Source: http://m.klgates.com/Standing-to-Sue-under-the-Fair-and-Accurate-Credit-Transactions-Act-after-Spokeo-01-12-2018/
Timestamp: 2019-04-19 22:52:05+00:00

Document:
FACTA—a 2003 amendment to the Fair Credit Reporting Act—requires the truncation of card numbers and expiration dates on printed cardholder receipts. Specifically, section 113 of FACTA provides that “no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any [electronically-printed] receipt provided to the cardholder at the point of the sale or transaction.” Consumers may bring a civil claim for negligent or willful violation of the statute; a willful violation can give rise to statutory and punitive damages.
If consumers sue in federal court, they must establish standing, including an “injury in fact,” to maintain a claim. Although an intangible statutory injury may suffice under some circumstances, this “does not mean that a plaintiff automatically satisfies 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.” Thus, as the Supreme Court held in Spokeo, “a bare procedural violation, divorced from any concrete harm,” does not “satisfy the injury-in-fact requirement.” Courts have wrestled with how to apply this aspect of Spokeo to FACTA cases.
In mid-2016, district courts in the Eleventh Circuit issued a series of five decisions that applied Spokeo to FACTA claims and rejected challenges to the plaintiffs’ standing. The rulings reasoned that the alleged failure to truncate a card number, or the alleged printing of a card expiration date, was a “substantive” violation of a statutory right, rather than “a bare procedural violation.” According to these courts, the violation itself constituted a concrete injury, and thus the plaintiffs did not need to plead any further facts regarding harm suffered.
District courts outside of the Eleventh Circuit, however, began developing a contrary view of the application of Spokeo to FACTA claims. These courts concluded that certain alleged violations of the FACTA card number truncation requirement were “technical violation[s]” that “create no ‘concrete’ harm of the type sought to be prevented by Congress.” For instance, in Noble v. Nevada Checker CAB Corp., the District of Nevada reasoned that FACTA’s “more than the last 5 digits” language creates ambiguity when viewed in the context of the card industry standard that the first six digits of a card number identify the card issuer, not the cardholder. And because FACTA does not preclude the printing of the card issuer’s name on the receipt, the printing of the first digit and last four digits presents no greater risk of harm to the cardholder than what the statute permits. Thus, absent separate allegations of “actual harm,” such as resulting credit card fraud, the cardholder lacks an injury-in-fact and thus standing. Other district courts in the Ninth Circuit adopted similar reasoning, as did district courts in the Second, Third, Seventh, and Eighth Circuits.
A recent trial court decision out of North Carolina is illustrative. In Miles v. Company Store, Inc., the plaintiff alleged that the defendant violated FACTA by printing both the first six digits and last four digits of his credit card number on his customer copy receipt, thereby purportedly exposing him “to an increased risk of identity theft.” Recognizing that North Carolina’s standing doctrine incorporates an injury-in-fact requirement “imported from federal standing doctrine,” the North Carolina state court looked to recent federal court decisions for guidance. Without citing to Spokeo, the court identified and followed several post-Spokeo decisions where “federal courts have determined that the exact injury alleged here does not meet the concreteness requirement.” It remains to be seen if more state courts apply a Spokeo-type concreteness analysis to alleged FACTA claims and, if so, in which states Spokeo-type challenges result in dismissal.
Although a clear majority trend—that an alleged FACTA violation by itself does not establish a concrete injury under Spokeo—has developed, upcoming decisions from the courts of appeals could change the legal landscape. The Ninth Circuit will likely be the next federal appellate court to address the intersection of FACTA and Spokeo. On November 17, 2017, a Ninth Circuit panel heard oral argument in the Noble appeal, focusing largely on whether the printing of the card issuer identification portion of a card number can give rise to concrete injury when FACTA does not prohibit the printing of the issuer’s name on the same receipt. Depending on how the court rules, it could create a split with the Second Circuit’s decision in Katz. Appeals are also underway in the Third and Fifth Circuits.
Absent a circuit split, it does not appear that the Supreme Court will review the application of Spokeo to FACTA claims any time soon. In June 2017, for example, the Court denied certiorari in the Meyers case. And the parties did not seek certiorari in Crupar-Weinmann or Katz. It remains to be seen how other federal courts—including the courts of appeals before which appeals are pending—and other state courts view the issue, as well as whether it eventually makes its way to the Supreme Court. Businesses that generate printed cardholder receipts—like our hypothetical grocery store—should remain alert to developments in this area of the law.
