WASHINGTON, DC.— The Washington Legal Foundation (WLF) this past week urged the U.S. Supreme Court to grant a petition for review filed by two small Nebraska banks and to ultimately overturn an appeals court decision that allows uninjured plaintiffs to sue the banks. If review is granted (something that could happen as soon as late February), the Nebraska banks would likely be presenting their arguments before the High Court this coming October. The First National Bank of Wahoo has branches in Wahoo, Burchard, Sterling, and Syracuse; Mutual First Federal Credit Union has branches in the Omaha area.
In a brief filed in support of a petition for review filed by the two banks, WLF argued that the U.S. Constitution bars federal courts from hearing the claims of those who have not been injured by the conduct of which they complain; such individuals are deemed to lack “standing” to sue. The incentives motivating uninjured individuals to file lawsuits are readily apparent: numerous federal statutes provide that a prevailing plaintiff is entitled to recover “statutory damages” (i.e., a fixed sum computed without regard to the injuries the plaintiff actually incurred) as well as attorney’s fees. If such lawsuits are certified as class actions, the lawsuits can generate millions of dollars. But, WLF argued in its brief, the Constitution does not permit federal courts to hear suits filed by those whose only alleged injury is a bare, technical violation of a federal statute.
Federal law requires that before a bank may impose an ATM fee, it must provide clear advance notice of the fee to ATM users. The plaintiff in this case concedes that he knew that he would be charged a fee and agreed to pay it. Nonetheless, he noticed that the banks were providing notice only on the ATM screen and not a second form of notice (also required by federal law) with a sticker on the ATM. So, he used five of the defendants’ ATM machines, paid multiple $2.00 ATM fees, and then filed a lawsuit seeking to recover millions of dollars in “statutory damages” on behalf of all others who used one of the five ATMs. WLF argued that the plaintiff did not suffer an injury sufficient to invoke “standing” because he received the information (the fact that he would be charged a $2.00 transaction fee) to which federal law entitled him.
After filing the petition, WLF issued the following statement by Chief Counsel Richard Samp:
“Individual citizens may be unhappy when they conclude that someone else is violating federal law. But that sense of outrage gives them no right to file a lawsuit seeking to force compliance with the law, unless they can show that they have been injured by the misconduct. Congress occasionally adopts statutes that create a right of action by private citizens when they discover that others have violated the law; but such statutes do not alter the constitutional provision that bars courts from hearing a case unless the plaintiff can show that he suffered a concrete injury.”
WLF is a public interest law firm and policy center that regularly litigates in support of tort reform, to ensure that the costs of unwarranted lawsuits do not drive up costs for all consumers.