Eleventh Circuit Vacates FACTA Settlement Based on Spokeo

The Eleventh Circuit, en banc, vacated a district court in Florida order approving a 6.3 million dollar settlement based primarily on the Supreme Court’s 2016 ruling in Spokeo, Inc. v. Robins. In Spokeo, the Court ruled that a plaintiff must plead a concrete injury in order to have standing in federal court as opposed to just pleading bare procedural violations of federal law.

The problem the Eleventh Circuit faced in Muransky v. Godiva Chocolatier is as follows:

In Spokeo, Inc. v. Robins, the Supreme Court took on a standing question that had bedeviled litigants, scholars, and lower courts—whether pleading that a statutory requirement was violated is enough to establish standing, even if the plaintiff suffered no injury from the alleged violation. The answer was a resounding no: a party does not have standing to sue when it pleads only the bare violation of a statute.

That holding left the class action litigants here in an awkward spot. Years ago, the named plaintiff pleaded this case as a pure statutory violation. He alleged that Godiva chocolate stores had printed too many credit card digits on hundreds of thousands of receipts over the course of several years, and pointed out that those extra numbers were prohibited under a federal law aimed at preventing identity theft. 

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But even if the parties wish to bargain around Spokeo, we cannot indulge them. Federal courts retain our constitutional duty to evaluate whether a plaintiff has pleaded a concrete injury—even where Congress has said that a party may sue over a statutory violation. Having shut his eyes and closed his ears to the requirements of Spokeo while his claims were still at the district court, the named plaintiff now tries to say that those claims surely show concrete injury under Spokeo in any event.

In a lengthy dissent, the following was stated:

Today this court misreads FACTA and dilutes core protections provided by Congress. FACTA’s truncation requirement protects against both actual identity theft and a consumer’s interest in using a credit or debit card without incurring any heightened risk of identity theft. By assuming that the truncation requirement redresses only actual identity theft and nothing more, the majority overlooks that FACTA protects against a point-of-sale harm—the consumer suffers a heightened risk of identity theft the moment the business prints an untruncated receipt. The court’s mistake all but ensures that consumers in the Eleventh Circuit must now allege, support, and prove that they suffered actual identity theft (or at least soon will) because of a defendant’s FACTA violation in order to avail themselves of the law’s protections. It is tough, though—and sometimes impossible—to trace an identity thief. As a result, the majority’s decision essentially eviscerates this statute in our circuit, stripping thousands of consumers who receive untruncated receipts of a universally championed remedy.

While Muransky is a FACTA case, this decision, and the the implications of Spokeo relate to Fair Credit Reporting Act and Fair Debt Collection Act cases. Plaintiff should be careful to specifically plead concrete injuries.