The 11th Circuit Weighs in on "Injury in Fact" - Taking Time to put a Credit Card Receipt in your Wallet and Later Dispose of it Creates Article III Standing
It doesn’t take much to have “standing to sue” under Article III for a technical violation of FCRA in the 11th Circuit. Based on the 11th Circuit’s October 3, 2018 opinion in Muransky v. Godiva Chocolatier, Inc., 2018 U.S. App. LEXIS 27980 (11th Cir. 2018), all you need is an “enhanced” but unrealized “risk of identity theft” and the few seconds it takes to put a credit card receipt in your wallet and throw it out at home.
In affirming the approval of a class action settlement in Muransky, the 11th Circuit rejected an argument made by objectors to the settlement that the settling plaintiff lacked standing to assert claims under the Fair and Accurate Credit Transaction Act amendments (“FACTA”) to the Fair Credit Reporting Act (“FCRA”) due to his lack of a concrete injury-in-fact. In Muransky, the plaintiff sued Godiva for its alleged failure to truncate his credit card number on a purchase receipt to only the last five digits as required under the FACTA amendments to FCRA, claiming that his Godiva purchase receipt showed the first six and last four digits of his credit card number. The plaintiff sought to represent a class of customers whose credit card numbers Godiva printed on receipts in violation of FACTA truncation requirements, which he claimed posed an “elevated risk of identity theft” to himself and the class. The plaintiff admitted that he kept his Godiva receipt, such that it did not fall into the hands of an identity thief.
The plaintiff and Godiva reached a class action settlement which provided that Godiva would fund a common fund of $6.3 million from which all fees, costs, and class member benefits would be paid. It was estimated that class members who submitted a timely claim form would receive approximately $235 as their pro-rata share of the settlement fund. The settlement further provided that the plaintiff would receive an incentive award of $10,000 and that class counsel would receive attorney’s fees equal to one-third of the common fund or $2.1 million.
Five class members objected to the settlement arguing that the settlement provided a disproportionate benefit to the plaintiff and class counsel and challenging whether the plaintiff even had standing to bring claims for a technical violation of FACTA’s truncation requirements based on the “concrete injury-in-fact standard” for Article III standing enunciated by the Supreme Court in Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 194 L. Ed. 2d 635 (2016). In granting final approval to the settlement, the U.S. District Court rejected all of the objections raised and the objectors appealed.
On appeal, the 11th Circuit affirmed the judgment of the U.S. District Court, finding that the incentive award and attorney’s fees award were not unreasonable or disproportionate. On the issue of the plaintiff’s standing, the 11th Circuit held that the enhanced (but unrealized) risk of identity theft arising from providing a customer with a receipt showing more than the last five digits of his own credit card number, coupled with the fact that such a customer “must use their time (and wallet space) to safely dispose of or keep the untruncated receipt so as to avoid someone finding their credit card number on their receipt” constituted a sufficient injury in fact to create Article II standing.
This decision undoubtedly will be cited by class action proponents and plaintiff’s counsel in the 11th Circuit and elsewhere in an ongoing effort to water down Spokeo’s concrete injury-in-fact requirement. Whether the objectors in Muransky will petition the Supreme Court for certiorari review is unknown at this time.