Supreme Court Update: Zubik v. Burwell (14-1418) and Spokeo v. Robbins (13-339)

May 17, 2016 Supreme Court Update

Greetings, Court Fans!

While a potential ninth justice made plans to give a high school commencement address, The Eight continued to demonstrate that, without a full complement of justices, this may be the Term Without Blockbusters. (Although, with abortion and affirmative action still on the docket, that remains unlikely.) Two more high-profile cases were disposed of yesterday with something more like a whimper than a bang. In Zubik v. Burwell (14-1418), the latest challenge to the Obamacare contraceptive mandate, the Court remanded the challenges to the various circuits whence they came for the lower courts to attempt to fashion a compromise solution. And in Spokeo v. Robbins (13-339), a closely watched case involving statutory standing, the Court declined to announce a bright-line rule that would satisfy one side or the other, instead offering some clarification of Article III's injury-in-fact requirement and remanding for the Ninth Circuit to apply the clarified standard in the first instance.

This Update will cover those two decisions. We'll be back later in the week with summaries of the other decisions handed down yesterday—Husky Int'l Electronics v. Ritz (15-145), holding that a misrepresentation is not an essential element of "actual fraud" under the Bankruptcy Code's discharge exceptions; Merrill Lynch v. Manning (14-1132), holding that the jurisdictional test established by Section 27 of the Securities Exchange Act is the same as that for deciding if a case "arises under" a federal law; and Sherrif v. Gillie (15-338), holding that the use of state letterhead by "special counsel" assigned to collect debts on behalf of a state agency does not violate the Fair Debt Collection Practices Act.

The big news yesterday came in Zubik, where a slew of religiously affiliated nonprofit organizations (most famously, the Little Sisters of the Poor) challenged the requirement of Obamacare's implementing regulations that they either provide contraceptive coverage to their female employees or submit a form to their insurer stating that they object on religious grounds to providing contraceptive coverage. Regular readers will recall that, just six days after the case was argued in March, the Court issued an unusual order asking the parties to consider, and submit briefs on, a potential compromise by which "contraceptive coverage could be provided to petitioners' employees, through petitioners' insurance companies, without any such notice from petitioners." The Court specifically contemplated a scenario in which employers with religious objections could contract at the outset for healthcare plans that did not provide contraceptive coverage, while employees who wanted it could nevertheless receive that coverage free of charge from the same insurance company (but without the affirmative employer opt-out notice that the religious employers said made them complicit in the scheme). At the time, most observers felt the unusual order revealed a 4-4 deadlock among the justices. Because there is a circuit split on this question (eight circuit courts have ruled for the Government, with the Eighth Circuit alone ruling for religious employers), an affirmance by a divided court would leave in place the uncertainty surrounding employers' obligations under the ACA's implementing regulations.

In response to the Court's order, both parties filed briefs saying they could accept a compromise along those lines—with the petitioners enthusiastically embracing the Court's suggestion and the Government accepting it with some reservations. Despite the parties' agreement, the Court sat on the case for over a month, underscoring how divisive this issue is at One First Street, where the justices appear to be divided 4-4 on the merits of the underlying challenge. Yesterday, however, the Court issued a per curiam opinion vacating the judgments below and remanding each case to its respective circuit court for further consideration of a compromise. The Court stated that remanding to the circuit courts was preferable to deciding itself because there may still be disagreement between the parties "on issues of implementation" and "the importance of those areas of potential concern is uncertain." The Court stressed that "the parties on remand should be afforded an opportunity to arrive at an approach going forward that accommodates petitioners' religious exercise while at the same time ensuring that women covered by petitioners' health plans receive full and equal health coverage, including contraceptive coverage," and all but instructed the lower courts to allow for renewed briefing and argument. Translation: Don't even try to send this case back to us before we've got a full court. In the meantime, the Court noted that the Government could rely on the fact that the petitioners have through the litigation made clear their religious objections to the contraceptive mandate to itself facilitate provision of full contraceptive coverage, as if the challenged forms had been submitted by the petitioners.

Justice Sotomayor, joined by Justice Ginsburg, authored a concurring opinion underscoring that nothing in the Court's per curiam opinion expresses a view on the merits of the underlying challenge. In particular, they wished to emphasize that the Court has not "endorse[d] the petitioners' position that the existing regulations substantially burden their religious exercise or that contraceptive coverage must be provided through a separate policy, with a separate enrollment process."

So the next chapter in the long-running saga of the ACA's contraceptive mandate will be played out in the circuit courts. Whether we'll see a return to SCOTUS will likely depend on how sincere the parties were in their willingness to accept a compromise position. In any event, one hopes the issue does not return to the Supreme Court until there is a ninth justice to break the apparent deadlock that currently exists on this issue.

