We can’t stand no-injury class actions – brought by plaintiffs who allege only that “I got exactly the product I paid for, and wasn’t hurt, but for X reason I paid ‘too much’ for it.” Such litigation is a waste of time and money, and is inevitably driven by class action lawyers looking for fees, not by any real injury, which is why they’re called ‘no injury” to start with. We see them in our sandbox, mostly in connection with third-party payor actions, although some FCA cases also spout similar damage theories. They’re usually based on some sort of technical violation of the FDCA. But our clients are hardly the only defendants burdened by this kind of senseless litigation for litigation’s sake.
Statutory violations – otherwise not causing harm to anyone – are widely asserted as the basis for classwide relief in many areas of the law. Such violations were at issue in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), decided last month. Spokeo came to the Court on the question of whether certain alleged violations of the Fair Credit Reporting Act (“FCRA”) could suffice to create the Article III standing needed to proceed in federal court. The Court gave the defense community some relief, at least rhetorical, from no-injury class actions – but ultimately remanded the action without making a definitive ruling on the claims before it.
In a nutshell, sufficient for our purposes here, FCRA imposes penalties for (among other things) false reporting of credit-related information. The defendant, Spokeo, operated an internet search engine that, for a fee, allowed anybody to conduct web searches on anybody else. 136 S. Ct. at 1546. Given that the Internet (present company excepted) often seems to be a giant garbage can, the plaintiff claimed that some of the information about him was false. Since the information on file was (or could be) used for determining credit, he brought a FCRA class action. Id. He sought statutory damages ($100-$1000 per “violation”), without any showing that he had ever actually been denied credit. Id. The district court dismissed for lack of standing, but the court of appeals (the Ninth) reversed. Id.
In the good part of Spokeo, the Court held that a mere “technical” statutory violation, absent any actual harm (the plaintiff had not alleged that anything came of the vaguely-pleaded search of his information) couldn’t constitutionally support an action – notwithstanding the imposition of statutory damages – because there was no “injury in fact.” Such an injury, among other things, must be “concrete.” “We have made it clear time and time again that an injury in fact must be both concrete and particularized.” Id. at 1548 (citations omitted).
A “concrete” injury must be “de facto”; that is, it must actually exist. When we have used the adjective “concrete,” we have meant to convey the usual meaning of the term − “real,” and not “abstract.” Concreteness, therefore, is quite different from particularization. “Concrete” is not, however, necessarily synonymous with “tangible.”
Id. at 1548-49 (citations to dictionaries omitted).
While Congress has some say about when intangible injury constitutes “injury in fact” sufficient to confer Article III standing to sue, that “does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. at 1549. Congress may “define injuries and articulate chains of causation that will give rise to a case or controversy where none existed before,” but only within the confines of Article III. Id. In considering the constitutionality of congressional action, courts must “consider whether an alleged intangible harm has a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit.” Id. In particular:
[Plaintiff] could not . . . allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III. Deprivation of a procedural right without some concrete interest that is affected by the deprivation is insufficient to create Article III standing.
Id. (citations and quotation marks omitted) (emphasis added).
That’s very good language, and it garnered the votes of six justices, but that is as far as the Court was willing to go. Because the Ninth Circuit had muddled the initial distinction between what was “concrete” and what was “particular,” it had failed to analyze concreteness, id, at 1550, so the Court remanded – with the following pertinent observations:
On the one hand, Congress plainly sought to curb the dissemination of false information by adopting procedures designed to decrease that risk. On the other hand, [plaintiff] cannot satisfy the demands of Article III by alleging a bare procedural violation. A violation of one of the FCRA’s procedural requirements may result in no harm. . . . In addition, not all inaccuracies cause harm or present any material risk of harm . . . . It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.
Id. (emphasis added).
It seems to us that in Spokeo, the defendants came away with a very tasty half a loaf, both some very good language (emphasized above) and the reversal of an adverse appellate ruling, the but without a final ruling that this or that allegation of a statutory violation flat out fails the case or controversy test of Article III. We see being able to use the same language against allegations of technical FDCA violations (some examples being recordkeeping, language of particular DHCP letters, formatting, and many clinical trial regulations), as well as FCA claims that delve into the intricacies of statutory reimbursement schemes. Given what the Court did hold in Spokeo, we’d much rather be in our shoes than in those of the plaintiff class action bar.