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How a Godiva Receipt Changed the Odds for Class Action Defendants

Nov. 25, 2020, 9:01 AM

There’s been a steady rise in the number of class actions filed under various statutes in which the named plaintiffs identified an alleged violation as the basis for their claim even though they did not suffer a concrete injury.

For example, more than 628 putative class actions were filed as of Oct. 30 under the Telephone Consumer Protection Act, already close to the 657 TCPA class actions filed in all of 2019. Similarly, there’s been an explosion in the number of class actions filed under the Consolidated Omnibus Budget Reconciliation Act (COBRA) in recent years, with household names such as Lowe’s, Best Buy, PepsiCo, Amazon, and Wal-Mart all being sued for allegedly deficient COBRA notices.

In these cases, the defendants frequently challenge the plaintiffs’ standing at both the motion to dismiss and class certification stages, arguing that even if the plaintiffs identified a statutory violation, they lack standing to sue because they are unable to identify either (1) a concrete and particularized injury caused by the violation, or (2) a material risk of harm to a concrete interest. Courts, however, have routinely denied those standing challenges.

It appeared the tide may have begun to turn in the defendants’ favor with the U.S. Supreme Court’s 2016 opinion in Spokeo Inc. v. Robbins. The Eleventh Circuit Court of Appeals on Oct. 28 applied Spokeo to address this thorny standing issue in Muransky v. Godiva Chocolatier Inc. en route to finding that the named plaintiffs lacked standing and therefore could not maintain claims under the Fair and Accurate Credit Transactions Act (FACTA).

The Legal Battle Over a Godiva Receipt

In Muransky¸ the plaintiff made a purchase with a credit card at a Godiva Chocolate retail store. The receipt contained the first six and last four digits of his 16-digit credit card number, which Muransky alleged violated FACTA. Muransky sought, on behalf of himself and all other similarly situated plaintiffs, $342 million in statutory damages, as well punitive damages for a willful violation of FACTA. Notably, however, Muransky disclaimed any recovery for personal injury.

Godiva argued that neither Muransky, nor any other member of the class, alleged they had suffered an injury in fact. Despite that position, the parties ultimately reached a proposed settlement pursuant to which Godiva agreed to pay $6.3 million to settle all claims on behalf of the class. That agreement was reached before the Supreme Court’s decision in Spokeo.

Muransky addressed a single question: When Congress creates a statutory right or entitlement and gives a plaintiff the right to sue for a violation, does the violation itself, without any other identifiable harm, give the plaintiff standing so as to create a case or controversy under Article III of the Constitution?

Following the Supreme Court’s opinion in Spokeo, the 11th Circuit answered that no, “‘a bare procedural violation, divorced from any concrete harm’ is not enough to support standing.” It held that for a party to have standing to bring a lawsuit, it must have “(1) suffered an injury in fact, (2) that is fairly particularized, and (3) is likely to be redressed by a favorable judicial decision.”

A plaintiff must show that the defendant harmed him, and that a court can either eliminate the harm or compensate for it. Under the court’s analysis, a plaintiff must plead, and later prove, an injury that is concrete, particularized, and actual or imminent, even when the plaintiff’s claim is a procedural violation of a congressional statute that allows a private right of action.

Muransky‘s Broader Application

The Mursanksy court only considered the named plaintiffs’ standing to sue under FACTA, but the opinion has far broader application, and defendants in variety of actions, such as actions brought under ERISA, COBRA, FACTA, and the TCPA to name a few, will rely on its reasoning in seeking to dismiss or oppose certification of a class in actions where plaintiffs have arguably identified a violation of a statute but are unable to identify any economic loss or other concrete harm suffered as a result of that alleged violation.

In fact, district courts have already relied on Muransky to find that plaintiffs, both individual and as class representatives, lacked standing to maintain the claims asserted in those cases. See Rodriguez v. His House Children’s Home (S.D. Fla. Nov. 5, 2020) and Bloomgarden v. Allstate Fire & Casualty Ins. Co. (S.D. Fla Oct. 30, 2020).

It is reasonable to conclude that list will continue to expand in the coming weeks and months.

This column does not necessarily reflect the opinion of The Bureau of National Affairs, Inc. or its owners.

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Author Information

Eliot Burriss, Todd Wozniak, and Lindsey Camp are partners with Holland & Knight and Morgan Kleoppel is an associate. They are all members of the firm’s ERISA Litigation team.