States to Supreme Court: Don’t Revive ‘Bad Old Days’ of Class Actions

Published On July 21, 2015 | By Jeff Landis | Class Action, Litigation

Attorneys General from eight states submitted an amicus brief in Spokeo v. Robins, urging the Supreme Court to overturn the 9th Circuit’s ruling that a technical violation of a statute can confer Article III standing on a plaintiff without any actual harm. The states—Alabama, Colorado, Michigan, Nebraska, Tennessee, West Virginia, Wisconsin and Wyoming—warn that the lower court’s decision “undermines the standing requirements of Article III and threatens to return us to the ‘bad old days’ of class-action abuse, where lawyer driven actions were designed to produce large fees rather than to make injured parties whole.” In doing so, the states find themselves aligned with pro-business groups like the U.S. Chamber of Commerce and the American Bankers’ Association, and technology companies like Facebook, Google and eBay, all of whom have also urged the Court to reverse the 9th Circuit’s decision.

According to the states, the 9th Circuit’s ruling improperly collapses both the Article III standing analysis and the requirements for class certification under Federal Rule of Civil Procedure 23. With respect to standing, the states argue that the 9th Circuit’s rule reduces the standing analysis “to one question—did the defendant allegedly fail to conform its behavior to the statute.” And that “[i]f the answer to that question is yes, the standing inquiry would essentially end.” With respect to class certification, the states argue that because “these actions allege a bare technical violation of the statute, issues of commonality and typicality are swept away.” Not only that, “named plaintiffs may simply waive claims of actual damages in order to avoid raising any questions about commonality or typicality.” According to the states, this turns class actions on their head “because the more insignificant the actual damages, the more likely a windfall class action will survive the certification process and force a profitable settlement.”

The states take the position that the Court can restore the appropriate balance between providing injured parties with access to courts and protecting business from abusive litigation seeking “firm-killing” damages “simply by reiterating what it has said again and again—standing requires a concrete injury. No new rules or tests are needed.” In doing so, they argue that lower courts have departed from the bedrock principles of Article III standing “by relying extensively upon dicta in a line of cases,” particularly Warth v. Seldin, 422 U.S. 490, 500 (1975), where the Court explained in a footnote that “the actual or threatened injury required by Art. III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.” According to the states, this quote —which appears in numerous opinions allowing statutory standing—“does not support the proposition that Congress has the constitutional power to confer standing without actual harm,” but rather that Congress may “create[] new chains of causation against a constitutional backdrop, subject to the same standing requirement of injury in fact as any other cause of action.”

Finally, the states caution that doing away with the Article III standing requirement could lead to overenforcement. Specifically, the states point out that a government agency determining whether to prosecute a particular behavior engages in a “complex balancing act,” which includes not only assessing whether a violation has occurred, but also “whether agency resources are best spent on this violation or another” and “whether the particular enforcement action requested best fits the agency’s overall policies.” According to the states, “the doctrine of standing, and particularly its injury-in-fact requirement, serves a role as a similar check on overenforcement” in private actions and “without the injury-in-fact requirement to constrain them, class representatives will simply seek the most lucrative action for themselves, regardless of the social benefit or the purpose of the statute in question.”

The case, Spokeo Inc. v. Robins, is currently scheduled for oral argument in the Court’s October 2015 term.

About The Author

Jeff’s practice focuses on representing clients in litigation and government investigations, with a particular focus on defending companies in complex class action lawsuits. He also assists clients in responding to formal investigations and informal inquiries conducted by the FTC, DOJ and states’ Attorney General Offices. Jeff has extensive experience in all aspects of civil litigation, including serving as trial counsel for both plaintiffs and defendants in matters pending before judges, juries, and arbitration panels.

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