Making the Intangible Concrete: Litigating Intangible Privacy Harms in a Post-spokeo World

• Publication year: 2017
• Author: By Elizabeth C. Pritzker

MAKING THE INTANGIBLE CONCRETE: LITIGATING INTANGIBLE PRIVACY HARMS IN A POST-SPOKEO WORLD

By Elizabeth C. Pritzker¹

I. INTRODUCTION

Twenty-five years ago, the Supreme Court in Lujan v. Defenders of Wildlife² declared that for a federal court to have subject matter jurisdiction in a case, the plaintiff must have Article III standing in the form of an "injury in fact" to bring the claim. Subsequently, "injury in fact" became a "bedrock" Article III prerequisite for a party invoking the jurisdictional power of the federal courts.³

Since Lujan, defendants have regularly sought to invoke the Article III "injury in fact" requirement as a shield against plaintiffs lacking tangible physical harm or monetized damages—especially against plaintiffs seeking statutory damages on behalf of a class. Such cases typically involve federal statutes designed to protect individuals from unauthorized data gathering, improper or negligent disclosure of their private information, unwanted solicitations and calls, or personal intrusions of their privacy. These statutes endow private litigants with causes of action that empower them to enforce the laws as "private attorneys general" and include statutory damages.⁴ This broad sweep of statutory power has put the question of Article III standing in the balance, raising concerns about whether Congress may grant standing to individuals who have not suffered tangible injury, in the form of a physical or economic harm, from the malfeasance at issue.

Last term, in Spokeo Inc. v. Robins,⁵ an eight-member Supreme Court⁶ aimed to clarify the Article III standing requirement for privacy-related class action lawsuits. Justice Alito's majority opinion focused on two key points: (1) that "particularized" injury and "concrete" injury are distinct, but necessary, requirements of standing; and (2) that the plaintiff's alleged "concrete" harm may be either tangible or intangible to meet Article III standing.⁷

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Particularization and concreteness have long been a feature in class action jurisprudence, but the notion of an intangible concrete harm raises new questions about how plaintiffs can successfully demonstrate such harm in federal court. Defendants also face new considerations when deciding whether to seek dismissal of consumer and privacy class actions based on lack of Article III standing. For example, defendants now need to carefully consider whether to remove a case to federal court. In the year since Spokeo was decided, many courts have remanded class actions to state courts based on a defense challenge to standing—with one court even awarding attorneys' fees for improvident removal.⁸

This Article examines privacy law cases that address the intangible harm question in the months following Spokeo, to show what has and hasn't worked for purposes of establishing Article III standing. The Article also discusses the risks defendants face in challenging plaintiffs' asserted bases for Article III standing in cases removed to federal court.

II. SPOKEO'S ARTICULATION OF ARTICLE III STANDING

Spokeo addressed issues of Article III standing for statutory violations—in this instance, a class claim alleging violations of the Fair Credit Reporting Act (FCRA). Plaintiff Thomas Robins sued Spokeo, Inc., an online "people search engine," alleging that Spokeo had published untrue facts about him, including that he was married with children, in his fifties, employed, relatively affluent, and had a graduate degree. Robins alleged all of this information was false, and that dissemination of this information had damaged his employment prospects.⁹

Robins brought suit on behalf of himself and a class of similarly situated individuals under the FCRA, which provides for statutory damages of "not less than $100 and not more than $1,000" for each willful violation "with respect to any consumer."¹⁰ The FCRA seeks to ensure "fair and accurate credit reporting."¹¹ To achieve this end, the Act regulates the creation and use of "consumer report[s]" by "consumer reporting agenc[ies]" for certain specified purposes, such as credit transactions, insurance, licensing, consumer-initiated business transactions, and employment.¹² Specifically, the FCRA requires that credit reporting agencies "follow reasonable procedures to assure maximum possible accuracy of consumer reports" and information.¹³ Robbins alleged that Spokeo had violated these and other procedural requirements of the Act.¹⁴

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The district court dismissed the proposed class action on the ground that the "alleged harm to Plaintiff's employment prospects [was] speculative, attenuated and implausible." Further, since the alleged inaccuracies, in the court's view, had actually upgraded Robins' personal and professional credentials, the court ruled that Robins had not alleged the "injury in fact" necessary for Article III standing.¹⁵ The Ninth Circuit reversed, finding that Robins had demonstrated "violations of statutory rights created by the FCRA [that] are 'concrete, de facto injuries.'"¹⁶

