On December 16, U.S. District Judge Paul A. Engelmayer dismissed a putative class action suit alleging that Nordstrom department store's credit card account disclosures violated the Truth in Lending Act ("TILA"). Relying on the Supreme Court's decision in Spokeo, Inc. v. Robins, the Court concluded that the plaintiff did not have standing to bring the suit against Nordstrom because the plaintiff had not incurred any concrete harm in connection with the alleged violation of TILA.
The plaintiff, Ester Kelen, alleged that Nordstrom inaccurately or incompletely disclosed information regarding late payment fees and returned payment fees when she opened a credit card account with the department store. According to Kelen, the disclosures she received when she opened her account noted the fee for payments returned by her financial institution was $25 and the fee for late payments was $35. Kelen argued that Nordstrom failed to disclose the complete computation method for the fees, including the possibility that she might be charged less than the stated amounts, in violation of TILA and Regulation Z, which implements TILA.
Kelen's complaint, however, never claimed that Nordstrom charged her either fee. Instead, Kelen argued that Nordstrom's errant disclosures established a concrete harm and created a material risk of concrete harm to her and to other consumers. Nordstrom moved the Court to dismiss Kelen's claim, contending that she had not suffered an injury-in-fact sufficient to confer Article III standing.
The Court sided with Nordstrom, citing Spokeo and Strubel v. Comenity Bank, a recent decision from the Second Circuit Court of Appeals dismissing a TILA case on similar grounds. While the Court acknowledged that Spokeo addresses a different statute, the Fair Credit Reporting Act, it still found the Spokeo reasoning instructive, finding that a plaintiff who merely pleads a statutory violation does not establish an injury-in-fact.
Judge Engelmayer concluded that the dissemination of incorrect information, by itself, does not create a risk of real harm. Instead, Kelen needed to demonstrate some indication that she would experience harm from Nordstrom's inaccurate fee disclosures in order to have Article III standing. Kelen's failure to do so was fatal to her complaint, as she did not allege that she changed her behavior in any way based upon Nordstrom's fee disclosures, that Nordstrom had charged her a fee, or that she had even read the fee disclosures. "In light of these spartan pleadings," the Court wrote, "Kelen's claim to have suffer[ed] a concrete, particularized injury falls short of the standards set by the case law, which requires alleging more than the mere fact of a violation of a disclosure statute for a plaintiff to plead a material risk of harm."
The case is Kelen v. Nordstrom Inc, et al., Case Number 1:16-cv-01617.
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