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Tyus v. United States Postal Service

United States District Court, E.D. Wisconsin

January 4, 2017

RONDO TYUS and DAVID GEBHARDT, Individually and as representatives of the Classes, Plaintiffs,


          WILLIAM E. DUFFIN U.S. Magistrate Judge

         On October 19, 2016, this court found that plaintiffs David Gebhardt and Rondo Tyus lacked Article III standing to proceed in federal court and that the case must be remanded to state court. (ECF No. 33.) The plaintiffs now move the court to reconsider whether they have Article III standing or, alternatively, to allow them to amend their complaint. (ECF No. 37.) USPS has also filed a motion for reconsideration in which it asks this court to reconsider its finding that a remand of the case - instead of a dismissal-was warranted after the court found the plaintiffs lacked Article III standing. (ECF No. 41.) Both motions are fully briefed and ready for resolution.

         To prevail on a motion for reconsideration, a party must either present newly discovered evidence or establish that the court made a manifest error of law or fact. Oto v. Metro. Life Ins. Co., 224 F.3d 601, 606 (7th Cir. 2000).[1] While “[r]econsideration is a useful mechanism when the court has clearly erred and immediate correction will save time in the long run[, ]” Eivaz v. Edwards, No. 12-CV-910, 2015 WL 59347, at *1 (E.D. Wis. Jan. 5, 2015), a “'manifest error' is not demonstrated by the disappointment of the losing party.” Oto, 224 F.3d at 606. Whether to grant or deny a motion for reconsideration is within the district court's sound judgment. LB Credit Corp. v. Resolution Trust Corp., 49 F.3d 1263, 1267 (7th Cir. 1995).


         Plaintiffs' motion raises three arguments: (1) the court “overlooked” the plaintiffs' argument that the rights here are “substantive” as opposed to “procedural”; (2) the court misunderstood the facts of Thomas v. FTS USA, LLC., No. 3:13-CV-825, 2016 WL 3653878 (E.D. Va. June 30, 2016); and (3) the court incorrectly interpreted a passage of Spokeo v. Robins, 136 S.Ct. 1540 (2016), and should have considered the allegations of factual inaccuracies in Tyus's credit report as set forth in his brief opposing the motion to dismiss.

         Substantive versus Procedural Rights

         In its order, the court concluded that (1) while the FCRA created a right to privacy, the plaintiffs had not alleged a concrete injury to their privacy right, and (2) the failure to provide a stand-alone disclosure form was the sort of violation which does not establish a concrete injury for standing purposes. (ECF No. 33 at 13; citing Groshek v. Time Warner Cable, Inc., 15-C-157, 2016 WL 4203506 (E.D. Wis. Aug. 9, 2016).) The court did not overlook the distinction between substantive rights and procedural rights. It simply disagreed with the plaintiffs' argument.

         The Court of Appeals for the Seventh Circuit recently weighed in on these issues. In Meyers v. Nicolet Restaurant of De Pere, LLC, No. 16-2075, 2016 WL 7217581 (7th Cir. Dec. 13, 2016), the plaintiff used a credit card to pay for his dinner at the defendant restaurant. The Fair and Accurate Credit Transaction Act (FACTA) (a 2003 amendment to the FCRA) provides that “[n]o person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1). Plaintiff noticed that his credit card receipt did not truncate the expiration date as required. He sued the restaurant. His allegations showed that “Meyers discovered the violation immediately and nobody else ever saw the non-compliant receipt.” Id. at *3.

         The Court of Appeals summarized the lessons of Spokeo:

That Congress has passed a statute coupled with a private right of action is a good indicator that whatever harm might flow from a violation of that statute would be particular to the plaintiff. Yet the plaintiff still must allege a concrete injury that resulted from the violation in his case. As Spokeo explained, “Congress' role in identifying and elevating intangible harms does not mean that a plaintiff automatically satisfies the injury-in-fact requirement whenever a statute grants a person a statutory right and purports to authorize that person to sue to vindicate that right.” Id. at 1549. In other words, Congress' judgment that there should be a legal remedy for the violation of a statute does not mean each statutory violation creates an Article III injury. See Diedrich v. Ocwen Loan Servicing, LLC, 839 F.3d 583, 590-91 (7th Cir. 2016) (rejecting the argument that a violation of the Real Estate Settlement Procedures Act, without more, is a sufficient injury-in-fact after Spokeo). Such an injury “must be ‘de facto'; that is, it must actually exist.” Spokeo, 136 S.Ct. at 1548.

Meyers, 2016 WL 7217581, at *3. The court concluded:

Spokeo compels the conclusion that Meyers' allegations are insufficient to satisfy the injury-in-fact requirement for Article III standing. The allegations demonstrate that Meyers did not suffer any harm because of Nicolet's printing of the expiration date on his receipt. Nor has the violation created any appreciable risk of harm. After all, Meyers discovered the violation immediately and nobody else ever saw the non-compliant receipt. In these circumstances, it is hard to imagine how the expiration date's presence could have increased the risk that Meyers' identity would be compromised. See Id. at 1550 (“It is difficult to imagine how the dissemination of an incorrect zip code, without more, could work any concrete harm.”).

Id. In reaching that conclusion, the court noted:

[Meyers] staked his entire standing argument on the statute's grant of a substantive right to receive a compliant receipt. But whether the right is characterized as “substantive” or “procedural, ” its violation must be accompanied by an injury-in-fact. A violation of a statute that causes no harm does not trigger a federal case. That is one of the lessons of Spokeo.

Meyers, 2016 WL 7217581, at *3, n. 2.

         There is admittedly a split among courts as to whether a “bare violation” of the FCRA's disclosure and pre-adverse action notice provisions is in and of itself a “concrete harm” sufficient to give a plaintiff standing to pursue such a claim in federal court. Some courts, including those relied upon by plaintiffs, have concluded that a bare violation is sufficient. See e.g. Rodriguez v. El Toro Med. Investors Ltd. P'ship, No. 16-00059, 2016 WL 6804394 (C.D. Cal. Nov. 16, 2016); Thomas, 2016 WL 3653878, at *11. Others, including this court, have concluded otherwise. In stating that a “violation of a statute that causes no harm does not trigger a federal case, ” the Court of Appeals for the Seventh Circuit seems to be in the latter camp. Meyers, 2016 WL 7217581, at *3, n.2. Thus, this court's position is unchanged.

         Application of Thomas

         This court's order noted that in Thomas the complaint alleged that Thomas had not received a disclosure form and had not authorized the release of a background report. (ECF No. 33 at 12-13.) Plaintiffs note that, while Thomas alleged he never received a disclosure form, he conceded that he had received an “Employment Release Statement” by the time the case was decided at summary judgment. See Thomas, 2016 WL 3653878, at *8, n.3. Plaintiffs allege that, therefore, their claims are substantially identical to those in Thomas.

         As for this court's alleged misunderstanding of the facts in Thomas, the reference to the Thomas pleadings was merely to contrast them with the plaintiffs' pleadings in this case. In any event, Thomas is not binding on this court and as stated above this court disagrees with its conclusion.

         Interpretation of Spokeo

         Plaintiffs' final argument contends that the court misapplied a passage from Spokeo pertaining to the impact of inaccurate background reports. Specifically, plaintiffs take issue with the court's statement that “Spokeo contemplated this very situation” (ECF No. 33 at 15), ...

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