Justice Alito, joined by five justices,¹⁷ delivered the Supreme Court's Spokeo opinion. The opinion begins with a nod to Lujan, which "established that the 'irreducible constitutional minimum' of standing consists of three elements."¹⁸ These elements are that "[t]he plaintiff must have (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by favorable judicial decision."¹⁹ To satisfy these requirements at the pleading stage, "the plaintiff must 'clearly . . . allege facts demonstrating' each [standing] element."²⁰

Justice Alito extensively explained the "injury in fact" element of Article III standing. To establish an "injury in fact" plaintiffs must allege "an invasion of a legally protected interest"—that is both "concrete and particularized."²¹ These inquiries, while related, are not one and the same. A particularized injury "must affect the plaintiff in a personal and individual way."²² The plaintiff must "'personally [have] suffered some actual or threatened injury.'"²³

Courts must then independently assess whether the alleged injury is concrete. "Particularization is necessary to establish injury in fact," Justice Alito wrote, "but it is not sufficient. An injury in fact must also be 'concrete.'"²⁴ "A 'concrete' injury must be 'de facto'; that is, it must actually exist . . . . [It must be] 'real,' and not 'abstract.'"²⁵ But, he explained, "'[c]oncrete' is not . . . necessarily synonymous with 'tangible.'"²⁶ "Although tangible injuries²⁷ are perhaps easier to recognize," Justice Alito acknowledged that the Supreme Court has "confirmed in many of [its] previous cases that intangible injuries can nevertheless be concrete."²⁸

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In determining whether intangible injuries, such as those involving privacy or information injuries, constitute "injury in fact" for Article III purposes, Justice Alito's Spokeo opinion identifies two factors to consider: (1) does the alleged intangible harm have "a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts";²⁹ and (2) has Congress identified the intangible harm "as one that meets minimum Article III requirements"?³⁰ This Article will refer to these factors as the (1) historical precedent factor and (2) congressional identification factor.

The historical precedent factor asks whether there is historical precedent that says the intangible harm is a cognizable and redressable injury. Notably, this factor is not rooted in statute. If, for example, the plaintiff can allege an intangible harm from a defendant practice that amounts or is analogous to an intrusion upon seclusion—a specific privacy tort listed in the Restatement Second of Torts, 652(b)—she may be found to have satisfied the first Spokeo factor of "injury in fact" identified in Justice Alito's majority opinion because historical legal precedent supports the intangible harm caused by the intrusion upon seclusion tort.

The congressional intent factor has two components, both of which focus on statutory language and intent. First, has the Legislature identified in the statute a violation that amounts to a specific harm or a risk of such harm? In such circumstances, the violation of a "right granted by statute" will be sufficient to constitute injury and "a plaintiff in such circumstances need not allege any additional harm beyond the harm Congress has identified."³¹ Second, does the statute's wording offer guidance on how Congress views the nature or severity of the harm in question? Stated another way, courts should ask whether one can discern, from the statute's language or its history, a legislative attempt to "define injuries and articulate chains of causation" in such a way as to establish concreteness?³²

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The Supreme Court did not dismiss the case, as Spokeo had urged. Nor, indeed, did the Supreme Court majority apply the Spokeo principles articulated in Justice Alito's opinion to the facts in the case. Instead, the court remanded the case to the Ninth Circuit, finding that their previous analysis was "incomplete" because the panel had "overlooked" concreteness.³³ In remanding the case, the Spokeo majority took "no position" as to whether Robins had alleged a "degree of risk" of harm "sufficient to meet the concreteness requirement" for standing.³⁴

The Ninth Circuit heard arguments on the remanded case on December 13, 2016. Although the panel has not issued its opinion following remand, other Ninth Circuit panels have interpreted Spokeo and its Article III standing requirements in cases involving intangible privacy or information-related concerns. Circuit and district courts throughout the country have tackled these issues as well, but with divergent results.

III. THE AFTERMATH OF SPOKEO

Spokeo's multi-factor inquiry introduces a fair amount of ambiguity into the Article III analysis. This has led to divergent...