Plaintiffs had no standing to sue over disclosure of SWIFT financial transactions to government

In the same vein as ACLU v. NSA: Plaintiffs lacked standing to challenge administrative subpoenas for bank transfer records.

The government sought by administrative subpoenas information from the SWIFT banking network.

Defendant S.W.I.F.T. SCRL (the Society for Worldwide Interbank Financial Telecommunication, or SWIFT) is an international cooperative consortium of banks, brokers, and investment managers. Based in Brussels and with its principal American place of business in northern Virginia, SWIFT supplies secure standardized messaging services to financial institutions. Quoting from SWIFT’s website, the complaint describes the SWIFT consortium as follows:

“Defendant SWIFT is ‘the financial industry-owned co-operative supplying secure, standardized messaging services and interface software to 7,800 financial institutions in more than 200 countries. SWIFT’s worldwide community includes banks, broker/dealers and investment managers, as well as their market infrastructures in payments, securities, treasury and trade.'”

Additionally, the complaint notes that most of the eleven million transactions per day handled by SWIFT are international in nature in that they involve communication across national borders.

Plaintiffs lacked standing to sue over disclosure of information to the government under administrative subpoenas from the Treasury Department. Walker v. S.W.I.F.T., 517 F. Supp. 2d 801 (E.D. Va. 2007)*:

Plaintiff Walker filed the present suit against SWIFT on June 23, 2006–the same day the Times article was published–in the United States District Court for the Northern District of Illinois. Plaintiff Kruse was added as a plaintiff on February 27, 2007. The complaint alleged four counts of wrongdoing. Count I alleged that SWIFT “denied Plaintiffs … their rights to speak and receive speech privately under the First Amendment.” Count II alleged that SWIFT “violated [their] reasonable expectations of privacy and denied … their right to be free from unreasonable searches and seizures as guaranteed by the Fourth Amendment to the Constitution of the United States.” Count III alleged that SWIFT violated the RFPA when it “disclosed information contained in customer financial records without reasonable description or any of the other five criteria enumerated” in the statute. Count IV alleged that SWIFT engaged in unfair, unlawful and/or fraudulent business practices in contravention of the ICFDBPA.

. . .

It is axiomatic that a party seeking to establish standing in the federal courts must demonstrate an injury in fact, i.e., she must demonstrate “an invasion of a legally protected interest which is (a) concrete and particularized and (b) ‘actual or imminent, not “conjectural” or “hypothetical.”‘” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). A party must therefore allege facts creating a plausible inference that an injury in fact has occurred. See Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007) (“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions . . . . Factual allegations must be enough to raise a right to relief above the speculative level.”). This plaintiffs have failed to do.

The complaint is deficient in its factual allegations relating to standing. Apart from the conclusory allegation in paragraph 41, to the effect that “[b]y the acts alleged herein, SWIFT’s conduct proximately caused harm to Plaintiffs and class members,” the complaint fails to allege facts from which injury in fact may be inferred. For example, although the complaint adequately alleges that SWIFT disclosed information regarding certain financial transactions, there is no allegation that plaintiffs’ bank or banks are members of SWIFT, nor is there any information indicating that plaintiffs’ financial information was disclosed by SWIFT. Plaintiffs rely on their own belief that their financial information has been disclosed, but such a belief, without more, cannot support standing. This point is well illustrated by the recent Sixth Circuit decision in ACLU v. Nat’l Security Agency, 493 F.3d 644 (6th Cir. 2007), which held that a plaintiff’s own assessment of injury in fact is insufficient to establish standing. 493 F.3d at 673-74 (“[I]t would be unprecedented for this court to find standing for plaintiffs to litigate a Fourth Amendment cause of action without any evidence that the plaintiffs themselves have been subjected to an illegal search or seizure.”). The complaint fails to identify plaintiffs’ bank or banks, fails to establish whether such bank or banks are members of SWIFT, and fails to allege any facts giving rise to a plausible inference that plaintiffs’ financial information was disclosed by SWIFT.

It may be that these omissions can easily be remedied. Plaintiffs certainly know the identity of their banks and presumably can readily determine whether those banks’ transactions are handled by SWIFT. 127 S.Ct. at 1974. Plaintiffs would “nudge their claims across the line from the conceivable to the plausible” were they (i) to allege the identity of the banks or financial institutions they used, (ii) to conduct a reasonable inquiry to determine whether these banks were members of SWIFT, and (iii) to conduct a reasonable inquiry to determine whether SWIFT disclosed the named banks’ transactions. Bell Atlantic, 127 S.Ct. at 1974. In this respect it seems at least plausible that plaintiffs’ banks know or can ascertain from SWIFT whether data they provided to SWIFT was later disclosed by SWIFT.