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Experts Weigh In on Spokeo SCOTUS Decision And What It Means For Collections Industry

While most of the industry was looking at the Supreme Court’s decision on a case involving lawyers being allowed to use the letterhead of state’s attorneys general when collecting debts on behalf of the states, the Supreme Court also issued another ruling on Monday that has implications for the debt collection industry.

Spokeo v. Robins is a case that could have far-reaching implications for anyone who files class-action lawsuits, making it harder for plaintiffs to sue for damages under laws that contain “statutory right” statutes.

The decision of the Supreme Court caught many in the industry off-guard, especially following the passing of Justice Antonin Scalia, a conservative member of the Court who passed away earlier this year.

“I think the Court came to a principled and well balanced decision that should have a lasting impact on cases (especially class-action litigation) brought under strict liability consumer protection statutes, such as the FCRA, FDCPA, TCPA and TILA,” said Scott Wortman, a partner at the law firm of Warshaw Burstein. “The Court’s finding that a plaintiff does not automatically satisfy the injury-in-fact requirement whenever a statute grants a right and purports to authorize a suit to vindicate it, should be welcome by all advocates for common-sense civil litigation reform. However, aggressive self-proclaimed consumer attorneys that target industries and companies as profit centers by exploiting technical and non-injurious violations will most likely attempt to capitalize on the Court’s language that intangible injuries can nevertheless be concrete. That said, this decision is monumental in finding that a plaintiff cannot satisfy the demands of Article III by alleging a bare procedural or technical violation.”

Wrote Joann Needleman, a partner and head of the consumer finance practice at law firm Clark Hill: The Spokeo decision is a victory for all defendants who are subject to potential claims under various federal financial consumer protection laws that contain a similar “statutory right” to sue and which now require plaintiffs seeking damages to assert a “concrete and particularized” injury in fact. The decision will have a significant impact on future consumer class actions. Because consumers now cannot solely rely on the penalties set forth in the statute to state a claim of actual harm, it will be harder for plaintiffs to prove damages. Time will tell, however, whether creative consumer attorneys will adjust their pleadings accordingly and whether a new round of motions to dismiss will determine their adequacy.

One more opinion, from Don Maurice, managing partner of the law firm Maurice Wutscher: While Spokeo does not require only real, tangible harms in all cases, it does limit a wide array of claims and makes clear that not all alleged statutory violations are accompanied by a cognizable, statutory harm. Expect Spokeo to quickly make its way into consumer financial services litigation. The next few months should see several trial court decisions that will flesh out whether certain statutory protections themselves identify harms sufficient alone for standing or whether those violations require additional, real world harms. Also, because a lack of standing can be raised at any time during the life of a case, several appeals courts may right now be looking at Spokeo’s application to matters before them.

 

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