ATM Fee-Notice Litigation, Part II: Moving To Dismiss For Lack Of Standing

Originally published February 23, 2012

In this installment of our advisory, we discuss the strategy of moving to dismiss a fee-notice litigation on the grounds that a plaintiff lacks constitutional standing to bring suit under the Electronic Fund Transfer Act ("EFTA"). After explaining the standing doctrine, we argue that a plaintiff who has prior notice of an ATM fee cannot establish an injury in fact or causation. Next, we analyze two contrary cases decided under EFTA and propose a response to them based on controlling precedents. Finally, we look at First American Financial Corp. v. Edwards, a case pending before the United States Supreme Court, and recommend that defendants consider moving in the alternative for a stay of litigation.

Standing Doctrine Under Article III of the Constitution, federal courts can hear only disputes that raise an actual case or controversy between the parties. The purpose of this requirement is to restrict judicial power "to the traditional role of Anglo-American courts, which is to redress or prevent actual or imminently threatened injury to persons caused by private or official violation of law."1 To have standing, a plaintiff must demonstrate (1) that he or she suffered a concrete, particularized "injury in fact"; (2) that the defendant's action caused the claimed injury; and (3) that the claimed injury would likely be "redressed by a favorable decision."2 Where any one of these elements is missing, a federal court lacks subject-matter jurisdiction and the case must be dismissed.3

No Injury in Fact There is a strong argument that a plaintiff claiming that a defendant failed to post physical signage of an ATM fee—even though the fee was electronically disclosed on the ATM screen—cannot make the injury-in-fact showing. Because the on-screen notice made the plaintiff aware of the fee, he or she was not misled or otherwise harmed by the absence of physical signage. Thus, in those circumstances, the plaintiff suffered no concrete, particularized injury in fact.

This argument is supported by cases decided outside of the EFTA context. For example, in Cargill, Inc. v. United States, the plaintiffs claimed that, by failing to give notice that an agency had been reestablished, the defendant violated regulations promulgated under the Federal Advisory Committee Act.4 According to the Fifth Circuit, while there may have been "technical violations of the [regulatory] notice rules," the plaintiffs had actual notice of the agency's continued operation because the plaintiffs had been meeting with the agency and its personnel.5 In light of that actual notice, the Fifth Circuit held that the plaintiffs suffered no injury in fact and "therefore lack[ed] standing to assert the claim at hand."6

Another example is Central Arizona Irrigation & Drainage District v. Lujan,7 which arose out of the Secretary of the Interior's proposal to amend a water-supply contract to allow...