Supreme Court Set to Hear Cases on “No-Injury” Class Actions

In November, the U.S. Supreme Court will hear oral argument in two cases that could have broad implications on class action litigation. Spokeo, Inc. v. Robins, which will be argued on November 2, 2015, will address whether the publication of inaccurate personal information in violation of the Fair Credit Reporting Act (FCRA) is alone sufficient to confer upon a plaintiff Article III standing. The second case, Tyson Foods, Inc. v. Bouaphaked, set for November 11, 2015, concerns the standard for class certification under F.R.C.P. 23 and whether a class may contain members who were not injured by the alleged wrongdoing.

The plaintiff in Spokeo brought a class action claiming that the company disclosed inaccurate information that harmed his employment prospects. The defendant moved to dismiss on grounds that there was no “injury in fact.” Even though the plaintiff suffered no actual damages, the district court and the Ninth Circuit found that the FCRA created a statutory right to a private cause of action that satisfied Article III’s “injury-in-fact” requirement.

In Tyson, the plaintiffs argued that the company failed to pay its employees for the time they spent donning and doffing protective gear and walking to and from their work stations. The district court and the Eighth Circuit held that class certification was proper even though some individual class members did not work overtime and were therefore not entitled to damages.

On October 14, 2015, the Justices heard argument in a third class action matter, Campbell-Ewald Co. v. Gomez. Campbell-Ewald appealed a Ninth Circuit’s decision in which that court rejected the company’s attempt to settle the plaintiff’s case through an offer of complete relief on his claim. The plaintiff claimed that he received an unsolicited recruitment text message from the U.S. Navy in violation of the Telephone Consumer Protection Act (TCPA). The circuit courts have been split on whether an offer of complete relief will moot a class representative’s claim. The Third Circuit, in Weiss v. Regal Collections, 385 F.3d 337 (3d Cir. 2004), and Seventh Circuit, in Damasco v. Clearwire Corp., 662 F.3d 891 (7th Cir. 2011), for example, have found that an offer of complete relief before the plaintiff moves for certification will generally moot his individual claim.

Class actions are a powerful litigation tool. The aggregate amounts at stake often incentivize class action lawyers to file lawsuits that would otherwise be too small to litigate. The automatic statutory damages imposed under the FCRA, the TCPA, the Truth in Lending Act, among others, have dramatically widened this market. According to the Petitioner’s Writ of Certiorari in Spokeo, “29 putative class actions claiming statutory damages under FCRA” were filed in the first four months of 2014. Similarly, as Tyson’s Petition pointed out, “professionally assembled class actions are now a fact of life that impose significant costs on companies doing business in the United States… A recent study of major companies found that 54 percent of them are currently engaged in class action litigation.” Spokeo and Tyson lower the threshold for plaintiffs in some circuits to pursue class actions where there are no actual damages or class-wide entitlement to damages. The Justices of the Supreme Court are poised to hear these issues over the next few weeks. If the oral argument in Campbell-Ewald is any indication, the attorneys appearing in November will find a hot bench. During that argument, Justice Breyer suggested: If the defendant offers the plaintiff a check, and the plaintiff won’t take it, “The judge at that point should say, the [plaintiff] has all he wants. The case is over. Goodbye. And, of course, if that person now has all he wants, he can’t certify this is a class because he isn’t harmed.” The court’s rulings could either help corporate defendants rein in “no injury” class actions in federal court, or open the door to more lawyer-driven litigation.