Shook Partner Frank Cruz-Alvarez and Associate Britta Stamps have authored an article for the Washington Legal Foundation's Legal Pulse exploring a decision from the Eleventh Circuit determining that "even if the parties want to settle quickly for strategic purposes, they cannot avoid jurisdictional issues like standing." Cruz-Alvarez and Stamps detail the ruling in Muransky v. Godiva Chocolatier, Inc., a Fair and Accurate Credit Transactions Act (FACTA) class action in which the parties' settlement was approved by a lower court without addressing the issue of standing.
"Not so fast, said an objector at the final approval hearing," Cruz-Alvarez and Stamps explain. "By that point, the Supreme Court had issued the Spokeo opinion, and the objector argued that the district court must examine Article III standing under Spokeo. But the district court issued its final approval of the settlement shortly thereafter, without addressing Spokeo or Article III standing."
"In the case of Muransky, the Eleventh Circuit applied Spokeo and held that 'a ‘bare procedural violation, divorced from any concrete harm’ is not enough to establish an Article III injury,'" Cruz-Alvarez and Stamps write. "A 'naked assertion' that the class representative or class members are exposed to an elevated risk of identity theft—as claimed by the class representative here under FACTA—does not satisfy the concreteness requirement."
"Following Muransky, class representatives can no longer skate by with bare allegations of statutory violations unmoored to material harms," they conclude. "Defendants should immediately scrutinize the alleged harm in a class-action complaint. If the plaintiffs’ damages are limited to statutory damages pursuant to the alleged statutory violation, dismissal under Spokeo may be warranted."