Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca7-15-01083/USCOURTS-ca7-15-01083-0/pdf.json

Parties Involved:
ACT, Inc.
Appellee
College Board
Appellee
Karoline Kamzic
Appellant
Cathleen Silha
Appellant
Elyse Stevens
Appellant
Arie Wolf
Appellant

Document Text:

In the 

United States Court of Appeals 

For the Seventh Circuit ____________________ 

No. 15-1083 

CATHLENE SILHA, et al., 

Plaintiffs-Appellants, 

v.

ACT, INC. and THE COLLEGE BOARD, 

Defendants-Appellees. 

____________________ 

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division. 

No. 14 C 0505 — Amy J. St. Eve, Judge. 

____________________ 

ARGUED SEPTEMBER 18, 2015 — DECIDED NOVEMBER 18, 2015 

____________________ 

Before BAUER, KANNE, and ROVNER, Circuit Judges. 

KANNE, Circuit Judge. Every year, millions of high school 

students take the American College Test (“ACT”) and Scholastic Aptitude Test (“SAT”) with the ultimate aim of gaining 

admission to a college or university. To advance this goal 

and as part of the examination process, some student testtakers authorize the relevant testing agencies to “send” or 

“share” their personally identifiable information (“PII”) with 

educational organizations through an information exchange 

Case: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
2 No. 15-1083 

program. Plaintiff-appellants, a group of former participants 

in the information exchange programs, allege that they were 

harmed because the testing agencies did not disclose that the 

students’ PII was actually sold to the educational organizations for profit. We hold that plaintiff-appellants’ claims lack 

standing under Article III of the Constitution and therefore 

affirm the judgment of the district court. 

I. BACKGROUND

ACT, Inc. and The College Board (“Defendants”) are national testing agencies that administer the ACT and SAT college entrance exams, respectively, for a fee. When a student 

signs up to take a test, Defendants obtain some of the student’s PII, including name, home address, gender, birthdate, 

high school, email address, and phone number, along with 

other identifiers. 

In connection with the examinations, Defendants offer 

optional programs to facilitate the exchange of information 

between student test-takers and educational organizations, 

which include colleges and universities, scholarship organizations, and government agencies. ACT’s program is called 

the Education Opportunity Service, and The College Board’s 

program is called the Student Search Service. To participate 

in ACT’s program, students must affirmatively respond 

“Yes” to authorize ACT to “send” certain PII—name, address, gender, high school, email address, racial/ethnic background, and intended college major—to participating educational organizations. Similarly, to participate in The College 

Board’s program, test-takers must affirmatively respond 

“Yes” to authorize The College Board to “share” or “send” 

certain PII—name, address, sex, birthdate, school, grade level, ethnic group, email address, and intended college maCase: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
No. 15-1083 3

jor—to participating educational groups. Both information 

exchange programs are optional and free of charge to participants. Both programs disclose the categories of information 

released, as well as the types of educational organizations 

that may receive this information. 

On January 23, 2014, a group of former information exchange program participants—Cathlene Silha,1 Arie Wolf, 

Karoline Kamzic, and Elyse Stevens (“Plaintiffs”)—filed a 

putative class action complaint against Defendants. They alleged that Defendants deceived them and the putative class 

by concealing the sale or licensing of students’ PII under the 

cover of the information exchange programs. Specifically, 

Plaintiffs claimed that Defendants sold or licensed their PII 

for a profit of at least $.33 per student, per buyer. Plaintiffs 

relied on several theories of relief, including unfair and deceptive business practices, breach of contract, invasion of 

privacy, and unjust enrichment. The district court’s jurisdiction (apart from the Article III standing issue to which we 

will turn) was proper pursuant to 28 U.S.C. § 1332(d)(2). 

Defendants responded on March 28, 2014, by filing motions to dismiss for lack of subject matter jurisdiction under 

Federal Rule of Civil Procedure 12(b)(1) and for failure to 

state a claim under Rule 12(b)(6). 

On September 2, 2014, the district court granted Defendants’ motions to dismiss under Rule 12(b)(1), finding that 

 

1 We note that there is a discrepancy regarding the spelling of plaintiff 

Silha’s first name. In their brief, plaintiff-appellants spell the name as 

“Cathleen Silha.” In contrast, the original complaint and district court 

judgment spell the name as “Cathlene Silha.” For the purposes of this 

opinion, we spell this plaintiff’s name as “Cathlene Silha.” 

