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Third Circuit Rejects J. Crew Customer Suit in Rigorous Application of Standing Principles

Last Friday, the Third Circuit held that a J. Crew customer lacked standing to sue the company for printing ten digits of his credit card on a receipt, in violation of the Fair and Accurate Credit Transaction Act (which provides that companies should print only the last four digits).  Relying on the Supreme Court’s decision in Spokeo v. Robins, the court held that the plaintiff’s alleged injuries—a violation of the statute and the “risk of identity theft”—were merely “procedural,” and thus insufficiently “concrete” to confer standing under Article III.  The Third Circuit’s rigorous application of Article III standing requirements is good news for defendants in mislabeling cases, some of which are “gotcha”-type suits arising from highly technical labeling violations. 

But before discussing J. Crew, a quick primer on Spokeo is in order:  As we’ve covered on our other blogs, there the named plaintiff alleged that Spokeo, a people-search website, had published incorrect information about him on the Internet, in violation of the Fair Credit Reporting Act (FCRA).  And, claimed the plaintiff, he had standing to sue because Congress created a private right of action for violations of the FCRA. 

The Supreme Court didn’t bite, holding that to have an Article III injury, plaintiffs must allege more than the existence of “a statute [that] grants a person a statutory right and purports to authorize that person to vindicate that right.”  Instead, plaintiffs must plead and prove a “concrete”—or “‘real, and not ‘abstract’”—injury.  The Court found it “instructive” whether the alleged harm has “a close relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in English or American courts.”  But it’s not Blackstone or bust.  The Supreme Court also held that “because Congress is well positioned to identify intangible harms that meet minimum Article III requirements, its judgment is also instructive and important.” In other words, having a private right of action under a federal statute is helpful, but not sufficient, for establishing standing. 

Back to J. Crew: The Third Circuit first held the plaintiff’s alleged harm—having extra credit card digits printed on his receipt—did not look like a traditional common law suit.  The torts of unreasonable publicity and breach of confidence, for example, require the disclosure of information to third parties.  That didn’t happen here.  And, the Court explained, there was no evidence that Congress intended to “elevate” the injury the plaintiff suffered to a “concrete harm.”

Nor did the plaintiff allege facts showing a “real risk of harm.”  The plaintiff insisted that J. Crew’s receipt created a “real risk of identity theft.”  But, the panel explained, the plaintiff had alleged neither that a third party had found his receipt, “nor that the receipt included enough information to likely enable identity theft.”  So that “real risk” was nowhere near materializing. 

The Third Circuit’s holding could extend beyond the Fair and Accurate Credit Transaction Act.  For example, in product adulteration cases, claiming that a company violated the Food, Drug, and Cosmetic Act (or a state’s consumer protection statute) might not be enough to demonstrate a concrete injury.  Likewise, consumers seeking injunctive relief might have a tougher time demonstrating a risk of “future injury” from misbranded products.  If, as the Third Circuit held, plaintiffs must show a real risk of harm, that showing will difficult for plaintiffs who are already aware of a deceptive advertisement, and therefore are unlikely to be misled into buying a misbranded product in the future.