The U.S. Supreme Court on Monday handed a narrow victory to Spokeo Inc. over the online people-search company’s bid to avoid a class action lawsuit for including incorrect information in its database.
The court, in a 6-2 decision, threw out an appeals court ruling in favor of lead plaintiff Thomas Robins, who sued the company in California claiming his Spokeo entry had damaged his job-seeking efforts because it contained inaccurate information. The court sent the case back to lower courts for further proceedings.
The legal issue before the justices was whether a plaintiff had the legal standing to sue for a technical violation of a federal consumer law even when there is a question about whether the person has been directly harmed.
The court did not decide that key question. It instead threw out the ruling in favor of the plaintiffs by the 9th U.S. Circuit Court of Appeals, saying it had not analyzed the standing question correctly.
Justice Samuel Alito wrote on behalf of the majority that the high court was taking no position on whether the appeals court was correct to find there was standing. Liberal justices Ruth Bader Ginsburg and Sonia Sotomayor dissented.
Business interests urged the conservative-leaning Supreme Court to impose new limits on class action litigation as it has done in a series of decisions including a 2011 victory for Wal Mart Stores Inc.
In 2010, Robins filed suit on behalf of himself and others potentially harmed by incorrect information about them that Spokeo might disseminate.
The suit was filed under the federal Fair Credit Reporting Act, which requires consumer reporting agencies to provide correct information. Spokeo, which maintains it is not a consumer reporting agency, sought to have the lawsuit thrown out.
Robins’ lawsuit was filed two years before Spokeo agreed to pay $800,000 to settle U.S. Federal Trade Commission claims that it had violated the Fair Credit Reporting Act when attempting to sell data to other companies.
Robins asserted that inaccurate information in his Spokeo entry – for example, stating that he had earned a graduate degree when he had not – hurt his job prospects.
Facebook, Google and Yahoo have faced similar lawsuits over violations of different federal laws. As many online companies have millions of users, a case can quickly snowball into a class action potentially worth millions of dollars.
(Reporting by Lawrence Hurley; Editing by Will Dunham)
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