Fax Lawsuits: Spokeo’s Reach Beyond the Fair Credit Reporting Act

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The requirement of standing forms the bedrock of the federal court system.  In plain English, federal courts are constitutionally empowered only to decide real fights between adverse parties (so-called “cases or controversies”), not hypothetical and abstract disputes.  That jurisdictional requirement is so important that the parties can never waive it, and the courts can and do examine standing without the parties having said a word about it.

In most cases, standing is pretty easy to figure out. there’s no doubt that someone maimed in a car crash by negligence has suffered an injury that is both concrete (ouch) and particular to them.   But assume a different set of facts.  Suppose that Congress passes a statute that limited business’s ability to send commercial faxes without consent.  Suppose further that the statute (and accompanying regulations) required that certain opt-out language had to appear in commercial faxes, even if they are received with consent, and that the penalty for  failure to include that language was $500 per fax.  Now suppose someone fails to include the correct language, and those faxes went out to people who consented to receive them.  May the recipient of that defective notice sue on behalf of himself and a few million others at $500 a fax?

That fact pattern, of course, has actually occurred in a case involving the Telephone Consumer Protection Act (TCPA). And class action suits have been filed under many statutes in which Congress enacts a variety of technical requirements and then has stated that those who violate the statute must pay statutory damages.  But if all that happened is that someone committed a technical violation and no one gets hurt, is there a federal civil case there?  The Supreme Court is now considering Spokeo v. Robinswhich is expected to addresses that question in the context of the Fair Credit Reporting Act.

There are least three potential answers, and the implications go well beyond credit reporting.

The first answer is that the presence of a federal statute is enough: if Congress passes a law that says that those who send  commercial faxes which fail to contain a specific disclosure have to pay $500 per fax, then that is the end of it: the court’s job is to defer to Congress and enforce the statute.  That was the approach that the Ninth Circuit took, and it is not likely to be the one that the Roberts Court adopts.

The second answer involves looking at the statute itself and asking two questions: (1) is the plaintiff’s alleged harm within the zone of interests covered by the statute; and (2) did the actions of the plaintiff cause harm to those interests?  The TCPA seems directed at those who receive faxes without solicitation, and is intended to give them a way to opt out so that they can revoke that consent.  Under that analysis, it would seem that someone who opted in to receiving faxes, but didn’t receive the right optout language has not suffered harm of the kind that Congress intended to remedy.

The third answer involves a straight-up constitutional rule that a technical violation of any statute, standing alone, cannot create federal court jurisdiction in the absence of “something more.”  For example, in Spokeo, the defendant was an information aggregator that (among other things) made the plaintiff out to be wealthier and better educated than he actually was.  The question there seems to boil down to whether the transmission of false information is enough to create a cause of action because it might be misused in the future.  (Phrased that way, the question answers itself.).

In any event, the transcript of the oral argument is here, and you can read the tea leaves for yourself.  But we would urge SIIA members to keep an eye out for this decision as it will have important implications not only for suits brought against publishers under the TCPA, but also for suits against technology companies under the Video Privacy Protection Act, the Stored Communications Act, and federal wiretapping statutes.

Christopher Christopher Mohr is General Counsel and VP, Intellectual Property Policy & Enforcement at SIIA.