Case: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
4 No. 15-1083 

Plaintiffs did not fulfill their burden of establishing Article 

III standing. The district court addressed each of the Plaintiffs’ three theories of injury: “(1) the examination fee paid to 

take the ACT and SAT tests; (2) the diminished value of 

Plaintiffs’ PII based on Defendants’ sale, licensing, and distribution of this information; and (3) the fees that third parties paid to Defendants for Plaintiffs’ PII.” Silha, et al. v. ACT, 

Inc. and The College Board, No. 14 C 0505, slip op. at 3 (N.D. 

IL. Sep. 2, 2014). 

First, the district court rejected the alleged harm of examination fees because there was no “causation—a fairly traceable connection” between Defendants’ conduct and Plaintiffs’ injury. Id. The district court found that Defendants’ sale 

of Plaintiffs’ PII “did not cause” Plaintiffs to pay the examination fees because Plaintiffs paid those fees to take the examinations and eventually gain admission to college. Id.

Second, the district court rejected the claimed injury of 

diminished value of PII because Plaintiffs failed to “allege 

that they have the ability to sell their personal information or 

that Defendants’ conduct foreclosed them from entering into 

a ‘value for value transaction’ relating to their PII.” Id.

Third, the district court rejected the alleged injury of fees 

paid by third parties for Plaintiffs’ PII because “a plaintiff’s 

injury must be based on the plaintiff’s loss, not the defendant’s gain.” Id. at 4. The district court found that the Plaintiffs’ had not alleged that “they suffered an economic loss, 

[only] that [Defendants] profited.” Id.

Subsequently, on September 22, 2014, Plaintiffs moved to 

alter or amend the district court’s judgment, pursuant to 

Federal Rules of Civil Procedure 59(e) or 60(b)(6). At the 

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No. 15-1083 5

same time, Plaintiffs sought leave to amend their original 

complaint in response to the district court’s dismissal for lack 

of injury. The proposed amended complaint included new 

allegations that Plaintiffs had the opportunity to sell their 

PII. Plaintiffs also sought to add a new claim under the Illinois Right of Publicity Act. 

On December 15, 2014, the district court denied Plaintiffs’ 

motion, concluding that nothing in the proposed amended 

complaint would plausibly establish injury in fact. Furthermore, the district court found that Plaintiffs’ proposed right 

to publicity claim was time-barred. This appeal followed. 

II. ANALYSIS

We review a district court’s dismissal for lack of subject 

matter jurisdiction de novo. Remijas v. Neiman Marcus Grp., 

LLC, 794 F.3d 688, 691 (7th Cir. 2015); Apex Dig., Inc. v. Sears, 

Roebuck & Co., 572 F.3d 440, 443 (7th Cir. 2009). 

Article III of the Constitution limits federal judicial power to certain “cases” and “controversies,” and the “irreducible constitutional minimum” of standing contains three elements. Lujan v. Defs. of Wildlife, 504 U.S. 555, 559–60 (1992) 

(internal citations and quotations marks omitted). 

To establish Article III standing, “a plaintiff must show 

(1) it has suffered an ‘injury in fact’ that is (a) concrete and 

particularized and (b) actual or imminent, not conjectural or 

hypothetical; (2) the injury is fairly traceable to the challenged action of the defendant; and (3) it is likely, as opposed to merely speculative, that the injury will be redressed 

by a favorable decision.” Friends of the Earth, Inc. v. Laidlaw 

Envtl. Servs. (TOC), Inc., 528 U.S. 167, 180–181 (2000) (citing 

Lujan, 504 U.S. at 560–61). As the party invoking federal juCase: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
6 No. 15-1083 

risdiction, a plaintiff bears the burden of establishing the elements of Article III standing. Lujan, 504 U.S. at 561; Remijas, 

794 F.3d at 691–92. 

In evaluating a challenge to subject matter jurisdiction, 

the court must first determine whether a factual or facial 

challenge has been raised. Apex Dig., 572 F.3d at 443. 

A factual challenge contends that “there is in fact no subject matter jurisdiction,” even if the pleadings are formally 

sufficient. Id. at 444 (emphasis in original) (internal citations 

and quotation marks omitted). In reviewing a factual challenge, the court may look beyond the pleadings and view 

any evidence submitted to determine if subject matter jurisdiction exists. Id.

