Addressing the issue of when “a bare procedural violation of a statutory right constitute[s] an injury in fact sufficient for standing to bring suit in federal court”, the U.S. Court of Appeals for the Second Circuit has joined the Seventh Circuit in holding, in the specific context of the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), that the printing of an expiration date on an otherwise properly redacted credit or debit card receipt does not constitute an injury in fact sufficient to establish Article III standing to bring a claim alleging only a bare procedural violation of FACTA.
In Crupar-Weinmann v. Paris Baguette America, Inc., Case No. 14-3709, decided June 27, 2017, the plaintiff alleged that the defendant’s restaurants “routinely gave receipts to its customers at the point of sale at its various retail stores which displayed the expiration dates of the customers’ credit and/or debit cards, in violation of the requirements of FACTA.” The Court of Appeals noted that the plaintiff’s amended complaint was otherwise devoid of specific factual allegations concerning the plaintiff’s interaction with the restaurant or any consequences that stemmed from the display of her credit card’s expiration date on the printed receipt. Instead, the plaintiff relied on broad allegations of Congress’s objective, in enacting FACTA, to reduce the risk of consumer identity theft by limiting the amount of information identity thieves could retrieve from found or stolen card receipts, and alleged that the defendant “knowingly and recklessly” printed card expiration dates on customers’ card receipts thereby “creat[ing] a real, non‐speculative harm in the form of increased risk of identity theft.”
Acknowledging the U.S.Supreme Court’s opinion in Spokeo, Inc. v. Robins, the Second Circuit stated that the inquiry “is necessarily context‐specific to the statutory right in question and the particular risk of harm Congress sought to prevent. *** [T]he critical question for standing purposes is ‘whether the particular procedural violations alleged in this case entail a degree of risk sufficient to meet the concreteness requirement.’” (Quoting Spokeo, emphasis added by Second Circuit).
The Court compared Crupar’s allegations to those in another case in which it recently applied Spokeo. In Strubel v. Comenity Bank, the Court recognized that “an alleged procedural violation can by itself manifest concrete injury where Congress conferred the procedural right to protect a plaintiff’s concrete interests and where the procedural violation presents a ‘risk of real harm’ to that concrete interest.” But the Court noted an “important limitation” to that principal, first identified in Gruber: “‘[E]ven where Congress has accorded procedural rights to protect a concrete interest, a plaintiff may fail to demonstrate concrete injury where violation of the procedure at issue presents no material risk of harm to that underlying interest.’ *** A central inquiry, then, is whether the particular bare procedural violation may present a material risk of harm to the underlying concrete interest Congress sought to protect.”
Turning to Crupar’s complaint, the Second Circuit examined whether Paris Baguette’s alleged bare procedural violation — printing the plaintiff’s credit card expiration date on her receipt — presented a material risk of harm to the underlying concrete interest Congress sought to protect in enacting FACTA. In answering that question, the Court said that it found dispositive the fact that, in enacting the Credit and Debit Card Receipt Clarification Act of 2007 (“Clarification Act”), Congress explicitly stated that “[e]xperts in the field agree that proper truncation of the card number, . . . regardless of the inclusion of the expiration date, prevents a potential fraudster from perpetrating identity theft or credit card fraud.” (Emphasis added by Second Circuit). In the Court’s view, this made clear, notwithstanding the fact that the Clarification Act maintained FACTA’s prohibition on printing expiration numbers, that “Congress did not think that the inclusion of a credit card expiration date on a receipt increases the risk of material harm of identity theft.” (Emphasis in original.) The Court opined that “Congress could not have been clearer in stating that “[t]he purpose of this Act is to ensure that consumers suffering from any actual harm to their credit or identity are protected while simultaneously limiting abusive lawsuits that do not protect consumers but only result in increased cost to business and potentially increased prices to consumers.” Given Congress’s clarification of FACTA, coupled with the Court’s holding in Strubel that a plaintiff must allege, at a minimum, that the bare “procedural violation presents a ‘risk of real harm’ to [her] concrete interest,” the Court concluded that the plaintiff in Crupar-Weinmann had failed to allege that Paris Baguette’s bare procedural violation of FACTA by printing the expiration date posed a material risk of harm to her.
Of note, the Court left the door open to FACTA plaintiffs, if only a crack: “This is not to say that it is impossible to allege a different ‘bare procedural violation’ of 15 U.S.C. § 1681c(g) for which some plaintiff might have standing. In a circumstance like this, however, where the plaintiff alleges no particular harm beyond a purely procedural violation, and Congress has found that that particular bare procedural violation does not increase the risk of the relevant material harm, the plaintiff lacks standing to proceed with such a suit.” No doubt, plaintiffs’ counsel in FACTA cases will be working overtime to conjure up such harms.
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