David Hughes v. Kore of Indiana Enterprise Inc, 731 F.3d 672

Background

Kore, owner of two ATMs in Indianapolis bars, was sued in a class action for allegedly failing to post the sticker ATM fee notice required by the Electronic Funds Transfer Act (EFTA); Kore provided on‑screen notice but not the sticker.
The EFTA then provided individual plaintiffs either actual damages or statutory damages of $100–$1,000 per suit; class recoveries were capped at the lesser of $500,000 or 1% of defendant’s net worth.
Parties stipulated Kore’s 1% net‑worth cap was $10,000 and there were about 2,800 transactions during the relevant year, yielding at most ~$3.57 per transaction if fully distributed.
The district court decertified the class on two independent grounds: (1) individual suits would be preferable because of the $100 statutory minimum in individual actions, and (2) adequate notice to class members could not be practicably given because ATM records use numeric IDs not readily linked to names.
The plaintiff sought review under Rule 23(f); the Seventh Circuit allowed appeal, reversed decertification, and remanded, addressing notice methods and distribution options (including cy pres) given the tiny per‑member recovery.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the class should remain certified despite very small per‑member damages	Class treatment is necessary because individual suits for small statutory amounts are impracticable and class procedure furthers deterrence	Implicitly, defendants did not oppose certification in district court; decertification argued on practical grounds	Reversed decertification: small stakes do not preclude class treatment; class may provide deterrent and is appropriate here
Whether individual suits are a reasonable alternative given EFTA’s $100–$1,000 statutory damages	Class contends individual suits are unlikely because lawyers will not pursue low‑stakes claims despite statutory minimums	District court held individual suits better because of the $100 statutory floor	Court rejected that as a sufficient basis to decertify; individual suits are unrealistic and do not defeat superiority here
Whether adequate notice under Fed. R. Civ. P. 23(c)(2)(B) is practicable	Plaintiff proposed sticker postings on the two ATMs plus publication and a website notice as the best practicable notice	District court found individual notice impracticable because ATMs identify transactions by numeric codes requiring subpoenas to many banks	Court held proposed notice (publication, ATM postings, website) adequate as best practicable under circumstances; identifying every user by name not required given stakes
Whether distribution to class members is feasible or whether cy pres is appropriate	Plaintiff suggested class funds could be distributed, but acknowledged per‑member shares would be negligible; alternative is cy pres to consumer‑protection charity	District court was concerned about distributing trivial sums and administrative burdens	Court approved consideration of cy pres (or similar) where direct distribution provides no meaningful relief and cy pres better advances deterrence/consumer protection, while cautioning against counsel fee abuses

Key Cases Cited

Blair v. Equifax Check Servs., Inc., 181 F.3d 832 (7th Cir.) (standard for granting interlocutory review under Rule 23(f))
Mirfasihi v. Fleet Mortg. Corp., 356 F.3d 781 (7th Cir. 2004) (explaining cy pres doctrine origins and application in class actions)
Mace v. Van Ru Credit Corp., 109 F.3d 338 (7th Cir. 1997) (class actions needed where individual claims are small)
Eisen v. Carlisle & Jacquelin, 417 U.S. 156 (1974) (requirement of individual notice when members can be identified through reasonable effort)
Kohen v. Pac. Inv. Mgmt. Co., 571 F.3d 672 (7th Cir. 2009) (settlement pressure where potential liability is large relative to probability of success)
In re Baby Prods. Antitrust Litig., 708 F.3d 163 (3d Cir. 2013) (warning that litigation costs should not dictate remedy structure)
Lane v. Facebook, Inc., 696 F.3d 811 (9th Cir. 2012) (cy pres considerations and limits)
Nachshin v. AOL, LLC, 663 F.3d 1034 (9th Cir. 2011) (requiring cy pres recipients have interests parallel to the class)
Six Mexican Workers v. Ariz. Citrus Growers, 904 F.2d 1301 (9th Cir. 1990) (class action distribution practicality and cy pres discussion)
Juris v. Inamed Corp., 685 F.3d 1294 (11th Cir. 2012) (publication as substitute notice when individual identification is impracticable)
Klier v. Elf Atochem N. Am., Inc., 658 F.3d 468 (5th Cir. 2011) (notice and opt‑out considerations)