On September 20, the Second Circuit Court of Appeals in Katz v. The Donna Karan Company, LLC, affirmed the lower court’s dismissal of a Fair and Accurate Credit Transactions Act putative class action for failure to establish a concrete injury sufficient to maintain Article III standing to bring suit.
As we previously reported, plaintiff Yehuda Katz alleged a class action claim against retailer Donna Karan and two subsidiaries under FACTA 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 receipt with the non-truncated number. The District Court for the Southern District of New York granted the defendants’ motion to dismiss, finding that Katz had alleged only a “bare procedural violation” that was divorced from any concrete harm. Specifically, the Court held that although Donna Karan violated FACTA’s prohibition on printing the first six digits of Katz’s credit card, “the first six digits [known as the “Issuer Identification Number (“IIN”)] do not disclose any information about Plaintiff; but rather ‘identity the institution that issued the card to the card holder.”
On appeal, the Second Circuit affirmed the district court’s dismissal. “While Katz may be correct that every additional digit increases the risk of a brute force cryptological attack, printing the first six digits – the IIN – is the equivalent of printing the name of the issuing institution, information which need not be truncated under FACTA, and thus the district court did not clearly err in concluding that printing the IIN does not increase the risk of real harm.” Furthermore, the receipt did not disclose Katz’s name, “a fact that also reduces the possibility that disclosure of the IIN would result in harm.” The Second Circuit emphasized, however, that standing in other FACTA cases should proceed “on a case- and fact-specific basis.”