Dr. David S. Muransky v. Godiva Chocolatier, Inc.

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[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 16-16486; 16-16783
________________________
D.C. Docket No. 0:15-cv-60716-WPD
DR. DAVID S. MURANSKY,
individually and on behalf of all others similarly situated,
Plaintiff - Appellee,
JAMES H. PRICE,
ERIC ALAN ISAACSON,
Interested Parties - Appellants,
versus
GODIVA CHOCOLATIER, INC.,
a New Jersey corporation,
Defendant - Appellee.
________________________
Appeals from the United States District Court
for the Southern District of Florida
________________________
(October 3, 2018)
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Before MARTIN, JORDAN, and GINSBURG, * Circuit Judges.
MARTIN, Circuit Judge:
This appeal was brought to contest the approval of a class-action settlement.
Dr. David Muransky filed a class action against Godiva Chocolatier, Inc. for
violating the Fair and Accurate Credit Transactions Act (“FACTA”). Appellants
James Price and Eric Isaacson (“the objectors”) objected to a class settlement
reached by Dr. Muransky and Godiva. Over their objections, the District Court
approved the settlement, class counsel’s request for attorney’s fees, and an
incentive award for Dr. Muransky. After careful review and with the benefit of
oral argument, we affirm.
I. Background
In April 2015, Dr. Muransky filed a class action against Godiva for allegedly
violating FACTA. FACTA prohibits merchants from printing “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). The
operative complaint alleges that after Dr. Muransky made a purchase at a Godiva
store, Godiva gave him a receipt that showed his credit card number’s first six and
last four digits. Dr. Muransky sought to represent a class of customers whose
*
Honorable Douglas H. Ginsburg, United States Circuit Judge for the District of
Columbia Circuit, sitting by designation.
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credit card numbers Godiva printed on receipts in violation of FACTA. These
violations, the complaint says, exposed Dr. Muransky and the class “to an elevated
risk of identity theft.” According to the complaint, Godiva’s violation of FACTA
was willful, so the class was entitled to statutory and punitive damages, as well as
attorney’s fees and costs. See id. § 1681n(a).
Godiva moved to dismiss the complaint on the ground that it did not
plausibly allege a willful violation of FACTA. The District Court denied Godiva’s
motion. After that, the parties engaged in discovery then mediated the case. In
late November 2015, the parties notified the court of an agreement in principle to
settle the case on a class-wide basis. They requested a stay, which the court
granted.
Two months after that request, Dr. Muransky moved for preliminary
approval of the class-action settlement. He explained that the parties agreed to a
settlement fund of $6.3 million from which all fees, costs, and class members
would be paid. He estimated that class members who submitted a timely claim
form would receive around $235 as their pro-rata share of the settlement fund.
None of the money would revert to Godiva. Dr. Muransky indicated he intended
to apply for an incentive award of up to $10,000 and that class counsel would
move for an award of attorney’s fees of up to one-third of the settlement fund,
which would be $2.1 million.
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In this motion, Dr. Muransky also argued that the amount class members
would recover by submitting a claim compared favorably to their possible recovery
had the case proceeded to trial. FACTA provides for a combination of actual and
statutory damages. 15 U.S.C. § 1681n(a). For statutory damages, FACTA
provides for an award of $100 to $1,000 for each violation. Id. § 1681n(a)(1)(A).
Given the nature of the violation, Dr. Muransky acknowledged there was “a good
chance” each class member would recover the $100 minimum statutory damage
award if the case went to trial. At the fairness hearing, the District Court agreed
with Dr. Muransky’s assessment, saying it was reasonable for class counsel to have
estimated that class members “could [receive] more than double what the class
members could get if they went to trial and won the case.”
Dr. Muransky’s motion also addressed some of the risks that favored pre-
trial settlement. Most notably, Dr. Muransky pointed to two cases then pending
before the Supreme Court: Spokeo, Inc. v. Robins, 578 U.S. ___, 136 S. Ct. 1540
(2016), on Article III standing, and Tyson Foods, Inc. v. Bouaphakeo, 577 U.S.
___, 136 S. Ct. 1036 (2016), on class certification under Federal Rule of Civil
Procedure 23(b)(3). The outcomes of those two cases, which at the time were
uncertain, posed serious risks to the class members’ ability to pursue FACTA
claims against Godiva. Dr. Muransky also acknowledged the difficulty of proving
the “willfulness” of Godiva’s FACTA violation, which the District Court also
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discussed at the fairness hearing. Without proving “willfulness,” the class would
not be entitled to statutory damages. See 15 U.S.C. § 1681n(a).
The motion for preliminary approval also contained a proposed class notice
and a proposed schedule of notice, opt-out, and motion deadlines. The proposed
notice said Dr. Muransky would seek an incentive award of up to $10,000 “for his
work in representing the class” and that class counsel would seek up to $2.1
million in attorney’s fees. The District Court granted the motion for preliminary
approval, certified the class under Rule 23(b)(3), and approved the form of notice.
Under the preliminary approval order, class members who wanted to be excluded
from the settlement were required to give written notice of exclusion to the claims
administrator. Those who failed to submit an opt-out certification would be
included in the settlement class and bound by its terms. Then to get money from
the settlement fund, class members had to file a claim form with the claims
administrator. Class members could also file objections, which the court would
consider as part of its determination of whether the settlement was fair. After
extensions by the District Court, the final deadline for class members to submit
claims, object, or opt-out was August 23, and the deadline for Dr. Muransky to
move for final settlement approval was September 9.
Notice of the settlement was sent to 318,000 class members and over 47,000
submitted claim forms. Only fifteen class members opted out. Five class
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members, including Mr. Price and Mr. Isaacson, objected to the settlement. In
their objections, Mr. Price and Mr. Isaacson said they are members of the
settlement class and that they timely submitted claim forms. Among other
arguments, they said notice of Dr. Muransky’s attorney’s fee motion was
inadequate under Rule 23(h); the court should subject any attorney’s fee award to a
lodestar analysis; and a $10,000 incentive award was not warranted.
On September 7, Dr. Muransky moved for final approval of the class
settlement and requested an award of $2.1 million in attorney’s fees as well as
$10,000 as an incentive award. At the court’s direction, Dr. Muransky filed a
separate motion for attorney’s fees and expenses. The Magistrate Judge issued a
report and recommendation (“R&R”) on the attorney’s fee motion just four days
later, before the objectors filed opposition briefs. The R&R recommended that the
District Court grant the motion and award the full amount of $2.1 million.
Although the R&R was issued before the objectors filed opposition briefs, the
Magistrate Judge considered Mr. Price’s and Mr. Isaacson’s previously filed
objections to the settlement. In addition, soon after the R&R was issued, the
objectors filed briefs in opposition to the motion for attorney’s fees. They later
filed objections to the R&R as well.
On September 21, the District Court held a fairness hearing, during which
objectors’ counsel made their case. During the hearing, Mr. Isaacson’s counsel
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raised standing as a new objection, saying that the court needed to decide whether
Dr. Muransky had Article III standing. Soon after the hearing, the District Court
approved the settlement and awarded the incentive award and attorney’s fees to Dr.
Muransky and class counsel respectively. In response to the objectors’ argument
that notice was not adequate, the District Court noted it had “permitted objections
to be filed both before and after” the motion for attorney’s fees was filed and that
“meaningful objections were in fact filed both before and after the filing” of that
motion. The court said it had reviewed the class members’ objections to the R&R
de novo, “taken them into full consideration,” and “carefully analyzed” them. The
court then found that the requested attorney’s fees were reasonable and awarded
$2.1 million, one-third of the settlement fund, in fees. The Court also granted the
$10,000 incentive award for Dr. Muransky’s “efforts in this case.”
