Adams and Reese Counsel Cole Braun had his article "Where Do We Stand on Standing?" published in the Conference on Consumer Finance Law Quarterly Report, Vol. 77, No. 1.
The original article can be accessed here.
The article is also reprinted below with permission from CCFL.
Where Do We Stand on Standing?
By Cole Braun, Adams and Reese LLP
Since the Supreme Court’s ruling in Spokeo, Inc. v. Robins[1] (“Spokeo”) in 2016, the district and circuit courts have struggled to develop and implement a uniform application of Article III standing in consumer financial litigation cases. Hopes that the Supreme Court’s revisitation of this issue, in TransUnion v. Ramirez[2] (“TransUnion”) in 2021, would bring about clarity have not fully materialized. Instead, the courts have continued to diverge in the application of Article III standing, and now, whether or not a plaintiff has a claim that can be filed in or removed to federal court depends on the circuit. So, where do we stand?
I. Brief Review of Spokeo and Transunion
Assuming that you are familiar with Spokeo and TransUnion, I’ll briefly summarize and highlight those opinions, and get to the main theme here which is a light survey of the current state of law in the various circuit courts following these opinions.
The Supreme Court in Spokeo emphasized that plaintiffs do not automatically obtain Article III standing based solely upon a statutory violation, and instead some “concrete injury” is required.[3] “Bare procedural violation[s]” are not sufficient to allow a matter to proceed in federal court.[4] However, the Court went on to opine that while “concrete” did mean “real, and not abstract” these injuries could also be “intangible.”[5] The Spokeo Court suggested that these intangible harms may have a “close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts,” and that Congress may have a role in establishing the type of harms being addressed.[6]
Following the quick divergence on the application of these principles, the Court revisited the issue five years later in TransUnion and attempted to provide some additional clarification and guidance on the issue of what constitutes a concrete intangible injury.
First, the Court in TransUnion made it clear that Congress had no authority to create standing under Article III from whole cloth.[7] As Justice Barrett stated prior to her ascent to the Supreme Court, “Article III grants federal courts the power to redress harms that defendants cause plaintiffs, not a freewheeling power to hold defendants accountable for legal infractions.”[8] Transunion effectively closed the door — opened by Spokeo — which suggested that Congress could create a concrete intangible injury through statutory fiat.[9]
Second, the Court in TransUnion, further echoed the line of thought from Spokeo that concrete intangibles bore “a close relationship” to traditionally recognized harms and included as examples “reputational harms, disclosure of private information, and intrusion upon seclusion.”[10] But, the Court warned that Spokeo “is not an open ended-invitation for federal courts to loosen Article III based on contemporary, evolving beliefs about what kinds of suits should be heard in federal courts.”[11]
Finally, the Court in TransUnion appears to allow for exceptions to the pure legal infraction bar for informational injuries arising from violations of “public disclosure or sunshine laws that entitle all members of the public to certain information” where the plaintiff alleges some form of “adverse effects” or “downstream consequences” from failing to receive the required information.[12]
The Court, as is its prerogative, left the matter for the various courts to sort through and find a workable solution to its opinions.
II. “Harms Traditionally Recognized”—How much traditional harm is required?
Per the Court’s guidance in Spokeo and TransUnion, plaintiffs have been able to successfully reframe various purely statutory violations under the “harms traditionally recognized” by the common law metric. However, the courts have diverged in its application and claims recognized in one circuit may not be allowed in another.
In all the circuits, the courts recognize the direction from the Supreme Court and provide for a careful analysis of the common-law analogues presented by plaintiffs to support their consumer claims with minimal or no apparent actual damages. However, the divergence rests upon whether there is a degree of harm metric or not.
The majority of the circuits appear to hold that there is no threshold requirement for plaintiff’s concrete intangible harms. Instead, the only requirement is that the alleged harm bear a close relationship to the common law analogue “in kind, not degree.”
The Fifth and Eleventh Circuits appear to be hesitant to adopt this framework.
