by Deepak Gupta
This morning, the Eighth Circuit issued its decision in Charvat v. Mutual First, reversing the dismissal of two consumer class actions on constitutional standing grounds. The district court held that the plaintiff's claims — for violations of a federal law requiring on-machine notice of ATM fees — didn't allege an "injury in fact" but only an "injury in law." Today, the Eighth Circuit holds that the plaintiff claimed sufficient informational injury because he alleged that he was personally denied notice.
I argued these appeals before the Eighth Circuit in May (which gave me the opportunity to visit lovely Omaha for the first time). Our opening brief offered the court three paths to reversal. First, the banks caused the plaintiff an economic injury by charging him an illegal fee — illegal because the statute prohibited the fees absent notice. Second, he was independently injured because he was denied information to which he was statutorily entitled. And third, the statute is a valid exercise of Congress's authority to define injuries. The Justice Department filed an amicus brief supporting us on the first and second ground (in part because the case implicated CFPB regulations).
The Eighth Circuit's opinion today dodges the first ground because it was unclear to the court whether that argument was waived in the district court. It rests instead on the second ground: informational injury. That means the court wisely avoided the need to address the third, more theoretically ambitious, ground. The opinion also contains a nice discussion of the role of statutory damages and makes clear where the limits are — that "Article III precludes a
plaintiff from asserting a claim for an abstract statutory violation."
Charvat happens to involve ATM fees, but the appeal was closely watched by industry and consumer lawyers alike because it appeared to be the first case to raise far broader questions about Article III standing left unanswered in the wake of the Supreme Court's anticlimactic dismissal in First American Financial Corporation v. Edwards.
When it was granted by the Supreme Court, Edwards appeared to be a major test of the limits of Article III standing in consumer cases — cases in which the plaintiffs' alleged injury is supposedly just an "injury in law" rather than an "injury in fact." But it became apparent at oral argument that the distinction between those two things is either entirely illusory or very difficult to draw, and the case fizzled out: The Court dismissed the writ of certiorari as improvidently granted on the same day that it issued the landmark Obamacare ruling. (When I was at the CFPB, we joined the Solicitor General's brief supporting the plaintiff; the brief in Charvat was a continuation of the administration's position on these issues.)
What does this all mean? Some saw the grant in Edwards as a signal to the lower courts to push the envelope on standing in statutory-damages class actions. Today's decision casts doubt on defendants' hopes that courts will radically rewrite the law of standing. The Eighth Circuit is the most conservative federal appellate court in the nation (a majority of its judges were appointed by George W. Bush) and this was an all-conservative panel.