 Pub. L. No. 108-159, 117 Stat. 1952.
 Spokeo, 136 S. Ct. at 1547 (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 560 (1992)).
 See Altman v. White House Black Market, Inc., No. 1:15-cv-2451-SCJ, 2016 WL 3946780, at *3-5 (N.D. Ga. July 13, 2016); Guarisma v. Microsoft Corp., 209 F. Supp. 3d 1261, 1264-67 (S.D. Fla. 2016).
 Noble v. Nevada Checker CAB Corp. No. 2:15-cv-02322-RCJ-VCF, 2016 WL 4432685, at *3 (D. Nev. Aug. 19, 2016), appeal argued, No. 16-16573 (9th Cir. Nov. 17, 2017).
 Stelmachers v. Verifone Sys., Inc., No. 5:14-cv-04912-EJD, 2016 WL 6835084, at *2-4 (N.D. Cal. Nov. 21, 2016) (concluding alleged printing of more than last five digits “make[s] out only a bare procedural violation of FACTA” because “the risk that Plaintiff will be subjected to the type of ‘low tech’ identity theft identified in the [first amended complaint] is too attenuated to constitute a qualifying injury in fact for standing”); Stelmachers v. Verifone Sys., Inc., No. 5:14-cv-04912-EJD, 2017 WL 3968871, at *3-5 (N.D. Cal. Sept. 7, 2017) (dismissing second amended complaint “because Plaintiff still has not plausibly identified a concrete, certainly impending injury resulting from the non-compliant receipt”), appeal stayed pending decision in Noble, No. 17-17010 (9th Cir. Dec. 12, 2017).
 Katz v. Donna Karan Int’l, Inc., No. 14 Civ. 740 (PAC), 2017 WL 2191605, at *3-7 (S.D.N.Y. May 17, 2017) (“there is no evidence that Congress, in enacting FACTA, intended to create for consumers a substantive right to receive a redacted copy of their credit card receipt”), aff’d sub nom. Katz v. Donna Karan Co., 872 F.3d 114 (2d Cir. 2017).
 Kamal v. J. Crew Group, Inc., No. 2:15-0190 (WJM), 2016 WL 6133827, at *2-4 (D.N.J. Oct. 20, 2016) (reasoning that Clarification Act reflects Congress’s recognition that improper truncation in and of itself is not actual harm); Hendrick v. Aramark Corp., --- F. Supp. 3d ----, 2017 WL 1397241, at *3-5 (E.D. Pa. Apr. 18, 2017) (following Kamal); Kamal v. J. Crew Group, Inc., No. 2:15–0190 (WJM), 2017 WL 2587617, at *2-5 (D.N.J. June 14, 2017) (dismissing second amended complaint because alleged printing of first six digits and last four digits of card number was a “bare procedural violation”), appeal docketed, No. 17-2345 (3d Cir. June 22, 2017). But see Gennock v. Kirkland’s, Inc., No. 2:17-cv-00454-DSC-RCM, slip op. at 4-11 (W.D. Pa. Nov. 29, 2017) (magistrate report recommending denial of motion to dismiss on grounds that since Spokeo, Third Circuit has recognized standing in context of both Fair Credit Reporting Act and Telephone Consumer Protection Act claims that implicate similar privacy rights as FACTA (citing In re Horizon Healthcare Services, Inc. Data Breach Litigation, 846 F.3d 625 (3d Cir. 2017), and Susinno v. Work Out World, Inc., 862 F.3d 346, 351 (3d Cir. 2017)), predicting that the Third Circuit will reverse Kamal on appeal, and rejecting Katz as “tak[ing] a circuitous route through FACTA” that ignores the statute’s plain language), adopted slip op. at 1 (W.D. Pa. Jan. 4, 2018).
 Paci v. Costco Wholesale Corp., No. 16-cv-0094, 2017 WL 1196918, at *2-3 (N.D. Ill. Mar. 30, 2017) (granting defendant’s motion for summary judgment because plaintiff had not created triable issue of fact as to existence of concrete injury as a result of printing first six digits and last four digits on receipt where only evidence of harm was that plaintiff secured receipt in a file cabinet as opposed to her normal practice of placing receipt in a box).