The objectors appealed. They say the District Court abused its discretion by
finding that the notice satisfied Rule 23(h), by awarding $2.1 million in attorney’s
fees, and by awarding $10,000 as an incentive to Dr. Muransky. Mr. Isaacson
raises a fourth issue: he challenges Dr. Muransky’s Article III standing to pursue a
FACTA claim against Godiva. Before addressing those arguments, we consider
the objectors’ ability to make them on appeal. We then consider the merits of the
arguments properly before us.
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II. Jurisdiction
A. The objector’s right to appeal
The Supreme Court has held “only parties to a lawsuit, or those that properly
become parties, may appeal an adverse judgment.” Marino v. Ortiz, 484 U.S. 301,
304, 108 S. Ct. 586, 587 (1988) (per curiam). We start by deciding whether
objectors like Mr. Price and Mr. Isaacson are “parties” with the ability to appeal
from a district court’s judgment. We hold that they are.
In Devlin v. Scardelletti, 536 U.S. 1, 122 S. Ct. 2005 (2002), the Supreme
Court addressed whether a nonnamed class member who timely objects to a
settlement agreement but does not opt out is a “party for the purposes of appealing
the approval of the settlement.” Id. at 7, 122 S. Ct. at 2009 (quotation marks
omitted). The Court held that nonnamed class members who are bound by a
judgment must “be allowed to appeal the approval of a settlement when they have
objected at the fairness hearing.” Id. at 10, 122 S. Ct. at 2011. “To hold
otherwise,” the Court explained, “would deprive nonnamed class members of the
power to preserve their own interests in a settlement that will ultimately bind them,
despite their expressed objections before the trial court.” Id.
Devlin addressed a mandatory settlement class, but not whether objectors to
a Rule 23(b)(3) settlement who can opt out of a settlement also are “parties” that
can appeal. See id. at 10–11, 122 S. Ct. at 2011 (noting that appeal was the
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objectors’ only option because they could not opt out of the settlement). Since
Devlin, the only circuit courts of appeal to have decided this issue have held that
class members who object to a Rule 23(b)(3) settlement but do not opt out are
“parties” for purposes of appeal. 1 Generally, these courts reason that Devlin “is
about party status and one who could cease to be a party is still a party until opting
out.” Nat’l Ass’n of Chain Drug Stores, 582 F.3d at 40. In AAL High Yield Bond
Fund v. Deloitte & Touche LLP, 361 F.3d 1305 (11th Cir. 2004), this Court ruled
that objectors who were not class members could not appeal because they were not
“parties who are actually bound by a judgment.” Id. at 1310. Yet at the same time,
we know that actual class members who object but do not opt out of a Rule
23(b)(3) class settlement are still bound by the judgment approving the class
settlement. See Amchem Prods., Inc. v. Windsor, 521 U.S. 591, 614–15, 117 S.
Ct. 2231, 2245 (1997). With all of this in mind, we conclude that class members
who object to Rule 23(b)(3) class settlements but do not opt out are “parties” for
purposes of appeal. Mr. Price and Mr. Isaacson are therefore proper parties.
B. Article III standing
“We review our subject matter jurisdiction de novo.” Day v. Persels &
Assocs., LLC, 729 F.3d 1309, 1316 (11th Cir. 2013). Article III of the
1
Nat’l Ass’n of Chain Drug Stores v. New England Carpenters Health Benefits Fund,
582 F.3d 30, 39–40 (1st Cir. 2009); Fidel v. Farley, 534 F.3d 508, 512–13 (6th Cir. 2008);
Churchill Vill., LLC v. Gen. Elec., 361 F.3d 566, 572–73 (9th Cir. 2004); In re Integra Realty
Res., Inc., 354 F.3d 1246, 1257–58 (10th Cir. 2004).
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Constitution limits our jurisdiction to “cases” or “controversies.” Standing is one
of the essential components of Article III’s case or controversy requirement. Lujan
v. Defs. of Wildlife, 504 U.S. 555, 560, 112 S. Ct. 2130, 2136 (1992). Standing, in
turn, has “three elements: injury in fact, causation, and redressability.” Nicklaw v.
Citimortgage, Inc., 839 F.3d 998, 1001 (11th Cir. 2016). An injury in fact must be
concrete, particularized, and actual or imminent. Lujan, 504 U.S. at 560, 112 S.
Ct. at 2136. Mr. Isaacson argues that Dr. Muransky has not alleged a concrete
injury in fact that confers Article III standing under the Supreme Court’s decision
in Spokeo, 136 S. Ct. at 1548. We have concluded to the contrary.
To determine whether a statutory violation results in a concrete injury, we
consider both “history and the judgment of Congress.” Id. at 1549. More
specifically, we look to whether the intangible harm that results from the statutory
violation bears a “close relationship” to harms that have “traditionally been
regarded as providing a basis for a lawsuit in English or American courts.” Id.
And we consider the judgment of Congress because it “is well positioned to
identify intangible harms that meet minimum Article III requirements.” Id.
But before we get ahead of ourselves, we stop to examine the duties imposed
and the rights conferred by FACTA. FACTA, which is an amendment to the Fair
Credit Reporting Act, “is aimed at protecting consumers from identity theft.”
Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1306 (11th Cir. 2009). To
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do that, FACTA imposes a duty on merchants “that accept[] credit cards or debit
cards for the transaction of business” not to “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). FACTA authorizes
customers to bring private actions against merchants that willfully or negligently
violate this duty. 15 U.S.C. §§ 1681n(a); 1681o(a). A merchant willfully violates
FACTA by acting in knowing violation of its statutory duties or by acting in
reckless disregard of those duties. See Safeco Ins. Co. of Am. v. Burr, 551 U.S.
47, 57–58, 127 S. Ct. 2201, 2208–09 (2007). For willful violations, customers
may recover actual damages or statutory damages from $100 to $1000, and
punitive damages. 15 U.S.C. § 1681n(a)(1), (a)(2); Safeco, 551 U.S. at 53, 127 S.
Ct. at 2206. Customers can recover statutory damages for willful violations even if
they cannot show their identity was stolen or credit impacted, 15 U.S.C.
§ 1681n(a), and even if they received and kept the defective receipt. Engel v.
Scully & Scully, Inc., 279 F.R.D. 117, 125–26 (S.D.N.Y. 2011). By contrast,
when the violation is a result of negligence, customers can only recover their actual
damages as well as attorney’s fees. 15 U.S.C. § 1681o(a); Engel, 279 F.R.D. at
125–26.
Dr. Muransky alleged that Godiva willfully violated its duty not to print
more than five digits of his credit card number on a receipt. See 15 U.S.C.
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§§ 1681c(g)(1), 1681n(a). We must therefore examine whether a merchant’s
willful violation of FACTA’s card-truncation duties and any resulting harms bears
a “close relationship” to causes of action recognized at common law. See Spokeo,
136 S. Ct. at 1549. This court has made similar inquiries, analogizing to common
law causes of actions in three cases decided since Spokeo. In Perry v. Cable News
Network, Inc., 854 F.3d 1336 (11th Cir. 2017), we held that the violation of the
Video Privacy Protection Act conferred standing based in part on an analogy
between the private right of action created by the Act and the common law tort of
intrusion upon seclusion. Id. at 1341. Likewise, Pedro v. Equifax, Inc., 868 F.3d
1275 (11th Cir. 2017) analogized the violation of the Fair Credit Reporting Act
based on reporting inaccurate credit information to the tort of defamation. Id. at
1279–80. Conversely, in Nicklaw, this Court rejected the plaintiff’s attempt to
analogize his statutory cause of action for the failure to timely record a (since
recorded) satisfaction of mortgage to a common law quiet title action. 839 F.3d at
1002–03.
