On October 28, 2020, the en banc Eleventh Circuit reversed the Northern District of Georgia’s approval of a class settlement, holding that the settlement was invalid because the named plaintiff did not have standing to sue for a violation of the Fair and Accurate Credit Transactions Act (“FACTA”). The case represents the latest example—and perhaps the most sweeping decision to date—in which the Eleventh Circuit has construed the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), and held that a plaintiff alleging a statutory violation failed to show concrete harm sufficient to establish Article III standing. (You can read coverage of previous such cases here, here, and here.) That said, it is clear that these thorny Spokeo-based standing issues still engender significant disagreement in the Circuit, as Judge Britt Grant’s majority opinion gave rise to three separate dissents totaling 111 pages.

• The plaintiff alleged that Godiva Chocolatier, Inc. (“Godiva”) violated FACTA by including the first six and the last four digits of his credit card number on his receipt (the Act forbids merchants from printing more than the last five digits of the card number). At the time he originally filed the complaint, the plaintiff pleaded the case as a pure statutory violation and disclaimed any recovery for actual damages.
• Given the staggering potential for statutory damages under FACTA—between $100 and $1,000 per class member—the parties quickly reached an agreement to settle the case. A driving factor in their settlement discussions was the Supreme Court’s impending decision in Spokeo. Shortly after the parties reached an agreement to settle for $6.3 million—an amount significantly smaller than the $342 million potential liability for Godiva—the district court certified the class and granted preliminary approval of the settlement.
• By the time the district court held a fairness hearing on the proposed class settlement, the Supreme Court had issued its opinion in Spokeo. In light of the Spokeo decision, one objector to the settlement argued that the named plaintiff did not have standing to pursue the FACTA claim. The district court, however, approved the class settlement without addressing the Article III or Spokeo concerns.
• On appeal, a panel of the Eleventh Circuit affirmed, holding that the plaintiff had standing under Spokeo. Under the panel’s reasoning, any statutory violation that increases the risk—no matter how small—of the type of harm Congress sought to prevent (here, an increased risk of identity theft) is sufficient to confer Article III standing.
• Sitting en banc, however, the Eleventh Circuit reversed. The Eleventh Circuit emphasized that “[b]are procedural violations,” even in the context of an alleged “statutory violation,” are not enough to confer standing under Spokeo, because there is no injury in fact. Instead, the court reiterated that plaintiffs must identify real harm to support standing.
• To determine whether real harm flows from an alleged statutory violation, the Eleventh Circuit instructed courts to ask: (1) “if the violation itself caused harm, whether tangible or intangible,” and, if not, (2) “whether the violation posed a material risk of harm to the plaintiff,” i.e., “more than a minor or theoretical risk—a ‘substantial risk’ that the harm will occur.” And, “[i]f the answer to both questions is no, the plaintiff has failed to meet his burden of establishing standing.” Importantly, in assessing standing, courts “need to come to [their] own conclusion[s] that the alleged harm is concrete” and cannot simply rely on the text of a statute or a congressional finding to identify harm sufficient to establish standing.
• Applying this framework, the court rejected the plaintiff’s argument that his FACTA-noncompliant receipt, standing alone, caused him any direct injury or posed a material (as opposed to hypothetical) risk of harm. The court noted that there was no intrinsic worth in a compliant receipt, so a noncompliant receipt itself was not a concrete injury. The court also held that the plaintiff had not provided any evidence (or even sufficiently alleged) that the noncompliant receipt increased his risk of identity theft.
• The decision is just another example in a growing body of caselaw confirming that a lack of Article III standing is a powerful defense against class actions alleging mere statutory violations. Moreover, the decision underscores that Article III standing is a hurdle that plaintiffs must clear, not only to pursue their claims on the merits, but also to settle on behalf of a proposed class—and the evidentiary burden is not relaxed “even if the parties wish to bargain around Spokeo.”
• The case is Muransky v. Godiva Chocolatier, Inc., Nos. 16-16486 & 16-16783 (11th Cir. Oct. 28, 2020), and the decision can be found here.