 Thompson v. Rally House of Kan. City, Inc., No. 15–00886–CV–W–GAF, 2016 WL 8136658, at *2-5 (W.D. Mo. Oct. 6, 2016) (plaintiff alleged “no real risk of harm as the improper receipt has only been in Plaintiff’s possession since receiving it from Defendants”).
 872 F.3d 114, 119 (2d Cir. 2017).
 See id. at 119-20 (concluding that the defendant’s challenge to the plaintiff’s standing was a factual challenge, as opposed to a facial one).
 Id. at 120. The court limited its holding, however, “emphasiz[ing] … that we do not here resolve whether other bare procedural violations of FACTA should or will meet a similar outcome, a question for lower courts to determine in the first instance, on a case- and fact-specific basis.” Id. at 121; cf. Katz v. Metropolitan Transp. Auth., No. 17-CV-472(KAM), 2017 WL 6734185, at *6-10 (E.D.N.Y. Dec. 29, 2017) (dismissing card number truncation claim for lack of standing and rejecting plaintiff’s argument that Katz v. Donna Karan Co. was not dispositive).
 843 F.3d 724, 727-29 (7th Cir. 2016), cert. denied 137 S. Ct. 2267 (2017).
 Pub. L. No. 110-241, 122 Stat. 1565. Pursuant to the Clarification Act, the printing of an expiration date on a cardholder receipt subject to FACTA between December 4, 2004, and June 3, 2008, was not a willful violation. 15 U.S.C. § 1681n(d); see Clarification Act, § 3, 122 Stat. 1565, 1566 (2007).
 Meyers, 843 F.3d at 727-28.
 Id. at 728-29. Although Meyers concerned the printing of an expiration date as opposed to more than the last five digits of the card number, in Paci, a case concerning the card number, the district court concluded that Meyers “is both instructive and dispositive.” 2017 WL 1196918, at *2.
 Fullwood v. Wolfgang’s Steakhouse, Inc., No. 13 Civ. 7174 (KPF), 2017 WL 377931, at *6 (S.D.N.Y. Jan. 26, 2017); Crupar-Weinmann v. Paris Baguette Am., Inc., 235 F. Supp. 3d 570, 574-77 (S.D.N.Y. Jan. 30, 2017) (“plaintiff has failed to allege facts demonstrating that the violation in question put her at an increased risk of identity theft”), aff’d 861 F.3d 76 (2d Cir. 2017).
 Gant v. Fondren Orthopedic Group LLP, No. 4:16-cv-00648, 2017 WL 4479955, at *1-2 (S.D. Tex. May 22, 2017) (“a violation of FACTA, in and of itself, does not establish standing”), appeal docketed, No. 17-20407 (5th Cir. June 23, 2017); Batra v. RLS Supermarkets LLC, 3:16-CV-2874-B, 2017 WL 3421073, at *2-8 (N.D. Tex. Aug. 9, 2017) (“a violation of 15 U.S.C. § 1681c(g) is not one where the violation, alone, constitutes a concrete injury”), appeal docketed, No. 17-11014 (5th Cir. Sept. 7, 2017).
 Llewellyn v. AZ Compassionate Care Inc., No. CV-16-04181-PHX-DGC, 2017 WL 1437632, at *2-6 (D. Ariz. Apr. 24, 2017) (“Plaintiff alleges a bare technical violation of FACTA, without satisfying his burden of alleging concrete harm.”). But see Deschaf v. Am. Valet & Limousine Inc., 234 F. Supp. 3d 964, 967-70 (D. Ariz. Feb. 15, 2017) (“A person or entity who prints an expiration date on a receipt, therefore, does not simply violate a procedural provision of FACTA but creates a real risk of identity theft—the very harm that FACTA was enacted to combat.”).
 Weinstein v. Intermountain Healthcare, Inc., No. 2:16–cv–00280–DN, 2017 WL 1233829, at *3-4 (D. Utah Apr. 3, 2017) (plaintiff “has not alleged any actual harm but has only alleged a violation of FACTA by having the expiration date of his credit card printed on a receipt”).
