Jarek Charvat, Individually and on behalf of all others similarly situated v. Mutual First Federal Credit Union

United States Court of Appeals
For the Eighth Circuit
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No. 12-2790
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Jarek Charvat, Individually and on behalf of all others similarly situated
lllllllllllllllllllll Plaintiff - Appellant
v.
Mutual First Federal Credit Union
lllllllllllllllllllll Defendant - Appellee
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No. 12-2797
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Jarek Charvat, Individually and on behalf of all others similarly situated
lllllllllllllllllllll Plaintiff - Appellant
v.
First National Bank of Wahoo
lllllllllllllllllllll Defendant - Appellee
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United States of America
lllllllllllllllllllll Amicus on Behalf of Appellant
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Appeal from United States District Court
for the District of Nebraska - Omaha
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Submitted: May 14, 2013
Filed: August 2, 2013
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Before RILEY, Chief Judge, MELLOY and SHEPHERD, Circuit Judges.
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SHEPHERD, Circuit Judge.
Jarek Charvat brought putative class actions against two Nebraska banks,
Mutual First Federal Credit Union (“Mutual First”) and First National Bank of
Wahoo (“First National”) (collectively, “Appellees”), alleging violation of the
Electronic Fund Transfer Act (“EFTA”). See 15 U.S.C. § 1693. The district court
dismissed both of Charvat’s suits for lack of standing, and he now appeals. We
reverse.
I.
In early 2012, Charvat made several withdrawals from Appellees’ ATMs. A
total of three transactions occurred, one at Mutual First in Omaha and two at First
National in Wahoo, Nebraska. At the time Charvat completed the transactions, the
EFTA required ATM operators to provide two forms of notice, one “on or at” the
ATM (“on machine” notice) and another on-screen during the transaction, if operators
charged a transaction fee. See § 1693b(d)(3)(B)(i)-(ii), amended by Act of Dec. 20,
2012, Pub. L. No. 112-216, 126 Stat. 1590 (removing the “on machine” notice
requirement). A transaction fee was not allowed without the prescribed notice, and
consumers could recover various damages under the EFTA for violations. See
§ 1693m(a) (actual damages, statutory damages, costs, and fees). Charvat received
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an on-screen notice of a transaction fee at each ATM, which he accepted, and for each
transaction Charvat was charged a $2.00 fee. However, Charvat alleges that neither
of Appellees’ ATMs had “on machine” notice.
Charvat brought separate putative class action suits against Appellees, alleging
violation of the EFTA. Both First Mutual and First National moved to dismiss,
arguing the district court lacked subject matter jurisdiction because Charvat did not
have standing to bring his claims. The district court granted Appellees’ motions to
dismiss, concluding that Charvat had not alleged an injury in fact but only an “injury
in law.” The district court held that an EFTA plaintiff “must allege an injury in fact
that was caused by the lack of an exterior fee notice on the ATM,” and determined
that Charvat had not done so. Charvat v. First Nat’l Bank of Wahoo, No. 8:12CV97,
2012 WL 2016184, at *3 (D. Neb. June 4, 2012) (emphasis omitted); see also Order
to Show Cause 4, No. 8:12CV11, ECF No. 22 (reaching same conclusion in suit
against Mutual First). Charvat filed timely appeals in both cases, which are now
consolidated for appeal.
II.
We review the district court’s dismissal of Charvat’s complaints de novo,
“accepting as true the factual allegations contained in the complaint and granting
[Charvat] the benefit of all reasonable inferences that can be drawn from those
allegations.” See Gomez v. Wells Fargo Bank, N.A., 676 F.3d 655, 660 (8th Cir.
2012). The sole issue here is whether Charvat has standing to bring his EFTA claims
against Appellees. “[The] ‘irreducible constitutional minimum of standing’ requires
a showing of ‘injury in fact’ to the plaintiff that is ‘fairly traceable to the challenged
action of the defendant,’ and ‘likely [to] be redressed by a favorable decision.’”
Braden v. Wal-Mart Stores, Inc., 588 F.3d 585, 591 (8th Cir. 2009) (quoting Lujan
v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). Although the district court
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primarily focused on the injury in fact element, Appellees also attack traceability. We
address these two elements in turn.
A.
The injury in fact element requires a plaintiff to allege “an invasion of a legally
protected interest which is (a) concrete and particularized and (b) actual or imminent,
not conjectural or hypothetical.” Lujan, 504 U.S. at 560. Because injury in fact is a
constitutional requirement, Congress may not grant standing to an individual who
would not otherwise have standing. See Raines v. Byrd, 521 U.S. 811, 820 n.3
(1997). Congress may, however, create legal rights via statute, the invasion of which
can create standing to sue. See Warth v. Seldin, 422 U.S. 490, 500 (1975) (“The
actual or threatened injury required by Art. III may exist solely by virtue of statutes
creating legal rights, the invasion of which creates standing . . . .” (quotation
omitted)).
