In Dieffenbach v. Barnes & Noble, Inc., the Seventh Circuit allowed a data breach class action to survive the pleadings stage, including a challenge to the plaintiffs’ standing. At the same time, the Court indicated that the plaintiffs may have a tough time proving their claims on the merits or establishing that class certification is warranted. That warning may put the brakes on this action as well as others brought on a similar theory of liability.
Every data breach class action in federal court must confront a threshold question: has the plaintiff alleged a sufficient “injury in fact” to establish Article III standing? The inquiry frequently focuses on whether a plaintiff has standing simply by pleading an increased risk of future injury from the theft of personal identifying information (PII). This is because many named plaintiffs do not––because they cannot––allege any present harm. The federal courts of appeals continue to weigh in on the issue of whether allegations of possible future harm suffice for Article III purposes. But far from providing clarity or consensus, recent appellate decisions have reached differing conclusions, which appear highly dependent on the nature of the facts alleged in each case.
The Sixth Circuit Court of Appeals recently ended a Fair Debt Collection Practices Act (“FDCPA”) lawsuit because the plaintiffs could not show that the allegedly offending letter had caused them actual harm. In Hagy v. Demers & Adams, the Sixth Circuit held that the plaintiffs lacked standing to sue a law firm for its technical FDCPA violation, namely failing to identify itself as a debt collector in a letter to the plaintiffs. Debt collectors will likely applaud the practical and sensible approach the Sixth Circuit applied in Hagy. The decision is remarkable, however, for its constitutional rebuke of Congress. Reminding the legislative branch that it lacks general police powers to create statutory remedies where no actual harm exists, the Sixth Circuit’s decision suggests — without specifically stating — that the statutory damage provision of the FDCPA may be unconstitutional. Read More
The Ninth Circuit recently held in Bassett v. ABM Parking Services, Inc. that a plaintiff cannot establish Article III standing to maintain a Fair and Accurate Credit Transactions Act (“FACTA”) claim merely by pleading that a business printed a credit card expiration date on the plaintiff’s receipt. In so ruling, the Ninth Circuit followed similar rulings by the Second and Seventh Circuits, avoiding a potential circuit split. As explained below, the Bassett decision is the latest in a growing majority of cases in the wake of Spokeo, Inc. v. Robins that demand a plaintiff allege actual harm to maintain a FACTA damages claim—even one for statutory damages based on an alleged willful violation.
After paying for groceries with a credit card or debit card, the clerk hands the receipt to the customer. In addition to the last four digits of the card number, it contains the first digit. Or perhaps it contains the first six digits. Or maybe the expiration date. Is this a concrete injury that provides the customer standing to sue the grocery store?
That is the question federal courts have grappled with since the Supreme Court decided Spokeo, Inc. v. Robins in May 2016. The Fair and Accurate Credit Transactions Act (“FACTA”) regulates retailers’ conduct in printing card number information on customers’ receipts and provides a private right of action for alleged violations. But, as discussed below, a customer may not have standing to sue in federal court or even in certain state courts just because a violation may have occurred.
From the January 27, 2017 issue of the Washington Legal Foundation’s LEGAL BACKGROUNDER, Vol. 32 No. 3, with permission from the Washington Legal Foundation (WLF).
Last term, in Spokeo, Inc. v. Robins, the United States Supreme Court issued a much-anticipated opinion on Article III standing. The Court reiterated that to establish standing at the pleading stage, a plaintiff must allege an injury-in-fact that is both particularized and concrete. In other words, a plaintiff bringing suit upon an alleged statutory violation may not establish standing by merely alleging “a bare procedural violation, divorced from any concrete harm.”
Much has been written about Spokeo in the intervening months. Some members of the plaintiffs’ bar have lauded the decision as purportedly protecting consumer rights; some members of the defense bar have suggested Spokeo may signal the end of statutory class actions. Yet, to date, courts have not taken a uniform, bright-line approach in applying Spokeo to civil litigation asserting statutory causes of action, including those styled as putative class actions. Even still, courts have begun to develop two apparent schools of thought on how to analyze standing under Spokeo, resulting in increasingly divided case law across the country.
This article analyzes a few notable decisions applying each of these two approaches and considers the possibility that courts may begin to apply a third, “hybrid” approach.
To read the full article, click here.