Pharmacy giant Walgreens has secured the chance to persuade the Illinois Supreme Court to cut off an attempt by trial lawyers to enhance the reach of controversial earlier decisions from the court concerning a state biometrics privacy law, and greatly expand the ability of would-be plaintiffs to use Illinois’ state courts to sock businesses with big money class actions over technical violations of state and federal laws that resulted in no real harm to anyone.
On Sept. 27, the Illinois Supreme Court granted Walgreens’ petition to hear its appeal of decisions from Lake County judges, which would otherwise leave it facing a class action worth potentially hundreds of millions of dollars from people throughout the U.S. who had some prepaid debit card numbers included on the receipt they received when they loaded cash onto those cards at Walgreens stores.
Trial lawyers who bring the case would also typically stand to gain a third of any money paid by Walgreens under the class action.
Keith Keogh
| Keogh Law
The case landed in Lake County Circuit Court in suburban Waukegan in 2019, when attorneys Keith Keogh, of Chicago; Bret Lusskin Jr., of Aventura, Florida; and Scott D. Owens, of Hollywood, Florida, filed suit on behalf of named plaintiff Calley Fausett.
According to the lawsuit, in March 2019, Fausett loaded money onto a so-called “general purpose reloadable card” at a Walgreens store in Phoenix, Arizona, using the retailer’s Universal Swipe fund load system.
In the lawsuit, Fausett claimed she received two receipts, each containing “the first six and last four digits of her debit card account number.”
The lawsuit asserts this violated the federal law known as the Fair and Accurate Credit Transactions Act (FACTA).
First enacted by Congress in 2003, the law includes many provisions familiar to Americans, including establishing the right of every American to a free annual copy of their credit reports.
In the years since, the law was also amended to include provisions intended to minimize the risk of identity theft. These included a provision restricting the ability of retailers to print customers’ card numbers on receipts, in the belief that would-be identity thieves could use such a receipt to gain access to someone’s bank account or other sensitive identity elements.
That provision has generated a blizzard of lawsuits in the years since its enactment, targeting retailers, in particular, in federal and state courts. Successful class action lawsuits under the FACTA law can result in significant payout prizes, as plaintiffs can demand payment of $100-$1,000 each, plus attorney fees.
However, in federal courts and other state courts across the country, judges have largely limited the ability of plaintiffs to bring lawsuits under the FACTA law, saying it is not enough for plaintiffs to simply state a retailer may have violated FACTA. Judges have ruled plaintiffs must be able to prove they suffered some real harm from the alleged violations of the law in order to have “standing” to sue.
In Illinois, however, plaintiffs say a different, much more generous standard should apply.
In Fausett’s case, her attorneys argued they should be able to press their claim even though Fausett did not suffer any real harm or even real threat of harm.
They said the violation of the law should be enough to justify a potentially massive class action lawsuit on behalf of many thousands of people across the country who, like Fausett, loaded funds onto a prepaid debit card at Walgreens stores, even if those people did not live in Illinois, simply because Walgreens is headquartered in Lake County.
No injury, no barrier?
The plaintiffs centered their claims on recent decisions from the Illinois Supreme Court.
Known as Rosenbach v Six Flags and McDonald v Bronzeville Symphony, the decisions centered on lawsuits brought against the theme park operator and nursing home company under the controversial Illinois state law known as the Biometric Information Privacy Act (BIPA.)
Passed in 2008, the BIPA law was ostensibly enacted to protect people from danger they may suffer from the unauthorized or unnoticed scanning of their so-called biometric identifiers, such as fingerprints, facial geometry or retinas.
To coerce compliance with the law, BIPA included steep financial penalties of $1,000-$5,000 per violation, depending on how willful the business may be determined to have been in not complying.
Since 2015, thousands of class actions have been filed under the BIPA law, threatening businesses of all types and sizes with potentially catastrophic payouts over technical violations of the law. Businesses pushed back against the law, initially by asserting it was absurd to threaten businesses with such potentially ruinous rulings when no one was actually harmed.
