Cybersecurity Law Report Quotes Michael Stortz on Plaintiff Standing in Data Breach Class Actions

Akin Gump litigation partner Michael Stortz has been quoted in the Cybersecurity Law Report article “Will Supreme Court’s New Standing Test Tame the Real World of Class Actions?” discussing the Supreme Court’s recent TransUnion v. Ramirez decision. The ruling, according to the article, will likely make it harder for data breach class actions to succeed in federal court.

Ramirez, as the article notes, extends the 2016 Supreme Court ruling in Spokeo v. Robins that plaintiffs who allege a statutory violation still must show a concrete harm for damages. Federal appellate courts during that time, it is reported, have split on whether to grant standing to consumers for increased risks after data breaches and misuse of data.

Stortz said the Supreme Court in the Ramirez case “went out of its way to lay down bright-line rules. The decision speaks in terms of ‘no harm, no foul’ and the risk of future harm does not confer standing to seek retrospective damages. Those bright-line statements provide welcome clarity in this area.” This precedent, he said, “will be very powerful for defendants facing cases involving statutory violations,” including of federal consumer protection and privacy laws like the Fair Credit Reporting Act and Telephone Consumer Protection Act. He pointed out that the Court offered clarification that federal courts must look past the procedural violation of a law to “independently decide whether a plaintiff has suffered a concrete harm.”

One of the takeaways from the Ramirez ruling, stated Stortz, is that it “requires lower courts to assess whether absent class members can establish concrete harm,” which might let defendants narrow cases to the few named plaintiffs who typically describe concrete injuries in the complaints. This will very useful, he added, for freeing defendants from “the risk of aggregated class-wide statutory damages being used to extract settlements or unfair outcomes, even where the underlying claim is really a limited procedural violation of the statute.”

Stortz also observed that Ramirez could lead to more litigation in state court since some individual state class action laws lack the tough federal focus on typicality and commonality. At the same time, he said there could also be more challenges in state courts over jurisdiction.