The U.S. Court of Appeals for the Eleventh Circuit has granted en banc review of a decision that business groups called a "dramatic departure" on standing to bring privacy claims under the U.S. Supreme Court's holding in Spokeo v. Robins.

The decision, by three judges of an Eleventh Circuit panel, found that a customer of Godiva Chocolatier Inc. had standing to sue after the store gave him a receipt that displayed 10 digits of his credit card number in violation of the Fair and Accurate Credit Transactions Act, an amendment to the Fair Credit Reporting Act. An objector to the $6.3 million class action settlement of the case petitioned the Eleventh Circuit to have an en banc panel rehear the standing argument, which conflicted with the Supreme Court's 2016 ruling in Spokeo. Several business groups filed amicus briefs supporting rehearing, adding that the Eleventh Circuit now stood apart from four other circuits, which found no standing in similar cases.

In a Friday order, the Eleventh Circuit said that a majority of the panel voted in favor of rehearing.

"We are pleased the court has chosen to revisit this class settlement where a lead plaintiff was permitted to settle and bar identity-theft claims of other class members even though he personally suffered no such injury," wrote John Davis, of the Law Office of John W. Davis in Tampa. Davis represents the objector, Eric Alan Isaacson, an attorney in La Jolla, California, who specializes in class action appeals.

"En banc rehearing will permit the Eleventh Circuit to reconcile its precedent with the decisions of other circuits, which do not allow named plaintiffs who themselves suffered no injury to file lawsuits in order to compromise other people's claims," Davis said.

Godiva's attorney, David Almeida of Chicago's Benesch declined to comment, and Michael Hilicki of Chicago's Keogh Law, who represented the plaintiff David Muransky, did not return a call for comment.

Muransky filed the case in 2015. He claimed that Godiva gave him a receipt that showed his credit card number's first six and last four digits. FACTA prohibits businesses from printing "more than the last five digits" of a customer's credit number, or the expiration date, on any receipt. It provides $100 to $1,000 per violation in statutory damages.

In a settlement reached prior to Spokeo, Godiva was to provide $6.3 million, which included $2.1 million in attorney fees and a $10,000 incentive award to Muransky as the lead plaintiff.

Two objectors, including Isaacson, found the settlement wasn't so sweet. They raised concerns about the fees, incentive award and, in an issue first raised at the settlement's fairness hearing, Muransky's standing to sue under Article III of the U.S. Constitution.

In Spokeo, the Supreme Court held that in order to establish standing a plaintiff must allege an injury that is "particularized" and "concrete"—not just claim a bare statutory violation.

On Oct. 3, 2018, three judges on the Eleventh Circuit unanimously approved the settlement. The panel also disagreed on the standing issue, adding that Muransky's alleged harm was similar to the common law tort of breach of confidence or a "modern version" of the claim for breach of an implied bailment agreement.

"We therefore conclude printing more than five digits of a credit card number in willful violation of FACTA causes the person whose account number is disclosed to suffer a concrete injury," wrote Judge Beverly Martin for the panel.

Isaacson immediately petitioned for rehearing, calling the Eleventh Circuit's decision a "dramatic departure that will induce class-action lawyers to flock to the Eleventh Circuit with cases that would be dead on arrival elsewhere." He said the decision conflicted with the Ninth, Second and Seventh circuits in recent decisions in other FACTA cases. Joining him in amicus briefs were three business groups: the National Retail Federation, the U.S. Chamber of Commerce and the International Franchise Association. The Eleventh Circuit, they wrote, had "adopted a flawed rationale that was not briefed by the parties and has not been adopted by any other court."

"Without the protection of the standing doctrine, businesses in this circuit will be forced to settle no-injury FACTA cases or face hundreds of millions or even billions of dollars in statutory damages—all in cases where no consumer was harmed," wrote their attorney, Kevin Huff of Kellogg, Hansen, Todd, Figel & Frederick in Washington, D.C. "The threat of annihilative damages is real. Plaintiff's lawyers have filed dozens of no-injury FACTA class actions asserting similar claims of unintentional FACTA violations with no resulting harm."

One was those is Six Flags Entertainment Corp., which filed a separate amicus brief supporting rehearing, because it faces numerous FACTA lawsuits, which it called the "hallmark of class-action abuse," including one in the Northern District of Georgia.

"The panel's opinion secures this Circuit's place outside the mainstream on the recurring question of the plaintiffs' standing to bring such suits," wrote Six Flags attorney Jonathan Franklin, head of the appellate practice at Norton Rose Fulbright in Washington, D.C.

Stephanie Martz, general counsel of the National Retail Federation, noted that the plaintiff, in the case before the Eleventh Circuit, suffered no harm under Spokeo because he kept his receipt.

"As retailers, we are very strongly committed to our customers' privacy and security, but, by the same token, we consider it to be really a vexatious lawsuit when something gets filed on a very technical violation with no proof of harm whatsoever, and there was no harm," she said. "And that's what Spokeo stands for."

On March 8, the U.S. Court of Appeals for the Third Circuit found in Kamal v. J. Crew Group that a plaintiff in a case with similar facts lacked standing to sue under FACTA. After Isaacson notified the Eleventh Circuit of that decision, the panel amended its opinion April 22 but reaffirmed its holding.

"We think it beyond debate that a consumer has a concrete interest in preventing his identity from actually being stolen," Martin wrote.

Isaacson renewed his motion for rehearing en banc, and the same business groups and Six Flags filed motions to submit amicus briefs in support.

Martz, of the National Retail Federation, said that because the Eleventh Circuit had already amended its opinion, its decision to rehear the case en banc came as a surprise.

"I had thought this was going to die on the vine in the Eleventh Circuit," she said.