New Jersey Federal Court Relies on Spokeo to Dismiss FACTA Class Action For Failure to Allege Concrete Harm

The U.S. District Court for the District of New Jersey recently relied on the U.S. Supreme Court’s opinion in Spokeo v. Robins to grant a Rule 12(b)(1) motion to dismiss a statutory violation-based class action complaint for failure to allege a concrete injury. In Kamal v. J. Crew Group Inc., et al. the Court concluded that the plaintiff lacked standing to sue under the Fair and Accurate Credit Transactions Act (“FACTA”) because, as in Spokeo, the claims were based on a purely statutory injury, i.e., the plaintiff did not allege a “concrete and particularized” injury.

The plaintiff brought suit against J. Crew under FACTA by claiming that J. Crew’s credit card receipts improperly truncated his credit card number, as the receipts included the last four digits and first six digits of his account, rather than the last five digits only as permitted under FACTA. J. Crew moved to dismiss for failure to state a claim under Rule 12(b)(6), but the District Court denied the motion and then stayed the action to await the Supreme Court’s decision in Spokeo, which presented the issue of whether a claim of statutory damages is sufficient to confer injury in fact for standing to sue. In Spokeo, the Supreme Court affirmed the “injury-in-fact” requirement for standing, reiterating that an injury must be both “concrete and particularized.” For a thorough discussion of the Court’s holding in Spokeo, please visit our prior blogs here and here.

Following Spokeo, J. Crew filed a motion to dismiss for lack of subject matter jurisdiction based on the plaintiff’s lack of standing. The District Court concluded that the plaintiff’s claim that he was exposed to an increased future risk of identity theft did not meet the requisite bar of a “concrete and particularized” injury-in-fact, as emphasized in Spokeo. The District Court explained there was “no evidence that anyone has accessed or attempted to access or will access plaintiff’s credit card information.” Notably, the District Court stated that the record did not “indicate that anyone will actually obtain one of Plaintiff’s discarded J. Crew receipts, and – through means left entirely to the Court’s imagination – identify the remaining six digits of the card number and then proceed undetected to ransack Plaintiff’s Discover account.” The District Court examined the plaintiff’s arguments in the abstract and ultimately described the plaintiff’s “increased risk of a data breach sometime in the future” as falling short of a sufficiently “‘concrete’ [injury] to qualify as an ‘injury in fact.’” Acknowledging that the purpose of FACTA is to protect consumers who have actually suffered harm to their credit or identity because of a violation of the privacy statute, the District Court concluded the plaintiff’s alleged injury was insufficient to confer standing and dismissed the case, but it permitted Kamal the opportunity to re-plead.

The Kamal decision is the latest in a number of cases in which courts have considered Spokeo in deciding whether plaintiffs have sufficiently alleged concrete injuries that confer standing. In Kamal, the District Court explicitly recognized that other courts considering the issue have reached “inconsistent outcomes.” Indeed, shortly after Spokeo was issued, there were a handful of decisions from District Courts in the Eleventh Circuit finding that plaintiffs had suffered adequate injuries to bring such lawsuits (see Wood v. J Choo USA, Guarisma v. Microsoft, and Altman v. White House Black Market, Inc., while there were subsequent decisions from District Courts in the Eighth (see Thompson v. Rally House of Kansas City, Inc.) and Ninth (see Noble v. Nevada Checker CAB Corp.) Circuits, and now the Third Circuit, finding no standing in such cases.

As District Courts continue to interpret Spokeo, class action plaintiffs in federal court would be wise to plead that they suffered more than a mere statutory injury, but rather a “concrete and particularized” “injury-in-fact,” or risk dismissal for lack of standing. It seems the Circuit Courts of Appeal soon will have the opportunity to weigh in – and it should be interesting to watch how courts continue to interpret Spokeo, particularly in the context of statutory damages-based class action litigation. Stay tuned to this blog for further developments.

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