In its 2016 decision in Spokeo v. Robins, the U.S. Supreme Court held that a plaintiff alleging a Fair Credit Reporting Act violation does not have standing under Article III of the U.S. Constitution to sue for statutory damages in federal court unless the plaintiff can show that he or she suffered “concrete,” “real” harm as a result of the violation.  Because Spokeo was expected to reduce the number of lawsuits filed in federal court based on federal statutory claims, the Supreme Court’s adoption of a robust standard for plaintiffs to establish standing in federal court was welcomed by the financial services industry.  At the same time, there was concern that plaintiffs might be able to pursue their federal statutory claims in state court after a dismissal or remand under Spokeo because of more liberal state court standing requirements.   

Last month, in Ashley Gennock and Jordan Budai v. Kirkland’s Inc., the Pennsylvania Superior Court ruled that the plaintiffs did not have standing under Pennsylvania law to bring a putative class action for alleged violations of the federal Fair and Accurate Credit Transactions Act (“FACTA”).  As a result, the Superior Court reversed the trial court’s order determining that the plaintiffs did have standing and dismissed their complaint.

The plaintiffs alleged that the defendant retailer had violated FACTA by providing them with paper receipts that contained the first six and last four digits of their credit card numbers.  They did not allege that the violation resulted in identity theft or misappropriation of their credit card numbers but alleged only that the FACTA violation placed them at greater risk of such occurrences.  The plaintiffs initially filed their lawsuit in a Pennsylvania federal district court which dismissed the lawsuit relying on the Third Circuit’s 2019 decision in Kamal v. J. Crew Group.  In that decision, the Third Circuit held that technical violations of FACTA, absent any showing of concrete harm, did not meet Article III standing requirements.  To reach its decision, the Third Circuit relied on Spokeo’s “concrete injury” requirement.

The plaintiffs subsequently transferred their complaint to state court.  The trial court overruled Kirkland’s preliminary objections alleging that the plaintiffs lacked standing and failed to allege facts sufficient to establish a willful FACTA violation.  On appeal, the plaintiffs argued that Kirkland was attempting to improperly restrict Pennsylvania court standing to the federal Article III “concrete injury” standard.  They argued that they had statutory standing under Pennsylvania law or, in the alternative, traditional standing under Pennsylvania law.

The Superior Court first rejected the plaintiffs’ claim of statutory standing, stating that FACTA did not contain a provision delineating who has standing to pursue a FACTA claim and that FACTA did not automatically confer standing by creating a private right of action.  In also rejecting the plaintiffs’ claim of traditional standing, the Superior Court stated that while it was not bound by the Third Circuit’s Kamal decision, it found the decision “particularly pertinent to whether Plaintiffs were aggrieved pursuant to Pennsylvania’s traditional standing doctrine.” 

Relying on the Third Circuit’s reasoning for not finding a concrete injury in Kamal, the Superior Court found it determinative that the plaintiffs, like the plaintiffs in Kamal, had alleged “neither third-party access of [the] information, nor that the receipt included enough information to enable identity theft.”  Rather, according to the Superior Court, “[a]ll the plaintiffs have alleged is the same interest of all customers in receiving receipts in compliance with FACTA, namely, that they be properly truncated when printed.”  The Superior Court concluded that the plaintiffs’ speculation that the receipts placed them at heighted risk for identity theft “simply does not amount to an interest that is substantial, direct, and immediate, which our Supreme Court has identified as the foundational components of standing.  Simply stated, Kirkland’s conduct has not adversely affected them.” (citation omitted).