Eleventh Circuit Breaks from Sister Circuits on Spokeo

Last month, the Eleventh Circuit revisited the U.S. Supreme Court’s controversial decision in Spokeo, Inc. v. Robins, and appears to have set a low bar for plaintiffs to clear in establishing standing.

The case, Muransky v. Godiva Chocolatier, Inc., Case No. 16-16486 (11th Cir. October 3, 2018) came before the Eleventh Circuit on appeal from the United States District Court for the Southern District of Florida after the district court approved a settlement plan between the class of plaintiffs and Godiva. The named plaintiff in the underlying suit, Dr. David Muransky, filed a class action lawsuit against Godiva, which had given Muransky a receipt showing the first six and last four digits of his credit card number. The complaint alleged violations of the Fair and Accurate Credit Transactions Act (“FACTA”), which prohibits merchants from including “more than the last 5 digits of the card number . . . upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). The District Court approved a class action settlement in the underlying case, over objections from appellants James Price and Eric Isaacson.

In an odd procedural context, the objectors argued on appeal that the settling class plaintiff (Muransky) did not have Article III standing to pursue the underlying FACTA claim against Godiva. In making this argument, objectors relied on the United States Supreme Court’s holding in Spokeo Inc. v. Robins. The Court in Spokeo reiterated the long-standing principle that a sufficient injury to warrant Article III standing must be concrete and particularized, but held that “concrete” is not synonymous with “tangible.” The factors the Court set forth for determining whether an intangible injury was in fact “concrete” include: (1) whether the intangible harm has a close relationship to harms that have traditionally provided a cause of action and (2) whether Congress has acted to legally recognize the injury. However, the Court held that a plaintiff does not automatically satisfy the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right. Article III standing still requires a concrete injury even in the context of a statutory violation.

The concrete and particularized injury-in-fact that Muransky suffered, according to the Eleventh Circuit, was the use of his time and wallet space to safely dispose of the Godiva receipt so as to avoid someone finding the receipt and acquiring Muransky’s credit card number.

Relying on Spokeo, the objectors claimed that Muransky could not satisfy the requirements for Article III standing, alleging that Muransky’s only “injury” was the statutory violation of FACTA. The Eleventh Circuit, in applying the first factor of the Spokeo analysis, found that Muransky’s injury bore a close relationship to the common law tort of breach of confidence, a harm that has traditionally provided a basis for a lawsuit under American and English Law. The Court analogized that a customer using a credit card to make purchases entrusts the merchant with his or her card number. If the card number is not kept confidential, in violation of FACTA, the consumer’s trust is violated. The Eleventh Circuit further compared a violation of FACTA to a claim for breach of an implied bailment agreement, viewing Godiva as a bailee of Muransky’s credit card information.

The Eleventh Circuit next considered Congress’ creation of a statutory cause of action. It viewed Congress’ enactment of FACTA as the establishment of a duty of care for merchants in an effort to reduce identity theft and credit card fraud. Based on the structure and purpose of FACTA, the court held that “printing more than five digits of a credit card number . . . causes the person whose account number is disclosed to suffer a concrete injury.”

The concrete and particularized injury-in-fact that Muransky suffered, according to the Eleventh Circuit, was the use of his time and wallet space to safely dispose of the Godiva receipt so as to avoid someone finding the receipt and acquiring Muransky’s credit card number. While small, the injury of “shouldering the cost of safely keeping or destroying the receipt” was, in the Eleventh Circuit’s opinion, sufficient to confer Article III standing.

In making this decision, the Eleventh Circuit strayed from a line of cases decided by the Second, Seventh, and Ninth Circuits. In Bassett v. ABM Parking Servs. Inc., 883 F.3d 776 (9th Cir. 2018) the Ninth Circuit dismissed a similar claim under the Fair Credit Reporting Act for lack of standing, holding that there was no close relationship between the plaintiff’s FACTA claim and privacy-based torts centered on wrongful disclosure when the defendant did not disclose the plaintiff’s information to anyone but the plaintiff. Additionally, in Crupar-Weinmann v. Paris Baguette Am., Inc., 861 F.3d 76 (2nd Cir. 2018) and Meyers v. Nicolet Rest. of De Pere, LLC, 843 F.3d 724 (7th Cir. 2016), the Second and Seventh Circuits held that a consumer did not suffer any injury-in-fact when a restaurant printed the expiration date of the consumer’s credit card on a receipt, in violation of FACTA. Unlike these fellow appellate courts, however, the Eleventh Circuit’s decision in Muransky appears to set a low bar for plaintiffs attempting to establish particularized and concrete injuries so as to invoke Article III Standing.

The lack-of-standing defense is not necessarily a dead-letter in the Eleventh Circuit, however, as the court also has held in a previous case that “the requirement of concreteness under Article III is not satisfied every time a statute creates a legal obligation and grants a private right of action for its violation.” Nicklaw v. Citimortgage, Inc., 839 F.3d 998, 1003 (11th Cir. 2016), denying reh’g, 855 F.3d 1265 (11th Cir. 2017).

In Nicklaw, the plaintiff alleged that the defendant failed to record a satisfaction of the plaintiff’s mortgage within the time period required by state law, even though the defendant subsequently recorded the mortgage two years before the plaintiff filed his complaint. The plaintiff argued that he had suffered a concrete harm as a result of the defendant’s failure to comply with the New York statute simply because the state legislature intended to create a right to have the satisfaction of a mortgage timely recorded. The Court rejected this argument, explaining that “[b]y alleging only that CitiMortgage recorded the certificate late and nothing else, Nicklaw has failed to establish that he suffered or could suffer any harm that could constitute a concrete injury.” Nicklaw, 839 F.3d at 1003.

As these cases demonstrate, the case law on standing for what appear to be bare statutory violations continues to evolve throughout the circuits, and even within the Eleventh Circuit itself.

As these cases demonstrate, the case law on standing for what appear to be bare statutory violations continues to evolve throughout the circuits, and even within the Eleventh Circuit itself. With cases going both ways, careful attention must be paid to align or distinguish the facts of any case involving a potential Spokeo defense with one or more of the Eleventh Circuit’s existing precedential decisions.