Here, Godiva’s disclosure of Dr. Muransky’s credit card number is similar to
the common law tort of breach of confidence. See Alicia Solow-Niederman,
Beyond the Privacy Torts: Reinvigorating a Common Law Approach for Data
Breaches, 127 Yale L.J. F. 614, 624–26 (2018) (arguing that data breaches
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resemble the common law tort of breach of confidence).2 Typical breach of
confidence cases involve a customer entrusting formulas, letters, or images to a
trusted person, including merchants, who would without permission disclose these
items to other people, or to the public, or use them for personal gain. See Richards
& Solove, 96 Geo. L.J. at 135–38 (collecting cases); cf. United States v. O’Hagan,
521 U.S. 642, 652–55, 117 S. Ct. 2199, 2207–08 (1997) (establishing the
misappropriation theory of insider trading based on similar principles). An
important difference between the breach of confidence tort and privacy torts is the
identification of the harm. In privacy suits, the harm is usually construed in terms
of exposure, “with an emphasis on publication as the cause of the harm.” Solow-
Niederman, 127 Yale L.J. F. at 621; see, e.g., Peterson v. Idaho First Nat. Bank,
367 P.2d 284, 286–88 (Idaho 1961) (rejecting a tort claim because disclosure of a
customer’s bank records to his employer did not amount to public disclosure for
purposes of the right to privacy). But in breach of confidence cases, the harm
happens when the plaintiff’s trust in the breaching party is violated. See
2
The tort of breach of confidence was recognized at the time of the country’s founding
but has rarely been used because of the development of modern privacy torts. Neil M. Richards
& Daniel J. Solove, Privacy’s Other Path: Recovering the Law of Confidentiality, 96 Geo. L.J.
123, 135–38, 156–58 (2007); see also Pavesich v. New England Life Ins. Co., 50 S.E. 68, 68–69,
75 (Ga. 1905) (describing how privacy torts in the United States and England before 1890 were
“founded upon a supposed right of property, or a breach of trust or confidence, or the like”);
Samuel D. Warren & Louis D. Brandeis, The Right to Privacy, 4 Harv. L. Rev. 193, 207–08
(1890) (describing cases “where protection has been afforded against wrongful publication . . .
upon the ground of an alleged breach of an implied contract or of a trust or confidence”).
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McCormick v. England, 494 S.E.2d 431, 437–38 (S.C. Ct. App. 1997)
(distinguishing privacy torts from breach of confidence). Under this view, when a
customer uses a credit card to make purchases, he entrusts the merchant with his
card number and his trust is violated when that card number is not kept
confidential.
The willful violation of FACTA’s card-truncation duty also resembles a
modern version of a claim for breach of an implied bailment agreement. The
common law has often implied a bailment agreement when a merchant holds a
customer’s property as a necessary incident to the merchant’s business. Woodruff
v. Painter, 24 A. 621, 622 (Pa. 1892) (holding a shop could be liable for a watch
that went missing while a customer tried on a suit); Bunnell v. Stern, 25 N.E. 910
(N.Y. 1890) (holding a shop could be liable for a customer’s missing cloak).
When a bailment relationship is implied, the merchant has a duty to protect the
customer’s property from damage, loss, or theft. See, e.g., Armored Car Serv., Inc.
v. First Nat. Bank of Miami, 114 So. 2d 431, 434 (Fla. 3d DCA 1959) (describing
the rule that an implied bailment for the mutual benefit of both parties imposes a
duty on the bailee to avoid ordinary negligence). A bailee is also obligated to
return the bailor’s property in a time, place, and manner proscribed by agreement
or “by the nature of the objective to be accomplished by the bailment.” See 8A
Am. Jur. 2d Bailments § 134. Viewed through a bailment lens, Godiva is a bailee
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of Dr. Muransky’s credit card information and, if returned on a printed receipt, has
a duty to return it without displaying “more than the last 5 digits of the card
number.” See 15 U.S.C. § 1681c(g); cf. Carpenter v. United States, 585 U.S. ___,
138 S. Ct. 2206, 2269 (2018) (Gorsuch, J., dissenting) (describing how “ancient
principles” from bailment cases “may help us address modern data cases too”); Ian
Samuel, Carpenter and the Property Vocabulary, Harv. L. Rev. Blog (Dec. 8 2017),
https://blog.harvardlawreview.org/carpenter-and-the-property-vocabulary/.
These common law torts bear a “close relationship” to the statutory cause of
action authorized by Congress. By passing FACTA, Congress expressed its
judgment that prohibiting merchants from printing more than five digits of a
customer’s credit card number would “reduce identity theft and credit card fraud.”
Credit and Debit Receipt Clarification Act of 2007, Pub. L. 110-241, § 2(a)(6), 122
Stat. 1565, 1565. To achieve its goals, Congress established a duty of care for
merchants that print receipts and defined that duty as requiring printing no more
than five digits of customers’ credit card numbers. See 15 U.S.C. § 1681c(g)(1).
Congress also made willful violations of that duty actionable, even when the
customer owed that duty had suffered no actual damages. Id. § 1681n(a)(1)(A).
We can infer from these two provisions that Congress conceived of the harm as
happening when the merchant provides a customer with an untruncated receipt.
See In re Horizon Healthcare Servs. Inc. Data Breach Litig., 846 F.3d 625, 639 (3d
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Cir. 2017) (Congress “allowed for statutory damages for willful violations—which
clearly illustrates that Congress believed that the violation of FCRA causes a
concrete harm to consumers.”); see also Palm Beach Golf Ctr.-Boca, Inc. v. John
G. Sarris, D.D.S., P.A., 781 F.3d 1245, 1251 (11th Cir. 2015) (observing that
Congress’s creation of legal rights that satisfy Article III standing “may be inferred
from conduct prohibited” by statute). Thus, the structure and purpose of FACTA
show that it provides customers the right to enforce the nondisclosure of their
untruncated credit card numbers, similar to the rights and harms asserted in breach
of confidence cases. 3 The resulting harm from the statute’s violation is “concrete
in the sense that it involves a clear de facto injury, i.e., the unlawful disclosure of
legally protected information.” See In re Nickelodeon Consumer Privacy Litig.,
827 F.3d 262, 274 (3d Cir. 2016). 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. See Perry, 854 F.3d
at 1340.4
3
Because the harm suffered when a merchant prints untruncated credit card information
is like a breach of confidence or the breach of an implied bailment agreement, we reject the
reasoning of courts that only compare FACTA claims to privacy torts. See, e.g., Gesten v.
Burger King Corp., No. 17-22541, 2017 WL 4326101, at *5 (S.D. Fla. Sept. 27, 2017).
