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Huff v. TeleCheck Services, Inc.

United States Court of Appeals, Sixth Circuit

May 3, 2019

James Huff, individually and on behalf of all others similarly situated, Plaintiff-Appellant,
v.
TeleCheck Services, Inc.; TeleCheck International, Inc.; First Data Corporation, Defendants-Appellees.

          Argued: December 6, 2018

          Appeal from the United States District Court for the Middle District of Tennessee at Nashville. No. 3:14-cv-01832-Samuel H. Mays, Jr., District Judge.

         ARGUED:

          Martin D. Holmes, DICKINSON WRIGHT PLLC, Nashville, Tennessee, for Appellant.

          David R. Esquivel, BASS, BERRY & SIMS PLC, Nashville, Tennessee, for Appellees.

         ON BRIEF:

          Martin D. Holmes, DICKINSON WRIGHT PLLC, Nashville, Tennessee, Scott A. Petz, Alma Sobo, DICKINSON WRIGHT PLLC, Troy, Michigan, for Appellant.

          David R. Esquivel, Jeffrey P. Yarbro, Margaret V. Dodson, BASS, BERRY & SIMS PLC, Nashville, Tennessee, for Appellees.

          Before: BATCHELDER, SUTTON, and WHITE, Circuit Judges.

          OPINION

          SUTTON, CIRCUIT JUDGE

         This case deals with a fading technology (checks) and an evergreen imperative (Article III standing). When a customer buys something with a check, merchants often consult a check verification company to determine whether to accept the check. Invoking his rights under the Fair Credit Reporting Act, James Huff requested a copy of his file from a check verification company called TeleCheck. The report omitted that his driver's license was linked to six different bank accounts and omitted two transactions that occurred on those accounts. Huff filed this lawsuit under the Act. Because Huff has not shown that the incomplete report injured him in any way, we affirm the district court's dismissal of his case for lack of standing.

         I.

         When a retail consumer offers a check to a merchant, the customer usually provides a form of identification such as a driver's license. The merchant often takes the bank account number on the check and the driver's license number, called identifiers, and sends them to companies like TeleCheck. TeleCheck runs each identifier through its system. If one of the identifiers has a debt on file, TeleCheck sends the merchant a "Code 4"-what the industry calls a negative decline. If there is not a debt on file, TeleCheck examines the customer's check-writing history to determine whether to send a "Code 3"-what the industry calls a risk-based decline. If TeleCheck recommends a decline, the merchant refuses the customer's check. If there are no debts on file and the customer presents a low risk, TeleCheck approves the transaction, and the merchant accepts the check.

         When a customer presents two identifiers in a transaction, TeleCheck records a link between the identifiers in its system. If in a later transaction a customer uses only one of those identifiers, TeleCheck recommends a Code 4 decline if there is a debt associated with the presented identifier or the linked identifier. Say a customer presents his driver's license along with a check to buy milk. That links his license number and the account number on the check in TeleCheck's system. Then the customer bounces a check on the same account. Now, when the customer tries to buy eggs with a check from a different account and presents his license, TeleCheck will see that an identifier linked to the license-the bad bank account-shows a debt, and it will issue a Code 4 decline. By contrast, linked identifiers play no role in TeleCheck's Code 3 decline recommendations.

         James Huff often pays by check. Inspired by a legal services advertisement, Huff requested a copy of his file from TeleCheck under the Fair Credit Reporting Act. 15 U.S.C. § 1681g(a)(1). Huff provided TeleCheck with only a copy of his driver's license. As a result, the report contained only the 23 transactions in which he presented his license during the past year. But the report also told Huff that TeleCheck had more information. A bolded disclaimer at the bottom of the report read: "Linked Data: Your record is linked to information not included in this report, subject to identity verification prior to disclosure. Please contact TeleCheck at 1-800-366-1435 to verify Monday-Friday 830am-430pm CST." R. 78-6 at 3.

         Huff did not call. He sued.

         Huff's driver's license as it happens contains links to six different bank accounts: his own account, his wife's account, and four accounts that haven't been used for years. The accounts were linked because Huff had presented his license in transactions alongside checks from each of the accounts. In addition to leaving off the linked accounts, the report did not reveal two checks from those accounts over the past year that were not presented with Huff's license. One of the checks was from Huff's own account, and one was from his wife's.

         TeleCheck has never told a merchant to decline one of Huff's checks due to his linked information.

         After discovery, Huff moved for class certification, and TeleCheck moved for summary judgment based on lack of standing. The district court dismissed the case because Huff lacked standing to bring it.

         II.

         Article III of the United States Constitution limits the "judicial Power" of the federal courts to deciding "Cases" and "Controversies." U.S. Const. art. III, § 2. That limitation checks the power of the judicial branch by confining it to resolving concrete disputes, Spokeo, Inc. v. Robins, 136 S.Ct. 1540, 1547 (2016), and checks the power of the legislative branch by prohibiting it from using the Judiciary as an adjunct to its own powers, see Hagy v. Demers & Adams, 882 F.3d 616, 623 (6th Cir. 2018). To protect the vital, but limited all the same, role of the Judiciary in our system of government, the Constitution makes standing an indispensable ingredient of a judicial dispute.

         To establish standing, Huff had to show three things: (1) that he suffered an injury, (2) caused by TeleCheck, (3) that a judicial decision could redress. Lujan v. Defs. of Wildlife, 504 U.S. 555, 560-61 (1992). The burden of establishing standing rests with Huff, and he must provide the allegations or evidence required at each stage of the litigation. Id. at 561. At summary judgment, the current stage of this litigation, Huff cannot rely on allegations alone but must set forth evidence demonstrating his standing.

         This case turns on the "[f]irst and foremost" prong of that inquiry, injury in fact. Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 103 (1998). An injury in fact must be real, not abstract, actual, not ...


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