After the U.S. Supreme Court's decision in Spokeo, Inc. v. Robbins last year, many defendants have perceived the assertion of a standing argument as a potential panacea when confronted with federal statutory claims in which the plaintiff did not suffer any actual harm. However, it is important to recognize that the successful maintenance of a Spokeo standing argument does not lead to a dismissal on the merits and with prejudice, and instead could result in the case being litigated in state court, regardless of whether it began there or in federal court.
A case from late 2016 illustrates the sometimes vexing relationship between standing and jurisdiction in federal court when asserting a Spokeo defense after removal. In Mocek v. Allsaints USA Limited, the plaintiff, Barbara Mocek, filed a class action complaint in Illinois state court alleging that Allsaints violated the Fair and Accurate Transactions Act (FACTA), 15 U.S.C. § 1681c(g) by failing to truncate enough numbers from her credit card number on her receipt. Allsaints removed the case to federal court, asserting both federal question and Class Action Fairness Act jurisdiction. After removal, however, Allsaints moved to have the case dismissed with prejudice on the grounds that plaintiff lacked Article III standing under Spokeo. In response, Ms. Mocek moved to remand the case back to state court, contending that the Allsaints' argument in favor of dismissal was an "affirmative disavowal of jurisdiction."
The court remanded the action to state court, taking Allsaints to task for trying "to have it both ways by asserting, then immediately disavowing, federal jurisdiction, apparently in hopes of achieving outright dismissal, with prejudice, rather than [remand]." The Mocek court held that even though FACTA standing remains unsettled after Spokeo, remand was required, as doubts regarding jurisdiction are resolved in favor of remand, and neither side was arguing in favor of federal court jurisdiction.
In an additional blow to Allsaints, the court also granted Ms. Mocek's request for $58,112 in attorneys' fees for Allsaints' improvident removal. Finding that Allsaints lacked an objectively reasonable basis for removal in light of its inconsistent positions regarding jurisdiction, the court held that "it should have been obvious" to Allsaints that the consequence of prevailing on its Spokeo argument would be remand to state court, not dismissal with prejudice as it requested.
The court's ruling in Mocek reflects that Spokeo standing arguments may not be a silver bullet for defeating class claims where the plaintiff's injury was caused by a "bare procedural violation," such as those under FACTA, the Telephone Consumer Protection Act, or the Fair Credit Reporting Act. Indeed, successfully asserting a defense based on Spokeo may lead to the unintended consequence of remand to state court, an outcome that few defendants likely would prefer. It bears emphasis that state courts are not bound by Spokeo in making their own standing determinations.
