Eleventh Circuit Stops Consumer Lawsuits for Procedural Violations

Eleventh Circuit Stops Consumer Lawsuits for Procedural Violations

November 20, 2020 0 By administrator

The Eleventh Circuit recently took a huge bite out of consumers’ ability to bring class actions. In Muransky v. Godiva Chocolatier, Inc., 2020 U.S. App. LEXIS 33995 (11th Cir. Oct. 28, 2020) (en banc), the court uprooted the circuit’s plaintiff-friendly view of standing and forcefully held that consumers can’t sue for technical statutory violations. It’s a real blow to the plaintiffs’ bar, and that’s even without considering that the court vacated a $6.3 million settlement (a third of which was for class counsel’s attorney’s fees) and dismissed the case outright for lack of standing.

The case involved the portion of the FCRA known as the Fair and Accurate Credit Transactions Act (“FACTA”), which (among other things) prohibits merchants from printing more than the last five digits of a credit card number on consumers’ receipts. Damages can easily add up in a FACTA class action, even without any showing of actual damages, merchants can be on the hook for up to $1,000 in damages per violation, plus punitive damages and attorneys’ fees.

Let’s dig into the background that led to the seismic shift in standing rules in the Eleventh Circuit: Back in April 2015, a Godiva customer filed a FATCA class action against Godiva for printing too many credit card digits on receipts, which the plaintiff claimed increased the risk of identity theft. Three weeks later, the Supreme Court granted cert in Spokeo, Inc. v. Robins, in which the Court ultimately confirmed that pleading a “bare procedural violation” isn’t enough to support Article III standing, which “requires a concrete injury even in the context of a statutory violation.”

The looming uncertainty over the outcome of Spokeo caused the parties to settle relatively quickly, and after Spokeo was decided, apparently neither side wanted to go back to square one. The parties pushed through a fairness hearing, and the district court approved the parties’ $6.3 million settlement. Despite the parties’ agreement, some class members weren’t so keen on the settlement and lodged objections, which sent the case to the Eleventh Circuit for a fairness review.

The case has been on a tumultuous path through the Eleventh Circuit. An Eleventh Circuit panel previously upheld the settlement (first in an October 2018 decision and then again via a reissued decision in April 2019), finding that increased risk of identity theft was sufficient concrete injury to establish Article III standing. The panel adopted a new categorical rule for standing: “if Congress adopts procedures designed to minimize the risk of harm to a concrete interest, then a violation of that procedure that causes even a marginal increase in the risk of harm to the interest is sufficient to constitute a concrete injury.” Muransky v. Godiva Chocolatier, Inc., 922 F.3d 1175, 1188 (11th…

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