4
In this way, Dr. Muransky also satisfies Justice Thomas’s injury-in-fact test. Spokeo,
136 S. Ct. at 1550 (Thomas, J., concurring). Justice Thomas’s test focuses on the distinction
between a plaintiff’s enforcement of private rights versus public rights. Id. For “plaintiff[s]
seeking to vindicate a statutorily created private right,” Justice Thomas concluded they “need not
allege actual harm beyond the invasion of that private right.” Id. at 1553. Justice Thomas
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We recognize there are some differences between these common law causes
of action and the willful violation of FACTA’s card-truncation duties. For
instance, in the bailment context, there is usually tangible harm to property. Also,
these common law torts usually are complete after the person entrusted with
property or information gives it to a third party or uses it for their own personal
gain. But the point is not that Dr. Muransky’s harm would have been actionable at
common law. The inquiry under Spokeo is whether the alleged harm bears a
“close relationship” to one actionable at common law. See Spokeo, 136 S. Ct. at
1549. And even when the harm that results from violation of the statute differs
somewhat from a harm recognized at common law, Congress “has the power to
define injuries and articulate chains of causation that will give rise to a case or
controversy where none existed [at common law] before.” Spokeo, 136 S. Ct. at
1549 (quotation marks omitted). We conclude any differences between the
common law torts discussed above and the FACTA cause of action are an example
supported the Court’s decision to remand in Spokeo for the lower courts to consider whether
“Congress ha[d] created a private duty owed personally to [the plaintiff] to protect his
information,” in which case, “the violation of the legal duty suffices for Article III injury in
fact.” Id. at 1554.
Here, FACTA imposes on merchants a duty to protect customers’ credit card information,
and customers have a private right to enforce FACTA duties that merchants owe personally to
them. See 15 U.S.C. §§ 1681c(g)(1), 1681n(a); see also Palm Beach,781 F.3d at 1252
(recognizing that the Telephone Consumer Protection Act created a “cognizable right” that
recipients of junk faxes can enforce). This satisfies the test articulated by Justice Thomas in
Spokeo, 136 S. Ct. at 1553–54.
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of Congress’s use of this power.
When the violation of a statute creates a concrete injury, as it does here,
plaintiffs do not need to allege “additional harm beyond the one Congress has
identified.” Spokeo, 136 S. Ct. at 1549. But in this case, Dr. Muransky also pled
that he received the receipt from Godiva and all indications are that he still has it.
This has imposed an additional burden on him. When merchants breach their
truncation duty, customers like Dr. Muransky must use their time (and wallet
space) to safely dispose of or keep the untruncated receipt so as to avoid someone
finding their credit card number on their receipt. This Court has held that this type
of time wasting constitutes an injury in fact. See Palm Beach Golf, 781 F.3d at
1251–52 (holding that plaintiff suffered an injury in fact when unsolicited faxes
electronically occupied plaintiff’s telephone line and fax machine for one minute);
Common Cause/Georgia v. Billups, 554 F.3d 1340, 1351 (11th Cir. 2009) (holding
that the time it took to get an acceptable photo ID was sufficient to confer
standing); id. at 1351–52 (holding that requiring someone to show a photo ID to
vote is a sufficient injury); Fla. State Conference of NAACP v. Browning, 522
F.3d 1153, 1165 (11th Cir. 2008) (holding that the diversion of time and resources
to counteract an unlawful action can satisfy the injury-in-fact requirement). Thus,
in the context of FACTA, Dr. Muransky suffered a concrete injury when Godiva
provided him with a receipt containing his untruncated credit card number, and he
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had to “shoulder the cost” of protecting it. See Florence Endocrine Clinic, PLLC
v. Arriva Med., LLC, 858 F.3d 1362, 1366 (11th Cir. 2017). Time spent safely
disposing of or keeping the untruncated receipt is, of course, a small injury, but it
is enough for standing purposes. See Common Cause, 554 F.3d at 1351 (“The
Supreme Court has rejected the argument that an injury must be significant; a small
injury, an identifiable trifle, is sufficient to confer standing.” (quotation marks
omitted)). Thus, when Godiva unlawfully gave an untruncated receipt to Dr.
Muransky, he suffered the concrete injury of shouldering the cost of safely keeping
or destroying the receipt.
Our holding that Dr. Muransky alleged a concrete injury is in keeping with
the decisions of the Second, Seventh, and Ninth Circuits. See Bassett v. ABM
Parking Servs., Inc., 883 F.3d 776 (9th Cir. 2018); Crupar-Weinmann v. Paris
Baguette Am., Inc., 861 F.3d 76 (2d Cir. 2017); Meyers v. Nicolet Rest. of De
Pere, LLC, 843 F.3d 724 (7th Cir. 2016). In those cases, customers alleged they
suffered a risk of identity theft because merchants printed receipts that included the
customers’ credit card expiration date, a violation of FACTA, 15 U.S.C.
§ 1681c(g). See Bassett, 883 F.3d at 777; Crupar-Weinmann, 861 F.3d at 78;
Meyers, 843 F.3d at 725. But well before those decisions, Congress had passed the
Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, 122
Stat. 1565 (2008). The Clarification Act’s findings say that “[e]xperts in the field
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agree that proper truncation of the card number, . . . regardless of the inclusion of
the expiration date, prevents a potential fraudster from perpetrating identity theft or
credit card fraud.” Id. (emphasis added). For this reason, the Clarification Act
gave amnesty from liability to merchants who printed an expiration date on a
customer’s receipt but otherwise complied with FACTA before passage of the Act.
Id. § 3(a), 15 U.S.C. § 1681n(d). The decisions of our sister circuits all rely on the
Clarification Act to hold that Congress does not consider an untruncated expiration
date alone to be harmful. See Bassett, 883 F.3d at 781 (“Far from ‘elevating’
expiration date violations, the Clarification Act suggests that alleged injuries like
Bassett’s are not concrete.”); Crupar-Weinmann, 861 F.3d at 78 (“Guided by
unambiguous statutory language that a receipt with a credit card expiration date
does not raise a material risk of identity theft, . . . we conclude that allegations in
her amended complaint do not satisfy the injury-in-fact requirement . . . .”);
Meyers, 843 F.3d at 727 (“Congress has specifically declared that failure to
truncate a card’s expiration date, without more, does not heighten the risk of
identity theft.”).
Here, Godiva printed the first six and last four digits of Dr. Muransky’s
credit card number without its expiration date. In contrast to the findings about
expiration dates, the Clarification Act’s findings also say that “proper truncation of
the card number . . . prevents a potential fraudster from perpetuating identity theft
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or credit card fraud.” Clarification Act § 2(a)(6). Based on the Clarification Act’s
findings and the cause of action authorized by FACTA, Congress created
actionable rights in customers against merchants that provide customers with
receipts containing untruncated credit card numbers.
This case is also distinguishable from the Second Circuit’s decision in Katz
v. Donna Karan Co., 872 F.3d 114, 116 (2d Cir. 2017) for two reasons. First, Katz
did not consider whether the FACTA violation was comparable to a breach of
confidence tort or the breach of an implied bailment agreement. Second, Katz
addressed a factual challenge to standing, and gave deference to district court fact-
findings. Here, we address a facial challenge.
In Katz, the Second Circuit found no clear error in a district court’s
dismissal of a FACTA suit for lack of standing. Id. at 116. In the district court,
the defendant presented evidence that the first six digits of a credit card number
identify only the card’s issuer and reveal nothing about the consumer. Id. at 118–
19. By contrast, the Katz plaintiff asserted that the “more digits revealed, the more
vulnerable a card number may be to a brute force cryptological attack.” Id. at 120
(quotation marks omitted). In spite of the plaintiff’s argument, the district court
found no risk of harm to the consumer because the publication of the first six digits
of a credit card number did not create a material risk of injury. Id. at 116. Based
on this finding of fact, the Second Circuit affirmed, “conclud[ing] that the district
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court did not clearly err in finding that the bare procedural violation in question did
not raise a material risk of harm of identity theft.” Katz , 872 F.3d at 121. But the
Second Circuit emphasized that it was not “resolv[ing] whether other procedural
violations of FACTA should or will meet a similar outcome, a question for lower
courts to determine in the first instance, on a case- and fact- specific basis.” Id.
