A Statutory Violation May No Longer Be Enough To Get You Into Federal Court

Under Article III of the U.S. Constitution, to establish standing in federal court, the 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 a favorable judicial decision. However, Congress simultaneously has the right to create causes of action for per se violations of a statute. In other words, Congress can create a cause of action in a case where a violation was technically committed, but no actual harm was suffered.

The interplay between Article III standing and Congress' power to establish a per se cause of action was recently considered by the U.S. Supreme Court in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). In Spokeo, plaintiff Robins sued Spokeo (a website that allows users to search individuals by name, email, or phone number) alleging a technical violation under the Fair Credit Reporting Act of 1970 (FCRA). Under the FCRA, each willful violation -- regardless of actual harm -- exposes the liable party to between $100 and $1,000 in statutory damages.

In analyzing the "injury in fact" requirement, the high Court put down a two-part test: (1) that the injury is particularized; and (2) that the injury is concrete. To be particularized, the plaintiff must be affected in a personal and individual way. To be concrete, the injury must be real, and not abstract.

Although the Court left some ambiguity in holding that a concrete harm need not be tangible (e.g., free speech), and that the risk of harm alone may be sufficient (e.g., slander per se); it ultimately found that a purely procedural violation is insufficient to establish standing.

"Article III standing requires a concrete injury even in the context of a statutory violation. For that reason, [a plaintiff] could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III."

Utilizing the Spokeo decision, in Medellin v. Ikea U.S. West Inc., the plaintiff recently convinced the Ninth Circuit to undo over five years of litigation and remand a heavily-litigated class action back to state court. By way of background, Medellin is a purported class action, claiming a violation of California's Song-Beverly Credit Card Act against Ikea for its requests of customers' ZIP codes during credit and debit card transactions. The case was originally filed in California state court in 2011, then removed to federal court, a class was certified in 2012, then trimmed in 2013 and completely decertified in 2014.

Seeing the Spokeo decision as an opportunity to get out of a difficult procedural posture and re-litigate its claims in state court, Medellin argued that the federal court lacked jurisdiction to hear its strictly procedural claims. On January 13, 2017, in a two-page opinion, the Ninth Circuit agreed and instructed the district court to dismiss the case without prejudice.

Although Medellin demonstrates how a plaintiff can utilize Spokeo to keep per se statutory violations out of federal court, the question remains: what standing would a plaintiff have if an entity committed a technical violation of a federal statute where the federal court holds exclusive jurisdiction? In such a circumstance, the plaintiff may find itself without any recourse whatsoever.