Intrusion Upon Seclusion
The common law claim for intrusion upon seclusion is a frequent argument by plaintiffs to support standing for violations of various consumer statutes.
The Court in TransUnion looked favorably upon a decision from the Seventh Circuit, penned by Justice Barrett while at the Seventh Circuit, Gadelhak v. AT&T Services, Inc.[13] In Gadelhak, the court determined that the receipt of five unwanted text messages was sufficient to establish a concrete injury under the Telephone Consumer Protection Act (“TCPA”) based upon its relation to the tort of intrusion upon seclusion.[14] As explained by then Judge Barrett, “when Spokeo instructs us to analogize to harms recognized by the common law, we are meant to look for a ‘close relationship’ in kind, not degree.”[15]
Following this guidance, the Sixth Circuit recently allowed a claim alleging a violation of the federal Fair Debt Collection Practices Act (“FDCPA”) to proceed based upon a single phone call because it bore a ‘“close relationship’ to the kind of harm that the common law” claim for intrusion upon seclusion sought to protect.[16]
The Eleventh Circuit has also recently adopted the similar in kind but degrees approach from Gadelhak.[17] In Drazen v. Pinto, the Eleventh Circuit determined that the receipt of a single text message was sufficient harm to establish standing under the TCPA.[18] Just as with Gadelhak, the court determined that the alleged injury suffered for this violation of the TCPA bore a close relationship to the common-law claim for intrusion upon seclusion.[19]
However, plaintiffs do not always succeed in establishing that the harm is closely related to these traditional analogues. For example, the Fourth Circuit recently determined that a plaintiff’s claim for an alleged violation of a state privacy law protecting consumers from identity fraud and identify theft protection did not bear any close relationship to intrusion upon seclusion or other similar common law remedies.[20] The Fourth Circuit further explained that “Article III excludes plaintiffs who rely on an abstract statutory privacy injury unless it came with a nonspeculative increased risk of identity theft.”[21]
Similarly, the Fifth Circuit also cuts a finer line in evaluating these types of claims. In Perez v. McCreary, Veselka, Bragg & Allen, P.C., the Fifth Circuit rejected various arguments by the plaintiff that an alleged violation of the FDCPA after receiving a dunning letter concerning a time-barred debt was sufficient in itself to qualify as a concrete injury.[22]
Specifically, the plaintiff argued (and the court rejected) that the violation was a concrete harm sufficient to establish Article III standing under Spokeo and TransUnion because: 1) the letter subjected plaintiff to a material risk of financial harm; 2) the letter confused and misled her; 3) that it required her to waste her time by consulting with an attorney; and 4) the receipt of the unwanted letter was analogous to the tort of intrusion upon seclusion.[23]
The court in Perez quickly dealt with these theories. First, the court noted that the risk of a harm is not a concrete injury unless the plaintiff is seeking some form of “forward–looking” remedy such as declaratory or injunctive relief. However, plaintiff’s claims in Perez solely concerned a past risk of harm – i.e. the accidental payment of time-barred debt – which no longer exists and for which she was not actually injured. Thus, the court determined that a “material risk of harm” did not provide standing for suit where there was no imminent risk and the plaintiff did not suffer some form of actual injury in the past.[24]
Second, the Fifth Circuit disagreed with the trial court that plaintiff’s confusion qualified as a concrete injury vis-à-vis a claim for fraud or misrepresentation. Instead, the court explained that her injury was not like a fraudulent misrepresentation claim because “the nature of the harm” recognized by fraud claims “is a traditional, tangible harm” and thus, the plaintiff’s intangible harm “is necessarily different ‘in kind’ from her common-law analog.”[25] Third, the court found that plaintiff’s wasted time claim was not similar to any common-law analog offered by plaintiff, and as such, plaintiff did not meet her burden under Article III.[26]
Finally, the court in Perez determined that the claims were not a fit with the common-law analog of intrusion upon seclusion. The court highlighted that Congress, in the FDCPA, specifically addressed these types of unwanted calls and correspondence through the provisions which prohibit harassment and abuse.[27] However, the plaintiff in Perez did not allege a violation of this section of the FDCPA for her claim, and instead, alleged a violation of the FDCPA provisions which prohibit the use of “false, deceptive, or misleading” communications in collecting a debt.[28] Consequently, the court determined that plaintiff’s claims were not analogous, and that she could not “bootstrap the harms it recognizes as actionable to demonstrate standing to sue based on a different provision.”[29] For good measure, the court went on to state that even if the plaintiff had pled a claim under the correct provision of the FDCPA, she would still be out of luck as the “FDCPA’s harassment provision doesn’t recognize that a single unwanted message qualifies as a concrete harm.”[30]
Notably, the district courts in New York have begun to handle FDCPA claims in a similar manner to the Fifth Circuit in Perez. Despite the prior authority in the Second Circuit, which determined that “FDCPA violations are concrete harms”[31], the district courts in New York and Connecticut have determined that TransUnion presumptively overrules those decisions and have begun to dismiss these claims based upon Article III standing issues.[32] The Second Circuit has yet to revisit its pre-TransUnion case law, but the district courts appear to be pushing for appellate guidance.
