Recent cases by the Eleventh Circuit and the D.C. Circuit deepen the divide among the courts on the standing of consumers to sue for violations of the Fair and Accurate Credit Transactions Act (“FACTA”). In Muransky v. Godiva Chocolatier, Inc., 922 F.3d 1175 (11th Cir. 2019) and Jeffries v. Volume Services of America, 2019 WL 2750856 (D.C. Cir. July 2, 2019), the courts of appeal have held that the consumer plaintiff had Article III standing under the Supreme Court’s decision in Spokeo, Inc. v. Robins to sue retailers for violation of FACTA’s truncation requirement. FACTA prohibits retailers from printing “more than the last 5 digits of the credit card number or the expiration date” on the consumer’s receipt. Prior decisions from the Second, Third, Seventh and Ninth Circuits held that the consumer plaintiff lacked standing to sue the retailer for a violation of FACTA’s truncation requirement absent a resulting tangible injury.
In Muransky, the Eleventh Circuit recently vacated and reissued an earlier ruling holding that a plaintiff had standing under Spokeo to pursue a putative class action for violation of FACTA’s truncation requirement. In Muransky, the retailer printed a receipt with the plaintiff’s first six and last four digits of his credit card. After a short period of discovery, the parties settled the case for $6.3 million. During the approval process, a class member objected to the settlement on the basis that the plaintiff suffered no harm, and class members who had their identities stolen would have their claims barred. After the district court approved the settlement, the objector appealed.
On appeal, in addition to the objector’s challenge, an amicus brief was filed on behalf of the National Retail Federation, the U.S. Chamber of Commerce, and the International Franchise Association. These groups argued that plaintiff’s lawyers had “weaponized” FACTA in recent years to force defendants to settle class actions “despite the absence of any actual harm or risk of harm.” The groups noted recent, significant FACTA class action settlements in the Eleventh Circuit ranging from $2.5 million to $30.9 million.
The Eleventh Circuit affirmed the district court’s approval of the settlement, and rejected the challenge to the plaintiff’s standing. The court recognized that prior courts in the Second, Third, Seventh and Ninth Circuits had held that consumers lacked standing to pursue lawsuits for violation of FACTA’s truncation requirement, absent some tangible injury. In Kamal v. J. Crew Group, Inc., 918, F.3d 102 (3d Cir. 2019), the Third Circuit affirmed the dismissal of the consumer’s putative class action. The Third Circuit held that printing the first six and last four digits of the credit card, without any additional degree of risk, was “a bare procedural violation” that does not create Article III standing.
The decision in Kamal was consistent with prior decisions from the Second Circuit (Crupar-Weinmann v. Paris Baguette Am., Inc., 861 F.3d 76 (2d Cir. 2017)), Seventh Circuit (Meyers v. Nicolet Restaurant of De Pere, LLC, 843 F.3d 724 (7th Cir. 2016)), and Ninth Circuit (Bassett v. ABM Parking Services, Inc., 883 F.3d 776 (9th Cir. 2018)). Each of those cases involved a violation of the FACTA truncation requirement involving the printing of the credit card expiration date on the receipt. In each case, the court held that the plaintiff lacked standing to sue.
Even more recently, in Jeffries, the D.C. Circuit followed the reasoning of the Eleventh Circuit in Muransky to reverse the district court’s dismissal of a consumer’s putative class action for violation of FACTA’s truncation requirement on standing grounds. In that case, the retailer had printed all 16 digits of the plaintiff’s credit card number and the expiration date of the card on the receipt. These facts were important because the D.C. Circuit recognized that “not every violation of FACTA’s truncation requirement creates a risk of identity theft” sufficient to constitute a concrete injury in fact. The court specifically cited with approval the expiration date cases from the Second, Seventh and Ninth Circuits, noting that the mere technical violation of printing the expiration date did not create a risk of identity theft triggering a concrete injury in fact. However, the D.C. Circuit held that the “egregious” FACTA violation of printing all 16 digits and the expiration date created a real risk of harm to the plaintiff because it provided all of the information necessary for a criminal to defraud the plaintiff.
First, the procedural posture of Muransky and the “egregious” facts in Jeffries may have helped lead to their respective results.
In Muransky, the retailer did not challenge the plaintiff’s standing in the district court. Rather, the standing challenge came from an objector to the settlement of the putative class action. Thousands of class members had already made claims in the settlement, and the court was likely disinclined to unwind such a settlement due to a single objector. Regardless, Muransky is nonetheless the law in the Eleventh Circuit, and district courts will be bound to follow it. Muransky will only increase the already significant number of FACTA class actions brought in that jurisdiction.
In Jeffries, the retailer had printed all 16 digits of the plaintiff’s credit card number and the expiration date of the card on the receipt. In finding standing, the D.C. Circuit noted the “egregious” nature of the FACTA violation. Therefore, less “egregious” violations of FACTA can be distinguished from Jeffries, such that the D.C. Circuit may not necessarily become a safe haven for FACTA lawsuits.
Second, the divide among the courts of appeal continues to justify the Supreme Court clarifying the scope of Spokeo.