Supreme Court Spokeo Decision Could Affect ERISA Plan Litigation

A U.S Supreme Court decision in Spokeo Inc. v. Robins could have implications for Employee Retirement Income Security Act (ERISA) litigation.

The decision was already referenced in an order by the Supreme Court remanding the Verizon pension risk transfer lawsuit back to an appellate court. And, alerts from law firms suggest the decision will impact other ERISA litigation.

The Spokeo suit applies to the Fair Credit Reporting Act of 1970 (FCRA). Spokeo, Inc., an alleged consumer reporting agency, operates a “people search engine,” which searches a wide spectrum of databases to gather and provide personal information about individuals to a variety of users, including employers wanting to evaluate prospective employees. After Thomas Robins discovered that his Spokeo-generated profile contained inaccurate information, he filed a federal class-action complaint against Spokeo, alleging that the company willfully failed to comply with the FCRA’s requirements.

A district court dismissed Robins’ complaint, holding that he had not properly pleaded injury in fact as required by Article III. The 9th U.S. Circuit Court of Appeals reversed. Based on Robins’ allegation that “Spokeo violated his statutory rights” and the fact that Robins’ “personal interests in the handling of his credit information are individualized,” the court held that Robins had adequately alleged an injury in fact.

The Supreme Court remanded the case back to the 9th Circuit for review, finding that its Article III analysis was incomplete. It said the injury in fact requirement requires a plaintiff to show that he or she suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.”  The court further noted that a “concrete” injury need not be a “tangible” injury. It added that, Article III standing requires a concrete injury even in the context of a statutory violation; however, this does not mean that the risk of real harm cannot satisfy that requirement.

A blog by Seyfarth Shaw LLP attorney Mark Casciari says, “Add to these preconditions the Supreme Court’s Twombly holding, which said that any federal complaint, as a matter of federal civil procedure, must state a “plausible” claim, beyond speculation and conclusion, in order to be considered by a federal judge.”

Casciari notes that “Some ERISA litigation claims obviously involve concrete injuries. These include claims for denial of benefits that plan terms allow, plan investment losses resulting from a fiduciary breach and detrimental reliance on fiduciary misrepresentations. Other ERISA litigation claims less obviously involve concrete injuries. These include claims challenging a denial to provide plan documents in a timely fashion, claims challenging notice of plan amendments that arguably violate ERISA section 204(h), claims challenging a fiduciary breach attendant to an investment of plan assets in an overfunded defined pension plan, and claims challenging a failure to fund a defined benefit plan where the plaintiff has suffered no benefit denial.”

In the Verizon case, employees whose pension benefits were not transferred to an insurer had their claims of harm dismissed for lack of standing because they did not prove an injury in fact.