Reversing two lower court rulings, the U.S. Court of Appeals for the Eighth Circuit recently held that a consumer who alleged violations of the Electronic Fund Transfer Act had Constitutional standing to sue, where the consumer used an ATM machine that included only one of the two then-required disclosures of the applicable transaction fee.
A copy of the opinion is available at: http://media.ca8.uscourts.gov/opndir/13/08/122790P.pdf
A consumer sued two banks separately, alleging violations of the Electronic Funds Transfer Act ("EFTA"). Specifically, the consumer alleged that when he made several withdrawals from the banks' various ATM machines, he received electronic notice of the applicable fee - and consented to same - but that notice of the fee was not posted on the ATM machine, as required under the EFTA at the time of the applicable transactions.
The banks moved to dismiss the consumer's complaint, arguing that the consumer lacked standing. The lower courts each granted the banks' motions, and the consumer appealed. The Eighth Circuit consolidated the two actions for appeal.
As you may recall, the EFTA provided at the time of the transactions in question that ATM operators provide two forms of notice - one on-screen, and one on the machine itself. See 15 U.S.C. Sec. 1693b(d)(3)(B)(i)-(ii). (The statute has since been amended to remove the latter of the two requirements.) The EFTA provided for actual and statutory damages to consumers for related violations. Id. at 1693(m)(8).
The sole issue facing the Eighth Circuit on appeal was whether the consumer had standing to sue. Accordingly, the Eighth Circuit began its analysis by noting that in order to have standing, a plaintiff must show an "injury in fact" that is "fairly traceable" to the actions of the defendant. See, e.g., Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009). The injuries must be "concrete and particularized" as well as "actual or imminent, not conjectural or hypothetical." Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992).
On appeal, the consumer contended that his "injury in fact" consisted of being charged an illegal fee of $2.00, as well as an informational injury due to the banks' failure to provide the required notice.
The Eighth Circuit agreed with the consumer, determining that once he "alleged a violation of the notice provisions of the EFTA in connection with his ATM transactions, he had standing to claim damages." In so holding, the Eighth Circuit observed that "[i]f [the notice required by the EFTA] was not provided and a fee was nonetheless charged, an injury occurred..."
The banks argued that the plaintiff's claims of injury were abstract and therefore precluded by Article III of the U.S. Constitution. The Eighth Circuit agreed that an abstract claim would be precluded, but determined that the consumer's complaint was "concrete and personal." For that reason, the Eighth Circuit held that the consumer "has satisfied the injury in fact requirement of standing."
The banks also contended that the consumer's alleged injury was not "fairly traceable" to the banks' conduct, on the grounds that when the consumer received on-screen notice of the fee and consented to same, any causal link between the banks' behavior and the alleged injury was broken.
The Eighth Circuit again found the banks' argument unpersuasive, noting that if the banks "had not violated the EFTA's notice requirement, [the consumer] would not have been forced to choose between engaging in a transaction without the required notice and walking away. Thus, we conclude [the consumer's] injury was fairly traceable to [the banks'] conduct."
Accordingly, the Eighth Circuit reversed the judgment of the lower court, and remanded the matter for further proceedings consistent with its opinion.
Ralph T. Wutscher
McGinnis Wutscher Beiramee LLP
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Chicago, Illinois 60602
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