Despite this admonition to consider future FACTA standing based on the case and
facts of each distinct case, many district courts have incorporated the fact findings
from Katz into its legal analysis that FACTA violations do not create a concrete
injury. In this way, these courts have transformed the fact-findings of a single
district court into a bright-line, no-standing rule. See, e.g., Tarr v. Burger King
Corp., No. 17-23776, 2018 WL 318477, at *3 (S.D. Fla. Jan. 5, 2018) (collecting
cases).5
There are a number of problems with relying on facts found in another
FACTA case to say Dr. Muransky does not have standing here. For one, the Katz
5
Some of these same courts also say Congress could not have thought disclosure of the
first six digits (the digits that identify the card-issuing bank) posed a risk because Congress did
not also prohibit printing the name of the bank on the receipt. See, e.g., Noble v. Nevada
Checker Cab Corp., 726 F. App’x 582, 584 (9th Cir. 2018) (unpublished memorandum
disposition).
No court has considered whether the congressional record reflects that a rash of
merchants were printing the name of the card-issuing bank on customers’ receipts before the
passage of FACTA. Congress’s decision to regulate printing more than the last five digits of a
credit card number may well have been rationally related to the problem that was “acute to the
legislative mind.” Williamson v. Lee Optical of Oklahoma Inc., 348 U.S. 483, 489, 75 S. Ct.
461, 465 (1955). Just because Congress did not also prohibit printing the issuing bank’s name
does not mean we can infer Congress did not consider printing the first six digits to be risky.
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plaintiff may have done a poor job at proving standing as a factual matter and
therefore findings against him should not preclude standing for others. See Katz,
872 F.3d 121 (“The plaintiff did not seek the opportunity to supplement the record
with additional evidence after defendants included in their motion papers extrinsic
evidence suggesting that printing the [issuer identification number] did not
increase the risk of harm.”); see also id. at 121 (noting that “in some
circumstances, a fact-finding hearing with expert witness testimony may very well
be appropriate [to decide standing], depending on the novelty of the issue, the
extent of the material dispute of facts, and the statutory prohibition in question.”).
Adverse findings in a single case generally do not bind people who were not
parties or privies to parties to it. See Blonder-Tongue Labs., Inc. v. Univ. of Ill.
Found., 402 U.S. 313, 329, 91 S. Ct. 1434, 1443 (1971). This rule applies “with
equal force to questions of jurisdiction,” including standing. See Underwriters
Nat’l Assur. Co. v. N.C. Life & Acc. & Health Ins. Guar. Ass’n, 455 U.S. 691,
706–07 & n.13, 102 S. Ct. 1357, 1367 & n.13 (1982).
Another problem with developing bright-line FACTA-standing rules based
on facts found in other cases relates to variations in the amount of risk related to
different disclosures or data breaches in light of evolving technology. The idea
that the first six digits do not pose a risk of identity theft appears to have its origin
in expert reports and declarations by Mari Frank in 2007 and 2008. See Bateman
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v. Am. Multi-Cinema, Inc., 252 F.R.D. 647, 651 (C.D. Cal. 2008), rev’d and
remanded, 623 F.3d 708 (9th Cir. 2010); Lopez v. KB Toys Retail, Inc., 2:07–cv–
00144, Dkt. No. 28 at 5 (C.D. Cal. July 17, 2007). In these cases, Frank opined
that disclosing the first four to six digits of a credit card number do not pose a risk
because “the mathematical probability” of guessing “the remainder of the digits
necessary to complete a transaction is miniscule, either 10,000,000:1 or
100,000,000:1.” Bateman, 252 F.R.D. at 651. The same expert opinion was
adopted by another district court in 2010. See In re Toys “R” Us - Delaware, Inc.
- Fair & Accurate Credit Transactions Act (FACTA) Litig., No. CV 06-08163
MMM FMOX, 2010 WL 5071073, at *12 (C.D. Cal. Aug. 17, 2010).
The Toys “R” Us decision is often cited for the proposition that printing the
first six digits poses no risk of harm. See, e.g., Coleman v. Exxon Mobil Corp.,
No. 1:17-CV-119-SNLJ, 2018 WL 1785477, at *4 (E.D. Mo. Apr. 13, 2018)
(citing Toys “R” Us, 2010 WL 5071073, at *12, and collecting other cases also
citing Toys “R” Us). Yet it is not apparent that any of these district courts
considered whether it still made sense to rely on facts established in these older
cases, in light of technological changes related to brute-force cryptological attack
on credit card numbers . See Katz, 872 F.3d at 118 (summarizing plaintiff’s
contention that disclosure of the first six numbers, in addition to the last four,
makes plaintiff more vulnerable to “computer-assisted guessing” of his remaining
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card numbers). Neither are we aware of a court that has taken a fresh look at the
argument that an identity thief could use the first six digits, in combination with
other available information, to access more information about a victim than would
have been possible in 2007. See Toys “R” Us, 2010 WL 5071073, at *12–13
(summarizing plaintiff’s expert’s opinion that disclosure of the first six digits
makes it easier for thieves to acquire other identifying information).
These problems show the importance of the Second Circuit’s admonition
that standing in FACTA cases is “a case- and fact- specific” question. See id. at
121. We echo that sentiment and know that district courts will consider standing in
light of existing precedent as applied to the “case or controversy” and
accompanying record actually before them. See GTE Directories Pub. Corp. v.
Trimen Am., Inc., 67 F.3d 1563, 1567 (11th Cir. 1995) (“The determination of
whether an actual case or controversy exists is determined on a case-by-case
basis.”).
Here, we are presented with a facial challenge to Dr. Muransky’s standing,
so we must take the allegations in the complaint as true and evaluate whether those
allegations plausibly allege standing. See Stalley ex rel. U.S. v. Orlando Reg’l
Healthcare Sys., Inc., 524 F.3d 1229, 1232 (11th Cir. 2008) (per curiam)
(distinguishing between facial and factual attacks on standing). As set out above,
the complaint alleges two concrete injuries: one based on the statutory violation
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and its relationship to common law causes of action and another based on Godiva
giving Dr. Muransky an untruncated receipt. Mr. Isaacson has not challenged any
other aspect of Dr. Muransky’s standing, and we conclude the other Article III
standing requirements are satisfied.
III. The Merits
A. Notice of class counsel’s attorney’s fee motion
We now consider the objectors’ challenge to the sufficiency of notice of the
attorney’s fee motion. As required by Rule 23(c)(2)(B), these class members got
notice of the preliminary approval of the class settlement. That notice gave
information about the attorney’s fees and expenses Dr. Muransky would seek:
Plaintiff will petition for a service award not to exceed $10,000 for his
work in representing the Class, and for Class Counsel’s fees not to
exceed one-third of the fund, which is $2,100,000, plus reasonable
expenses.
Class members got this notice in advance of counsel’s motion for attorney’s fees.
Yet the attorney’s fees motion was not filed until two weeks after the deadline for
class members to object had already passed. 6 The class did not receive additional
notice after the motion was filed. The objectors say this process deprived class
members of the notice they needed to assess the fee request and violated Rule
23(h).
6
Dr. Muransky originally made the attorney’s fee request on September 7 as part of the
motion for final approval. The District Court instructed him to file a separate attorney’s fee
motion, which he did on September 12.