The EFTA, the statute at issue here, was passed to establish a “basic framework
establishing the rights, liabilities, and responsibilities of participants in electronic
fund and remittance transfer systems.” 15 U.S.C. § 1693(b). The “primary1
objective” of the EFTA is “the provision of individual consumer rights.” Id. One of
the consumer rights provided under the EFTA is the right to notice of fees linked to
ATM transactions. See § 1693b(d). No ATM fee may be charged unless the
consumer receives the prescribed notice and elects to continue the transaction.
§ 1693b(d)(3)(C). As noted above, when Charvat conducted his ATM transactions,
the EFTA required notice of fees both on the ATM and also on the screen. See
Under the EFTA, “electronic fund transfer” essentially means any transfer of1
funds initiated through a computer terminal or telephone, where a financial institution
is authorized to debit or credit an account. See 15 U.S.C. § 1693a(7). This includes
point-of-sale transfers (i.e., debit card transactions), ATM transactions, direct
deposits, and telephonic transfers. Id.
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§1693b(d)(3)(B)(i)-(ii), amended by Act of Dec. 20, 2012, Pub. L. No. 112-216, 126
Stat. 1590. The EFTA authorizes individual and class action suits for violations of
the EFTA, with recovery of actual damages, statutory damages, costs, and attorney’s
fees. See § 1693m(a).
On appeal, Charvat argues he suffered two independent, equally cognizable
injuries: an economic injury in the form of an illegal $2.00 fee and an informational
injury due to Appellees’ failure to provide the statutorily required notice. As an
initial matter, Appellees argue Charvat waived any claim that the $2.00 fee
constituted an injury in fact. Appellees argue Charvat repeatedly filed documents in
the district court stating that the $2.00 fee was not the injury. See, e.g., Pl.’s Resp.
to Def.’s Mot. to Dismiss 1, No. 8:12-CV-00097, ECF No. 11 (“The injury to Plaintiff
Charvat and the putative class in this matter is not the $2.00 fee, but the failure to
provide information in the manner prescribed by Congress.”). Charvat responds that
his statements to the district court merely meant the $2.00 fee standing alone was not
his injury, but rather that his injury was the combination of the $2.00 fee and the
failure to provide both forms of notice. Charvat also argues that claiming the $2.00
fee as his injury is merely a new argument on appeal, and not a new issue, since the
broader issue of standing was clearly before the district court. See Hintz v. JPMorgan
Chase Bank, N.A., 686 F.3d 505, 508 (8th Cir. 2012) (“Appellants’ contention that
the order was not on the merits raises only a new argument, not a new issue, and thus
is not barred from review.”).
Notably, the district court did not address the $2.00 fee as an injury in fact, but
only addressed the informational injury in its orders dismissing Charvat’s claims. See
Charvat, 2012 WL 2016184, at *2 (“The issue then is whether [First National’s]
failure to give a notice to which Charvat was statutorily entitled in itself constitutes
an injury in fact to Charvat.”); id. at *3 (“Here, Charvat alleges only a statutory
violation of the EFTA because [First National] failed to provide an exterior fee notice
on its ATM.”); see also Order to Show Cause 4, No. 8:12CV11, ECF No. 22 (using
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identical language in suit against Mutual First). Nor did the district court discuss
whether it found that Charvat waived the $2.00 fee as his injury in fact. Thus, we
have no lower court decision to review regarding the $2.00 fee as an injury, either on
the merits or in regard to an alleged waiver.
However, assuming, without deciding, that Charvat did waive the claim that
the $2.00 fee constituted an injury in fact, we conclude Charvat still had standing to
pursue his claims against Appellees based on the informational injury that he
allegedly sustained. The district court concluded that because Charvat failed to allege
some injury beyond the failure to receive an “on machine” notice, he had not suffered
a cognizable injury in fact. We disagree. Decisions by this Court and the Supreme
Court indicate that an informational injury alone is sufficient to confer standing, even
without an additional economic or other injury.
The district court’s rejection of Charvat’s informational injury claim was based
largely on the determination that a statutory violation, standing alone, was not a
sufficient injury in fact. But Charvat identifies a variety of instances where the denial
of a statutory right to receive information is sufficient to establish standing. For
example, the Supreme Court “has previously held that a plaintiff suffers an ‘injury in
fact’ when the plaintiff fails to obtain information which must be publicly disclosed
pursuant to a statute.” Fed. Election Comm’n v. Akins, 524 U.S. 11, 21 (1998). Our
Court, as well, has held that plaintiffs need not show actual damages, beyond a
statutory violation, in order to recover statutory damages. See Dryden v. Lou
Budke’s Arrow Fin. Co., 630 F.2d 641, 647 (8th Cir. 1980) (“[Truth in Lending Act]
plaintiffs, otherwise entitled to recover, need not show that they sustained actual
damages stemming from the TILA violations proved before they may recover the
statutory damages the Act also provides for.”). Once Charvat alleged a violation of
the notice provisions of the EFTA in connection with his ATM transactions, he had
standing to claim damages. See id. (“If [borrower] proved that the disclosure
provisions of [TILA] and Regulation Z were violated in connection with the January
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26 transaction, [lender] is liable for statutory damages.”). Thus, the district court
erred by requiring Charvat to demonstrate an injury beyond Appellees’ failure to
provide the prescribed “on machine” notice.2
The district court also held that “[t]he [EFTA’s] authorization of statutory
damages is unrelated to injury.” Charvat, 2012 WL 2016184, at *3 (emphasis
omitted). We disagree. At the time of Charvat’s transactions, the EFTA created a
right to a particular form of notice before an ATM transaction fee could be levied.
