Tuesday, June 19, 2018

FYI: 9th Cir Rejects ID Theft Putative Class Action for Lack of Spokeo Standing

The U.S. Court of Appeals for the Ninth Circuit recently held the plaintiff did not allege Article III standing for her claim under the federal Fair Credit Reporting Act ("FCRA") where there were no specific factual allegations plausibly tying the inclusion of her debit card expiration date on her receipt to her alleged identity theft. 


Moreover, the Court held, leave to amend would be futile because this action against the National Park Service was barred by sovereign immunity. 


Accordingly, the Ninth Circuit affirmed the ruling of the district court dismissing the complaint. 


A copy of the opinion is available at:  Link to Opinion


The plaintiff ("Plaintiff") filed a complaint on behalf of herself and a putative class alleging that when she purchased an entrance pass to Yellowstone National Park, the National Park Service ("Park Service") printed a receipt bearing her full debt card expiration date.  The receipt otherwise complied with FCRA and did not include more than the last five digits of her debit card number. 


Plaintiff claimed that the Park Service violated FCRA's prohibition that "no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction."  15 U.S.C. § 1681c(g). 


Plaintiff further alleged that after the transaction, and because of the inclusion of the expiration date on her receipt, her debit card was used fraudulently and she suffered damages from her stolen identity.

The Park Service filed a motion to dismiss which was granted by the district court on the grounds that FCRA does not waive the U.S. government's sovereign immunity.  This appeal followed. 


On appeal, the Ninth Circuit analyzed both whether Plaintiff had Article III standing to bring her claim, and whether sovereign immunity applied. 


For Article III standing, Plaintiff was required to allege that she "(1) suffered an injury in fact, (2) that is fairly traceable to the alleged conduct of [the Park Service], and (3) that is likely to be redressed by a favorable judicial decision."


The Ninth Circuit stated that although Plaintiff alleged a sufficient injury of identity theft and fraudulent charges, there was a question of whether that was "fairly traceable" to the Park Service's issuance of the receipt.


At the pleading stage, Plaintiff did "not need to prove proximate causation," but she had the burden of "demonstrating that her injury-in-fact [was] . . . fairly traceable to" the Park Service's issuance of the receipt.


In the Complaint, Plaintiff alleged only that "[a]fter this debit card transaction Plaintiff['s] [] personal debit card was used fraudulently and she suffered damages from the stolen identity," and "[b]ased on information and belief, the fraudulent use of Plaintiff['s] [] debit card was caused in part by the inclusion of the expiration date of her debit card on the receipt of her purchase from Defendant National Park Service." 


The Ninth Circuit concluded that the latter allegation was a legal conclusion that was not entitled to the presumption of truth at the pleading stage, and the former allegation presented "no specific factual allegations plausibly tying the Park Service receipt to her identity theft." 


The Ninth Circuit noted that Plaintiff did not allege another copy of the receipt existed, that her copy was lost or stolen, or that anyone other than her lawyers ever viewed the receipt.


The Court therefore concluded that it was "left with an allegation of a 'bare procedural violation' of the FCRA and a generic allegation of later harm that is 'divorced from' that violation." 


Thus, the Ninth Circuit held that Plaintiff failed to allege standing.


The Court went on to explain that in a typical appeal it would consider whether amendment to the complaint could cure the defects in the standing allegations, but it did not reach the question here because it also held that Plaintiff's "suit [was] also barred by sovereign immunity," so any amendment would be futile.


In reaching this conclusion, the Ninth Circuit first noted that sovereign immunity shields the United States from suit "absent a consent to be sued that is 'unequivocally expressed' in the text of a relevant statute." 

FCRA defines a "person" as "any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity." 


As the Park Service is an agency of the United States, "the sovereign immunity question boils down to whether the inclusion of 'governmental . . . agency' in the FCRA's definition of 'person' constitutes an unequivocal waiver of the federal government's immunity from money damages and subjects the United States to the various provisions directed at 'any person' who violates the law."


The Ninth Circuit determined that "[c]onstruing the FCRA as a whole – including the different contexts in which 'person' is used, and the inclusion of a clear waiver of sovereign immunity in an unrelated provision," the FCRA was "ambiguous as to whether Congress waived immunity for [Plaintiff's] suit." 


Moreover, because "[a]ny ambiguities in the statutory language are to be construed in favor of immunity," the Court held that Plaintiff's suit was properly dismissed. 


Accordingly, the Ninth Circuit affirmed the ruling of the district court dismissing the lawsuit.




Ralph T. Wutscher
Maurice Wutscher LLP
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Email: rwutscher@MauriceWutscher.com


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