Key Points
- On March 8, the Court of Appeals for the Third Circuit issued a precedential opinion upholding dismissal of a putative consumer class action where the plaintiff failed to plead a concrete injury-in-fact stemming from an alleged technical violation of the Fair and Accurate Credit Transactions Act of 2003.
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Companies facing consumer class action exposure should be aware of this new decision, as it may be useful to combat abusive litigation where plaintiffs seek to impose significant liability in the absence of any cognizable harm
On March 8, 2019, a panel of the Court of Appeals for the Third Circuit issued a precedential opinion affirming the dismissal of a putative class action under the Fair and Accurate Credit Transactions Act of 2003 (FACTA). Specifically, in Kamal v. J. Crew Group, Inc., -- F.3d --, 2019 WL 1087350 (3d Cir. Mar. 8, 2019), the court ruled that the plaintiff failed to plead a concrete harm sufficient to confer Article III standing under the analysis set forth by the U.S. Supreme Court in Spokeo, Inc. v. Robins.
The Kamal decision is notable, in part, because the Third Circuit has upheld Article III standing in other post-Spokeo cases, where an alleged injury from a procedural violation “had already materialized.” See id. at *5–6. According to the court, however, the Kamal decision was its first “occasion to review standing where a procedural violation allegedly presents a ‘material risk of harm.’” Id. at *6. In rejecting the plaintiff’s standing arguments based upon a “risk” of harm, the Third Circuit reached a result that is consistent with a recent Second Circuit decision under FACTA, but inconsistent with a recent Eleventh Circuit decision under the same statute. See Katz v. Donna Karan Co., 872 F.3d 114, 116 (2d Cir. 2017) (finding plaintiff lacked standing based on improper truncation of plaintiff’s credit card number under FACTA); Muransky v. Godiva Chocolatier, Inc., 905 F.3d 1200, 1210–11 (11th Cir. 2018) (finding improper truncation of plaintiff’s credit card number created a concrete injury sufficient to confer standing). Notably, the U.S. Supreme Court is expected to address injury-in-fact requirements again in the pending Frank v. Gaos appeal, where the parties completed supplemental briefing on Article III standing at the end of last year. In the meantime, however, the Kamal decision is the latest federal appellate pronouncement on the subject in the consumer class action context.
In Kamal, the plaintiff, Ahmed Kamal, alleged that he had made three credit card purchases at J. Crew stores, and that, on each of those occasions, J. Crew printed both the first six digits and last four digits of his credit card number in violation of FACTA. 2019 WL 1087350, at *2. He claimed that the mere printing of those extra digits on his receipts constituted an actionable injury, and further that such alleged statutory noncompliance increased his risk of identity theft. Id.
To evaluate plaintiff’s standing, the Court of Appeals analyzed the Article III requirement of an injury-in-fact. The court recognized that:
[A] plaintiff does not automatically satisfy 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...