Spokeo v. Robins (13-1339) was another case that didn't quite live up to its billing. The case involved the controversial issue of "statutory standing," whereby Congress creates private rights of action authorizing individuals to sue for violations of federal statutes—often the basis for class-action complaints. Although this particular case concerned the Fair Credit Reporting Act of 1970 (FCRA), the Court's decision would have an impact on all manner of consumer-protection statutes that are often the source of class-action lawsuits, including the Telephone Consumer Protection Act and the Video Privacy Protection Act. However, while the Court offered some clarification on the constitutional standing requirements for plaintiffs bringing such suits, it did not draw a bright line either permitting or prohibiting these suits in all cases. Instead, it vacated a decision of the Ninth Circuit concluding that a plaintiff had standing to sue for seemingly minor violations of the FCRA and remanded for further consideration of whether his alleged injuries were sufficiently "concrete" for his suit to go forward.

Thomas Robins was an unemployed, unmarried, childless man when (according to his Complaint), "someone" ran a search for him on Spokeo, a "people search engine" that conducts searches of electronic databases to create and disseminate biographical sketches of people who are "searched." The profile that Spokeo created for Robins indicated that he was wealthy, married with children, and that he worked in a technical field. Robins sued Spokeo under the FCRA, for himself and a class of similarly situated people, alleging that Spokeo was a "consumer reporting agency" subject to the FCRA's requirements, including that it "follow reasonable procedures to assure maximum possible accuracy" of consumer reports. A preliminary question in the case was whether the inaccurate profile caused him a "concrete and particularized" injury sufficient to satisfy the "injury in fact" requirement of the standing doctrine. The District Court said no, but the Ninth Circuit reversed, holding that because Robins had alleged the violation of his own statutory rights under FCRA and because his personal interest in the accurate reporting of his own credit information was individualized rather than collective, he had satisfied Article III's injury-in-fact requirement.

The Supreme Court vacated, but did not quite reverse, the Ninth Circuit's decision. In an opinion authored by Justice Alito and joined by all but Justices Ginsburg and Sotomayor, the Court held that the Ninth Circuit's standing analysis "was incomplete." As Alito explained, "an injury in fact must be both concrete and particularized." (Though the Court has frequently reiterated the "concrete and particularized" requirement, this appears to be the first decision to treat those as independent requirements.) The Ninth Circuit ‘s analysis only showed that Robins had alleged a particularized injury, not that it was "concrete." The Court therefore remanded for further consideration of that independent element of the injury-in-fact requirement. Even as the named plaintiff in a putative class action, Robins must himself have standing. So far, so good, for Spokeo and other companies concerned about class-action damages suits for statutory violations.

The news was not all bad for Robins (and similarly situated plaintiffs), however. While the Court held that a concrete injury is required, it emphasized that injuries need not be tangible to be concrete and it reiterated prior decisions holding that Congress may "elevate to the status of legally cognizable injuries concrete, de facto injuries that were previously inadequate at law." That said, the Court made clear that "Article III standing requires a concrete injury even in the context of a statutory violation." Therefore, a plaintiff alleging "a bare procedural violation, divorced from any concrete harm," would not satisfy the injury-in-fact requirement of Article III. Accordingly, Robins would not satisfy Article III by alleging a violation of one of FCRA's procedural requirements or a truly innocuous inaccuracy, like an incorrect zip code. The Court left for the Ninth Circuit the task of determining whether "the particular procedural violations allege in this case entail a degree of risk sufficient to meet the concreteness requirement."

Justice Thomas joined the majority opinion, but wrote separately to explain his view of how the injury-in-fact requirement applies to different types of rights. Unsurprisingly this view is steeped in history. As Justice Thomas explained, common-law courts traditionally were more willing to entertain lawsuits brought by plaintiffs seeking to vindicate their own private rights, rather than public rights held by all. This traditional dichotomy continues to resonate in the Court's standing jurisprudence, insofar as separation-of-powers concerns are less pronounced when private individuals sue to redress violations of their own private rights, rather than public rights, which can involve "political disputes." In Thomas's view, these principles should continue to guide courts addressing congressionally created causes of action. A plaintiff seeking to vindicate a statutorily created private right of action need not allege actual harm beyond the violation of that private right. But a plaintiff seeking to vindicate a public right must "demonstrate that the violation of that public right has caused him a concrete, individual harm distinct from the general population." Applying these principles to Robins's FCRA suit, Justice Thomas concluded that, absent a particularized showing of harm, Robins had no standing to sue Spokeo for violation of duties that Spokeo owes to the public collectively. But Thomas agreed that a remand was appropriate to consider whether, in alleging that Spokeo failed to follow reasonable procedures to assure the accuracy of information pertaining to him, Robins had alleged a violation of a private right—i.e., a duty owed to him to protect his information.

Justice Ginsburg, joined by Justice Sotomayor, dissented. Based on their view of the record, Robins had already satisfied the concreteness requirement. "Far from an incorrect zip code, Robins complains of misinformation about his education, family situation, and economic status, inaccurate representations that could affect his fortune in the job market." Because FCRA's procedural requirements were intended to prevent this kind of harm, there was no reason, in the dissenters' view, to return the case "to the Ninth Circuit to underscore what Robins' complaint already conveys concretely: Spokeo's misinformation ‘cause[s] actual harm to [his] employment prospects.'"

That'll do it for today. We'll be back soon with summaries of the other cases decided yesterday and anything else the Court has in store this week.