TCPA Connect

May 24, 2016

Spokeo, Inc. v. Robins: What Does It Mean for TCPA Lawsuits?

By Christine M. Reilly | Marc Roth | Diana L. Eisner

As reported in our recent TCPA Connect, on May 16 the United States Supreme Court issued its highly anticipated ruling in Spokeo, Inc. v. Robins. The High Court ruled that a plaintiff must show a "concrete" injury-in-fact to pursue a claim arising under the Fair Credit Reporting Act (FCRA). However, the Court's reasoning was not confined to FCRA and its decision will likely have far-reaching implications in a variety of class action lawsuits brought under other federal consumer protection statutes, including the Telephone Consumer Protection Act (TCPA).

As the Court recognized, "Congress' role in identifying and elevating intangible harms 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. Article III standing requires a concrete injury even in the context of a statutory violation." Alleging a "bare procedural violation" of a statute is insufficient to confer standing where there is no real harm.

At the pleading stage, then, the plaintiff must "clearly allege facts" demonstrating a concrete injury. "Concrete" means that the injury must be "real" and not abstract; in other words, an injury must "actually exist." However, the Supreme Court left open the possibility that the "violation of a procedural right granted by statute can be sufficient in some circumstances to constitute injury in fact." In such a case, a plaintiff need not allege any additional harm beyond the one identified by Congress.

It remains to be seen how Spokeo will be applied in TCPA cases, but Spokeo certainly adds to a defendant's arsenal of arguments designed to dispose of a case at an early stage and may help curb the explosion of TCPA lawsuits over the last several years. TCPA plaintiffs and their attorneys often take a "kitchen sink" approach to litigation and pursue TCPA lawsuits in mass volume. Complaints are typically boilerplate, containing minimal, if any, connection between the defendant's alleged violation and any actual injury. Thus, many plaintiffs pursuing claims under the TCPA do not allege a "real" injury, other than a violation of a statutory right.

In the "robocall" context, for example, many plaintiffs simply allege receipt of an unwanted call or text message. Other plaintiffs acknowledge they consented to receive text messages, but the messages do not contain the precise disclosure language required by the FCC's regulations. Now, after Spokeo, it is possible that such allegations cannot ipso facto establish standing to sue. Plaintiffs may need to allege a concrete or real harm. This may be difficult, given that so many Americans are on "unlimited" or flat-rate cell phone plans where no charges are incurred for incoming calls or text messages and no other "injury" exists other than an alleged privacy invasion. In cases where the plaintiff did not answer the phone or know about the call absent the use of Caller ID, the plaintiff may be unable to allege a concrete harm stemming from the unanswered call, potentially shuttering the lawsuit.

In the fax context, TCPA plaintiffs often allege that the opt-out notice on junk faxes does not comply with the TCPA's technical requirements, including the specific disclosure that failure to remove the recipient from the distribution list within 30 days of receipt of the opt-out request violates the law. Complaints are usually devoid of any alleged harm stemming from this type of technical violation, particularly where the fax otherwise contains opt-out instructions. Before Spokeo, this allegation may have been sufficient to establish Article III standing, despite the absence of any alleged concrete harm to the recipient. Now, this type of allegation may very well be insufficient to confer Article III standing, given the lack of any alleged harm from what appears to be a "bare procedural violation."

Importantly, standing under Article III of the U.S. Constitution is a threshold requirement to bringing suit in federal court—a plaintiff without Article III standing cannot maintain suit. Moreover, this jurisdictional issue can be raised at any time, including on appeal. So, even for defendants currently engaged in TCPA litigation, Spokeo may provide another avenue for limiting or disposing of TCPA cases.

Beyond the threshold standing issue, Spokeo has the potential to constrain a plaintiff's ability to certify a class under Rule 23 of the Federal Rules of Civil Procedure. Under Rule 23, the primary inquiry is whether questions of law or fact are common to all class members. If commonality is lacking, no class can be certified. In TCPA cases, plaintiffs have obtained class certification based on the mere receipt of an alleged call, text message, or fax giving rise to a cause of action. However, based on Spokeo, arguably each class member must demonstrate a concrete harm, which may create an individualized inquiry that is inapt for class resolution.

In practice, Spokeo may force plaintiff lawyers to select putative class representatives more carefully, and to ensure that the named representative has suffered a "concrete" injury from a purported violation. Spokeo could also curb federal lawsuits based solely on a technical violation of the TCPA, such as an insufficient or imperfect disclosure. And, given the potential impact on class certification under Rule 23, narrowed class definitions could become the trend. TCPA classes are typically broadly defined and include all persons who received the alleged call or text during the four-year statute of limitations. Class composition could shift from a class that includes everyone on the defendant's call log to a class composed only of those who have suffered specified injuries.

As this decision promises to have significant implications for TCPA litigation, members of Manatt's TCPA Compliance and Class Action Defense practice will continue to actively monitor developments in this area. For further information on this decision, please contact the authors of this newsletter noted above.