Locke Lord QuickStudy: Class Actions Continue Down Rocky Road in Eleventh Circuit as Court Dismisses Godiva Class Action

In Muransky v. Godiva Chocolatier, Inc., 16-16486, 2020 WL 6305084 (11th Cir. Oct. 28, 2020), ‎the US Court of Appeals for the Eleventh Circuit dealt another blow to the plaintiffs’ class ‎action bar by not only vacating a $6.3 Million settlement, but dismissing an underlying class ‎action lawsuit under Spokeo.  Just last month, the Eleventh Circuit eliminated incentive ‎awards intended to sweeten the pot for class action plaintiffs in Johnson v. NPAS Solutions, ‎LLC, No. 18-12344, 2020 WL 5553312 (11th Cir. Sept. 17, 2020).‎

In Muransky, the plaintiff filed a class action lawsuit under the Fair and Accurate Credit ‎Transactions Act (“FACTA”) alleging that Godiva violated FACTA by issuing a receipt that ‎contained the first six and last four digits of the plaintiff’s sixteen-digit credit card number – ‎which is too many digits under FACTA.  The plaintiff’s complaint made clear, however, that the ‎suit was only “statutory in nature” and was “not intended to request any recovery for ‎personal injury.”  The lawsuit was filed as a putative class action.‎

Muransky was filed before the Supreme Court’s decision in Spokeo, Inc. v. Robins, 136 S. Ct. ‎‎1540 (2016), as revised (May 24, 2016), in which the Supreme Court ruled that a “concrete ‎injury” is required in order to have standing to bring a lawsuit. Id. at 1548.  A statutory ‎violation alone, such as the violation of FACTA alleged in Muransky, does not constitute a ‎concrete injury. Id. at 1550.‎

With the Spokeo decision looming, the parties quickly moved to reach a settlement of the ‎lawsuit.  Ultimately, the parties agreed to a settlement of $6.3 million instead of the $342 ‎million initially sought by the plaintiff.‎

Before the Supreme Court rendered its opinion in Spokeo, the district court certified the ‎class, granted preliminary approval of the settlement, and directed notice to the class ‎members.  Four class members filed objections to the settlement, though none of the ‎objectors initially argued that the plaintiff lacked standing.‎

By the time the district court conducted a fairness hearing, the Spokeo decision had been issued.  Following the decision, a single objector took notice and argued that the district court was ‎obligated to determine whether the plaintiff had Article III standing as required by Spokeo.  Without addressing Spokeo, the district court approved the class settlement.‎

An Eleventh Circuit panel initially agreed with the decision of the district court and concluded ‎that the plaintiff has satisfied the Article III requirements set forth in Spokeo.  The panel did ‎vacate the first opinion and issue a new one in its place, but still concluded that the plaintiff had ‎standing and approved the settlement.‎

The full court, however, ordered a rehearing en banc and has now vacated the panel opinion ‎leading to the Eleventh Circuit’s finding that the plaintiff, who initially alleged that he was only ‎seeking damages for a statutory violation, and not for any personal injury, did not suffer any ‎concrete injury under Spokeo.  Not only did the Eleventh Circuit vacate the settlement between ‎the parties, it dismissed the entire lawsuit.‎

The decision continues to chip away at the incentive to bring class action lawsuits in the Eleventh ‎Circuit.  Between the Johnson decision stripping away incentive awards and this decision ‎rejecting a settlement and dismissing an action under Spokeo, the Eleventh Circuit appears to be a ‎less desirable place for class actions today than it was just a few months ago.‎

We will continue to monitor the decisions of the Eleventh Circuit closely as the Court appears ‎poised to continue to closely scrutinize class action settlements, no matter how sweet the ‎settlement terms may appear.‎