Even though both parties agreed the plaintiffs lacked standing to bring suit under the Fair and Accurate Credit Transaction Act (“FACTA”), the Seventh Circuit recently reversed the district court’s dismissal for lack of standing, and instead ordered the district court to remand the case to state court.

The FACTA putative class action, originally filed in the Circuit Court of Cook County, Illinois, arose out of receipts for the use of parking facilities operated by SP Plus at Dayton International Airport. Plaintiffs Kathryn Collier and Benjamin Seitz alleged that the receipts included the expiration date of their credit and debit cards, in violation of FACTA. Collier and Seitz brought a putative class action, claiming statutory damages and actual damages in excess of $25,000. However, the complaint did not substantiate the actual damages and failed to describe any concrete harm suffered by either plaintiff.

SP Plus removed the case to federal court in the Northern District of Illinois based on federal question jurisdiction. A week later, it moved to dismiss the suit for lack of subject matter jurisdiction, claiming the lack of concrete harm deprived the court of Article III jurisdiction. Collier and Speitz responded with a motion to remand. The district court sided with SP Plus, ultimately dismissing the case with prejudice. Collier and Seitz appealed.

In reversing the district court, the Seventh Circuit explained that SP Plus, as the party invoking the federal court’s jurisdiction, had to establish all elements of jurisdiction, including Article III standing. Because a “mere reference to actual damages in the complaint’s prayer for relief does not establish Article III standing,” it was clear the complaint had not sufficiently alleged an injury. Thus, the court lacked subject matter jurisdiction.

The Court rejected SP Plus’s argument that once removal based on a federal question is accomplished, a defendant may challenge jurisdiction. The slate was not wiped clean. Instead, the removal statute mandates that a court remand a case if “at any time before final judgment it appears that the district court lacks subject matter jurisdiction.” On the other side of the coin, if Collier and Speitz amended their complaint in state court to allege an actual injury, SP Plus then could remove the case to federal court.

The Court expressed disapproval of SP Plus’s “dubious strategy” because it “resulted in a significant waste of federal judicial resources, much of which was avoidable.” However, it declined to award Collier and Speitz attorneys’ fees under the removal statute.

This case demonstrates the problems that continue to arise when plaintiffs who have suffered no injury file lawsuits seeking relief in court. Although plaintiffs may successfully avoid removal to federal court by not alleging an injury, they may run into problems in state court. Many states, including Illinois, also require a plaintiff to show a concrete injury in order to sue in state court.

The case is Collier et al. v. SP Plus Corp., No. 17-2431 (7th Cir. May 14, 2018). A copy of the opinion can be found here.