Since the Supreme Court issued its decision in Spokeo, Inc. v. Robins, appellate and district courts throughout the country have been grappling with the ruling's reach. Just this past month, the District Court for the Southern District of New York weighed in on the issue and found that a plaintiff must show more than a theoretical risk of harm in order to have standing in federal court. He or she must demonstrate that harm has actually occurred or that there is a material risk of imminent harm. The risk of imminent harm must be more than hypothetical.
In Katz v. Donna Karan Int'l, plaintiff Yehuda Katz alleged a class action claim against retailer Donna Karan and two subsidiaries under the Fair Credit Reporting Act based on their alleged failure to truncate the credit card number on Katz's receipt. Katz's complaint did not make any allegation of economic loss or harm, nor did he allege that any third party actually saw the non-truncated receipt. As a result, the defendants moved to dismiss the case, arguing that Katz's lack of injury means that he has not suffered a concrete harm sufficient to establish standing in the federal courts.
The court agreed with the retailer, finding that Katz had alleged only a "bare procedural violation" that was divorced from any concrete harm. The court's analysis focused on two prongs.
First, it held that Katz had not suffered any actual harm based on the receipt. It concluded that Congress' goal in passing the statute was to prevent identity theft, which Katz had not experienced.
Second, the court focused on the risk of harm. According to the court, while the increased risk of harm may be sufficient to constitute a concrete harm for standing purposes in some instances, this case was not one of those instances because Katz failed to plead that he was exposed to any real increased risk of identity theft. He did not allege that anyone besides store employees, himself, and his lawyer had viewed the receipt. He also did not allege any facts to indicate that his identity or financial information were stolen or lost—or even that such a loss was imminent. As a result, the court concluded that Katz could not even show a "material risk of harm."
The Katz decision demonstrates that in order to have standing, a plaintiff must have either actually suffered harm or plead facts sufficient to demonstrate a legitimate and imminent risk of harm. We will continue to monitor Article III standing arguments as the courts work to develop their post-Spokeo jurisprudence.
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