The Supreme Court recently issued an opinion concerning the requirements for Article III standing for statutory violations under the Stored Communications Act (SCA). In Frank v. Gaos, the Supreme Court in a per curiam decision remanded a class action settlement because there remained a standing issue in light of Spokeo v. Robins. While the Supreme Court did not express an opinion about how this issue should be decided, its ruling signals the Court’s direction to carefully examine Article III standing for mere statutory violations.
The class action Complaint in Frank alleged that when a user would conduct a Google search and click on a webpage, Google would transmit certain user information (including the terms of the search) to the server that hosted the selected webpage. The Complaint alleged that Google’s practice violated the SCA. The SCA prohibits “a person or entity providing an electronic communication service to the public” from “knowingly divulg[ing] to any person or entity the contents of a communication while in electronic storage by that service.” 18 U.S.C. § 2702(a)(1). Gaos also asserted a variety of state law claims, which were eventually dismissed.
Gaos’ putative class action was consolidated with a similar complaint and the parties negotiated a class wide settlement. The terms of the agreement required “Google to include certain disclosures about referrer headers on three of its webpages” and “to pay $8.5 million.” Frank, slip op. at 3-4. None of the money would be paid to absent class members, and “most of the money would be distributed to six cy pres recipients.” Frank, slip op. at 4. Class counsel and Google selected the cy pres recipients. Five class members objected to the settlement, arguing that the cy pres relief was improper and violated Fed. Rule Civ. Proc., Rule 23(e), which requires that class action settlements be fair and reasonable. The District Court granted final approval of the settlement and the objecting class members appealed.
After briefing in the Ninth Circuit was completed, but before the Ninth Circuit’s decision, the Supreme Court decided Spokeo, Inc. v. Robins, which held that “Article III standing requires a concrete injury even in the context of a statutory violation.” 136 S. Ct. 1540, 1543 (2016). A divided panel of the Ninth Circuit affirmed the District Court’s approval of the settlement without ever addressing Spokeo or whether the named plaintiff had standing to sue.
While the parties’ briefed the merits of the cy pres settlement before the Supreme Court, the Solicitor General filed a brief as amicus curiae arguing that the Court should remand this case for the lower court to address standing in light of Spokeo. After oral argument, the Court agreed and remanded the case without ever addressing the fairness of the class settlement. The Court noted in its opinion that “[t]he supplemental briefs filed in response to our order raise a wide variety of legal and factual issues not addressed in the merits briefing before us or at oral argument.” Frank, slip op. at 6.
Though the Court expressly stated that “[n]othing in [its] opinion should be interpreted as expressing a view on any particular resolution of the standing question,” the Court recognized that Spokeo abrogated a prior Ninth Circuit decision, Edwards v. First American Corp., 610 F.3d 514 (9th Cir. 2010), which held that Article III standing exists whenever the plaintiff alleges that the defendant violated a statute that provides an individual plaintiff with a cause of action. Frank, slip op. at 6. Instead, to establish standing, the named plaintiff must “allege SCA violations that are sufficiently concrete and particularized to support standing.” Id.
The Court’s remand is not insignificant. It signals a continued trend to revisit Article III standing in light of Spokeo v. Robins. It is worth watching how the Ninth Circuit resolves the standing question.