Dec 05

The Fight Begins Over FACTA Standing in State Courts

This post was co-authored by John G. Papianou and Erin A. Novak of Montgomery McCracken.

Since the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016), FACTA plaintiffs have had a difficult time convincing federal courts that they’ve suffered a concrete harm.  Spokeo held that persons have standing to sue for damages due to an alleged statutory violation only if they suffered a “concrete, de facto” injury, i.e., one that “actually exists” because it has already occurred or presents a “material risk” that it may occur.  Id. at 1559-60.  In the run-of-the-mill case, a shopper gets a receipt that displays too many digits of his or her credit card number.  While that may constitute a technical FACTA violation, federal courts are finding post-Spokeo that shoppers lack standing to sue because they have failed to allege either a concrete harm or a material risk of harm.

Rather than continuing to fight in federal court, some plaintiffs are now looking for a more hospitable forum in state courts.  In Miles v. The Company Store,[i] for example, the plaintiff sued in North Carolina’s Alamance County Superior Court, alleging that The Company Store violated FACTA by printing the first six digits and last four digits of his credit card number on his receipt.  Relying on recent federal cases dismissing similar FACTA claims and applying North Carolina’s federally derived case-or-controversy requirement for standing, the court dismissed the case for lack of standing.  Miles, No. 16-cvs-2346 (N.C. Super. Nov. 16, 2017).

Similarly, in Edelstein v. Westlake Properties, LLC,[ii] the plaintiff filed a FACTA class action in Los Angeles Superior Court.  Ironically, the defendants removed the action to federal court, arguing the plaintiff had standing.  Even more ironically, the plaintiff moved to remand the action arguing he lacked standing because he suffered no concrete harm.  The court agreed with the plaintiff and remanded the case to the Superior Court.  The defendants have appealed to the Ninth Circuit.

It remains to be seen where Edelstein winds up—in state or federal court—but it is clear FACTA plaintiffs are now seeking to find states with a more lax approach to standing than federal courts.  The irony is that defendants may find themselves the victims of their own success:  if plaintiffs give up suing in federal court and secure standing in state courts instead, defendants may wind up having to litigate nationwide classes in state courts.  The hope for defendants, of course, is that state courts like Miles find their state standing law about the same as federal law and dismiss the cases for lack of standing.

            [i]           Miles v. The Company Store, Inc., No. 16-cvs-2346 (N.C. Super. Nov. 16, 2017).

            [ii]           Edelstein v. Westlake Wellbeing Properties, LLC, No. 17-06488-AB(JEMX), 2017 WL 5495153 (C.D. Cal. Nov. 15, 2017), appeal filed, Edelstein v. Westlake Wellbeing Properties, LLC, No. 17-80242 (9th Cir. Nov. 22, 2017).


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