Court: District Court, S.D. New York; January 29, 2017; Federal District Court
A plaintiff must demonstrate constitutional standing by showing a concrete injury resulting from a defendant's actions. Devorah Cruper-Weinmann filed a putative class action against Paris Baguette America, Inc., claiming a violation of the Fair and Accurate Credit Transactions Act of 2003 (FACTA) for providing a receipt that included her credit card's expiration date. She sought statutory and punitive damages, along with attorney fees. The defendant moved to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6), which the court granted on January 16, 2014, citing the plaintiff's failure to plausibly claim willfulness in the alleged violation. The plaintiff appealed, and while the appeal was pending, the Supreme Court's decision in Spokeo, Inc. v. Robins established new standards for pleading an injury in fact for standing under Article III. Consequently, the Second Circuit remanded the case for the plaintiff to replead her claims in accordance with Spokeo, allowing the district court to reassess standing. The plaintiff subsequently filed an Amended Complaint, which the defendant moved to dismiss again under Federal Rules 12(b)(1) and (6). After reviewing the relevant submissions and case law, the court determined that the plaintiff did not have standing and dismissed the Amended Complaint. FACTA aims to prevent identity theft by mandating that businesses redact credit card details on receipts, requiring only the last five digits of the card number and no expiration date. Despite a 2007 amendment that provided a safe harbor for previous violations, the redaction requirements remained unchanged. The plaintiff alleged that she received a receipt displaying her card's expiration date after dining at Paris Baguette on September 19, 2013.
The plaintiff has not claimed to have experienced identity theft from the receipt in question, nor indicated that anyone else accessed it. The concept of standing, grounded in Article III, restricts who may bring a lawsuit in federal court. The Supreme Court outlines three necessary elements for standing: (1) a concrete and particularized injury in fact, (2) that is traceable to the defendant's actions, and (3) that can be remedied by a court ruling. An injury in fact must be real, not hypothetical. The key issue is whether the plaintiff's claim of receiving a receipt with her card's expiration date, in violation of FACTA, constitutes a sufficient injury in fact. In Spokeo, the Supreme Court emphasized the need for injuries to be concrete, noting that while intangible injuries can qualify, mere procedural violations do not automatically establish standing. However, a statutory procedural violation can suffice as an injury in fact under certain circumstances, meaning that a plaintiff need not demonstrate additional harm if Congress has recognized the violation as harmful. Examples are provided where procedural violations were deemed sufficient for standing, alongside hypothetical violations that would not meet this threshold.
The Court of Appeals for the Second Circuit clarified the interpretation of the Spokeo standard in Strubel v. Comenity Bank, where the plaintiff alleged four violations of the Truth in Lending Act (TILA) due to the defendant's failure to provide required disclosures in a credit card agreement. The court established that an alleged procedural violation can indicate a concrete injury if Congress intended to protect a plaintiff's concrete interests and the violation poses a risk of real harm to that interest. In Strubel, the court determined that the plaintiff met the injury-in-fact requirement for two of the violations, as the defendant’s failure to disclose critical obligations threatened the plaintiff's ability to use credit knowledgeably. Conversely, the court found that the other two alleged violations, related to a non-existent payment plan and the defendant's reporting obligations, did not impact the plaintiff’s credit use and therefore did not result in concrete injuries.
To assess whether a procedural violation constitutes an injury in fact, courts must evaluate if Congress granted the procedural right to protect a concrete interest and whether the violation posed a material risk of harm to that interest. The plaintiff in the current matter failed to demonstrate that the alleged procedural violation under the Fair and Accurate Credit Transactions Act (FACTA) presented a risk of identity theft, as there were no facts indicating that a third party accessed the improperly redacted receipt. Given that the presence of the full expiration date on the receipt did not threaten the plaintiff's identity security, the procedural violation did not satisfy the necessary condition for standing. This conclusion aligns with previous cases regarding standing in FACTA violations post-Spokeo.
A recent Seventh Circuit ruling determined that a plaintiff lacked standing due to insufficient demonstration of actual harm from a FACTA violation regarding the expiration date on a receipt. The court noted that the plaintiff discovered the issue immediately, and no one else viewed the non-compliant receipt, thus eliminating any risk of harm. Similar conclusions were reached in other cases where plaintiffs, having sole access to receipts with either excessive card number details or improper redactions, failed to show a credible risk of identity theft.
The plaintiff argued that the violation of redaction requirements posed a risk to the interests FACTA was designed to protect, asserting that such violations inherently raised the risk of identity theft, constituting concrete harm. However, the court referenced the Strubel case, emphasizing that a plaintiff must show that the violation specifically threatened the harm in question to establish standing. The court rejected the idea that simply violating a protective requirement equates to an automatic injury without evidence of an actual risk in the circumstances.
Additionally, the plaintiff claimed that FACTA conferred a substantive procedural right to receive appropriately redacted receipts, suggesting that any violation results in injury. However, the court reiterated that while a connection between the statute's purpose and the alleged harm is necessary, it is insufficient on its own for establishing standing. Lastly, the plaintiff's argument linking FACTA's redaction requirements to a recognized privacy interest was not substantiated by evidence that Congress intended to protect privacy rights over identity security. Consequently, the court granted the defendant's motion to dismiss, concluding the plaintiff's claims with prejudice.
The Court ruled that the circumstances alleged in this case did not meet the concreteness requirement for standing, as the alleged violation did not pose a sufficient risk of harm. Therefore, the Court did not need to consider Paris Baguette's argument regarding the adequacy of redacting only the credit card number under the 2007 FACTA amendment to prevent identity theft. The legal community is divided on whether procedural violations of FACTA confer standing; some courts have held that Congress intended to create a substantive right to proper redaction of credit card information. Notably, cases like Wood v. J Choo USA, Guarisma v. Microsoft, and Altman v. White House Black Mkt. Inc. have concluded such violations grant standing, but these rulings face scrutiny. The precedent set by Hammer v. Sam's E. Inc., which initially supported this view, was later undermined by the Spokeo decision. Additionally, reliance on an unpublished Eleventh Circuit decision does not sufficiently justify treating FACTA and FDCPA violations similarly for standing. The plaintiff argues that Congress can create substantive procedural rights to deter risks of harm, citing Donoghue v. Bulldog Investors General Partnership as a parallel. However, the Court noted that FACTA lacks a provision analogous to the Securities Exchange Act's § 16(b), which allows issuers to claim profits from breaches of fiduciary duties.