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Rule 23(h) sets up the procedures required for an award of attorney’s fees in
class actions. As for notice, Rule 23(h)(1) says that “[n]otice of the motion [for
attorney’s fees] must be served on all parties and, for motions by class counsel,
directed to class members in a reasonable manner.” Fed. R. Civ. P. 23(h)(1).
Although “reasonable manner” is not specific about when notice must be given,
courts interpreting Rule 23(h) have observed that the right to object to the fee
motion under Rule 23(h)(2) necessarily means that courts must give notice of the
attorney’s fee motion itself. The leading case is In re Mercury Interactive Corp.
Securities Litig., 618 F.3d 988, 989 (9th Cir. 2010). The Ninth Circuit interpreted
“[t]he plain text of” Rule 23(h) to “require[] that any class member be allowed an
opportunity to object to the fee ‘motion’ itself, not merely to the preliminary notice
that such a motion will be filed.” Id. at 993–94 (quoting Fed. R. Civ. P. 23(h)(2)).
The Advisory Committee’s notes support the Ninth Circuit’s interpretation of Rule
23(h). They say that “[i]n setting the date objections are due, the court should
provide sufficient time after the full fee motion is on file to enable potential
objectors to examine the motion.” Fed. R. Civ. P. 23 advisory committee’s note to
2003 amendment. The Seventh Circuit follows the Ninth Circuit’s Mercury
decision. Redman v. RadioShack Corp., 768 F.3d 622, 637–38 (7th Cir. 2014); see
also 3 Newberg on Class Actions § 8:24 (5th ed.) (endorsing the approach of the
Ninth and Seventh Circuits on doctrinal and policy grounds).
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The Ninth Circuit’s holding in Mercury was that “class members were
deprived of an adequate opportunity to object to the motion itself because, by the
time they were served with the motion, the time within which they were required to
file their objections had already expired.” 618 F.3d at 994. That same sequence—
objection deadline before a filed motion for attorney’s fees—was what happened
here. As in Mercury, this schedule deprived class members of “an opportunity to
object to the fee motion itself” because they had to file objections before the
motion was even filed. See id. at 993–94. As a result, this process violated Rule
23(h).7
Although we conclude the District Court erred by requiring class members
to object before they could assess the attorney’s fee motion, we hold that error does
not warrant reversal under the particular facts of this case. After receiving the
notice, four class members objected. Two of those, Mr. Price and Mr. Isaacson,
made detailed arguments in opposition to the requested attorney’s fee and incentive
awards, including by filing opposition briefs after Dr. Muransky filed the
7
The objectors also argue that the class notice did not provide class members with
sufficient information to file meaningful objections to class counsel’s attorney’s fee request. Mr.
Price, for example, says the notice should have advised class members of the “Eleventh Circuit’s
25% benchmark for attorneys’ fees [or] of Class Counsel’s justification for seeking a $525,000
bonus” above the 25% benchmark. Rule 23(h) requires only that notice of an attorney’s fee
motion be “served on all parties and . . . directed to class members in a reasonable manner.” Fed.
R. Civ. P. 23(h). The objectors cite no authority that requires the detail they request. Decisions
about the detail in descriptions about the attorney’s fees required to be included in class notice
are necessarily case specific and are best left to the discretion of district courts.
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attorney’s fee motion. Cf. Coleman v. Smith, 828 F.2d 714, 716–17 (11th Cir.
1987) (per curiam) (holding that notice of consequences of summary judgment was
adequate in part because party’s actions showed he understood how to respond to
summary judgment motion). The arguments made against the attorney’s fee
motion were considered by the Magistrate Judge and by the District Court. And on
this record, we have no reason to think other unnamed class members would have
made arguments besides those made by Mr. Price and Mr. Isaacson. Class
members were not therefore prejudiced by the objection schedule established by
the District Court. See Voeller v. Neilston Warehouse Co., 311 U.S. 531, 537, 61
S. Ct. 376, 379 (1941) (observing that “the rights of parties are habitually protected
in court by those who act in a representative capacity”); see also O’Bannon v.
Town Court Nursing Ctr., 447 U.S. 773, 797, 100 S. Ct. 2467, 2482 (1980)
(Blackmun, J., concurring) (because nursing home had an interest in making the
same arguments as absent patients, those patients’ due process interests were
satisfied). The District Court did not abuse its discretion by awarding attorney’s
fee, despite the Rule 23(h) violation.
B. The attorney’s fee award
The objectors also argue that the District Court made a mistake by awarding
33% of the class settlement fund as attorney’s fees to Dr. Muransky’s counsel.
The District Court’s approval of the attorney’s fee award is reviewed for abuse of
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discretion. Camden I Condo. Assoc. v. Dunkle, 946 F.2d 768, 770 (11th Cir.
1991). “A district court abuses its discretion if it applies an incorrect legal
standard, applies the law in an unreasonable or incorrect manner, follows improper
procedures in making a determination, or makes findings of fact that are clearly
erroneous.” Aycock v. R.J. Reynolds Tobacco Co., 769 F.3d 1063, 1068 (11th Cir.
2014) (quotation marks omitted). Under this standard, district courts have “great
latitude” in setting fee awards in class action cases. See Faught v. American Home
Shield Corp., 668 F.3d 1233, 1242 (11th Cir. 2011) (citation and internal quotation
marks omitted). We conclude the District Court did not abuse its discretion.
To begin, the objectors say the District Court applied the wrong legal test to
evaluate Dr. Muransky’s attorney’s fee request. In their view, the District Court
should have applied a lodestar analysis that multiplied the number of hours counsel
worked by the prevailing hourly rate. They claim that analysis is required by
Perdue v. Kenny A. ex rel. Winn, 559 U.S. 542, 546, 130 S. Ct. 1662, 1669 (2010).
In Perdue, the Supreme Court decided “whether the calculation of an attorney’s
fee, under federal fee-shifting statutes, based on the ‘lodestar,’ i.e., the number of
hours worked multiplied by the prevailing hourly rates, may be increased due to
superior performance and results.” Id. The Court allowed the award of attorney’s
fees under a fee-shifting statute to be enhanced above the lodestar amount, but only
in “rare” and “exceptional” cases. Id. at 554, 130 S. Ct. at 1674. Here, the
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objectors say the District Court should have followed Perdue because class
counsel’s fees would have been decided under a fee-shifting statute if the class
prevailed against Godiva. See 15 U.S.C. § 1681n(a)(3) (providing for attorney’s
fees “in the case of any successful action to enforce any liability” for a willful
violation of FACTA).
The problem for the objectors is that class counsel sought attorney’s fees
from a common fund rather than under a fee-shifting statute. See Fed. R. Civ. P.
23(h) (authorizing courts to award attorney’s fees that are “authorized by law or
by the parties’ agreement”). Camden I holds that “attorneys’ fees awarded from a
common fund shall be based upon a reasonable percentage of the fund established
for the benefit of the class.” 946 F.2d at 774. The common-fund doctrine applies
to class settlements that result in a common fund even when class counsel could
have pursued attorney’s fees under a fee-shifting statute. See Staton v. Boeing Co.,
327 F.3d 938, 968–69 (9th Cir. 2003); Florin v. Nationsbank of Ga., 34 F.3d 560,
563 (7th Cir. 1994). Perdue addresses fee-shifting statutes and says nothing about
the award of attorney’s fees from a common fund. 559 U.S. at 554, 130 S. Ct. at
1674. Perdue is therefore not contrary to our precedent in Camden I.
In the alternative, the objectors say that the District Court misapplied
Camden I by awarding 33% of the fund to class counsel. In Camden I, this Circuit
called 25% of a common fund a benchmark attorney’s fee award that “may be
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adjusted in accordance with the individual circumstances of each case.” 946 F.2d
at 775. To evaluate whether the benchmark should be enhanced, district courts can
apply the twelve factors from Johnson v. Georgia Highway Express, Inc., 488 F.2d
714, 717–19 (5th Cir. 1974), 8 in addition to other class-settlement specific factors.