Public Nuisance
The Fifth Circuit determined that the receipt of a robocall in violation of the TCPA was sufficiently related to the traditional harm of public nuisance to support plaintiff’s standing.[33] Similar to the Sixth Circuit’s decision, supra, the Fifth Circuit also found that the receipt of a single text message was sufficient to support a claim and provide a basis for standing.[34]
The Fifth Circuit pointedly disagreed with a contrary decision by the Eleventh Circuit, which held that a single text message could not establish Article III standing under the common-law analog for trespass to chattels.[35]
Public Disclosure of Private Information
The Huntstein decisions in the Eleventh Circuit may be the best (and most infamous) embodiments of the confusion over the application of the holdings from Spokeo and TransUnion.
Briefly, in Hunstein, the Eleventh Circuit first determined that the plaintiff did meet its burden in establishing that the creditor violated the FDCPA by sharing information about his debt to a third-party mailing vendor, due to its close relationship to the traditional harm of “public disclosure of private facts.”[36] Six-months later, the Eleventh Circuit panel issued a revised opinion to account for the holding in TransUnion, but did not reach a different conclusion.[37]
The matter was then escalated to an en banc review supported by several amicus curiae briefs from around the industry. On review, the Eleventh Circuit decided that the plaintiff did not actually meet his burden for standing per the TransUnion and Spokeo framework (“Hunstein III”).[38]
The Huntstein III court commented that “one of the ‘unexpected consequences of the common-law-analogy approach to identifying harms is the growing insistence on hammering square causes of action into round torts.’” Admonishing its prior opinion of overthinking the matter, the en banc court determined that the mere disclosure of information about the plaintiff’s debt to a private party was not similar to the old harm of public disclosure of a private fact because “[w]ithout publicity, none of the exposure targeted by the tort of public disclosure is at play.”[39][40]
Despite the en banc court’s insistence that this analysis is “an exercise in simplicity,” it is clear from its own reversal and issues in application, that the close relationship to a traditional harm factor in the Spokeo and TransUnion decisions are problematic and allow for creative and clever arguments to fit those square pegs.
The circuit courts are also split on whether or not a violation of the federal Fair and Accurate Credit Transactions Act of 2003 (“FACTA”) by failing to properly truncate a consumer’s credit card number on the receipt bears a close relationship to common-law analogues for breach of confidence or public disclosure claims.[41] As noted by the Sixth Circuit, the claimed violations of FACTA are not a close analogue for the common law public disclosure claims because there is no disclosure of the information to the public, and instead, the information is contained on the receipt handed to the consumer.[42] However, the D.C. Circuit in Jeffries determined that “FACTA’s truncation requirement establishes a similar relationship of trust between consumer and merchant” as a claim under the common law breach of confidence.[43] Even so, the court in Jeffries recognized that “not every FACTA violation creates a concrete injury in fact”, but the facts specific to that case were particularly “egregious” which justified a finding of concrete harm.[44]
III. Is there a need for adverse effects on informational injuries? Depends on the circuit.
An even greater split has developed in the circuit courts with the application of TransUnion and Spokeo to cases which previously recognized standing by plaintiffs asserting various forms of “informational injuries.”
