In Muransky v. Godiva Chocolatier, Inc., No. 16-16486 (11th Cir. Oct. 28, 2020) (en banc), a 7-3 court (with two absententions) tossed a Fair and Accurate Credit Transactions Act (FACTA) settlement on the ground that the class representative did not allege a concrete injury from having too much of his credit card number printed on his sales receipt.
“FACTA forbids merchants from printing more than the last five digits of the card number (or the card’s expiration date) on receipts offered to customers. Id. sec. 113, § 605(g), 117 Stat. at 1959 (codified at 15 U.S.C. § 1681c(g)(1)). A willful violation exposes a company to liability for actual damages—if any were sustained—or statutory damages ranging from $100 to $1,000 per violation. 15 U.S.C. § 1681n(a)(1)(A). Punitive damages and attorney’s fees are also available. Id. § 1681n(a)(2)–(3).”
Plaintiff Muransky “used his credit card to spend $19.26 at a Godiva retail store in Florida. He was handed a receipt containing the first six and last four digits of his sixteendigit credit card number—too many digits under FACTA.” He filed a putative nationwide class action, seeking only statutory damages. “He alleged the class’s harm, and risk of harm, from those statutory violations in broad terms: ‘Plaintiff and the members of the class have all suffered irreparable harm as a result of the Defendant’s unlawful and wrongful conduct,’ and ‘Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft.’ No additional details were offered.”
Looking down the barrel of “more than $342 million” in potential liability, the defendant quickly inked a $6.3 million settlement with the class. The parties knew that Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), as yet undecided in the Supreme Court, loomed on the horizon. The parties agreed that “the potential outcome of Spokeo factored heavily into the settlement negotiations.” When Spokeo finally came down—concluding that a “bare procedural violation, divorced from any concrete harm” is not enough to support standing—an objector seized on that holding and argued that the entire case had to be dismissed. The district court nevertheless approved the settlement, while essentially ignoring standing. A three-judge panel of the Eleventh Circuit affirmed.
The en banc court vacates approval of the settlement and orders that the case be dismissed. “At the heart of this case,” the majority declares, “is one question: whether the judiciary must assume that whenever Congress creates a legal entitlement, any violation of that entitlement causes a concrete injury.” The majority holds “no.” For standing, “[a] plaintiff needs to plead (and later support) an injury that is concrete, particularized, and actual or imminent, rather than conjectural or hypothetical.” Alleging a statutory violation alone does not clear that hurdle. “[A]lthough a congressional judgment may be ‘instructive and important’ to this Court’s analysis, we need to come to our own conclusion that the alleged harm is concrete before we can find that a plaintiff has standing.”
It is possible, the majority allows, for intangible harms to rise to the level of “concrete injuries.” “In several cases, we have concluded that a plaintiff had standing because the statutory violation at issue led to a type of harm that has historically been recognized as actionable,” such as invasion of privacy (the Video Privacy Protection Act) or defamation (the Fair Credit Reporting Act). Congress may also recognize new kinds of injuries, such as the economic loss from buying a product deemed to be worthless (the Food, Drug, and Cosmetic Act).
Even a material risk of harm may be enough, but this is where Spokeo tapped (some might say jammed on) the brakes. The majority holds that the plaintiff did not allege enough to prove a material risk of harm. “The heart of Muransky’s claim is that ‘he was provided with an electronically printed receipt’ that ‘displayed the last four digits of his credit card as well as the first six digits of his account number’….” He propounded several theories of harm. Most of these, the majority holds, are hollow variants on the discredited argument that a bare statutory violation is enough: for instance, that consumers have a “substantive right” to a FACTA-compliant receipt. The plaintiff argued that the “time he spent safeguarding his receipt … constitutes a direct injury in fact,” but if “his Godiva receipt would not offer any advantage to identity thieves, we could hardly say that he was injured because of the efforts he took to keep it out of their hands.”
“In his final attempt to show a direct harm, Muransky argues—for the first time—that Godiva’s FACTA violation is analogous to a common-law breach of confidence tort.” Yet even if that tort were well-founded in English and American common-law courts (which the majority doubts), “[t]wo key elements of a breach of confidence are completely absent from the violation he complains of. To begin, there was no ‘disclosure to a third party.’ Muransky was handed a receipt that bore his own information, and he does not allege that anyone else ever saw it …. Nor can we see how Muransky could have had a confidential relationship with the Godiva retail store.”
Turning to “material risk of harm,” plaintiff argued that “by requiring the truncation of all but the last five digits of a credit card, Congress has decided that printing additional digits creates a real risk of identity theft.” The majority holds that this argument amounts to unwarranted obeisance to Congress. “[E]ven if Congress had explicitly stated in the text of the statute that every FACTA violation poses a material risk of harm, that alone would not carry the day. Although the judgment of Congress is an ‘instructive and important’ tool to identify Article III injuries, we cannot accept Muransky’s argument that once Congress has spoken, the courts have no further role.” And plaintiff did nothing in his allegations to quantify the increased risk of identity theft. “He pleaded nothing about any specific risks from the sequence of numbers included on his receipt, and did not address the issue before the district court at any time.”
Finally, the majority rejects the dissent’s suggestion that the plaintiff should return to the district court to reallege injury. “The problem with that solution—even setting aside that the parties have been aware of the potential standing infirmities from the start—is that Muransky has never asked for it. Not before the panel, and not before our full Court. Instead, he and his counsel have pressed for their preferred theory of standing: ‘the violation of Dr. Muransky’s substantive FACTA rights, by itself, is a concrete injury.’ Muransky, for whatever reason, has never sought to replead or prove standing under a different theory.”
(Three judges—Wilson, Martin, and Jordan—dissent in three separate opinions running 110 pages.)