Camden I, 946 F.2d at 775. We have also said that the “majority of common fund
fee awards fall between 20% and 30% of the fund.” Waters v. Int’l Precious
Metals Corp., 190 F.3d 1291, 1294 (11th Cir. 1999). In this case, the objectors
argue the District Court misapplied the Johnson factors in awarding 33% of the
settlement fund as attorney’s fees.
We see no abuse of discretion in the District Court’s decision. Although the
objectors “are correct that the fee award is bigger than some awards in other
suits[,] . . . that does not mean the award is too big.” Birchmeier v. Caribbean
Cruise Line, Inc., 896 F.3d 792, 796 (7th Cir. 2018). The Magistrate Judge’s R&R
concluded that the Johnson factors supported the request for a fee above the 25%
benchmark. That conclusion was based on weighing nine Johnson factors in favor
of the enhanced award, including, by way of example, “the novelty and difficulty
of the issues” and “the results obtained.” After considering the objections to the
8
In Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (en banc), we adopted as
binding precedent all decisions of the former Fifth Circuit handed down before October 1, 1981.
Id. at 1209. We recognize that the Supreme Court criticized the Johnson factors in Perdue, 559
U.S. at 550–51, 130 S. Ct. at 1671–72. But as we’ve explained, Perdue arose in a different
context (fee-shifting statutes), and we are bound to apply our precedent in Camden I and Johnson
to this common fund.
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R&R de novo, the District Court reached the same conclusion that “the requested
attorneys’ fees are reasonable under the Johnson/Camden I analysis.” 9 The District
Court found that the settlement “confers substantial benefits” on class members.
The District Court’s order also emphasized “the results obtained,” saying the class
members who submitted claims “will receive cash payments that represent a
significant portion of the damages that would be available to them were they to
prevail in an individual action.” The District Court elaborated on these points at
the fairness hearing. There, the court discussed the significant legal hurdles class
counsel faced, including the possibility that the Supreme Court would hold in
Spokeo that risk of identity theft could not support standing. The court explained
the difficulty of proving willfulness, and its own skepticism that the evidence
would support a willfulness finding in this case.
The District Court properly assessed the risks faced by the class and the
compensation secured by class counsel. Under the circumstances, the District
Court did not abuse its discretion by awarding an above-benchmark percentage of
the common fund. The attorney’s fee award is therefore affirmed.
C. The incentive award
Finally, the objectors challenge the $10,000 incentive award the District
Court approved for Dr. Muransky as class representative. A district court’s
9
The District Court gave no weight to the Magistrate Judge’s characterization of Mr.
Price and Mr. Isaacson as “professional objectors.” We don’t either.
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decision to grant an incentive award to a named class representative is reviewed for
abuse of discretion. Hadix v. Johnson, 322 F.3d 895, 897 (6th Cir. 2003).
The objectors make two arguments on appeal. First, Mr. Isaacson argues
incentive awards are prohibited in common-fund settlements. [Second, the
objectors jointly challenge the $10,000 award as too large because they say Dr.
Muransky put little personal time and effort into the litigation. We reject both
arguments.
Relying on two common fund cases, Mr. Isaacson says litigants who secure
a common fund can recover reasonable attorney’s fees and litigation expenses but
cannot recover incentive awards for their own services. See Central R.R. &
Banking Co. v. Pettus, 113 U.S. 116, 122, 5 S. Ct. 389, 390 (1885); Trustees v.
Greenough, 105 U.S. 527, 538 (1882).
We are not persuaded by this argument. Many circuits have endorsed
incentive awards and recognize them as serving the purposes of Rule 23. See, e.g.,
Staton, 327 F.3d at 975–77; Hadix, 322 F.3d at 897–98. No circuit has applied
Greenough or Central Bank, which were decided well before the adoption of Rule
23, to prohibit incentive awards in the class-action context. We do not view
granting a monetary award as an incentive to a named class representatives as
categorically improper.
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At the same time, there are limits to an appropriate incentive award. In
Holmes v. Continental Can Co., 706 F.2d 1144 (11th Cir. 1983), the class
settlement awarded the class representatives different amounts than the unnamed
class members because class counsel estimated that the named representatives had
meritorious claims. Id. at 1148–49. This Court held that “[w]hen a settlement
explicitly provides for preferential treatment for the named plaintiffs in a class
action, a substantial burden falls upon the proponents of the settlement to
demonstrate and document its fairness.” Id. at 1147. We said that “a disparate
distribution favoring the named plaintiffs requires careful judicial scrutiny into
whether the settlement allocation is fair to the absent members of the class.” Id.
At the same time, we recognized that “the inference of unfairness” associated with
unequal distributions “may be rebutted by a factual showing that the higher
allocations to certain parties are rationally based on legitimate considerations.” Id.
Like the settlement distribution in Holmes, incentive awards “provide[] for
preferential treatment for the named plaintiffs,” see id. at 1147, and create a similar
possibility of collusion between class representatives, their counsel, and
defendants. See id. at 1148; Hadix, 322 F.3d at 897 (“[I]ncentive awards are
scrutinized carefully by courts who sensibly fear that [they] may lead named
plaintiffs to expect a bounty for bringing suit or to compromise the interest of the
class for personal gain.”). As a result, we hold that incentive awards must be
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supported by “legitimate considerations” sufficient to “dispel the cloud of
collusion which such a settlement suggests.” See Holmes, 706 F.2d at 1147
(quotation marks omitted).
The parties dispute what those considerations should be. The objectors
focus on the time and money actually spent on the case by the named
representative while Dr. Muransky argues that the value of the settlement to the
class members is most important. We see no reason to limit the discretion of
district courts to consider the justifications proposed by either party. Indeed, we
are aware of a number of justifications regularly cited in support of incentive
awards. For example, incentive awards may be given “to compensate class
representatives for work done on behalf of the class, to make up for financial or
reputational risk undertaken in bringing the action, . . . to recognize their
willingness to act as a private attorney general,” Rodriguez v. W. Publ’g Corp.,
563 F.3d 948, 958–59 (9th Cir. 2009), and to “induce an individual to become a
named plaintiff,” Montgomery v. Aetna Plywood, Inc., 231 F.3d 399, 410 (7th Cir.
2000). Although these considerations will certainly weigh differently in different
cases, together they “help illuminate the fact that class representatives . . . have
typically done something the absent class members have not—stepped forward and
worked on behalf of the class.” 5 Newberg on Class Actions § 17.3. All of these
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justifications are legitimate, and district courts may exercise their discretion to
determine whether they favor an incentive award in any given case.
Here, the District Court awarded Dr. Muransky $10,000 “for his efforts in
this case.” It is not clear what the District Court meant by that. Even so, we find
that the record supports the incentive award. See Friends of the Everglades v. S.
