Why Standing Matters To Your Credit Union

January 23, 2018 at 9:16 am 4 comments

Image result for child learning to walkAs a general rule, if I find a legal concept interesting, my readers find it slightly more interesting than the American version of Antiques Road Show. But this morning I get to talk about an extremely important legal principle that is directly impacting your credit union.

If you’re trying to ensure that your website is ADA compliant then you should know about standing. Let’s say you’re more confident than Donald Trump sending out a Saturday morning tweet when it comes to your website; you’re concerned about how much all those data thefts are costing your credit union then you still need to know about standing. So here it goes:

Standing refers to a person’s ability to show that they have been harmed by someone’s legally actionable mistake. You might have the best lawsuit in the world but unless you can show that you have been harmed by someone’s actions then you lack standing. Let’s say Bill Gates was driving 100mph last Saturday. His recklessness didn’t harm you. Similarly, not all statutes are intended to protect all people. For instance, Michael Phelps couldn’t successfully sue under the ADA claiming that a pool he was in wasn’t handicapped accessible.

Standing is one of the key issues for credit unions deciding to fight ADA website violation claims. Typically, the demand letters I have seen are brought in the name of a blind state resident regardless of whether or not the plaintiff is a member or could even qualify for membership. This clearly raises standing as a potential defense, so I was happy to see that NAFCU has submitted a brief in which a court will deal directly with the issue of whether someone who couldn’t qualify for membership in a credit union nevertheless has standing to sue that credit union. Don’t get me wrong. The argument is not a slam dunk winner but it is certainly one that credit unions should raise.

Standing is also a key issue for credit unions claiming that they have been harmed as a result of data breaches. In Spokeo, Inc. v. Robins, the Court held that in order to establish Article III standing, a plaintiff must show that he or she has suffered “an invasion of a legally protected interest” that is “concrete and particularized” and “actual or imminent, not conjectural or hypothetical.” How does this work in the context of data breaches? Is the fact that a large number of member’s personally identifiable information stolen by hackers enough to establish standing or do plaintiffs also have to show that the data was actually used to rip someone off (that’s a legal term)? This is not an extraction. Yahoo! is making pretty much the same argument in seeking to dismiss consumer claims related to its massive data breach. I also would anticipate Spokeo standing to be an issue in the Equifax litigation.

Unfortunately, Law360 is reporting this morning that the Supreme Court has decided not to hear a case in which it would have had the opportunity to further clarify Spokeo standing, albeit in the context of the Fair Credit Reporting Act.

The issue of standing is further complicated by the distinction between banks and credit unions which can show they have been harmed by a data breach by, for example, having to reissue plastic, and consumers who can prove that their information was exposed but cannot prove that someone has actually used their information yet.

I will keep you posted. I hope you’re still awake. Enjoy your day.

Entry filed under: Legal Watch. Tags: , .

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4 Comments Add your own

  • 1. Anthony Demangone  |  January 23, 2018 at 10:16 am

    Henry – thanks for the shout out. Still more work to be done!

    Reply
  • 2. Anonymous  |  January 23, 2018 at 10:31 am

    I resent your disparaging comments regarding the Antiques Roadshow and demand both a retraction and an apology. Not to me, but to the American People.

    Reply
    • 3. Henry Meier  |  January 23, 2018 at 4:25 pm

      To the extent that I have offended faithful viewers of the show I apologize. Its much more exciting than CSpan’s morning lineup.

      Reply
  • […] my hardcore faithful readers know, a key concept to understand in evaluating your credit union’s legal risk is standing. The very basic idea is […]

    Reply

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Authored By:

Henry Meier, Esq., Senior Vice President, General Counsel, New York Credit Union Association.

The views Henry expresses are Henry’s alone and do not necessarily reflect the views of the Association. In addition, although Henry strives to give his readers useful and accurate information on a broad range of subjects, many of which involve legal disputes, his views are not a substitute for legal advise from retained counsel.

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