14‐3709 Crupar‐Weinmann v. Paris Baguette America, Inc. 14‐3709 Crupar‐Weinmann v. Paris Baguette America, Inc.

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

_______________

August Term, 2015

(Argued: October 28, 2015 Decided: June 26, 2017)

Docket No. 14‐3709

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DEVORAH CRUPAR‐WEINMANN, individually and on behalf of all others similarly situated,

Plaintiff‐Appellant,

—v.—

PARIS BAGUETTE AMERICA, INC., doing business as P aris Baguette,

Defendant‐Appellee.* _______________

* The Clerk of Court is respectfully directed to amend the caption to conform to the caption above.

B e f o r e: KATZMANN, Chief Judge, POOLER and CHIN, Circuit Judges. _______________

Appeal from a judgment of the district court dismissing the plaintiff’s amended complaint with prejudice. The plaintiff brought suit against the defendant alleging a willful violation of the Fair and Accurate Credit Transactions Act of 2003 (“FACTA”), Pub. L. No. 108–159,

(codified as amended at 15 U.S.C. § 1681c(g)). Specifically, when the plaintiff purchased food at the defendant’s restaurant, she received a printed receipt that contained her credit card’s expiration date, one of several pieces of identifying information that FACTA prohibits printing on a receipt so as to reduce the risk of consumer identity theft. The plaintiff alleges that this action presented a material risk of harm of identity theft and constitutes an injury in fact sufficient for standing to sue. Here, however, we find it dispositive that Congress subsequently passed legislation amending FACTA to clarify that a receipt containing a printed expiration date does not raise a material risk of identity theft. This clarification, coupled with the absence of any specific allegations concerning the unintended exposure of the plaintiff’s receipt to others, let alone allegations of actual identity theft, leads us to the conclusion that the bare procedural violation the plaintiff alleges here is insufficient to satisfy the injury‐in‐fact requirement necessary to establish Article III standing. On this basis, we AFFIRM the judgment of the district court. _______________

GREGORY A. FRANK (Marvin L. Frank, on the brief), Frank LLP, New York, NY; Khaled (Jim) El Nabli, Joseph H. Lilly, and Peter Y. Lee, Nabli & Associates, P.C., New York, NY, for Plaintiff‐ Appellant.

JOSHUA A. BERMAN (Mary Jane Yoon and Eric L. Unis, on the brief), Troutman Sanders LLP, New York, NY, for Defendant‐Appellee.

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KATZMANN, Chief Judge:

When does a bare procedural violation of a statutory right constitute an

injury in fact sufficient for standing to bring suit in federal court? Although the

Supreme Court recently addressed this question in Spokeo, Inc. v. Robins,

(2016), as revised (May 24, 2016), the inquiry is necessarily context‐

specific to the statutory right in question and the particular risk of harm

Congress sought to prevent. Here, we address this issue as it relates to the Fair

and Accurate Credit Transactions Act of 2003 (“FACTA”), Pub. L. No. 108‐159,

(codified as amended at 15 U.S.C. § 1681c(g)), an issue of first

impression in this Circuit. Guided by unambiguous statutory language that a

receipt with a credit card expiration date does not raise a material risk of identity

theft, and finding that the bare procedural violation alleged by the plaintiff does

not present a material risk of harm, we conclude that allegations in her amended

complaint do not satisfy the injury‐in‐fact requirement necessary to establish

Article III standing to bring suit. Accordingly, we AFFIRM the judgment of the

district court dismissing her amended complaint for lack of standing.

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BACKGROUND

I. Factual History

The brief factual history of this case is drawn from plaintiff’s amended

complaint filed after we remanded the case to the district court. FACTA seeks to

prevent identity theft by, among other things, requiring that venders who accept

credit and debit cards not print “more than the last 5 digits of the card number or

the expiration date upon any receipt provided to the cardholder at the point of

the sale or transaction.” 15 U.S.C. § 1681c(g)(1). When plaintiff Devorah Crupar‐

Weinmann purchased food at Paris Baguette’s midtown Manhattan restaurant

on September 19, 2013, she paid for it with a credit card and received a printed

receipt displaying her card’s expiration date. She alleges that during this time

period, “Paris Baguette routinely gave receipts to its customers at the point of

sale at its various retail stores which displayed the expiration dates of the

customers’ credit and/or debit cards, in violation of the requirements of FACTA.”

