On March 10, 2014, the U.S. Supreme Court denied without comment a request to review an Eighth Circuit decision which held a plaintiff has standing to sue for violations of a federal statute solely to recover statutory damages when related alleged statutory misconduct caused no real monetary injury.  See Mutual First Federal Credit Union, et al. v. Jarek Charvat, No. 13-679 (March 10, 2014). 

In Charvat, the consumer-plaintiff filed a class-action claiming that the bank-defendants did not display a physical placard disclosing fees at their ATMs as previously required by the Electronic Fund Transfer Act.  Despite affirmatively accepting the fee following digital notice during the ATM transactions, plaintiff asserted he was entitled to statutory damages for the defendants’ violations.

Defendants argued that because plaintiff did not suffer any injury-in-fact, he lacked standing to sue.  On appeal, the Eighth Circuit held that the plaintiff did not have to show direct monetary injury to bring suit; rather, the “informational injury” allegedly suffered by the plaintiff was sufficient to give him standing to prosecute a claim for statutory damages.  

The “no injury” issue in Charvat often arises in Fair Debt Collection Practices Act (“FDCPA”) and Telephone Consumer Protection Act (“TCPA”) cases, where often courts allow recovery of extraordinary statutory damages and attorneys’ fees for technical violations which cause no actual harm.  Had the Supreme Court considered the Charvat case and reversed the Eight Circuit opinion, consumers would have been extremely limited in their ability to sue and collect damages under the FDCPA and TCPA. 

There is currently a split among the circuit courts of appeals on the “no injury” issue.  The Sixth, Eighth and Ninth Circuits have held that standing is satisfied when the only harm alleged is a technical violation of a federal statute, while the Second, Fourth and Tenth Circuits disagree.  Thus, it is surprising that the Supreme Court did not accept the opportunity to resolve the circuit split.  Although the Supreme Court denied the writ of certiorari, there is no indication that the Supreme Court agrees with the Eighth Circuit’s holding. Rather, the denial simply means that the justices concluded that the circumstances described in the Charvat petition were not sufficient to warrant review. Accordingly, the divide amongst the circuits remains and Charvat is binding precedent only in the Eighth Circuit.

For more information on the Charvat case, please contact Katherine Olson at (312) 334-3444 or kolson@messerstrickler.com.