The US Federal Appellate Court held that plaintiffs who received printed credit card receipts displaying too many card digits or expiration dates, in violation of the statute, failed to allege sufficient injury-in-fact to confer standing.
Within the past month, the Ninth Circuit Court of Appeals – the intermediate federal appellate court covering most of the western United States, including California, Oregon, Washington, Arizona, Nevada, Alaska, and Hawaii – issued a pair of decisions finding that the plaintiffs lacked standing to bring putative class action lawsuits under the Fair and Accurate Credit Transactions Act (FACTA). While both rulings were favorable to the defendants, as noted below, courts continue to issue inconsistent rulings on whether plaintiffs have standing to pursue class actions based on statutes with damages provisions.
FACTA, codified at 15 U.S.C. § 1681 et seq., was a 2003 amendment to the Fair Credit Reporting Act (FCRA) and, among other consumer protections, requires that printed credit card receipts provided at the point of sale contain no more than the last five digits of card numbers and no expiration dates. Any violation of FACTA amounting to "willful" noncompliance allows the consumer to recover statutory damages of not less than $100 but no more than $1,000 per occurrence, without any showing of actual harm; in addition, the consumer may recover costs of suit, attorneys' fees, and punitive damages. As a result of this statutory damage provision, without the requirement of actual injury, FACTA class actions have been a regular focus of the plaintiff bar and potentially can present significant damages if a case survives the motion to dismiss stage.
Article III of the US Constitution requires that a lawsuit present a judiciable "case or controversy" in order for a federal court to have subject matter jurisdiction; one part of this requirement is that the plaintiff(s) must have "standing" to bring the lawsuit. In recent years, challenges to standing at the motion to dismiss stage have been a popular and important defense in putative class actions brought alleging violations of consumer protection statutes (which, like FACTA, typically provide for statutory damages – sometimes even on a strict liability basis). Indeed, standing to bring a putative FCRA class action was the subject of the US Supreme Court's widely-publicized 2016 decision in Spokeo v. Robins, where the court held that a plaintiff must have suffered injury that is both concrete and particularized in order to have standing to bring a lawsuit alleging a statutory violation.
On February 21, 2018, the Ninth Circuit affirmed the dismissal of a FACTA class action based on lack of standing in Bassett v. ABM Parking Services (Case No. 16-35933). In Bassett, the plaintiff purportedly received a printed receipt while exiting a parking garage that listed the expiration date (but the permissible number of card digits) in violation of FACTA. The Ninth Circuit affirmed the federal Washington trial court's dismissal of the lawsuit because the plaintiff did not allege the receipt was lost, stolen, duplicated, or otherwise seen by anybody else – accordingly, the mere procedural violation without any alleged concrete injury did not suffice for standing. Notably, the plaintiff tried to argue around this with "alternative statutory theories of liability" – asserting that Congress created substantive rights (like the right to be free from identity theft) that were invaded by the statutory violation – but the court rejected those arguments as well. As the court humorously concluded, “We need not answer whether a tree falling in the forest makes a sound when no one is there to hear it. But when this receipt fell into Bassett’s hands in a parking garage and no identity thief was there to snatch it, it did not make an injury.”
In the wake of Bassett, on March 9, 2018, the Ninth Circuit issued an unpublished decision in Noble v. Nevada Checker Cab Corp. (Case No. 16-16573), again affirming dismissal of a putative class action alleging the defendant taxi company violated FACTA by printing credit card receipts containing the first digit of the card number (impermissible) in addition to the last four digits (permissible). The court noted that – as in Bassett – the plaintiffs did not allege that the receipts were given to anyone other than the cardholders who made the purchases. In finding there was no potential injury-in-fact and therefore no standing, the court concluded that the alleged violation "does not involve the sort of relevant information that Congress determined could lead to identity theft," noting that "the first digit of a credit card number merely identifies the brand of the card, and Congress has not prohibited the identity of the credit card issuer along with the last five digits of the credit card number."
Issues similar to those considered in Bassett and Noble have been decided by, or currently are pending before, other federal Circuit Courts of Appeal. The Ninth Circuit's decision in Bassett is consistent with standing decisions from the Second and Seventh Circuits involving receipts containing expiration dates, and the Fifth Circuit currently is considering a similar case. The Third Circuit has a decision pending in a standing case involving the printing of too many card digits, similar to Noble.
Since the Supreme Court decided Spokeo in May 2016, federal trial and intermediate appellate courts across the U.S. have issued many decisions with varying results on the issue of standing to bring putative class actions based on statutory violations. The decisions have gone both ways, and the result typically depends on whether sufficient potential for injury was alleged. Interestingly, just two months ago, the Supreme Court declined to hear further arguments on standing in Spokeo following further proceedings before the Ninth Circuit after remand in 2016 (i.e., the much-anticipated "Spokeo II" decision), so we anticipate courts will continue to issue decisions with varying results, depending upon the facts of a specific case.