Fla. Water Mgmt. Dist., 678 F.3d 1199, 1201 (11th Cir. 2012) (explaining that a
district court abuses its discretion when “neither the . . . decision nor the record
provide sufficient explanation to enable meaningful appellate review” (emphasis
added)); Cox Enters. v. News-Journal Corp., 510 F.3d 1350, 1361 (11th Cir. 2007)
(finding no abuse of discretion in district court’s decision not to award
prejudgment interest based on the record). At the District Court, Dr. Muransky
argued that an incentive award was justified by the size of the settlement. As
previously discussed, the District Court found that the class settlement “confers
substantial benefits” on the class members. And at the fairness hearing, the
District Court observed that Dr. Muransky “was subjecting himself to
inconvenience and time delays that didn’t materialize as much as they might have,
but they still were a possibility when he signed on as the class representative.”
These statements give meaning to the court’s $10,000 incentive award to Dr.
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Muransky “for his efforts in this case.” 10 We therefore hold that the District Court
did not abuse its discretion by granting this incentive award.
AFFIRMED.
10
By our calculation, Dr. Muransky’s incentive award had little impact on the class
members’ recovery. Assuming 48,000 class members submitted valid claims (a high-end
approximation) for the $4.2 million in the fund for distribution, Dr. Muransky’s incentive award
of $10,000 resulted in a reduction of about 21 cents in the recovery of the class members who
filed claims ($87.50 vs. $87.29).
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JORDAN, Circuit Judge, concurring:
I join Judge Martin’s thorough opinion for the court. I write separately to
note that Mr. Isaacson, a class member and one of the appellants, may lack Article
III standing to challenge the Article III standing of Dr. Muransky, the named
plaintiff and class representative.
As a member of the class, Mr. Isaacson did not just file objections to the
proposed settlement; he chose not to opt out and submitted a claim for
compensation pursuant to the settlement agreement. Given that the proposed
settlement fund totaled $4.1 million after attorney’s fees, and that approximately
47,000 class members filed claims, Mr. Isaacson stands to receive about $85 even
if his arguments about the attorney’s fees and the incentive award fail. Although
that sum is not a king’s ransom, there is no doubt that Mr. Isaacson is going to
realize some financial benefit from the settlement.
Article III’s standing requirements—injury-in-fact, causation, and
redressability—persist “throughout the life of [a] lawsuit.” Wittman v.
Personhuballah, 136 S. Ct. 1732, 1736 (2016). As a result, standing “must be met
by persons seeking appellate review, just as it must be met by persons appearing in
courts of first instance.” Hollingworth v. Perry, 570 U.S. 693, 705 (2013) (citation
and quotation marks omitted). Because “standing is not dispensed in gross,” it
seems to me that Mr. Isaacson “must demonstrate standing for each claim he seeks
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to press and for each form of relief that is sought.” Town of Chester v. Laroe
Estates, Inc., 137 S. Ct. 1645, 1650 (2017) (citation and internal quotation marks
omitted). If Mr. Isaacson “lacks standing to bring [a certain claim on] appeal, we
lack jurisdiction over [that claim] and must dismiss it.” Tenille v. Western Union
Co., 809 F.3d 555, 559 (10th Cir. 2015).
Mr. Isaacson certainly has standing on appeal to pursue his challenges to the
deadline set by the district court for objections to the proposed settlement, to the
attorney’s fees awarded to counsel for the plaintiffs, and to the incentive award
given to Dr. Muransky. An incorrect deadline could have certainly affected Mr.
Isaacson’s ability to assert objections to the motion for attorney’s fees, and any
decrease in the attorney’s fees or the incentive award would be redistributed
among the class members, potentially increasing Mr. Isaacson’s own monetary
recovery. But Mr. Isaacson has also challenged Dr. Muransky’s standing to bring
a FACTA claim in the first place, and it is with respect to that challenge that his
standing is at best doubtful.
According to Mr. Isaacson—who happens to be a plaintiffs’ class-action
attorney—Dr. Muransky did not suffer an injury that allows him to bring a claim
under FACTA because he “fail[ed] to allege that his credit suffered when he was
handed a receipt with a few extra digits, or that anyone else knew of the violation
or was in a position to take advantage of it to his injury.” Br. for Mr. Isaacson at
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34. In a recent law review article that he authored, Mr. Isaacson explained his
motivation for challenging Dr. Muransky’s standing in the following way: “I was
troubled by the notion that a class representative who suffered no injury should be
able to evade the burden of demonstrating his own Article III standing . . . when
entering [into] a class-action settlement that purports to release other class
members’ claims for actual damages.” Eric Alan Isaacson, A Real-World
Perspective on Withdrawal of Objections to Class Action-Settlements and
Attorneys’ Fees Awards: Reflections on the Proposed Revisions to Federal Rule of
Civil Procedure 23(E)(5), 10 Elon L. Rev. 35, 51 (2018) (footnotes omitted).
I do not doubt the sincerity of Mr. Isaacson’s convictions, but it might fairly
be said that one could be just as troubled by the notion that an appellant who
suffered no injury from a judgment should be able to seek reversal without
demonstrating that he has been injured by that judgment and has Article III
standing. After all, the desire to ensure compliance with the law affects only the
“generalized interest of all citizens in constitutional governance.” Schlesinger v.
Reservists Committee to Stop the War, 418 U.S. 208, 217 (1974). See also
Hollingsworth, 570 U.S. at 704 (“The presence of a disagreement, however sharp
and acrimonious it may be, is insufficient by itself to meet Art[icle] III’s
requirements.”).
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Mr. Isaacson, as noted, stands to gain financially from the settlement. How,
then, can it be said that Mr. Isaacson suffered any cognizable harm (aside from his
arguments as to the deadline for objections, the attorney’s fees, and the incentive
award) from the institution of the lawsuit by Dr. Muransky and/or the
consummation and approval of the settlement which provided him with a tangible
benefit? If Mr. Isaacson thought that the action brought by Dr. Muransky on
behalf of a class did not constitute a justiciable case or controversy under Article
III, why did he not simply opt out and let the statute of limitations expire on any
FACTA claim he might have had individually? Conversely, if Mr. Isaacson
thought that he (unlike Dr. Muransky) had Article III standing to assert a FACTA
claim and believed that he could do better as an individual litigant, why did Mr.
Isaacson not simply file suit on his own against Godiva?
Stated differently, if Mr. Isaacson prevailed on his standing argument, I do
not see how we could redress any injury he has suffered. See Wittman, 136 S. Ct.
at 1732 (dismissing appeal by intervenors who could not explain how their alleged
injury would be redressed by a favorable judicial decision). Indeed, Mr. Isaacson
will cause himself injury if he succeeds because his monetary recovery—along
with that of every class member—will be wiped out. For if Dr. Muransky has not
suffered an Article III injury, he does not have standing to sue Godiva under
FACTA, and that means that the entire case must be dismissed for want of a
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justiciable case or controversy. See generally William B. Rubenstein, 1 Newberg
on Class Actions § 2:8 (5th ed. June 2018) (“[I]f a case has only one class
representative and that party does not have standing, then the court lacks
jurisdiction over the case and it must be dismissed.”).
The rule against permitting appeals by prevailing litigants is a prudential
one, but a litigant who obtains a favorable judgment must nevertheless have a
personal stake to appeal. See generally Camreta v. Greene, 563 U.S. 692, 701-02
(2011). In an appropriate case, we may need to address whether a class member
like Mr. Isaacson has standing on appeal to challenge the standing of a class
representative who obtained a settlement providing economic benefits to the entire
class. Cf. King v. Cessna Aircraft Co., 505 F.3d 1160, 1165 (11th Cir. 2007) (“if
the requirements for appellate jurisdiction are not met ‘we cannot review whether a
judgment is defective, not even when the asserted defect is that the district court
lacked jurisdiction’”) (citation omitted).
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