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Corporate Counsel Connect collection

December 2015 Edition

It’s down to Justice Kennedy again after Spokeo oral arguments

Jeremy Byellin, JD Thomson Reuters

Perrie WeinerBack in August’s issue, I wrote about some of the top Supreme Court cases of this term. The Supreme Court heard oral arguments on one of these, Robins v. Spokeo, Inc., at the beginning of November.

The outcome of the case has significant implications for companies – particularly those who engage in any type of collection or aggregation of personal consumer data – since they could be facing lawsuits under the Fair Credit Reporting Act (FCRA) for simply publishing inaccuracies in such collected data.

Considering that a plethora of major tech companies actively engage in the collection and/or aggregation of personal consumer data – such as Facebook, Google, Yahoo, and eBay, who have collectively filed an amicus brief in support of “people search engine” Spokeo – it’s not hard to understand the potentially wide-reaching effects of the Court’s ruling on this case.

Why Spokeo?

But first, you may be wondering how the FCRA could be used to sue Spokeo, which is not a “consumer credit reporting agency” and does not publish “consumer credit reports,” at least as those terms are commonly understood. Thanks to the act’s broad language, the FCRA’s application to Spokeo and similar organizations is beyond dispute, at least in the present case.

Specifically, Spokeo is considered a consumer reporting agency under the FCRA because it accepts “monetary fees, dues, or on a cooperative nonprofit basis, regularly engages in whole or in part in the practice of assembling or evaluating consumer credit information or other information on consumers for the purpose of furnishing consumer reports to third parties.” And these “consumer reports” generated by Spokeo also fall within the purview of the act as broadly defined by statute.

So if that’s not the issue in the case, what is? The issue is whether the plaintiff, Thomas Robins, has standing to sue Spokeo despite the fact that he has claimed no concrete injury that resulted from Spokeo’s alleged publication of inaccurate data relating to him (aside from the inaccurate publication itself).

Supreme Court split

So what did the Court have to say about this during oral arguments? True to form, the justices seemed to revert to their ideological split, with Justices Ginsburg, Breyer, Sotomayor, and Kagan favoring Robins, while Spokeo’s position found favor with Chief Justice Roberts and Justices Scalia, Thomas, and Alito. Justice Kennedy, once again, was difficult to read, and may be swayed to join either camp and thereby create a majority.

So what can we guess about how Kennedy will rule based on what he said at oral arguments? Not much, unfortunately, but he did seem to latch onto the idea that Robins would have to allege a concrete injury to prevail here. This comment, however, was in the middle of suggestions by the liberal justices that Robins had, in fact, alleged an injury, in that the dissemination of false information was that harm.

The conservatives, on the other hand, had a difficult time swallowing that argument, instead arguing that there would have to be some concrete, particularized harm that stemmed from the published inaccuracies – such as denial of credit or adverse employment action. The liberals were quick to counter on this issue, pointing out that people “just don’t know” what is being done with these reports, and that individuals rarely learn of the specific reasons why an employer refuses to hire them or why a lender refuses them credit. In other words, there may be very few circumstances in which individuals are aware of the harm suffered by inaccurate information published by tech companies like Spokeo, making suing under the FCRA very difficult.

Moving forward

From how little he said during arguments, it’s impossible to tell at this point whether Kennedy will be swayed by the liberals’ contentions or instead swayed by the conservatives’ arguments. Should he join with the liberals (albeit a big “if”), the tech sector will find itself facing fresh legal requirements to ensure accuracy on the data that it collects on individual consumers – or find itself in court.

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