If that notice was not provided and a fee was nonetheless charged, an injury occurred,
and the statutory damages are directly related to the consumer’s injury. Cf. Dryden,
630 F.2d at 647 (“[S]tatutory damages are explicitly a bonus to the successful . . .
plaintiff, designed to encourage private enforcement of the Act, and a penalty against
the defendant, designed to deter future violations.”). This distinguishes the statutory
damages here from the qui tam damages at issue in Vermont Agency of Natural
Resources v. United States, 529 U.S. 765, 772 (2000), cited by the district court in
support of its conclusion that Charvat’s damages were unrelated to his injury. In a
qui tam case such as Vermont Agency, the relator is explicitly seeking to vindicate
violation of the rights of the government. See id. at 772-74 (suggesting, in suit to
remedy state agency’s submission of false claims to EPA, that qui tam relator’s
interest in suit was unrelated to injury to the government, but finding sufficient injury
to confer standing by considering relator partial assignee of government’s damages
claim). Here, in contrast, the statutory damages are given to a consumer who
personally experiences a statutory violation, and not to a third party who simply
notices the injury of another. Accordingly, we find Charvat’s claim of statutory
damages is sufficiently related to his injury to confer standing.
We note also that the vast majority of lower courts to consider this question2
have found that plaintiffs like Charvat do have standing to bring similar EFTA
claims. See, e.g., Alicea v. Citizens Bank of Penn., No. Civ. 12-1750, 2013 WL
1891348, at *2 & n.3 (W.D. Pa. May 6, 2013) (finding violation of EFTA notice
provision constitutes injury in fact, and collecting cases).
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We agree with Appellees and the district court that Article III precludes a
plaintiff from asserting a claim for an abstract statutory violation. See Summers v.
Earth Island Inst., 555 U.S. 488, 497 (2009) (“It would exceed Article III’s limitations
if, at the behest of Congress and in the absence of any showing of concrete injury, we
were to entertain citizen suits to vindicate the public’s nonconcrete interest in the
proper administration of the laws.” (internal marks omitted)). And if, hypothetically,
Charvat simply heard from an acquaintance that Appellees did not provide “on
machine” notice—but never himself visited their ATMs, never initiated a transaction,
and was never charged a transaction fee—then Charvat may well lack standing to
bring an EFTA suit. But based on the complaints filed in these cases, Charvat has not
merely asserted “the public’s nonconcrete interest” in the administration of the EFTA.
Instead, Charvat alleges a violation of his own interest: Appellees did not provide
him with the required “on machine” notice, and subsequently charged him a
prohibited fee following an ATM transaction that he initiated and completed. Thus,
we conclude that Charvat has alleged an action that injured him “‘in a concrete and
personal way,’” see id. (quoting Lujan, 504 U.S. at 581 (Kennedy, J., concurring in
part and concurring in judgment)), and has satisfied the injury in fact requirement of
standing.
B.
Appellees also argue that Charvat’s alleged injuries are not fairly traceable to
their conduct because their failure to provide “on machine” notice was not the sole
cause of his alleged injuries. “Traceability requires proof of causation, showing the
injury resulted from the actions of the defendant ‘and not . . . [from] the independent
action of some third party not before the court.’” See Oti Kaga, Inc. v. S. D. Hous.
Dev. Auth., 342 F.3d 871, 878 (8th Cir. 2003) (quoting Lujan, 504 U.S. at 560).
Appellees argue that Charvat, by accepting the $2.00 transaction fee after receiving
an on-screen notice of the fee, broke any causal link between Appellees and his
alleged injury.
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Appellees’ argument, however, is not supported by our case law. “‘Not every
infirmity in the causal chain deprives a plaintiff of standing.’” ABF Freight Sys., Inc.
v. Int’l Bhd. of Teamsters, 645 F.3d 954, 961 (8th Cir. 2011) (quoting St. Pierre v.
Dyer, 208 F.3d 394, 402 (2d Cir. 2000)). Indeed, in ABF Freight, the appellees
argued that the appellants’ injury flowed from their own action, namely the rejection
of collective bargaining amendments adopted by a competitor. Id. However, we
rejected this argument, finding that “[h]ad [appellees] not allegedly breached . . .
[appellants] would not have been forced to choose between options that were
unattractive . . . .” Id. The same logic applies here. If Appellees had not violated the
EFTA’s notice requirement, Charvat would not have been forced to choose between
engaging in a transaction without the required notice and walking away. Thus, we
conclude Charvat’s injury was fairly traceable to Appellees’ conduct.
III.
Accordingly, we reverse the judgment of the district court and remand for
further proceedings consistent with this opinion.
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