Will the Real Injured Party Please Stand Up? Charvat v. Mutual First Federal Credit Union and the Eighth Circuit's Failure to Correctly Acknowledge the Importance of the Separation of Powers Innate Within the Standing Doctrine

• Publication year: 2022

47 Creighton L. Rev. 339. WILL THE REAL INJURED PARTY PLEASE STAND UP? CHARVAT V. MUTUAL FIRST FEDERAL CREDIT UNION AND THE EIGHTH CIRCUIT'S FAILURE TO CORRECTLY ACKNOWLEDGE THE IMPORTANCE OF THE SEPARATION OF POWERS INNATE WITHIN THE STANDING DOCTRINE

WILL THE REAL INJURED PARTY PLEASE STAND UP? CHARVAT V. MUTUAL FIRST FEDERAL CREDIT UNION AND THE EIGHTH CIRCUIT'S FAILURE TO CORRECTLY ACKNOWLEDGE THE IMPORTANCE OF THE SEPARATION OF POWERS INNATE WITHIN THE STANDING DOCTRINE

Skyler H. Pearson

I. INTRODUCTION

The constitutional requirement known as standing is said to be problematic.(fn1) In Lujan v. Defenders of Wildlife,(fn2) the United States Supreme Court set forth three requirements for standing: an injury in fact, a fairly traceable causal connection between the injury and the challenged conduct, and the likelihood that the injury can be redressed with a favorable decision.(fn3) The standing doctrine, which has developed over time, serves as a protection for the concept of the separation of powers implicit throughout the text of the Constitution.(fn4) However, multiple courts across the country have recently undermined this doctrine and the important purposes it serves by allowing plaintiffs to pursue claims within the jurisdiction of federal courts without having suffered an injury-in-fact.(fn5)

In Charvat v. Mutal First Federal Credit Union,(fn6) the United States Court of Appeals for the Eighth Circuit determined that the satisfaction of an informational injury, without any financial loss, was sufficient to confer standing.(fn7) In Charvat, an automated teller machine ("ATM") customer alleged that two banks in Nebraska violated the Electronic Funds Transfer Act(fn8) ("EFTA") by failing to provide both statutorily prescribed forms of notice when he and others were charged fees for using the banks' ATMs.(fn9) The EFTA initially required that banks provide notice of potential fees in two ways.(fn10) The first required notice was the placement of a sticker on or near the ATM.(fn11) The second required form was an on-screen notice of potential fees.(fn12) The EFTA provides that owners and operators of ATMs who fail to provide both forms of notice are subject to claims for various consumer damages.(fn13) Charvat made multiple withdrawals from the banks' ATMs, each time receiving the on-screen notice that a fee would be charged, but the ATMs lacked the required notice that was to be posted on or at the machines.(fn14) Pursuant to the notice provision in the EFTA, Charvat and others similarly situated brought a putative class action against two Nebraska banks for charging fees without providing the proper notice.(fn15) The Eighth Circuit ultimately concluded that because the injury was fairly traceable to the challenged conduct Charvat's informational injury was sufficient to constitute an injury-in-fact, and he therefore had standing to sue.(fn16) Accordingly the Eighth Circuit reversed and remanded the district court's decision.(fn17)

This Note will first review the facts and holding of Charvat.(fn18) Next, this Note will discuss the essential development of the standing doctrine, the history, and provisions of the EFTA, as well as an overview of similar EFTA case decisions from various jurisdictions regarding the standing doctrine.(fn19) This Note will then argue the following: (A) the Eighth Circuit improperly concluded that Charvat had standing because he had actual notice of the fees; (B) the Eighth Circuit incorrectly interpreted the Congressional intent of the EFTA and failed to account for its removal of the on-machine notice requirement; and (C) the Eighth Circuit erred in determining that Charvat had standing because it is a baseline constitutional requirement that cannot be superseded by Congress and the far-reaching effects resulting from such a determination will flood federal courts with claims once unopened to litigants.(fn20) Finally, this Note will conclude that the Eighth Circuit erroneously expanded United States Supreme Court doctrine on standing to those who can prove no injury-in-fact, thus bypassing an important component of the checks and balances doctrine implicit throughout the text of the Constitution.(fn21)

