A procedural violation of a state’s privacy statute is not alone enough to establish Article III standing—a plaintiff must suffer a concrete injury, such as an increased risk of identity theft.  The Fourth Circuit’s decision in O’Leary v. TrustedID, Inc., 2023 WL 2125996 (4th Cir. Feb. 21, 2023) confirms this—but also illustrates how Article III standing is a two-edged sword that may allow a plaintiff to defeat a defendant’s attempt to remove a case to federal court. 

The plaintiff in O’Leary filed a class action against TrustedID in South Carolina state court for allegedly violating South Carolina’s Financial Identity Fraud and Identity Theft Protection Act, S.C. Code Ann. § 37-20-180.  The statute prohibits requiring consumers to use six or more digits of their Social Security numbers to access a website without also requiring some other authentication measure.  The plaintiff alleged that TrustedID’s website required him to provide six digits of his Social Security number and did not have any other safety precautions, such as a password requirement.

TrustedID removed the suit to federal court under the Class Action Fairness Act.  While TrustedID’s motion to dismiss was pending, the plaintiff filed a motion asking the court to decide whether he had Article III standing to bring his claims in light of TransUnion LLC v. Ramirez, 141 S. Ct. 2190 (2021), which had been recently decided.  The district court held that the plaintiff had standing, but it dismissed the case on the merits.

The Fourth Circuit reversed the district court’s ruling on standing and ordered that the case be remanded back to state court.  In the court’s view, the plaintiff lacked standing because he could not establish that entering six digits of his Social Security number—as opposed to five—meaningfully raised the risk of identity theft.  The court also rejected the argument that the plaintiff could establish standing based solely on an abstract privacy interest in his Social Security number.  Intangible harms are sufficient to confer standing if they bear a close relationship to a traditional or common law analog—such as “intrusion upon seclusion” or “disclosure of private information.”  But the court held that neither of those analogs was relevant because the plaintiff voluntarily disclosed his Social Security number to TrustedID.

Importantly, the Fourth Circuit’s decision did not result in a dismissal of the plaintiff’s claim—its decision addressed only federal jurisdiction, not the merits—so the outcome was an order that the case be remanded to state court.

The Fourth Circuit’s decision confirmed that a plaintiff seeking to present a claim in federal court premised on violations of state privacy statutes must show a more concrete harm than merely the fact that the statute was violated.  However, as this decision illustrates, the benefits of this standing doctrine do not flow in just one direction:  plaintiffs may be able to rely on lack of federal standing to protect their choice of a state forum.

Tags: Data Privacy, Litigation
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Photo of Sonya Winner Sonya Winner

A litigator with three decades of experience, Sonya Winner handles high-stakes civil cases for clients in a wide range of industries, including banking, pharmaceuticals and professional sports. She has handled numerous antitrust and consumer disputes, many of them class actions, in state and…

A litigator with three decades of experience, Sonya Winner handles high-stakes civil cases for clients in a wide range of industries, including banking, pharmaceuticals and professional sports. She has handled numerous antitrust and consumer disputes, many of them class actions, in state and federal courts across the country.

Sonya’s cases typically involve difficult technical issues and/or complex legal and regulatory schemes. She is regularly able to resolve cases before the trial phase, often through dispositive motions. But when neither summary judgment nor a favorable settlement is an option, she has the confidence of her clients to take the case all the way through trial and on appeal. Her recent successes have included a cutting-edge decision rejecting a “true lender” challenge to National Bank Act preemption in a class action involving interest rates on student loans, as well as the outright dismissal of a putative antitrust claim against the National Football League and its member clubs asserting an unlawful conspiracy to fix cheerleader compensation.

Sonya has been recognized as a leading trial lawyer by publications like Chambers and the Daily Journal. She is chair of the firm’s Class Action Litigation Practice Group.

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Photo of Andrew Soukup Andrew Soukup

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which…

Andrew Soukup has a wide-ranging complex litigation practice representing highly regulated businesses in class actions and other high-stakes disputes. He has built a successful record of defending clients from consumer protection claims asserted in class-action lawsuits and other multistate proceedings, many of which were defeated through dispositive pre-trial motions.
Andrew is co-chair of the firm’s Class Action Litigation practice group.

Andrew has helped his clients achieve successful outcomes at all stages of litigation, including through trial and appeal. He has helped his clients prevail in litigation against putative class representatives, government agencies, and commercial entities. Representative victories include:

  • Delivered wins in multiple nationwide class actions on behalf of large financial companies related to fees, disclosures, and other banking practices, including the successful defense of numerous lenders accused of violating the Paycheck Protection Program’s implementing laws, which contributed to Covington’s recent recognition as a “Class Action Group Of The Year.”
  • Successfully defending several of the nation’s leading financial institutions in a wide variety of litigation and arbitration proceedings involving alleged violations of RICO, FCRA, TILA, TCPA, FCBA, ECOA, EFTA, FACTA, and state consumer protection and unfair and deceptive acts or practices statutes, as well as claims involving breach of contract, fraud, unjust enrichment, and other torts.
  • Successfully defended several of the nation’s leading companies and brands from claims that they deceptively marketed their products, including claims brought under state consumer protection and unfair deceptive acts or practices statutes.
  • Obtained favorable outcomes for numerous clients in commercial disputes raising contract, fraud, and other business tort claims.

Because many of Andrew’s clients are subject to extensive federal regulation and oversight, Andrew has significant experience successfully invoking federal preemption to defeat litigation.

Andrew also advises clients on their arbitration agreements. He has successfully helped numerous clients avoid multi-district class-action litigation by successfully enforcing the institutions’ arbitration agreements.

Clients praise Andrew for his personal attention to their matters, his responsiveness, and his creative strategies. Based on his “big wins in his class action practice,” Law360 named Mr. Soukup a “Class Action Rising Star.”

Prior to practicing law, Andrew worked as a journalist.

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Photo of Jonah Panikar Jonah Panikar

Jonah Panikar is an associate in the firm’s Washington, DC office. He is a member of the Litigation and Investigations and Class Actions Practice Groups.

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