The Fourth Circuit in Laufer v. Naranda Hotels, LLC recently elaborated on this issue and outlined the rift between the circuits in analyzing the claims brought by a “tester” alleging a violation of Title III of the Americans with Disabilities Act (“ADA”).[45] That court framed this issue as falling under the public disclosure or sunshine exceptions noted by the Court in TransUnion and Spokeo.
The Fourth Circuit relies upon prior Supreme Court precedent to determine that certain plaintiffs may still have standing to assert claims based upon purely information injuries.[46] As put by the Fourth Circuit, this prior precedent established the rights of individuals to assert informational injuries in support of claims for violations of the ADA, the Fair Housing Act, or the Freedom of Information Act where the plaintiff alleges that defendant failed to provide the plaintiff with “information which must be publicly disclosed pursuant to a statute.”[47]
The Fourth Circuit argues, inter alia, that the Supreme Court in Spokeo specifically highlighted these prior cases as circumstances in which “the violation of a procedural right granted by statute can be sufficient . . . to constitute injury in fact” without the need to “allege any additional harm beyond the one Congress has identified.”[48] Accordingly, the Fourth Circuit rejects the conclusions reached by its sister courts which determined that Spokeo or TransUnion disturbed the status quo as to these types of cases. The First and Eleventh circuits appear to be in agreement with the Fourth Circuit.
For the other side of the issue, the Second Circuit in Harty v. West Point Realty, Inc., explains that the TransUnion decision required that plaintiffs asserting informational injury claims for violations of public disclosure or sunshine statutes must also allege some form of “downstream consequences” from the failure to receive the information.[49] Put differently, the Second Circuit explained that the plaintiff “must show that he has an ‘interest in using the information . . . beyond bringing [his] lawsuit.’”[50] The Third, Fifth, Sixth, Seventh, Ninth and Tenth circuits appear to be in agreement with the Second.[51]
So, if you are in the Second, Third, Fifth, Sixth, Seventh, Ninth, and Tenth circuits, a plaintiff needs to plead some form of plausible “adverse effect” or “downstream consequence” in order to have their day in federal court to address their informational injuries.
However, plaintiffs in the First, Fourth, and Eleventh circuits appear more disposed to allow those claims to proceed regardless of any alleged adverse effects.
The Supreme Court granted cert to the plaintiff to review the holding from the First Circuit.[52] Unfortunately, the Supreme Court determined that the case was moot without resolving the split between the circuit courts.[53] In a notable concurring opinion, Justice Thomas indicated that he would rule on the standing issue and determine that the plaintiff lacked standing to assert a claim under the ADA.[54] Justice Thomas commented that the plaintiff could not act as a “private attorney general” in attempting to enforce the technical requirements of the ADA.[55]
Although Justice Thomas’s concurring opinion should provide some additional weight to the arguments against standing, the issue remains unresolved for now.
IV. What to make of all this?
The confusion between the circuits makes it difficult to develop a uniform policy to handle consumer claims.
The lesson from the Hunstein mess demonstrates that in defending or evaluating these claims (regardless of circuit) analyzing how and whether the purported traditional harm is an actual fit for the statutory violation is a crucial first step. Educating counsel and the court at the earliest point of any incongruity should help to prevent unwarranted claims from proceeding past the dismissal stage.
It does appear that there is momentum towards allowing claims with a proper common law analogue to proceed regardless as to the amount of alleged harm. The holding by the Seventh Circuit in Gadelhak with the blessing of the Court in TransUnion appears to be persuasive that if the traditional harm argument exists, it does not matter whether or not the harm is otherwise de minimis.
