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The Supreme Court Is Split On Online Reputation And Harm

In Spokeo v. Robins, the high court considers a class-action lawsuit against a search engine company.

Posted on November 2, 2015, at 6:11 p.m. ET

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Should search engines and data brokers be held responsible for inaccurate information collected and published online? And if so, how should U.S. courts determine if harm done to a person’s reputation is real or merely imagined? These are the questions animating a case heard by the Supreme Court Monday and followed closely by Silicon Valley's data giants.

The case is Spokeo v. Robins, and at its core it concerns a person’s ability to challenge internet companies using data protection laws. It began when Thomas Robins, a Virginia resident, sued the person search engine Spokeo for publishing what he alleges are false reports about him, including inaccurate information about his employment, age, wealth, and marital status. Robins contested Spokeo in federal court for violating the Fair Credit Reporting Act (FCRA), which shields consumers from faulty information being shared about them and requires credit reporting agencies to ensure that the consumer data they sell is reasonably accurate.

Robins argued that Spokeo’s practices for vetting information were inadequate and that the company's alleged willful misrepresentation of him damaged his job prospects, leading to continued unemployment and psychological distress. The FCRA allows individuals to seek damages of up to $1,000; Robins wants not just to pursue those damages, but to represent an entire class of individuals who have had similar experiences as well. At class-action suit scale, fines of $1000 per violation can balloon into millions of dollars, and other internet companies that aggregate consumer data are watching the case very closely as a result. Google, Yahoo, eBay, and companies like them could have a lot to lose should the high court determine that class-action suits can be brought, even if there was no actual injury.

For the Supreme Court, the central issue is whether Robins has a legitimate claim to bring.

Spokeo believes that Robins has failed to show a real harm he has suffered. Robins believes that he has, in fact, suffered — but more than that, the simple fact that Spokeo violated FCRA should be enough to merit a lawsuit. Can a violation of the law trigger a suit, or does an individual also need to prove a concrete harm? Spokeo thinks that if the answer to that first question is yes, internet companies will soon be exposed to an inevitable onslaught of frivolous lawsuits, fueled by the allure of a quick dollar.

During oral arguments, the justices actively engaged both parties with skepticism, interrupting their opening statements with pointed questions, never allowing either party to string more than a handful of sentences together before interjecting. Between the justices, a split emerged, with one faction sympathetic to Robins and the other to Spokeo.

Chief Justice John Roberts, along with Justices Antonin Scalia and Anthony Kennedy, needled Robins’ position. Scalia argued that under Robins’ interpretation, any consumer could sue using data protection laws, whether or not they suffered any harm at all. He also noted that the FCRA compels companies to maintain practices to ensure the accuracy of their information but doesn’t require that information be accurate. Roberts and Kennedy posed several hypothetical scenarios — including one where an incorrect phone number was published for a person — suggesting the problem of setting a low threshold for lawsuits.

In an exchange with Robins’ lawyer, Roberts pointed to Spokeo’s disclaimer, which downplayed the accuracy of their information and seemed to contradict the usefulness of the products the companies sells. According to Robins’ lawyer, this disclaimer is a wink designed to evade more stringent regulation; Roberts, on the other hand, saw an earnest message of doing business on the internet.

The statements and questions of Justices Sonia Sotomayor, Ruth Bader Ginsburg, and Elena Kagan, however, were aimed at Spokeo. In particular, Kagan focused on Congress’s privacy-minded intentions when it designed FCRA, and the history of case law where economic, psychological, and reputational harm were seen as legitimate. In the realm of job applications and access to credit, Kagan argued that it's hard for a person to prove why they were rejected (“you will never be able to detect,” she said), and therefore it’s exceedingly difficult in some cases to demonstrate a concrete harm, in the narrow way that Spokeo pushed for. The prodding of Spokeo’s lawyer by Ginsburg, Sotomayor, and Kagan also suggested that a mere violation of the FCRA may be sufficient to bring a lawsuit.

No matter which way the justices lean, the case will have big implications for the colossal internet companies that collect consumer data and the consumers who supply and rely on it. The decision could be a victory for privacy advocates who seek protection from unfettered data aggregation. Or it could be a win for web firms who fear profit-crushing lawsuits without merit or harm.