Hold Up, Experian Case Halts for Spokeo Decision

In our fascinating legal world, there are times when even judges do not know what the just ruling should be. Whether a lawsuit brings up points previously unexplored or an overarching standard has yet to be set, some cases need to be put on hold for the sake of consistency. Past rulings tend to serve as sort of guidelines for future litigation – and it’s no different in the realm of class action law. And, as you sort through some of the more confusing aspects, it tends to get pretty interesting.

The first case we are looking at finds Experian up against allegations that it misreported short sales as foreclosures, producing inaccurate and misleading reports about consumers. The way that it breaks down, mortgage lenders could possibly misinterpret credit information, see that someone “foreclosed” and make it significantly harder for them to go about purchasing a home. But is the fear of something like this happening enough to justify a lawsuit? One problem courts have been having is determining whether the publication of false information amounts to “concrete harm.” It’s because of this gray area that the Experian suit has been put on hold until a decision is made in another highly anticipated case.

Enter Spokeo Inc. v. Thomas Robins.

Here, we have another proposed class action claiming violations of the Fair Credit Reporting Act (FCRA). In the suit, Spokeo, a “people search engine,” is accused of publishing bogus information about people on their website. This case is very similar to the Experian suit, with the lead plaintiff claiming that he could be harmed if potential employers relied on inaccurate information when evaluating him as a job applicant. Spokeo says the plaintiff’s fear can’t be considered actual harm, but the government says otherwise. The part of the case that could have serious ramifications? Whether or not the plaintiff needs to have actually have suffered an injury to have constitutional standing for his claims.

So, I mentioned ramifications, and here is where it starts to get interesting. Should the court rule in favor of the plaintiff, finding that the litigation can proceed without the presence of concrete harm, it could result in a flood of other “no-injury” class actions. It’s a shame, since class actions are supposed to be a form of defense from large corporations and not a means to exploit them.

A potential onslaught of worthless class actions seems like a big price to pay, but a ruling in the other direction could be much worse. If the court dismisses the case, siding with Spokeo, agencies that report consumer data will get a taste of just how much they can get away with, leaving them with little incentive to handle that data fairly. On top of that, not allowing cases to proceed without evidence of concrete harm would devastate privacy law and other consumer protection statutes. If the penalties set out in the law can fail, it will be harder for consumers to prove damages in court, making these types of laws almost unenforceable.

No one can say for sure what the court will decide or how far the result of their decision will reach, though we do have knowledge of previous cases that sculpted the class action landscape in a similar way. One prominent example is Wal-Mart v. Dukes.

In this suit, Wal-Mart was accused of discriminating against an expansive class of female employees. Specifically, the suit alleged that pay and promotion decisions were exclusively determined by management and that the women had all been shorted due to the fact that they were, well, women.

What made this case significant was the fact that it ended up redefining issues concerning commonality when certifying a class. The case was dismissed in favor of Wal-Mart, with the court finding that there was not a common answer as to why these women were disfavored. The ruling placed a strong emphasis, at the certification stage, on requiring plaintiffs to prove that all class members have suffered the same injury and aren’t just in similar circumstances.

It may not sound like an earth-shattering ruling, but it made a huge impact. Almost immediately, it became more difficult to bring about class actions claiming that companies discriminated across the board against a group of employees. In the first two years after the 2011 decision, the case has been reportedly cited more than 1,200 times in federal and state courts, resulting in settlements being thrown out, class actions being rejected or decertified, and the undoing of several years of litigation in some instances.

So, there you have it. The decision that they reach in the Spokeo litigation has the potential to have some wide-reaching effects. And, as we have seen before, one case is all that it may take to change how our legal system functions. We can’t be sure how far the ripples will go, but we can be sure that this is a case worth paying attention to.