuit’s ruling. At that point, observers were forecasting that Justice Kennedy would join a five-justice conservative majority—including Justice Scalia—to hold that a statutory violation cannot confer standing in the absence of actual injury.
Without Scalia, a conservative ruling in the Spokeo case is less likely to issue. Many believe that the Court now will be left evenly divided, with no majority view. If the Court issues a decision in that instance, ruling 4-4, the lower court opinion will stand as if the Supreme Court had never heard the case, with no precedent set by the Supreme Court.
Other conceivable outcomes exist. If the Supreme Court already internally decided the Spokeo case before Justice Scalia’s passing, with Scalia writing or signing on to an opinion in the case, his vote would still count posthumously. Alternatively, there is some chance that a majority could be attained among the current justices, such as if one of the four traditionally liberal justices voted to reverse the Ninth Circuit. Or, the Court could punt, opting to relist the Spokeo case to be heard again next term when there is a full nine-justice bench, or even rejecting the case as improvidently granted.
One way or the other, we should know by early summer. The Supreme Court’s current term, which began in October 2015, will continue until late June or early July. In May and June, the Court will sit only to announce orders and opinions.