Muransky v. Godiva Chocolatier, Inc.

CourtUnited States Courts of Appeals. United States Court of Appeals (11th Circuit)
PartiesDR. DAVID S. MURANSKY, individually and on behalf of all others similarly situated, Plaintiff - Appellee, JAMES H. PRICE, ERIC ALAN ISAACSON, Interested Parties - Appellants v. GODIVA CHOCOLATIER, INC., a New Jersey corporation, Defendant - Appellee.
Docket NumberNo. 16-16783,No. 16-16486,16-16486,16-16783
Decision Date28 October 2020

individually and on behalf of all others similarly situated, Plaintiff - Appellee,
JAMES H. PRICE, ERIC ALAN ISAACSON, Interested Parties - Appellants
GODIVA CHOCOLATIER, INC., a New Jersey corporation, Defendant - Appellee.

No. 16-16486
No. 16-16783


October 28, 2020


D.C. Docket No. 0:15-cv-60716-WPD

Appeals from the United States District Court for the Southern District of Florida

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GRANT, Circuit Judge, delivered the opinion of the Court, in which WILLIAM PRYOR, Chief Judge, NEWSOM, BRANCH, LUCK, LAGOA, and ED CARNES, Circuit Judges, joined.

GRANT, Circuit Judge:

In Spokeo, Inc. v. Robins, the Supreme Court took on a standing question that had bedeviled litigants, scholars, and lower courts—whether pleading that a statutory requirement was violated is enough to establish standing, even if the plaintiff suffered no injury from the alleged violation. The answer was a resounding no: a party does not have standing to sue when it pleads only the bare violation of a statute.

That holding left the class action litigants here in an awkward spot. Years ago, the named plaintiff pleaded this case as a pure statutory violation. He alleged that Godiva chocolate stores had printed too many credit card digits on hundreds of thousands of receipts over the course of several years, and pointed out that those extra numbers were prohibited under a federal law aimed at preventing identity theft. His complaint disclaimed any recovery for actual damages, and why not—with per-violation statutory damages of up to $1,000, the potential class recovery

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was staggering even if no one actually suffered any harm. Godiva, it seems, also found the potential damages staggering, and the parties agreed on a class settlement not too long after the lawsuit was filed.

So why are the litigants in an awkward spot? As they admitted in the district court, Spokeo was on the horizon during settlement talks, but had not yet been decided; it formed an ominous backdrop for their negotiations. Both parties had an interest in settling before that case was decided, because the Supreme Court's decision was likely to shift the bargaining calculus dramatically. So they settled. And having reached a deal in the shadow of Spokeo, neither side was ready to start all over after it was decided. Together, they pushed through the class fairness hearing, and landed here for a fairness review after a few class members objected to the settlement.

But even if the parties wish to bargain around Spokeo, we cannot indulge them. Federal courts retain our constitutional duty to evaluate whether a plaintiff has pleaded a concrete injury—even where Congress has said that a party may sue over a statutory violation. Having shut his eyes and closed his ears to the requirements of Spokeo while his claims were still at the district court, the named plaintiff now tries to say that those claims surely show concrete injury under Spokeo in any event. He has done his best to argue that the statutory violation he alleged carries with it both harm and risk of harm—and does so every time. But the emperor still has no clothes; the bare procedural violation the plaintiff alleges is just as bare as it ever was. Because the plaintiff alleged only a statutory violation, and not a concrete injury, he has no standing. That means we cannot evaluate the

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fairness of the parties' settlement, and we vacate the district court's order approving it.


Before turning to why alleging the violation of a statute is not enough to establish standing, we should say a few words about the statute at issue here. The Fair and Accurate Credit Transactions Act sets out a wide range of protections and procedures. Pub. L. No. 108-159, 117 Stat. 1952 (2003). One of the (many) stated goals of the legislation is "to prevent identity theft." Id. In support of that goal, FACTA forbids merchants from printing more than the last five digits of the card number (or the card's expiration date) on receipts offered to customers. Id. sec. 113, § 605(g), 117 Stat. at 1959 (codified at 15 U.S.C. § 1681c(g)(1)). A willful violation exposes a company to liability for actual damages—if any were sustained—or statutory damages ranging from $100 to $1,000 per violation. 15 U.S.C. § 1681n(a)(1)(A). Punitive damages and attorney's fees are also available. Id. § 1681n(a)(2)-(3).

