Concrete Injury and Subject Matter Jurisdiction

Posted By: John Albanese December 19, 2016

Under Article III of the federal constitution, a plaintiff must allege a “concrete and particularized” “injury-in-fact” in order for a federal court to have jurisdiction to adjudicate the case. In May 2016, the Supreme Court issued its much anticipated decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016) which dealt with what is a sufficient “injury-in-fact.”. In Spokeo, Plaintiff Robins alleged that Defendant Spokeo, Inc. had violated various sections of the Fair Credit Reporting Act in preparing an inaccurate report about him that falsely stated that he was married and had a higher income and more education that he had in reality. The Ninth Circuit had found that the plaintiff had standing, but the Supreme Court reversed, finding that the Ninth Circuit had not adequately addressed whether the plaintiff’s alleged injuries were “concrete.” The Court did not reach any conclusion about whether the Plaintiff had alleged a concrete injury, and instead remanded back to the Ninth Circuit for further analysis.

The lower courts are still sorting out the metes and bounds of exactly what constitutes a “concrete” injury. But there is at least one related issue where courts have settled on an answer. What happens to a case that has been removed form state court and where the federal court subsequently finds that it lacks jurisdiction due to the lack of concrete injury? Is this proper remedy dismissal or remand? State courts, of course, are not bound by the limits of Article III jurisdiction.

Cases Lacking Subject Matter Jurisdiction

Article III standing goes to the subject matter jurisdiction of the federal courts, and where subject matter jurisdiction is lacking in a removed case, Congress has provided the proper procedural disposition: “If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded.” 28 U.S.C 1477(c); see also Polo v. Innoventions Int’l, LLC, 833 F.3d 1193, 1196 (9th Cir. 2016); Coyne v. Am. Tobacco Co., 183 F.3d 488, 496 (6th Cir. 1999); Wallace v. ConAgra Foods, Inc., 747 F.3d 1025, 1033 (8th Cir. 2014).

Defendants, however, tend to prefer federal court to state court. Thus, despite the clear mandate of § 1447(c), some defendants post-Spokeo have removed cases asserting federal jurisdiction only to turn around and argue that case should be dismissed for lack of subject-matter jurisdiction. This maneuver is an utter waste of time because the remedy is a remand back to the state court from where Defendant removed the case.

Mocek v. Allsaints USA Ltd.

A federal judge recently agreed that removing and then seeking dismissal on Spokeo grounds is a baseless position. In Mocek v. Allsaints USA Ltd., No. 16 C 8484, 2016 WL 7116590, at *3 (N.D. Ill. Dec. 7, 2016), the plaintiff filed a class action in Illinois state court alleging that the defendant had violated the Fair and Accurate Transactions Act by printing too many credit card digits on a receipt. The defendant removed and then immediately moved to dismiss for lack of standing pursuant to Spokeo. The plaintiff then requested a remand back to state court because neither party was asserting that federal jurisdiction was proper. The plaintiff also requested his attorneys’ fees for in connection with the removal proceedings. The court agreed that remand was the proper remedy. The court further held that the defendant lacked an “objectively reasonable basis for removal” and awarded the plaintiff her attorneys’ fees and costs.

The decision in Allsaints should serve a reminder to defendants that Spokeo was a jurisdictional decision and not a decision on the merits. Removing and then seeking dismissal for lack of subject matter jurisdiction will probably not be a winning argument as long as 28 U.S.C. § 1447(c) is on the books.