Students Lack Standing to Challenge SAT, ACT Sale of Personal Information for Profit

Steven D. Schwinn, John Marshall Law School

The Seventh Circuit ruled today that students who authorized the corporations who run the SAT and ACT standardized tests to provide their personal information to educational organizations lacked standing to challenge the corporations' sale of that information. The ruling means that the putative class action against the SAT and ACT is dismissed.

Along the way, the court also ruled that the Iqbal/Twombly heightened pleading standard ("plausibility") applies to facial challenges to standing under Rule 12(b)(6). This may raise the bar for plaintiffs in pleading and arguing standing. This portion of the ruling aligns with the approach in several other circuits; but it's in tension with the Ninth Circuit, which says that "Twombly and Iqbal are ill-suited to application in the constitutional standing context."

The case arose when ACT, Inc., and The College Board (which administers the SAT) sold personal information of students who signed up to take the tests. The students agreed that the corporations could share their personal information with educational groups (schools, scholarship funds, and the like), but they didn't know that the corporations were going to sell their personal information. (The price was small--$.33 per student per educational group--but would add up quickly for the defendants.) The plaintiffs argued that they were harmed by the sale because (1) they should have received some of the proceeds, (2) the sale diminished the value of their personal information, and (3) they paid a fee to take the ACT or SAT, which presumably would have been lower if they had not consented to the sale.

The Seventh Circuit flatly rejected these claims. The court ruled that under the Iqbal/Twombly standard, the plaintiffs' allegations didn't plausibly suggest that they'd been harmed. The court said that just because the defendants benefited doesn't mean that the plaintiffs were harmed for standing purposes: "Plaintiffs have claimed injury based solely on a gain to Defendants and without alleging a loss to themselves." (Although the court applied the Iqbal/Twombly standard, it looks like the plaintiffs would have failed even without it.)

The court rejected the plaintiffs' claim that their complaint gave rise to a reasonable inference that if they knew of the sale they would have conditioned their permission on receipt of a portion of the proceeds. The court said that the plaintiffs didn't provide factual support for the inference, so it didn't even need to get to whether the claim gives rise to a plausible claim of subject matter jurisdiction under Iqbal and Twombly.

In other words, it's not clear that the heightened Iqbal/Twombly standard mattered to the outcome at all. Still, the case says that the standard now applies to standing in the Seventh Circuit.