SAN FRANCISCO (Legal Newsline) – Though a district judge used a U.S. Supreme Court decision issued last spring to dismiss a Lyft driver's proposed class action over alleged Fair Credit Reporting Act violations, that high court ruling hasn't killed all such putative actions, a Tampa, Florida-based attorney says.
"I think this was another instance of tension between the Supreme Court, a conservative body typically, and the (U.S. Court of Appeals for the Ninth Circuit in San Francisco), typically a very liberal court. I think what the Supremes were saying is that these cases, spurred by legal counsel, are attempting to turn technical violations into class actions, in which the defendant settles for a couple dollars each to the 'class' members, and nice paydays for the legal counsel."
Last month, Chief Magistrate Judge Joseph C. Spero, of the U.S. District Court for California's Northern District, relied on a Supreme Court decision in Spokeo Inc. v. Robins, handed down in May, when he dismissed with prejudice a Lyft driver's proposed class action lawsuit.
In the Spokeo case, the nation's highest court required plaintiffs to prove actual injuries rather than rely on technical violations.
"The Supremes are saying that claimants need to get beyond the technical violations and demonstrate real harm before proceeding," Froman said.
"So, as in the Spokeo case, if the plaintiff had been able to show that as a result of the false information published about him he lost a job, or was turned down for a loan or other credit, or became the target of ridicule on social media, he would have had standing to proceed. But just because they published incorrect information about it him, without harm, doesn’t create a viable claim."
In that case, Spokeo, a popular people search website, was sued by Thomas Robins, who alleged the company had willfully violated the FCRA when it published false information about him. During the course of his case, Robins was unable to show actual or imminent harm, as required under Article III of the U.S. Constitution, which prompted a District Court to grant Spokeo’s motion to dismiss.
Robins later filed an amended complaint alleging he'd suffered actual harm to his employment prospects based on what Spokeo had published about him.
The district court also dismissed that claim and Robins appealed, arguing his alleged injuries did meet Article III requirements. The U.S. Court of Appeals for the Ninth Circuit reversed the district court's dismissal, saying that violation of a statutory right is enough injury to qualify for standing under Article III.
Spokeo appealed that ruling. In a 6-2 decision handed down in May by the U.S. Supreme Court in May, Justice Samuel A. Alito Jr., writing for the majority, said the Ninth Circuit's Article III standing analysis had been incomplete because it didn't consider whether all elements of standing, including Article III's injury-in-fact requirement. The High Court sent the case back to the appeals court for further consideration about Robins' alleged injuries and the case's class action status.
Justices Ruth Bader Ginsburg and Sonia Sotomayor dissented.
As the Spokeo case made its way through the courts, an unrelated FCRA action filed by a Lyft driver, Michael Nokchan, who claimed his privacy had been violated by the ride sharing service when it conducted background checks on job applicants.
Spero ruled on Oct. 5 that Nokchan lacked under Article III because he'd not demonstrated any injuries as the result of Lyft's background checks.
"As in Spokeo, real harm would have been if he lost a job, or a job offer, or was denied a home loan or other credit that he could demonstrate stemmed from the false information, that would have been a concrete injury," Froman said.
"Or, in a collective/class action alleging failure to properly pay employees overtime, the class members would need to show they were similarly situated to the named plaintiff or plaintiffs, and like those named plaintiffs they were required to work overtime without receiving overtime pay, i.e. one-and-a-half times their regularly hourly rate."
The Lyft case is not the only action in which judges in lower courts referred to the U.S. Supreme Court's May decision in Spokeo. In September, the U.S. Court of Appeals for the Eighth Circuit cited the Spokeo decision when it dismissed a class action lawsuit brought against a Charter Communications over a former customer’s personally identifiable information.
On Oct. 6, the U.S. Court of Appeals for the 11th Circuit referred to the Spokeo decision and confirmed a plaintiff who brings a lawsuit based only on alleged statutory violation must establish standing under Article III by allege a concrete harm. In the Milwaukee case Gubala v. Time Warner Cable Inc., a U.S. District Judge also referred to Spokeo when she dismissed a putative class action that accused Time Warner of retaining subscribers’ personal identification information after they ended their service. The judge in that case ruled the plaintiff failed to show real injury under Article III.
The Spokeo decision hasn't been enough to shield Gannett Satellite Information Network from a Video Protection Privacy Act lawsuit. In New Jersey, court observers are waiting to see what impact the Spokeo decision will have in cases filed under that state's New Jersey’s Truth-in-Consumer, Contract Warranty and Notice Act.
While plaintiffs must show real injury to qualify for standing under Article III, the FCRA does provide for minimal damages in such cases, from $100 per incident up to $1,000 per incident. However, court observers have pointed out those damages are low but attorney fees in such cases, especially those that become class actions, are substantial, especially when the size of the class is large.
However, companies will not feel emboldened to not settle such cases and to, instead, fight these types of class actions, Froman said.
"Unless the claim goes to the core of their business model and a negative result would undermine the fundamentals of their business," he said. "Otherwise, like most claims, defendants are willing to make a business decision and, if they can resolve a claim without an expensive, protracted legal fight, they still will do so."