 See Llewellyn, 2017 WL 1437632, at *5; Batra, 2017 WL 3421073, at *6-7; Weinstein, 2017 WL 1233829, at *4 & n.46. But see Wood, 201 F. Supp. 3d at 1338-40 (rejecting argument that Clarification Act established that Congress did not recognize printing of card expiration date by itself as a cognizable injury).
 861 F.3d 76, 81-82 (2d Cir. 2017), reh’g denied (2d Cir. Aug. 24, 2017) (“Congress did not think that the inclusion of a credit card expiration date on a receipt increases the risk of material harm of identify theft.” (emphasis original)); see O’Shea v. P.C. Richard & Son, LLC, No. 15 Civ. 9069 (KPF), 2017 WL 3327602, at *4-7 (S.D.N.Y. Aug. 3, 2017) (“Crupar-Weinmann II makes clear that Plaintiffs lack Article III standing. Just as in that case, Plaintiffs here allege only that the expiration dates of their cards were printed on their receipts. Neither alleges that their identities were stolen or that credit card fraud was perpetrated against them.”); Fullwood v. Wolfgang’s Steakhouse, Inc., No. 13 Civ. 7174 (KPF), 2017 WL 5157466, at *3-6 (S.D.N.Y. Nov. 3, 2017) (same; dismissing third amended complaint).
 No. 17-22541-Civ-Scola, 2017 WL 4326101 (S.D. Fla. Sept. 27, 2017).
 Id. at *1, *2-6; see also Tarr v. Burger King Corp., No. 17-23776-Civ-Moreno, 2018 WL 318477. at *3-4 (S.D. Fla. Jan. 5, 2018) (agreeing with Gesten and adopting majority approach).
 2017 WL 4326101 at *2 (citing Katz, Kamal, and Noble).
 Id. at *3 (citing Crupar-Weinmann, Meyers, Hendrick, Paci, Stelmachers, and Thompson).
 Indeed, some federal courts have remanded, rather than dismissed, FACTA claims upon finding that the plaintiff failed to allege a concrete injury under Spokeo. See Edelstein v. Westlake Wellbeing Properties, LLC, No. CV 17-06488-AB (JEMx), 2017 WL 5495153, at *2-3 (C.D. Cal. Nov. 15, 2017); Lindner v. Roti Restaurants, LLC, No. 17-cv-935, 2017 WL 3130755, at *2-4 (N.D. Ill. July 24, 2017); Everett v. Memphis Light Gas & Water Division, No. 16-cv-2810-SHL-tmp, 2017 WL 1830165, at *2-4 (W.D. Tenn. Apr. 18, 2017); Mocek v. Allsaints USA Ltd., 220 F. Supp. 3d 910, 912-14 (N.D. Ill. 2016). But see Collier v. SP Plus Corp., No. 16 CV 10587, 2017 WL 4585572, at *2-5 (N.D. Ill. Apr. 28, 2017) (denying plaintiff’s motion to remand FACTA claim that defendant removed and moved to dismiss for lack of standing because even though plaintiff did not suffer injury under Spokeo, FACTA claim arose under federal law subject to federal court subject matter jurisdiction), appeal docketed No. 17-2431 (7th Cir. July 14, 2017). One such court even sanctioned a defendant for removing a FACTA case from state court and then moving to dismiss it for lack of Article III standing. See Mocek, 220 F. Supp. 3d at 914-15 (awarding plaintiff her attorneys’ fees “incurred as a result of removal”).
 The “futility exception” allows a federal court to decline to remand a case for which it lacks subject matter jurisdiction where the state court to which the case would be remanded lacks subject matter jurisdiction “for the very same reason.” See Lindner, 2017 WL 3130755, at *4 (discussing whether to apply “futility exception”).
 No. 16-CVS-2346, slip. op at 1-2 (N.C. Super. Ct. Nov. 9, 2017) (noting that the plaintiff did “not allege that the receipt was seen by anyone other than himself or that he suffered identity theft”).
 Id. (citing Hendrick, Kamal, Stelmachers, and Thompson).
 The Third Circuit has scheduled Kamal for argument in February 2018. The Fifth Circuit has noted the relatedness of the Gant and Batra appeals. It remains to be seen if they will be consolidated for argument, decision, or both.
 137 S. Ct. 2267 (2017).

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