Am. Compl. ¶ 17. The plaintiff’s amended complaint is otherwise devoid of

specific factual allegations concerning her interaction with the restaurant or any

consequences that stemmed from the display of her credit card’s expiration date

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on the printed receipt. Instead, her complaint emphasizes that Congress’s goal in

passing FACTA was to reduce the risk of consumer identity theft by “mak[ing] it

more difficult for identity thieves to obtain consumers’ [c]ard information by

reducing the amount of information identity thieves could retrieve from found or

stolen [c]ard receipts.” Id. ¶ 26. She further alleges that by “knowingly and

recklessly print[ing] . . . [c]ard expiration dates on the [c]ard receipts,” Paris

Baguette violated FACTA, id. ¶ 92, and that doing so “created a real, non‐

speculative harm in the form of increased risk of identity theft,” id. ¶ 29.

II. Procedural History

In 2013, Crupar‐Weinmann filed her initial complaint, which the defendant

moved to dismiss, primarily on the basis that she failed to plead facts sufficient

to allege plausibly that Paris Baguette willfully violated FACTA. Following full

briefing and oral argument, the district court granted the defendant’s motion to

dismiss. See Crupar‐Weinmann v. Paris Baguette Am., Inc., No. 13 CIV. 7013 JSR,

, at *1, *5 (S.D.N.Y. June 30, 2014). The district court dismissed

the plaintiff’s claims with prejudice, “convinced that plaintiff would not be able

to plausibly plead a claim for willful violation of FACTA, even if she were given

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the opportunity to replead.” Id. at *5. Crupar‐Weinmann then moved for

reconsideration, asserting both that the district court misconstrued the pleading

standard for a willful violation of FACTA and that it erred in dismissing her

complaint with prejudice and without leave to amend; the court denied this

motion on both grounds. See Crupar‐Weinmann v. Paris Baguette Am., Inc.,

, 413–14 (S.D.N.Y. 2014).

Crupar‐Weinmann then appealed, and on October 28, 2015, we heard

argument in both her case and a related case involving a similar legal question,

Katz v. The Donna Karan Company, LLC, et al., No. 15‐464. Shortly thereafter, the

Supreme Court heard oral argument in Spokeo, which raised questions

concerning whether a plaintiff who “allege[s] a bare procedural violation,

divorced from any concrete harm, [can] satisfy the injury‐in‐fact requirement of

Article III.”

. We held both this case and Katz until the Court

rendered its decision in Spokeo, which clarified standing doctrine in ways that we

explain in more detail below. Given Spokeo’s elucidation, we subsequently

vacated and remanded both cases “to allow plaintiffs an opportunity to replead

their claims to comport with the pleading standards set forth in Spokeo, and to

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allow the district courts to address any standing questions in the first instance,”

and we retained appellate jurisdiction over the outcomes. Cruper‐Weinmann v.

Paris Baguette Am., Inc.,

(2d Cir. 2016).

On remand, Crupar‐Weinmann amended her complaint, Paris Baguette

again moved to dismiss, and the district court again dismissed the plaintiff’s

complaint with prejudice, this time concluding that she lacked standing to bring

claims for violations of FACTA’s requirements. Cruper‐Weinmann v. Paris

Baguette Am., Inc., No. 13 CIV. 7013 (JSR),

(S.D.N.Y. Jan. 30,

2017). Crupar‐Weinmann then moved to renew her appeal; we granted that

motion, and the parties submitted letter briefing addressing the propriety of the

district court’s dismissal in light of Spokeo.

DISCUSSION

I. Standard of Review

We review de novo the district court’s decision to dismiss the complaint for

lack of standing pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6), “construing the

complaint in plaintiff’s favor and accepting as true all material factual allegations

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contained therein.” Donoghue v. Bulldog Inv’rs Gen. P’ship,

(2d

Cir. 2012).

II. Standing to Allege A Bare Procedural Violation of Law

On appeal, the plaintiff challenges the district court’s dismissal of her

amended complaint on the basis that she did not plead a concrete injury in fact

sufficient to establish Article III standing to bring suit against Paris Baguette.

