39 F.4th 946
7th Cir.2022Background:
- In July 2015 Wired published a controlled remote hack of a 2014 Jeep Cherokee using the uConnect infotainment system (designed by Harman, installed by FCA/Chrysler).
- FCA issued a recall and provided a software patch; NHTSA monitored and concluded the patch corrected the vulnerability. No other successful real-world hacks were reported.
- Four plaintiffs sued FCA and Harman as a putative nationwide class for model-year 2013–2015 vehicles, alleging defects and asserting four injury theories; only an "overpayment" economic theory survived the pleadings.
- During discovery plaintiffs produced expert reports: a consumer-survey (Kemp) and an economist (Williams) who estimated hypothetical overpayment between ~$5,478 and $8,701 per vehicle.
- After discovery defendants moved on multiple fronts including a factual challenge to Article III standing; plaintiffs failed to cite evidence in opposition, relying on earlier rulings and allegations.
- The district court (Judge Yandle) dismissed for lack of Article III standing (holding plaintiffs received what they bargained for), but incorrectly entered dismissal with prejudice; the Seventh Circuit affirmed dismissal for lack of subject-matter jurisdiction and modified the judgment to dismissal without leave to amend.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Article III standing (overpayment injury) | Overpayment is a cognizable economic injury; experts would show consumers paid more due to undisclosed cybersecurity risk | Plaintiffs produced no competent evidence at the factual-challenge stage to show they actually overpaid | Plaintiffs failed to meet burden on a factual challenge to standing; dismissal for lack of Article III standing affirmed |
| Use of expert reports raised on appeal | Kemp/Williams reports show overpayment and supply-demand effects | Evidence not presented to district court cannot be considered on appeal | Court declined to consider evidence first raised on appeal; appellate review limited to record presented below |
| Law-of-the-case (reconsideration by successor judge) | Earlier rulings rejecting facial standing challenge preclude reconsideration | Successor judge may consider new factual challenge after discovery; law of the case is discretionary and weaker on jurisdictional issues | Law-of-the-case did not bar reconsideration because the later challenge was factual and the legal landscape/record had changed |
| Disposition form (dismissal with prejudice vs jurisdictional) | — | A jurisdictional dismissal should not be labeled with prejudice | District court erred in entering a merits-style dismissal with prejudice; modified to dismissal for lack of subject-matter jurisdiction without leave to amend |
Key Cases Cited
- Lujan v. Defenders of Wildlife, 504 U.S. 555 (standing requires an injury in fact and proof increases as litigation proceeds)
- Spokeo, Inc. v. Robins, 136 S. Ct. 1540 (Article III standing elements: injury, traceability, redressability)
- Davis v. FEC, 554 U.S. 724 (proof required to establish standing increases as the suit proceeds)
- Silha v. ACT, Inc., 807 F.3d 169 (distinguishes facial and factual standing challenges)
- Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440 (on procedure for factual challenges to standing)
- Frederiksen v. City of Lockport, 384 F.3d 437 (jurisdictional dismissal cannot be entered with prejudice)
- MAO–MSO Recovery II, LLC v. State Farm Mut. Auto. Ins. Co., 935 F.3d 573 (district court may dismiss for lack of jurisdiction without leave to amend)
- Packer v. Trustees of Indiana Univ. Sch. of Med., 800 F.3d 843 (appellate courts generally will not consider evidence not presented to the district court)