Consequently, if the traditional harm analogue fits, then the claims presented are likely going to be allowed to proceed and the focus should be on whether an actual statutory violation occurred, and if so, evaluating the risks and settlement.
As to purely informational injuries, this is truly a matter depending upon the circuit. The split between the circuits is lopsided in favor of the required additional allegations of adverse effects or downstream consequences, but if the claim is in the minority circuits, then an evaluation should focus on the alleged violation, the risks, and potential for resolution.
About the Author
Cole Braun is Counsel in the Adams and Reese Nashville office, representing business clients in commercial litigation, consumer credit litigation, financial services, and insurance recovery and advisory services. Practicing since 2008, Cole has experience in a variety of litigation areas and across a number of state and federal jurisdictions. He is licensed to practice in Tennessee, Missouri, and Illinois, numerous federal district courts, and the United States Courts of Appeals for the Seventh and Eleventh Circuit.
Endnotes
[1] 578 U.S. 330, 341 (2016).
[2] ---- U.S. ----, 141 S. Ct. 2190, 2203 (2021).
[3] 578 U.S. at 341.
[4] Id. at 342.
[5] Id. at 340.
[6] Id. at 341.
[7] 141 S. Ct. at 2207.
[8] See TransUnion, 141 S. Ct. at 2205 (quoting Casillas v. Madison Avenue Assocs., Inc., 926 F.3d 329, 332 (7th Cir. 2019) (Barrett, J.))
[9] Spokeo, 578 U.S. at 340.
[10] TransUnion, 141 S. Ct. at 2204.
[11] Id. at 2204.
[12] Id. at 2214 (quoting Trichell v. Midland Credit Mgmt., Inc., 964 F.3d 990, 1004 (11th Cir. 2020).
[13] 950 F.3d 458 (7th Cir. 2020).
[14] Id. at 462–63.
[15] Id.
[16] Ward v. NPAS, Inc., 63 F.4th 576 (6th Cir. 2023).
[17] 74 F.4th 1336 (11th Cir. 2023) (en banc).
[18] Id. at 1344.
[19] Id. at 1345.
[20] O’Leary v. TrustedID, Inc., 60 F.4th 240 (4th Cir. 2023).
[21] Id. at 244.
[22] 45 F.4th 816, 820 (5th Cir. 2022).
[23] Id. at 823.
[24] Id. at 824.
[25] Id. at 825.
[26] Id.
[27] Id. at 826 (citing 15 U.S.C. § 1692d).
[28] See 15 U.S.C. § 1692e.
[29] 45 F.4th at 827.
[30] Id.
[31] Cohen v. Rosicki, Rosicki & Assocs., P.C., 897 F.3d 75, 81 (2d Cir. 2018); Strubel v. Comenity Bank, 842 F.3d 181, 189 (2d Cir. 2016).
[32] See Gregg v. SN Servicing Corp., Case No. 21-cv-01640, 2023 WL 112800 (E.D.N.Y. Jan. 4, 2023); see also Mohadeb v. Credit Corp. Solutions, Inc., No. 22-cv-5017, 2022 WL 17832856 (E.D.N.Y. Dec. 21, 2022); see also Lanza v. Client Services, Inc., No. 21-cv-06319, 2022 WL 17787465 (E.D.N.Y. Sept. 12, 2022); see also Ergas v. Eastpoint Recovery Grp., Inc., No. 20-cv-333S, 2022 WL 2128029 (W.D.N.Y. June 4, 2022); see also, Facchini v. Resurgent Capital Services, L.P., No. 22-cv-1621, 2023 WL 4236032 (D.Conn. June 28, 2023); but see, Rosa v. Mandarich Law Group, LLP, No. 22-cv-4720, 2023 WL 4561830 at *6 n.9 (S.D.N.Y. July 17, 2023) (relying upon prior Second Circuit precedent to determine standing exists for any alleged violation of the FDCPA for the use of false, deceptive, or misleading representations).
