Split en banc 11th Circuit vacates $6.3 million FACTA settlement

Courts Eleventh Circuit FACTA Settlement Class Action Spokeo Standing Appellate

On October 28, the U.S. Court of Appeals for the Eleventh Circuit, in a 7-3 en banc decision, vacated a $6.3 million Fair and Accurate Credit Transactions Act (FACTA) class action settlement, concluding the plaintiffs lacked standing because they did not allege any concrete harm. According to the opinion, the named plaintiff filed a FACTA class action against a chocolate retailer, alleging that the retailer printed too many credit card digits on receipts over several years. The complaint only pursued statutory damages and explicitly stated it did “not intend[] to request any recovery for personal injury.” The parties agreed to settle the litigation for $6.3 million prior to the U.S. Supreme Court decision in Spokeo, Inc. v. Robins (holding that a plaintiff must allege a concrete injury, not just a statutory violation, to establish standing). After Spokeo, the district court approved the class action, and class objectors appealed, with one objector arguing that the district court lacked jurisdiction to approve the settlement because the named plaintiff did not allege an injury in fact. On appeal, the 11th Circuit issued multiple opinions, with the first two affirming the settlement approval. The full panel ordered a rehearing en banc, vacating the last opinion.

The en banc panel vacated the district court order approving the settlement, concluding that the named plaintiff lacked standing under Spokeo. Specifically, the panel rejected the named plaintiff’s argument that “receipt of a noncompliant receipt itself is a concrete injury,” noting that “nothing in FACTA suggests some kind of intrinsic worth in a compliant receipt.”  Moreover, the panel disagreed with the named plaintiff’s distinction that his claim was a “substantive” violation and not just a “procedural” one, reasoning that “no matter what label you hang on a statutory violation, it must be accompanied by a concrete injury.” Because the complaint did not allege a concrete injury, the panel vacated the order.

In dissent, one judge argued that the named plaintiff plausibly alleged concrete harm by establishing that the retailer’s FACTA violation elevated his risk of identity theft. In the second dissent, another judge asserted that both common law and congressional intent support the conclusion that the plaintiff’s complaint constitutes a concrete injury in fact. And lastly, the third dissent argued that the order should not be dismissed outright because the majority made “assumptions about the risks of identity theft without the benefit of a factual record, expert reports, or adversarial testing of the issue in the district court.”