The Right-to-Sue: Privacy's Stand-or-Fall

Federal Trade Commission is the main federal agency that ensures that companies follow federal data privacy standards. However, even FTC cannot compare in manpower with thousands (or millions, depending on the company's scale) of vigilant consumers. That brings up an important issue – for what exactly can consumers sue?

Consumers’ ability to sue is a powerful tool. It may force many companies to spend hundreds of thousands of dollars on legal fees. Amplified by the class action potential, such right-to-sue will be able to put many start-ups out of business.

That is why the right-to-sue is a point of discussion in privacy law bills that may soon pass into federal law.  However, even if the federal law grants consumers the right-to-sue, which is as yet unclear, the Constitution has the ultimate say, and this say is called the standing requirement.

Let us imagine a company provided computerized search and information about people. It issued a report about a person that turned out to be incorrect.  The person found it out and sued the company that issued the report.  Will the person be able to sue the company under federal laws? The U.S. Supreme Court says, “it depends.” Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016)

In the Spokeo case, plaintiff Robins sued a company that provided computerized search information about him. The company reported him as a married man in his 50s, employed and with children. Robins did not like this misinformation because it made him appear overqualified and made it hard for him to find a job.  The Supreme Court addressed the question of “standing.” 

“Standing” is a constitutional requirement that one coming to court with a claim must have (1) an injury in fact, (2) that is fairly traceable to the defendant’s conduct, and (3) that is likely to be redressed by a favorable judicial decision. What is important, the injury-in-fact requirement cannot be erased by a federal law’s grant of the right to sue. So, even if federal law says that Robins can sue, that does not mean that the Constitution says the same.  

What does the Constitution say?  
The Supreme Court said that Constitution requires something more than just a procedural violation.  
  • “Robins could not, for example, allege a bare procedural violation, divorced from any concrete harm, and satisfy the injury-in-fact requirement of Article III.”  
Spokeo at 1549
So, if a person alleged a “bare procedural violation” – without any harm – that alone will not satisfy the constitutional standing requirement. 
  • “For example, even if a consumer reporting agency fails to provide the required notice to a user of the agency's consumer information, that information regardless may be entirely accurate. In addition, not all inaccuracies cause harm or present any material risk of harm.”
Spokeo at 1550.

Thus, the Spokeo case teaches us that there should be more than just a procedural violation like a zip code typo or a harmless omission of consumer notice. The violation of privacy should result in concrete and particularized harm

Additional Note: This article talks only about federal law and the U.S. Constitution.  Please note that state laws may already provide for the private right-to-sue.  For example, California Civil Code Sec. 1798.150 states that consumers can institute civil actions.  Whether state laws will be preempted (trumped over) by the new federal law in this regard, is still unclear. 

April 12, 2021
EN RUS KOR Business Law