A. Standing Doctrine After Spokeo

In Lujan v. Defenders of Wildlife, the Supreme Court explained that the

“irreducible constitutional minimum of standing contains three elements”: (1)

“an injury in fact” to “a legally protected interest” that is both “(a) concrete and

particularized, and (b) actual or imminent, not conjectural or hypothetical,” (2) “a

causal connection between the injury and the conduct complained of,” and (3)

that it is “likely, as opposed to merely speculative, that the injury will be

redressed by a favorable decision.”

, 560–61 (1992) (citations and

internal quotation marks omitted). As here, the controversy in Spokeo implicated

the “concrete and particularized” element of injury‐in‐fact standing analysis. See

Spokeo,

. There, the Court considered a claim against

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Spokeo, a “people search engine,” alleging that when Spokeo trawled online

sources to generate a profile of the plaintiff, it collected and reported inaccurate

information about him, including his age, education, and marriage and family

status, as well as job and socioeconomic position.

. The plaintiff

asserted that Spokeo qualified as a “consumer reporting agency” under the Fair

Credit Reporting Act of 1970 (“FCRA”),

(codified as amended at

et seq.), and that, as a result, Spokeo was required “to ‘follow

reasonable procedures to assure maximum possible accuracy’ of consumer

reports, . . . to limit the circumstances in which such agencies provide consumer

reports ‘for employment purposes,’ . . . and to post toll‐free numbers for

consumers to request reports,” among other protections. Spokeo,

(quoting 15 U.S.C. §§ 1681e(b), 1681b(b)(1), 1681j(a)). Importantly, as with

FACTA, violators of the FCRA can be liable for both actual and statutory

damages. Id. The Spokeo plaintiff’s putative class action lawsuit alleged that in

publishing incorrect information about the plaintiff and similarly situated

individuals, Spokeo willfully failed to comply with the FCRA’s requirements, id.

at 1546, and the case turned on whether harms stemming from bare procedural

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violations of the FCRA could satisfy the concreteness element of injury‐in‐fact

standing analysis.

The Supreme Court concluded that while the Spokeo plaintiff could not

“allege a bare procedural violation, divorced from any concrete harm, and satisfy

the injury‐in‐fact requirement of Article III,” that did “not mean . . . that the risk

of real harm cannot satisfy the requirement of concreteness.” Id. at 1549

(emphasis added). After all, as “Congress is well positioned to identify intangible

harms that meet minimum Article III requirements, [and] its judgment is also

instructive and important,” Congress “may ‘elevat[e] to the status of legally

cognizable injuries concrete, de facto injuries that were previously inadequate in

law.’” Id. (quoting Lujan,

). Given the variety of ways a consumer

reporting agency could run afoul of the FCRA, the Court recognized that while

any given “violation of one of the FCRA’s procedural requirements may result in

no harm,” “Congress plainly sought to curb the dissemination of false

information by adopting procedures designed to decrease that risk.” Id. at 1550.

Thus, the critical question for standing purposes is “whether the particular

procedural violations alleged in this case entail a degree of risk sufficient to meet

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the concreteness requirement.” Id. (emphasis added). The Court remanded the

case for the lower court to engage in this inquiry in the first instance. Id.

B. Post‐Spokeo Second Circuit Standing Doctrine

We recently had the opportunity to apply Spokeo to another consumer class

action lawsuit concerning a statute with a wide‐ranging set of procedural rights

and requirements, the Truth in Lending Act (“TILA”), Pub. L. No. 90–321,

(1968) (codified as amended at

et seq.), in Strubel v.

Comenity Bank,

(2d Cir. 2016). Unlike the single violation alleged

here, Strubel involved a variety of alleged violations of the TILA, all related to

required disclosures concerning the plaintiff’s rights and responsibilities as a

credit card holder and borrower of the bank.

at 185–86. Applying Spokeo, we

recognized that “an alleged procedural violation can by itself manifest concrete

injury where Congress conferred the procedural right to protect a plaintiff’s

concrete interests and where the procedural violation presents a ‘risk of real

harm’ to that concrete interest.”

