SCOTUS To Revisit Standing Challenge To 'Zombie' Lawsuits

In the United States Supreme Court's 2011 term, after briefing and oral argument in First Americans v. Edwards, the Court dismissed the writ as "improvidently granted." First Am. Fin. v. Edwards, 132 S.Ct. 2536 (2012) (per curiam). First American asked whether the Real Estate Settlement Procedures Act conferred standing upon a plaintiff who alleged no personal financial injury resulting from the alleged violation of law. The case was closely watched because it raised the possibility that "no injury" class action lawsuits - sometimes more colorfully called "zombie" actions - could be barred at the federal courthouse door on constitutional standing grounds. For whatever reasons, the Court found that First American did not properly present the question of "statutory" standing to sue under Article III, § 2 of the United States Constitution.

This April 27th, the Court agreed to hear an appeal of the Ninth Circuit's decision in Robins v. Spokeo, Inc. Spokeo's business involves profiling consumers based upon data from various sources, including social networks, and selling the results to human resources professionals and others. Robins alleged willful violations of the Fair Credit Reporting Act ("FCRA") in connection with Spokeo's description of him. Robins, who was unemployed, alleged that Spokeo's misinformation harmed his employment prospects. He sought to represent a putative class. The FCRA provides statutory damages for willful violations, apparently in the absence of actual financial injury. 15 U.S.C. § 1681n. The qualifier "apparently" denotes that one circuit court of appeals, in dicta, observed that § 1681n could be read to require actual damages "but simply substitute statutory rather than actual damages for the purpose of calculating the damage award." See Dowell v. Wells Fargo Bank, NA, 517 F.3d 1024, 1026 (8th Cir. 2008) (per curiam). In any event, most plaintiffs alleging "willfulness" will not also allege actual damages, for reasons that bear upon class certification. And, as has been said about fraud, willfulness is easy to allege and difficult to prove. But most class actions settle before trial.

The district court, after some vacillation, dismissed Robins' suit for lack of Article III standing. The Ninth Circuit reversed, liberally citing to its earlier decision in the First American case for the proposition that the violation of a statutory right alone can confer standing. Robins v. Spokeo, Inc., 742 F.3d 409, 412-14 (9th Cir...