By Jonathan Schmalfeld on September 8, 2017
It is a basic legal principle that, for party to have standing to bring a case, that party must have suffered (or in some instances be under the immediate threat to suffer) some actual harm. This is commonly referred to as the injury-in-fact requirement. This requirement is particularly important in cases where class certification is sought.
In May 2016, the United States Supreme Court handed down its decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L.Ed.2d 635 (2016) regarding injury in fact in claims involving statutory violations. In Spokeo, the plaintiff brought a federal class-action complaint under the Fair Credit Reporting Act (FCRA) against Spokeo, Inc, a consumer reporting agency which gathers and provides personal information on individuals. The named plaintiff in Spokeo discovered that his Spokeo profile contained inaccurate information, and alleged that the company willfully failed to comply with the FCRA’s requirements. Under the FCRA, a reporting agency that violates any of the Act’s provisions negligently could be liable for actual damages, attorney fees and costs. If the violation is willful, the agency could be liable for either actual damages or statutory damages of up to $1,000. A consumer who alleges a willful violation may also seek punitive damages. The Court held that even when Congress provides for a right of action for a statutory violation, as it did under the FCRA, a plaintiff must still show a “concrete injury;” i.e., one that actually exists. The Court stated that plaintiff “could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement.”
The vast majority of decisions applying and interpreting Spokeo involve plaintiffs alleging violation of consumer credit protection statutes like the Fair and Accurate Credit Transaction Act and the Fair Debt Collection Practices Act. However, Spokeo is also significant for defendants in product liability class actions which lack a discernable injury claim. Courts are already applying the decision to such claims. In Hochendoner v. Genzyme Corp., 823 F.3d 724 (1st Cir., 2016), the First Circuit dismissed two consolidated class action lawsuits involving products liability allegations against a drug manufacturer. Citing Spokeo, the First Circuit held that a plaintiff who does not plausibly allege an injury-in-fact as a result of a defendant’s actions lacks standing to assert claims based on those actions. 823 F.3d at 734.
In Eike v. Allergan, Inc., 850 F.3d 315 (7th Cir. 2017), the Seventh Circuit vacated class certification orders for eight purported classes of Missouri and Illinois consumers claiming their eye medication dispensers utilized wasteful and inefficient dropper sizes. Citing Spokeo, the Seventh Circuit held, “The fact that a seller does not sell the product that you want, or at the price you’d like to pay, is not an actionable injury; it is just a regret or disappointment—which is all we have here, the class having failed to allege ‘an invasion of a legally protected interest.’” 850 F.3d at 318.
Application of Spokeo in other product liability class action cases is a work in progress. For example, if a class representative claims misleading or false labeling, but cannot show how the entire class was harmed by that mislabeling, does the class lack standing? In Greene v. Gerber Products, Co., __ F. Supp. 3d __, 2017 WL 3327583 (E.D. N.Y. Aug. 2, 2017), plaintiffs alleged that the defendant marketed and advertised an infant formula using false and misleading representations. Plaintiffs asserted that they had “third-party standing” to seek injunction against future harm under Kowalski v. Tesmer, 543 U.S. 125, 125 S.Ct. 564, 160 L.Ed.2d 519 (2004), but the court rejected this argument, holding held that they had pleaded no facts to invoke this doctrine, and accordingly lacked standing. 2017 WL 3327583, at *11. Citing Spokeo, the Gerber Product Court affirmed that where a plaintiff’s standing is at issue, courts are not at liberty to make inferences in the plaintiff’s favor.
Accordingly, defendants in product class actions should consider raising a standing defense to test whether plaintiffs’ claims are sufficient to show the concrete injury in fact required by Spokeo.