In contrast, a facial challenge argues that the plaintiff has 

not sufficiently “alleged a basis of subject matter jurisdiction.” Id. at 443 (emphasis in original). In reviewing a facial 

challenge, the court must accept all well-pleaded factual allegations as true and draw all reasonable inferences in favor 

of the plaintiff. Id. at 443–44. 

Here, Defendants’ Rule 12(b)(1) motion is properly understood as a facial challenge because they contend that 

Plaintiffs’ complaint lacks sufficient factual allegations to establish standing.

Before addressing Plaintiffs’ arguments, we take this opportunity to clarify the standard for facial challenges to subject matter jurisdiction under Rule 12(b)(1). The Supreme 

Court has held that “each element [of standing] must be 

supported in the same way as any other matter on which the 

plaintiff bears the burden of proof.” E.g., Lujan, 504 U.S. at 

561; see also Apex Dig., 572 F.3d at 443 (quoting Lujan, 504 

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No. 15-1083 7

U.S. at 561). Moreover, in evaluating whether a complaint 

adequately pleads the elements of standing, courts apply the 

same analysis used to review whether a complaint adequately states a claim: “[C]ourts must accept as true all material 

allegations of the complaint, and must construe the complaint in favor of the complaining party.” Warth v. Seldin, 422 

U.S. 490, 501 (1975); see also Apex Dig., 572 F.3d at 443; In re 

Schering Plough Corp. Intron/Temodar Consumer Class Action, 

678 F.3d 235, 243 (3rd Cir. 2012).

The Supreme Court clarified the standard for pleading a 

claim in Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) 

and Ashcroft v. Iqbal, 556 U.S. 662 (2009): 

To survive a motion to dismiss, a complaint must 

contain sufficient factual matter, accepted as true, 

to state a claim to relief that is plausible on its face. 

A claim has facial plausibility when the plaintiff 

pleads factual content that allows the court to draw 

the reasonable inference that the defendant is liable 

for the misconduct alleged. 

Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 570) (internal citations and quotations marks omitted). 

To assess whether a complaint states a plausible claim of 

relief, the Court articulated a two-pronged approach in 

which a court (1) first identifies the well-pleaded factual allegations by discarding the pleadings that are “no more than 

conclusions” and (2) then determines whether the remaining 

well-pleaded factual allegations “plausibly give rise to an 

entitlement of relief.” Iqbal, 556 U.S. at 679.

Because Lujan mandates that standing “must be supported in the same way as any other matter on which the plaintiff bears the burden of proof,” it follows that the TwomblyCase: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
8 No. 15-1083 

Iqbal facial plausibility requirement for pleading a claim is 

incorporated into the standard for pleading subject matter 

jurisdiction. Lujan, 504 U.S. at 561. Therefore, we join many 

of our sister circuits and hold that when evaluating a facial 

challenge to subject matter jurisdiction under Rule 12(b)(1), a 

court should use Twombly-Iqbal’s “plausibility” requirement, 

which is the same standard used to evaluate facial challenges to claims under Rule 12(b)(6). See In re Schering Plough 

Corp. Intron/Temodar Consumer Class Action, 678 F.3d 235, 

243–44 (3rd Cir. 2012); Amidax Trading Grp. v. S.W.I.F.T. 

SCRL, 671 F.3d 140, 145 (2d Cir. 2011); Román-Oliveras v. P. R. 

Elec. Power Auth., 655 F.3d 43, 45 n.3, 49 (1st Cir. 2011); Lane 

v. Halliburton, 529 F.3d 548, 557 (5th Cir. 2008); Stalley v. 

Catholic Health Initiatives, 509 F.3d 517, 521 (8th Cir. 2007). 

But see Maya v. Centex Corp., 658 F.3d 1060, 1067–69 (9th Cir. 

2011) (declaring that “Twombly and Iqbal are ill-suited to application in the constitutional standing context”).

We now turn to the present case. Plaintiffs contend that 

they pled standing by alleging that Defendants had “deceived” them by not disclosing the sale of their PII and seeking damages from the income Defendants derived from this 

alleged deception. 

Applying Iqbal’s two-pronged approach, we first identify 

Plaintiffs’ well-pleaded factual allegations. After stripping 

away all conclusory statements of wrongdoing, we find that 

Plaintiffs’ complaint contains the following well-pleaded factual allegations: Plaintiffs took tests administered by Defendants; Plaintiffs consented to participate in the information exchange programs offered by Defendants; and 

Plaintiffs did not know at the time of their examinations that 

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No. 15-1083 9

Defendants profited from these information exchange programs. 