[33] Cranor v. 5 Star Nutrition, L.L.C., 998 F.3d 686, 692 (5th Cir. 2021).
[34] Id. at 692.
[35] Id. at 692-93 (citing Salcedo v. Hanna, 936 F.3d 1162 (11th Cir. 2019)).
[36] Hunstein v. Preferred Collection and Mgmt. Servs., Inc., 994 F.3d 1341 (11th Cir. 2021).
[37] Hunstein v. Preferred Collection and Mgmt. Servs., Inc., 17 F.4th 1016 (11th Cir. 2021).
[38] Huntstein v Preferred Collection and Management Servs., Inc., 48 F.4th 1236, 1242 (11th Cir. 2022) (en banc).
[39] Id.
[40] The Tenth Circuit looked favorably upon the en banc opinion from the Eleventh Circuit in rejecting a similar claim. See Shields v. Pro. Bureau of Collections of Md., Inc., 55 F.4th 823, 828 (10th Cir. 2022).
[41] See Thomas v. TOMS King (Ohio), LLC, 997 F.3d 629, 640-41 (6th Cir. 2021) (rejecting analogue); Muransky v. Godiva Choclatier, Inc., 979F.3d 917, 931 (11th Cir. 2020) (en banc) (rejecting analogue); Kamal v. J. Crew Group, Inc., 918 F.3d 102, 118 (3d Cir. 2019) (same); but see, Jeffries v. Volume Services America, Inc., 928 F.3d 1059, 1064-65 (D.C.C. 2022) (finding close relationship with breach of confidence claims).
[42] 997 F.3d at 641.
[43] 928 F.3d at 1064.
[44] Id.
[45] See Laufer v. Naranda Hotels, LLC, 60 F.4th 156, 168- 172 (4th Cir. 2023) (first citing Laufer v. Mann Hosp., LLC, 996 F.3d 269 (5th Cir. 2021); then citing Laufer v. Looper, 22 F.4th 871 (10th Cir. 2022); then citing Harty v. W. Point Realty, Inc., 28 F.4th 435 (2d Cir. 2022); then citing Laufer v. Arpan LLC, 29 F.4th 1268 (11th Cir. 2022); and then citing Laufer v. Acheson Hotels, LLC, 50 F.4th 259 (1st Cir. 2022)). (noting disagreement with rulings in the Fifth, Second, and Tenth circuits, and agreement with holdings in the First and Eleventh circuits).
[46] 60 F.4th 156 (citing Havens Realty Corp. v. Coleman, 455 U.S. 363 (1982); Pub. Citizens v. U.S. Dep’t. of Justice, 491 U.S. 440 (1989); Fed. Election Comm’n v. Akins, 524 U.S. 11 (1998).
[47] Id. at 166.
[48] Id. at 170 (citing Spokeo, 578 U.S. at 342).
[49] Harty, 28 F.4th at 444.
[50] Id. (quoting Looper, 22 F.4th at 877-78.
[51] Kelly v. RealPage, Inc., 47 F.4th 202 (3rd Cir. 2022); Mann Hosp., LLC, 996 F.3d 269; Grae v. Corrections Corp. of America, 57 F.4th 567, 570 (6th Cir. 2023); Wadsworth v. Kross, Lieberman & Stone, Inc., 12 F.4th 665, 667–68 (7th Cir. 2021); Pucillo v. National Credit Systems, Inc., 66 F.4th 634, 2023 WL 3090627 (7th Cir. Apr. 26, 2023); Munoz v. PHH Corp., No. 22‑22‑15407, 2023 WL 2202228 (9th Cir. Feb.24, 2023); Looper, 22 F.4th 871.
[52] Acheson Hotels, LLC v. Laufer, 143 S.Ct. 1053, 215 L.Ed.2d 278 (2023).
[53] Acheson Hotels, LLC v. Laufer, 601 U.S ---, --- S.Ct. ---, 2023 WL 8378965 (2023).
[54] Id., 2023 WL 8378965, * 5-6 (Thomas, concurring).
[55] Id.