The Illinois Supreme Court, however, ruled the potential pain was the point. In the Rosenbach ruling, and reinforced under McDonald, the state high court ruled plaintiffs don’t need to allege they suffered any actual harm to bring potentially massive class actions under BIPA; they need only demonstrate a company may have violated the law.
In pressing their claim against Walgreens, lawyers for Fausett said that standard should not be limited to only BIPA, but to any lawsuits filed in Illinois courts alleging violations of any law, like FACTA, that included measures intended to prevent possible future harms, like identity theft, and which did not explicitly require plaintiffs to prove they suffered actual harm.
Lake County judges Luis Berrones and Donna-Jo Vordestrasse agreed, rejecting Walgreens’ arguments that Fausett lacked standing, because she wasn’t actually harmed, and allowing Fausett’s legal team to move the case forward as a nationwide class action with potentially hundreds of millions of dollars at stake.
Walgreens sought to appeal, asking the Illinois Second District Appellate Court to take up the question of whether the loose standard of standing, such as laid out in Rosenbach, should apply to FACTA class actions in Illinois, as well, despite rulings from the U.S. Supreme Court and other courts in other states that plaintiffs must prove they were actually harmed by the alleged violations of the law.
Further, Walgreens asserted Fausett’s case was fatally flawed by the nature of her transaction: She did not use a personal credit or debit card to actually purchase anything, but merely loaded cash onto a prepaid debit card. The retailer asserted the FACTA law should be read to be limited to purchases using personal cards, linked in some way directly to a personal bank account or a credit account.
And Walgreens noted repeatedly that Fausett’s receipts included no account information that could be linked to her personally in any way, only digits that identified the bank through which transactions involving the prepaid card would be processed.
In responding to Walgreens’ attempt to appeal, Keogh and his fellow plaintiffs’ lawyers said the question of no-injury standing has already been decided by the state high court, twice.
“It is fundamentally inconsistent for Walgreens to assert Illinois law requires Fausett to incur injury beyond the violation of her rights to sue, when the Illinois Supreme Court holds ‘an individual need not allege some actual injury or adverse effect, beyond violation of his or her rights’ to sue,” Keogh wrote in his party's reply.
The Second District court quickly rejected Walgreens appeal petition without comment or written decision.
Walgreens then appealed to the Illinois Supreme Court, which in an unusual step, agreed to take up the appeal, despite no decision from the appellate court.
Flocking to Illinois
In the petition to appeal, Walgreens urged the courts to deliver a clear message and limit the reach of the “no injury” standard that trial lawyers are asserting should apply to FACTA and potentially a host of other consumer or identity protection laws without potentially large penalties.
Trial lawyers, Walgreens said, “are flocking to Illinois state court on the false legal premise that our state’s courts are open to federal statutory claims that have been rejected by both federal and sister state courts.”
They noted, already, that a settlement over a FACTA class action lawsuit against furniture seller IKEA was approved in Illinois, even though the case had been first brought in California and federal and state appeals courts there had rejected the plaintiffs’ attempts to claim they should be able to sue, despite suffering no actual harm.
Once IKEA indicated a willingness to settle, plaintiffs stayed their lawsuit in California and filed an identical complaint in Illinois, Walgreens said, “where those parties believed the settlement would be approved based on the erroneous belief that standing was different in Illinois than both California and other jurisdictions.”
Walgreens said others are mimicking those tactics in other cases, as well, on the belief that Illinois courts in Cook County, Lake County and elsewhere in the state are uniquely open to their no-injury, big money claims.
“Absent a clear statement by the Illinois Supreme … plaintiffs will continue to flock to Illinois for no-injury FACTA claims that could not be brought in any federal or other state court,” Walgreens said.
Walgreens is represented in the case by attorneys Robert M. Andalman, Rachael Blackburn and Diana Guler, of A&G Law, of Chicago.
A spokesperson for the Illinois Supreme Court said no date has yet been set for arguments in the case, noting briefing in the matter has only begun. The case could land before the justices sometime in 2024.