Several years after the passage of FACTA, in response to "hundreds" of lawsuits seeking damages because credit card expiration dates had been printed on receipts—lawsuits that otherwise contained no "allegation of harm to any consumer's identity"—Congress enacted what's known as the Clarification Act. Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241 § 2(a)(4)-(5), 122 Stat. 1565, 1565 (2008). That law retroactively eliminated liability for merchants who had printed credit card expiration dates on receipts but

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complied with the other receipt-printing limitations. Id. sec. 3, § 616(d), 122 Stat. at 1566 (codified at 15 U.S.C. § 1681n(d)). The Clarification Act offered a subsequent Congress's view that some technical FACTA violations caused consumers no harm: the statute's stated "purpose" was to protect "consumers suffering from any actual harm" while also "limiting abusive lawsuits" that would drive up costs to consumers without offering them any actual protection. Id. § 2(b), 122 Stat. at 1566.


With that background, we return to the allegations in front of us. Dr. David Muransky used his credit card to spend $19.26 at a Godiva retail store in Florida. He was handed a receipt containing the first six and last four digits of his sixteen-digit credit card number—too many digits under FACTA.

Muransky got busy, filing a class action complaint against Godiva less than a week later. He alleged that Godiva had willfully printed more digits than the law allowed and that the excess digits were a national problem for the company. Muransky's complaint made clear that the alleged FACTA violations were "statutory in nature" and that the suit was expressly "not intended to request any recovery for personal injury." He alleged the class's harm, and risk of harm, from those statutory violations in broad terms: "Plaintiff and the members of the class have all suffered irreparable harm as a result of the Defendant's unlawful and wrongful conduct," and "Plaintiff and members of the class continue to be exposed to an elevated risk of identity theft." No additional details were offered.

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The class of injured persons that Muransky proposed consisted of anyone in the United States who, in the two preceding years, received a point-of-sale receipt from Godiva that displayed more than the last five digits of their credit or debit card number. He sought statutory damages, punitive damages, and costs—as well as attorney's fees. Because of the size of the putative class, Godiva faced a startling liability of more than $342 million.

After a few motions to dismiss were rejected, Godiva's answer to the complaint included a standing argument: "Neither Dr. Muransky nor any member of the proposed class has suffered any injury in fact. They therefore lack standing to prosecute their alleged claims."

Given the dramatic size of the potential damages, it is no surprise that the parties soon began settlement negotiations. They tried to move quickly—both Muransky and Godiva admit that one of the driving forces in those negotiations was the Supreme Court's impending decision in Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (2016). As Muransky later told the trial court, "the class faced considerable uncertainty with regard to the Supreme Court's anticipated decision in Spokeo, Inc. v. Robins which, depending on the outcome, could have resulted in the case's dismissal for failure to present an injury in fact." Godiva's briefing acknowledged the same—the potential outcome of Spokeo factored heavily into the settlement negotiations.

The flush of negotiations led to an agreement in principle to settle the case: Godiva would pay $6.3 million instead of the $342 million initially sought. Almost a third of the pot, $2.1 million, would go to the class attorneys, with an

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additional $10,000 going to Muransky "for his service as Class Representative." The average class member, according to Muransky, would net about $60 when all was said and done.

With Spokeo still outstanding, the district court certified the class, granted preliminary approval of the settlement, and directed notice to the class members. Four class members filed various objections after they heard about the suit—including Appellants James Price and Eric Isaacson—though none of the objectors initially argued that Muransky lacked standing.

But by the time the district court held a fairness hearing on the proposed settlement, things had changed: the Supreme Court had issued its decision in Spokeo. Objector Isaacson took notice, and argued to the district court that it had an obligation to examine whether Muransky's claim satisfied the requirements of Article III standing as described in Spokeo. Muransky, he said, bore the burden of establishing the elements of standing as the party invoking federal jurisdiction—and in the absence of standing, the district court "would have no choice" but to dismiss the case. Neither Godiva nor Muransky offered anything in response.

Roughly a week later, the district court—without addressing Spokeo or Article III standing—approved the class settlement. The court instead offered a general conclusion that it had "jurisdiction over the subject matter of this litigation," before going on to approve the settlement. Isaacson and Price appealed.

Objector Price raised the same issues he raised below—the contents of the class notice, the attorney's fee award,...

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