Last week, the U.S. Court of Appeals for the Eighth Circuit rejected the argument that a plaintiff who seeks statutory damages for only an "informational injury" is constitutionally prohibited from asserting his claim. The decision in Charvat v. Mutual First Federal Credit Union reversed the district court's prior dismissal of the lawsuit, which involved the statutory requirement (recently revoked by Congress) that ATM machines contain both on-screen and on-machine notice of a transaction fee.
The Eight Circuit's decision is important because it follows the interesting saga of First American Financial v. Edwards, a case that raised the same issue, which was briefed and argued in the U.S. Supreme Court during the October 2011 Term. The decision by the Court to grant review in First American, a case involving a statutory damages claim under the Real Estate Settlement Procedures Act, generated intense speculation because of its potential effect on private litigation under a number of consumer financial protection statutes. That speculation reached a feverish pitch, at least in consumer financial litigation circles, when the Court postponed its decision until the last day of the Term. That morning, just before the Court rendered its decisions in the Affordable Care Act cases, the Court announced that it was dismissing First American because it had "improvidently granted review," a procedure the Court uses to punt cases when they are determined not to require constitutional interpretation or, as a practical matter, when the justices are unable to reach agreement on the outcome.
After First American, it is unclear whether the Supreme Court may yet be interested in deciding the limits of Congress' power to create private lawsuits for informational injuries in statues such as the RESPA and Fair Credit Reporting Act (FCRA). Charvat is the most recent decision in what is likely to be an increased number of cases in which defendants seek to advance this argument under a variety of consumer financial statutes. As these cases reach the federal appellate courts, and as the potential grows for conflicts among circuit courts, we will know whether this standing argument actually has legs.