We next determine whether these well-pleaded factual 

allegations plausibly suggest a claim of subject matter jurisdiction. We find that Plaintiffs fail the second prong of Iqbal

because Plaintiffs’ well-pleaded factual allegations do not 

support injury in fact sufficient for standing under Article III 

of the Constitution. 

Regarding injury in fact, this court has held that “[a] 

plaintiff who would have been no better off had the defendant refrained from the unlawful acts of which the plaintiff is 

complaining does not have standing under Article III of the 

Constitution to challenge those acts in a suit in federal 

court.” McNamara v. City of Chic., 138 F.3d 1219, 1221 (7th Cir. 

1998) (collecting cases). It follows that a plaintiff’s claim of 

injury in fact cannot be based solely on a defendant’s gain; it 

must be based on a plaintiff’s loss.2 Here, Plaintiffs have not 

alleged that they lost anything of value as a result of the alleged misconduct. 

As part of the information exchange program, Plaintiffs 

consented to and affirmatively authorized Defendants to 

 

2 Some district courts have explicitly applied this principle regarding 

injury in fact. E.g. In re Google, Inc. Privacy Policy Litig., No. C-12-01382-

PSG, 2013 WL 6248499, at *5 (N.D. Cal. Dec. 3, 2013) (“[A] plaintiff must 

do more than point to the dollars in a defendant’s pocket; he must sufficient[ly] allege that in the process he lost dollars of his own.”); Del Vecchio v. Amazon.com, Inc., No. C11-366RSL, 2012 WL 1997697, at *4 (W.D. 

Wash. June 1, 2012) (“It is not enough to allege only that the information 

has value to Defendant; the term ‘loss’ requires that Plaintiffs suffer a 

detriment.”).

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“send” or “share” certain PII with participating educational 

organizations in order to receive information about colleges, 

universities, scholarships, and other educational opportunities. The fact that Defendants allegedly collected a fee from 

participating educational organizations and did not disclose 

this sale did not make Plaintiffs worse off. In both potential 

scenarios—one with a fee paid to Defendants and one without a fee paid to Defendants—Plaintiffs’ PII would have 

been conveyed to participating educational organizations in 

an identical manner, and Plaintiffs would have received the 

same benefits from the information exchange. Moreover, we 

find it telling that Plaintiffs actually benefited from participation in the information exchange programs, in contrast to 

their allegations of harm. 

Additionally, Plaintiffs have pled that Defendants profited from the sale of their PII, but they did not establish how 

this profiteering deprived them of the economic value of this 

information. Plaintiffs’ only claim of economic value associated with their PII is a portion of the value created by Defendants after Plaintiffs authorized the sending or sharing of 

their information to educational organizations. 

In other words, Plaintiffs have claimed injury based solely on a gain to Defendants and without alleging a loss to 

themselves. Thus, we hold Plaintiffs’ well-pleaded allegations do not establish an injury in fact and consequently, do 

not plausibly support a claim of subject matter jurisdiction. 

Plaintiffs also argue that the allegations in their complaint give rise to the following reasonable inference: had 

Plaintiffs been told that their PII would be sold to third parties, they would have conditioned the sale on receipt of a 

portion of the sale proceeds. Here, we find that Plaintiffs’ arCase: 15-1083 Document: 39 Filed: 11/18/2015 Pages: 11
No. 15-1083 11

gument cannot satisfy the first prong of Iqbal because this 

inference cannot be reasonably drawn from Plaintiffs’ wellpleaded factual allegations. Plaintiffs provide no factual 

support for the necessary inferential steps for this argument, 

including their desire and ability to demand, negotiate, and 

receive a portion of the PII proceeds from Defendants. Because Plaintiffs do not provide the requisite factual support, 

we do not have to determine whether Plaintiffs’ “conditioned sale” argument gives rise to a plausible claim of subject matter jurisdiction. 

III. CONCLUSION

Having tested and examined Plaintiffs’ arguments, we 

hold that Plaintiffs’ well-pleaded factual allegations have not 

established a plausible claim of Article III standing and 

therefore subject matter jurisdiction. 

For the foregoing reasons, the judgment of the district 

court is AFFIRMED. 

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