II. FACTS AND HOLDING

In Charvat v. Mutual First Federal Credit Union,(fn22) Jarek Charvat and other automated teller machine ("ATM") customers (collectively "Charvat"), brought a class action suit against two Nebraska banks: Mutual First Federal Credit Union and First National Bank of Wahoo (hereinafter "the Banks"), alleging injuries under the Electronic Fund Transfers Act(fn23) ("EFTA").(fn24) The EFTA prohibits banks from charging ATM fees without properly giving notice to customers.(fn25) Subsection (b) of the EFTA states that the purpose of the Act, broadly speaking, is to define and protect individual consumer rights in ATM transactions.(fn26) The EFTA requires ATM operators who impose fees to provide notice to the consumer of the fee and its amount.(fn27) Unless the EFTA's requirements of these two forms of notice were followed fees were prohibited.(fn28)

Charvat visited the Banks' ATMs and made several withdrawals.(fn29) For each ATM transaction, the Banks charged Charvat a two-dollar fee.(fn30) Charvat alleged that at the time of these transactions, there was no notice posted on or at the ATMs in violation of the EFTA's notice requirement provision.(fn31) Charvat did not allege that he and other customers were without notice of a fee altogether, as notice was provided by an on-screen notification.(fn32) Instead, Charvat alleged that because the Banks failed to provide notice on or at the ATMs, they violated the Act's requirement and were prohibited from imposing any fee on Charvat or other class members.(fn33)

On March 8, 2012, Charvat brought suit both individually and on behalf of the class in the United States District Court for the District of Nebraska, claiming that the Banks' ATM fees were illegally charged.(fn34) Charvat alleged that the Banks violated the EFTA because the ATMs imposed fees without providing on-screen and on-machine notice as required by statute.(fn35)

At the district court level, Charvat neither pled actual damages in connection with the challenged transactions, nor did he later allege them during the course of litigation.(fn36) Charvat argued specifically at the district court level that his injury was not caused by the fees imposed for his transactions, but instead caused by the Banks' failure to provide notice as Congress prescribed in the EFTA.(fn37) Charvat sought damages provided by statute, including costs and attorney's fees.(fn38) Charvat's primary objective was to compel compliance with the EFTA regulations.(fn39)

The United States District Court for the District of Nebraska determined that the Article III standing requirement of an injury-in-fact was not met even though the Banks failed to provide the statutorily required notice.(fn40) The District Court granted the Banks' motion to stay the proceedings pending the United States Supreme Court's decision of First American Fin. Corp. v. Edwards,(fn41) set to be decided in the 2011 term.(fn42) The United States Court of Appeals for the Ninth Circuit heard a similar standing issue in connection with the Real Estate Settlement Procedures Act of 1974(fn43) in Edwards.(fn44) However, the issue presented to the United States Supreme Court was never resolved due to the Court's dismissal of Edwards as improvidently granted.(fn45) After learning of the Court's dismissal of Edwards the District Court dismissed Charvat's claims.(fn46) Charvat appealed to the United States Court of Appeals for the Eighth Circuit to reverse and remand the District Court's ruling.(fn47)

In his brief Charvat contended that the Eighth Circuit did not need to determine whether statutory damages, without any other injury, would be sufficient to satisfy a plaintiff's standing.(fn48) Charvat argued that a violation of the notice requirement is sufficient for any private individual who engaged in ATM transactions with banks to have standing to sue under the EFTA.(fn49) In the alternative, Charvat argued that the fees charged by the Banks in connection with the transactions, though negligible, constituted an injury to satisfy standing.(fn50)

The Banks' brief in opposition argued that Charvat suffered no injury from the lack of notice, because he had actual knowledge of the fees, which was the primary purpose of the requirement.(fn51) The Banks also argued that because Charvat had expressly acknowledged in the pleadings that his injury was not the fee but failure to supply information as required by Congress, Charvat waived his ability to make this argument before the Eighth Circuit and/or should be judicially estopped from doing so.(fn52)

The Eighth Circuit reversed the District Court's ruling and determined that Charvat had standing to bring his claim.(fn53) The Eigth Circuit reasoned that because the overall purpose of the EFTA is the protection of consumers' rights, any fee charged without strict adherence to the statute's provisions constitutes a cognizable claim.(fn54) The court also focused on the distinct damage provisions of the EFTA to determine that Congress intended plaintiffs such as Charvat to have standing.(fn55) The Eighth Circuit noted that the majority of lower courts to consider similar issues had found plaintiffs like Charvat had suffered an injury-in-fact sufficient to meet the...