. We noted, however, an important

limitation: “[E]ven where Congress has accorded procedural rights to protect a

concrete interest, a plaintiff may fail to demonstrate concrete injury where

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violation of the procedure at issue presents no material risk of harm to that

underlying interest.”

. A central inquiry, then, is whether the particular

bare procedural violation may present a material risk of harm to the underlying

concrete interest Congress sought to protect. Accordingly, in Strubel, we held that

those of the defendant’s practices that “could cause consumers unwittingly not

to satisfy their own obligations and thereby to lose their rights . . . raise[d] a

sufficient degree of the risk of real harm necessary to [establish] concrete injury

and Article III standing,” while other allegations where plaintiff “fail[ed] to

demonstrate sufficient risk of harm to a concrete TILA interest from

[defendant’s] alleged failure[s]” were properly dismissed for lack of standing.

.

III. Material Risk of Harm under FACTA

Applying Strubel, the key inquiry here is whether Paris Baguette’s alleged

bare procedural violation — printing Crupar‐Weinmann’s credit card expiration

date on her receipt — presents a material risk of harm to the underlying concrete

interest Congress sought to protect in passing FACTA. We find it dispositive that

in 2007, Congress clarified FACTA in the Credit and Debit Card Receipt

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Clarification Act of 2007 (“Clarification Act”), stating that “[e]xperts in the field

agree that proper truncation of the card number, . . . regardless of the inclusion of

the expiration date, prevents a potential fraudster from perpetrating identity theft

or credit card fraud.” Pub. L. 110–241, § 2(a)(6),

, 1565 (2007)

(emphasis added). This makes clear that Congress did not think that the inclusion

of a credit card expiration date on a receipt increases the risk of material harm of

identity theft.

Crupar‐Weinmann counters that the Clarification Act maintained

FACTA’s prohibition on printing credit card expiration dates on receipts, which

reflects Congress’s continued belief that the action does pose a material risk of

harm. While we acknowledge that the Clarification Act maintained FACTA’s

prohibition on this practice, we decline to draw plaintiff’s proposed inference,

because in the same Act, Congress expressly observed that the inclusion of

expiration dates did not raise a material risk of identity theft, presumably to

curtail the “hundreds of lawsuits [that] were filed [after FACTA’s passage]

alleging that the failure to remove the expiration date was a willful

violation . . . even where the account number was properly truncated[, and n]one

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of these lawsuits contained an allegation of harm to any consumer’s identity.”

Pub. L. 110–241 § 2(a)(4)–(5), 122 Stat. at 1565. Congress could not have been

clearer in stating that “[t]he purpose of this Act is to ensure that consumers

suffering from any actual harm to their credit or identity are protected while

simultaneously limiting abusive lawsuits that do not protect consumers but only

result in increased cost to business and potentially increased prices to

consumers.” Id. § 2(b), 122 Stat. at 1566. Given this clarification of FACTA,

coupled with our holding in Strubel that a plaintiff must allege that, at a

minimum, the bare “procedural violation presents a ‘risk of real harm’ to [her]

concrete interest,”

, we conclude that the plaintiff here has not

alleged in her amended complaint that Paris Baguette’s bare procedural violation

of FACTA posed a material risk of harm to her.1 We thus join our sister Circuit in

concluding, in a case with a nearly identical set of allegations, that “[i]n these

1 This is not to say that it is impossible to allege a different “bare procedural violation” of 15 U.S.C. § 1681c(g) for which some plaintiff might have standing. In a circumstance like this, however, where the plaintiff alleges no particular harm beyond a purely procedural violation, and Congress has found that that particular bare procedural violation does not increase the risk of the relevant material harm, the plaintiff lacks standing to proceed with such a suit.

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circumstances, it is hard to imagine how the expiration date’s presence could

have increased the risk that [plaintiff’s] identity would be compromised.” Meyers

v. Nicolet Rest. of De Pere, LLC,

(7th Cir. 2016).

CONCLUSION

For these reasons, we join the Seventh Circuit in holding that the printing

of an expiration date on an otherwise properly redacted receipt does not

constitute an injury in fact sufficient to establish Article III standing to bring a

claim alleging a bare procedural violation of FACTA. Accordingly, the judgment

of the district court is AFFIRMED.

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