Alert March 18, 2014

Supreme Court Denies Certiorari for Standing to Sue under the Electronic Fund Transfers Act

The United States Supreme Court declined to grant certiorari to decide whether Congress had the authority to confer Article III standing to sue when the plaintiff suffers no concrete harm and alleges as an injury based on a bare, technical violation of a federal statute; namely the Electronic Fund Transfers Act. Prior to 2012, the EFTA required ATM operators that imposed a fee for use of the ATM to provide prior notice of the fee by providing an on-machine notice posted in a prominent and conspicuous location on the ATM and a separate on-screen notice after the transaction is initiated, but before the consumer was “irrevocably committed” to completing the transaction. The EFTA was amended in 2012 to remove the requirement to provide notice on the machine. Petitioners, two banks, sought dismissal of class actions alleging violations of the EFTA arising from the failure of the banks to post on-machine notices advising consumers that a $2.00 transaction fee would be charged to consumers who did not hold accounts with the banks. Although petitioners had not posted on-machine notices, petitioners did provide electronic notice of the fee on the ATM screen before the consumers could be charged, as also required by EFTA. In their initial suit, which was filed before the EFTA was amended in 2012, respondents did not allege any actual damages for the violations, but rather, sought statutory damages only for the class, along with attorneys’ fees and costs. While the district court concluded that respondents lacked standing to sue because their sole injury was an “injury in law,” the United States Court of Appeals for the Eighth Circuit held that respondents suffered an “informational injury” that established standing. The petitioners’ request for certiorari followed a similar request in First Am. Fin. Corp. v. Edwards, No. 10-708, where the Supreme Court initially granted certiorari to consider whether the injury-in-fact requirement for Article III standing was satisfied when the only harm alleged was a technical violation of the Real Estate Settlement Procedures Act, but subsequently dismissed the writ of certiorari as improvidently granted (see First Am. Fin. Corp. v. Edwards, 132 S. Ct. 2536, 2537 (2012)). The Supreme Court’s most recent denial of certiorari in the present case further frustrates those who wanted the Court to seize the opportunity to clarify whether a technical violation of a federal statute can confer standing under Article III.