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7th Cir. Upholds Dismissal of Unlawful Data Retention Claim Under Spokeo

The U.S. Court of Appeals for the Seventh Circuit recently held that although a consumer’s suit against a cable service provider for failing to destroy his personal information was a substantive violation of the federal Cable Communications Policy Act, it failed to allege a concrete injury sufficient to confer standing.

A copy of the opinion in Gubala v. Time Warner Cable, Inc. is available at:  Link to Opinion.

A consumer subscribed to a cable service and provided the cable service operator with his date of birth, home address, home and work telephone numbers, social security number, and credit card information. Two years later, he canceled his subscription and eight years after that, upon inquiring, learned that all the information he had given the cable service when he subscribed a decade earlier remained in the company’s possession in apparent violation of federal law.

The federal Cable Communications Policy Act (“Cable Act”) 47 U.S.C. § 551(e), provides that a cable operator “shall destroy personally identifiable information if the information is no longer necessary for the purpose for which it was collected and there are no pending requests or orders for access to such information.”  47 U.S.C. § 551(e).

Section 551(f)(1) of the Cable Act provides that “any person aggrieved by any act of a cable operator in violation of this section may bring a civil action in a United States district court,” however the consumer presented neither allegation nor evidence of having been “aggrieved” by the cable operator’s violation of section 551(e).

The consumer filed a putative class action lawsuit against the cable operator seeking injunctive relief for alleged violations of 47 U.S.C. § 551(e).

The district court dismissed the suit on the ground that the consumer lacked standing. As an alternative ground for dismissal, the trial court ruled that even if the plaintiff had standing, he failed to state a claim upon which relief could be granted.  The trial court also held that the consumer could not be given an injunction, the only remedy he sought, because he had an adequate remedy at law — namely damages, authorized by section 551(f) of the Cable Act, which he had failed to seek.

The consumer appealed to the Seventh Circuit.

As you may recall, Article III of the U.S. Constitution authorizes the federal judiciary only to decide cases or controversies.  Such a case is not, however, justiciable under federal law unless the plaintiff has a “concrete” interest in prevailing in the case, for such an interest is the sine qua non of “standing to sue.”

The consumer argued that the Supreme Court of the United States’ recent admonishment that “Article III standing requires a concrete injury even in the context of a statutory violation,” applies only to violations of statutory rights that can be categorized as “procedural” rather than “substantive.” Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1549 (2016).

The Seventh Circuit disagreed. The Court noted that, as here, a failure to comply with a statutory requirement to destroy information could be substantive, yet need not cause a concrete injury.  The Court held that although the consumer might be able to prove a violation of the Cable Act, he had not alleged any plausible risk of harm substantial enough to be deemed “concrete” as a result of the violation. See Spokeo, supra, at 1549.

The Seventh Circuit assumed for the sake of argument that the cable operator had violated the statute by failing to destroy the consumer’s personally identifiable information, as alleged.  However, the Court observed that although there was a risk of harm, the consumer had not alleged that the cable operator had ever given away or leaked or lost any of his personal information.

Accordingly, the Seventh Circuit reasoned, the consumer only had a claim that the violation of the Cable Act made him feel aggrieved.  The Court held that the consumer could not bring a claim for damages because the damages could not possibly be quantified and were not alleged.

As for injunctive relief in lieu of damages, the Court noted that having not alleged that he was aggrieved by the cable operator’s statutory violation the consumer could not establish irreparable harm.

The consumer further contended that a violation of section 551(e) was a violation of a right of privacy. However, again the Seventh Circuit disagreed, observing that although violations of rights of privacy are actionable, the consumer did not allege a violation of his privacy because there is no indication that the cable operator had released, or allowed anyone to disseminate, any of his personal information.

The consumer’s final argument was that his personal information had economic value which the cable operator had deprived him of by retaining it.

The Seventh Circuit again disagreed, dismissing this argument as gibberish, and observing that the cable operator did not take the consumer’s personal information away from him.

Additionally, the Court noted that the duty of a cable provider to destroy a subscriber’s personal information is qualified by the reference in section 551(e) to section 551(d), which authorizes disclosure of such information if “necessary to render, or conduct a legitimate business activity related to, a cable service or other service provided by the cable operator to the subscriber … [or if] made pursuant to a court order authorizing such disclosure, if the subscriber is notified of such order by the person to whom the order is directed.” 47 U.S.C. § 551(d).

The Court explained that these disclosure provisions presuppose the right and indeed duty of the cable operator to retain rather than destroy subscriber personal information for specified reasons, which qualified the cable operator’s duty of destruction invoked by the consumer.

In sum, the Court held that the absence of any allegation — let alone evidence — of any concrete injury inflicted or likely to be inflicted on the consumer as a consequence of cable operator’s continued retention of his personal information precluded the relief sought and required that it affirm the district court’s judgment dismissing the consumer’s suit for lack of standing.

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The attorneys of Maurice Wutscher are seasoned business lawyers with substantial experience in business law, financial services litigation and regulatory compliance. They represent consumer and commercial financial services companies, including depository and non-depository mortgage lenders and servicers, as well as mortgage loan investors, financial asset buyers and sellers, loss mitigation companies, third-party debt collectors, and other financial services providers. They have defended scores of putative class actions, have substantial experience in federal appellate court litigation and bring substantial trial and complex bankruptcy experience. They are leaders and influencers in their highly specialized area of law. They serve in leadership positions in industry associations and regularly publish and speak before national audiences.

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