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Spokeo Strikes Down Another Data Privacy Class Action

Posted in Litigation

The Supreme Court’s decision in Spokeo, Inc. v. Robins continues to have an impact on class actions involving data privacy statutes. Most recently, a federal district court dismissed yet another class action involving claims under the Fair and Accurate Credit Transactions Act (FACTA) in Kirchein v. Pet Supermarket, Inc. for lack of subject matter jurisdiction under Spokeo, on the grounds that Kirchein did not establish the injury-in-fact necessary to maintain the case in federal court.

In January 2016, Kirchein filed a putative class action in the U.S. District Court for the Southern District of Florida, alleging violations of FACTA, which prohibits printing more than the last five digits of the credit card number or expiration date on the receipt provided to the customer. FACTA provides a private right of action with statutory damages up to $1,000 for any violation. In August 2016, the court preliminarily approved a $580,000 class action settlement. In October 2017, however, the defendant moved to vacate the preliminary approval order and settlement and reopen the class on the grounds that the class was much larger than the parties anticipated. The Court denied the motion on those grounds, but gave the parties an opportunity to brief the issue of subject matter jurisdiction under Spokeo.

After considering the parties’ briefing, the Court dismissed the case on February 8, 2018 for lack of subject matter jurisdiction, finding that the mere “disclosure of the first six digits of a credit card account number” did not result in an imminent, real risk of harm under Spokeo. In doing so, the Court relied heavily on its own September 2017 decision in a case alleging similar violations of FACTA. In that case, the Court held that merely printing the digits of the credit card on a receipt was insufficient to establish standing when the plaintiff did not allege that any disclosure of his private information actually occurred. Similarly here, Kirchein failed to allege that anyone besides Kirchein himself actually saw the receipt. To the extent that Kirchein relied on store employees seeing the receipt, the Court was unconvinced, finding that to be the same type of disclosure that happened any time a consumer uses a credit card to pay for a transaction.

The Court also rejected Kirchein’s argument that the settlement was still enforceable, despite any lack of standing resulting from Spokeo. The Court noted that Spokeo was not a change in the law, but merely clarified well-established principles of standing, and emphasized that it must have subject matter jurisdiction at all stages of a case, including to approve a class action settlement agreement under Rule 23.

The decision joins those of the Seventh and Second Circuits, as well as several other district courts, which have dismissed FACTA claims for lack of standing under Spokeo. These cases continue to suggest that purely technical violations of data privacy statutes will not satisfy the injury-in-fact requirement under Article III’s standing analysis after Spokeo. Instead, plaintiffs will need to show that a violation of the statute caused harm, likely through the actual disclosure to a third party.