Second Circuit Interprets Spokeo

As district courts continue to grapple with Spokeo on a daily basis, the Second Circuit has finally weighed in on how to understand the Supreme Court’s ruling. The decision comes in the context of claims brought under the Truth In Lending Act (TILA).

In Strubel v. Comenity Bank, — F.3d —-, 2016 WL 6892197 (2d Cir. Nov. 23, 2016), the Second Circuit analyzed consumer claims that a bank failed to provide four types of disclosures purportedly required by TILA.  The court held that two of the alleged non-disclosures gave rise to concrete injuries under TILA, and two did not.

Perhaps of greatest interest, the court affirmed that under Spokeo, “violations of statutorily mandated procedures” can qualify “as concrete injuries supporting standing.”  To determine whether violation of a statutory procedure gives rise to standing, the Second Circuit instructed courts to consider “whether Congress conferred the procedural right in order to protect an individual’s concrete interests.” If so, the procedural violation will suffice to give rise to standing as long as “the procedural violation presents a ‘risk of real harm’ to that concrete interest.”

The Second Circuit recognized that a core objective of TILA is to protect consumers’ concrete interest in avoiding the uninformed use of credit.  Accordingly, where TILA requires disclosures to consumers about their own rights and obligations, a bank that fails to make those disclosures will likely cause concrete harm under Spokeo:

A consumer who is not given notice of his obligations is likely not to satisfy them and, thereby, unwittingly to lose the very credit rights that the law affords him. For that reason, a creditor’s alleged violation of each notice requirement, by itself, gives rise to a “risk of real harm” to the consumer’s concrete interest in the informed use of credit. Having alleged such procedural violations, [plaintiff] was not required to allege “any additional harm” to demonstrate the concrete injury necessary for standing.

(Citations omitted).

On the other hand, where a mandatory disclosure pertains to the lender’s obligations (rather than the consumer’s), a non-disclosure may not suffice under Spokeo:

the alleged defect in [defendant’s] notice pertained to its obligation to respond within 30 days to a reported billing error when, in fact, it had already corrected the error—indeed, corrected sooner than it was required to do by law. While a consumer would undoubtedly appreciate prompt notification of such favorable action, it is not apparent how a creditor’s failure to tell the consumer that he will be so advised, by itself, risks real harm to any concrete consumer interest protected by the TILA. Insofar as [plaintiff] argues that a consumer might be left “fretting needlessly for … a long time” about the status of a reported billing error, such fretting would arise only if the creditor failed to report the correction within 30 days of a consumer’s actual report of billing error, a separate violation from the one here at issue. Fretting would not be caused by the failure to provide the notice complained of here….

It would be more than curious to conclude that a consumer sustains real injury to concrete TILA interests simply from a creditor’s failure to advise of a reporting obligation that, in the end, the creditor honors.

(Citations omitted).