United States Court of Appeals For the Seventh Circuit ____________________ No. 23-2447 LINDA THOMPSON, individually and on behalf of others simi- larly situated, Plaintiff-Appellant,

v. ARMY AND AIR FORCE EXCHANGE SERVICE, Defendant-Appellee. ____________________

Appeal from the United States District Court for the Southern District of Illinois. No. 22-cv-2799 — Staci M. Yandle, Judge. ____________________

ARGUED NOVEMBER 5, 2024 — DECIDED JANUARY 8, 2025 ____________________

Before SCUDDER, ST. EVE, and JACKSON-AKIWUMI, Circuit Judges. ST. EVE, Circuit Judge. This appeal involves the rare case where the parties agree that the district court lacked subject matter jurisdiction over the plaintiff’s claim. At issue is what happens next. 2 No. 23-2447

Linda Thompson filed a putative class action against the Army and Air Force Exchange Service (the “Exchange”) in Il- linois state court, alleging that the Exchange printed her credit card’s expiration date on purchase receipts in violation of the Fair and Accurate Credit Transactions Act (“FACTA”). The Exchange removed the case to federal court pursuant to 28 U.S.C. § 1442(a)(1), which provides for federal agency re- moval. Once in federal court, Thompson moved to remand the case back to state court, and the Exchange moved to dis- miss under Federal Rule of Civil Procedure 12(b)(1). Both par- ties focused on Thompson’s lack of Article III standing. The district court elected to dismiss the suit. It reasoned that the Exchange did not need to assert a colorable federal defense to remove the action and that the Exchange possessed an abso- lute right to litigate in federal court. We agree that the Exchange was not required to present a federal defense to remove this case. But the district court erred in dismissing the suit. We therefore vacate the judgment and remand, with instructions to remand the case to state court. I. Background The Exchange is an instrumentality of the United States Army and Air Force that provides retail services on military bases across the country. Linda Thompson alleges that she used her personal credit card at the Exchange’s food court at Scott Air Force Base in Illinois, and that on two occasions, her printed receipt included her credit card’s expiration date. She claims that the printing of this information violated FACTA, which amended portions of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681–1681x. No. 23-2447 3

Thompson filed a class-action complaint in Illinois state court on behalf of “all individuals in the United States … who … engaged in one or more transactions using a debit card or credit card” at a retail location owned or operated by the Ex- change. She sought statutory damages, attorney’s fees, and litigation expenses. The complaint did not allege any concrete harm (e.g., identity theft or credit card fraud). The Exchange removed the case to federal court pursuant to 28 U.S.C. § 1442(a)(1), which permits federal agencies to re- move cases filed in state court. Thompson thereafter moved to remand, contending that her lack of Article III standing de- prived the court of subject matter jurisdiction. A few days later, the Exchange moved to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1). The district court denied Thompson’s motion to remand and granted the Exchange’s motion to dismiss for lack of sub- ject matter jurisdiction. First, the court held that the removal was proper because the Exchange, as an arm of the federal government, could remove without asserting a colorable fed- eral defense, distinguishing Thompson’s acti