Aliano v. Joe Caputo and Sons, Inc. et al

Filing 235

MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 5/5/2011:Mailed notice(wp, )

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

KATHY ALIANO, Individually and
on Behalf of All Others
Similarly Situated,
Plaintiff,
Case No. 09 C 910
v.
JOE CAPUTO AND SONS ALGONQUIN, INC., an Illinois
Corporation, Individually and
d/b/a JOE CAPUTO & SONS FRUIT
MARKET; and DOES 1-10,

Hon. Harry D. Leinenweber

Defendants.

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Joe Caputo and Sons – Algonquin,
Inc.’s (hereinafter, the “Defendant”) Motion for Summary Judgment.
For the reasons stated herein, the Motion is denied.
I.

INTRODUCTION

Plaintiff Kathy Aliano (hereinafter, the “Plaintiff”) lives in
Villa Park, Illinois.

On February 12, 2008, she shopped at Joe

Caputo & Sons Fruit Market in Algonquin, Illinois, and used her
Discover credit

card

to

purchase

$105.57 in

groceries.

She

received a receipt from the store that showed the first six digits
and last four digits of her credit card number, which violates the
Fair and Accurate Credit Transactions Act (“FACTA”).

15 U.S.C.

§ 1681c(g)(1)(“[N]o person that accepts credit cards or debit cards

for the transaction of business shall print more than the last 5
digits of the card number or the expiration date upon any receipt
provided

to

the

cardholder

at

the

point

of

the

sale

or

transaction.”).
On February 12, 2009, Plaintiff filed a putative Class Action
Complaint against Defendant, seeking statutory damages of $100 to
$1,000 per FACTA violation, plus attorneys’ fees and costs, for
Defendant’s alleged willful FACTA violations.

Aliano has not

claimed any actual injury from Defendant’s actions.

The Court

certified the putative class in an opinion read in court on
September 21, 2010.
Brothers Natale and Vito Caputo co-own the Defendant grocery
store. The brothers also own and operate retail produce markets in
Palatine

and

entities.

Des

Plaines,

which

are

each

on

corporate

Natale serves as Defendant’s President, and Vito as its

Vice President, Secretary, and Treasurer.
public

separate

August

30,

2007.

To

Defendant opened to the

implement

its

electronic

transactions system, Defendant retained Integrated Store Systems,
Inc. (“ISSI”).

ISSI purchased, upgraded, and maintained the

equipment for Defendant’s point-of-sale system, which included the
equipment to print credit and debit card receipts.

ISSI selected

and installed the Store Management Suite software manufactured by
LOC Software for Defendant’s point-of-sale system.

Defendant

alleges it did not know that this software did not comply with

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FACTA’s truncation requirements until Plaintiff filed this lawsuit,
and that it relied completely on ISSI for its FACTA truncation
compliance.
Plaintiff filed this action on February 12, 2009. In November
2008, ISSI President Roger Larsen (“Larsen”) informed Defendant
that it had an upgrade to install for the point-of-sale software.
This installation would take at least three to four weeks to
complete and require Defendant to close some of its check-out
lanes. Defendant did not want this disruption to occur during the
holiday season, which is its most active time of the year for
business. Defendant alleges that Larsen did not tell it that the
upgrade would make it FACTA compliant, but rather that Larsen said
it would make the system more efficient.

Larsen testified at a

deposition that the upgraded software would truncate the printed
credit or debit card numbers on receipts to five or fewer digits.
In an interrogatory response, Defendant states that it became aware
of FACTA’s truncation requirements in September 2007, when Natale
Caputo received a phone call from his cousin-in-law, Robertino
Presta (“Presta”), the President of Caputo’s New Farm Produce, Inc.
Presta was being sued by the same Plaintiff in this case for
violating FACTA.

Defendant, however, argues that Presta did not

tell Natale about the specific nature of the lawsuit, such as that
it involved credit card receipts or that it involved improper

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truncation on the receipts.

Defendant also argues that it did not

understand the question to which it gave this answer.
II.

LEGAL STANDARD

Summary judgment is proper if “the movant shows that there is
no genuine issue as to any material fact and the movant is entitled
to judgment as a matter of law.”

FED . R. CIV . P. 56(a).

A fact is

material if it could affect the outcome of the suit, and a dispute
is genuine where the evidence is such that a reasonable jury could
return a verdict for the nonmoving party.

See Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986).

In ruling on summary

judgment, the Court does not weigh the evidence or determine the
truth of the matter, but determines whether a genuine issue of
material fact exists that warrants trial.

See id. at 249.

In

making this determination, the Court must view all the evidence and
draw

any

reasonable

inferences

therefrom

favorable to the nonmoving party.

in

the

light

most

See Miller v. Am. Family Mut.

Ins. Co., 203 F.3d 997, 1003 (7th Cir. 2000).
The moving party bears the burden of establishing the basis
for its motion, together with evidence demonstrating the absence of
any genuine issue of material fact.
477 U.S. 317, 323 (1986).

See Celotex Corp. v. Catrett,

Once the moving party has met this

burden, the nonmoving party may not rest on mere allegations, but
must present specific facts showing that a genuine issue exists for
trial.

See Big O Tire Dealers, Inc. v. Big O Warehouse, 741 F.2d
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160, 163 (7th Cir. 1984).

To support their position that a genuine

issue of material fact does or does not exist, the parties may cite
to materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations, admissions, and interrogatory answers, or show that
the materials in the record do or do not establish a genuine
dispute.

FED. R. CIV. P. 56(c).
III.

ANALYSIS

FACTA statutory damages are limited to willful noncompliance.
15 U.S.C. § 1681n(a).

The Supreme Court has held that willful

noncompliance under FACTA encompasses both knowing and reckless
behavior.
(2007).

Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 59–60
The Court cited the Restatement (Second) of Torts in

giving context to the definition of “reckless”:
The actor’s conduct is in reckless disregard of the
safety of another if he does an act or intentionally
fails to do an act which it is his duty to the other to
do, knowing or having reason to know of facts which would
lead a reasonable man to realize, not only that his
conduct creates an unreasonable risk of physical harm to
another, but also that such risk is substantially greater
than that which is necessary to make his conduct
negligent.
Id. at 69 (citing Restatement (Second) of Torts § 500 (1963–64)).
The legislative history of FACTA and the Credit and Debit Card
Clarification Act does not offer any indication that a “knowing”
violation would include anything other than its usual meaning.

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Defendant argues that it did not know of FACTA’s truncation
requirements prior to this lawsuit, and that the evidence does not
show that it recklessly violated FACTA.

However, in answering

Plaintiff’s interrogatories, Defendant stated that it first learned
of credit and debit card truncation requirements in September 2007,
as a result of the lawsuit filed by Kathy Aliano against Caputo’s
New Farm Produce, Inc.

Defendant now argues that it did not

understand

to

the

question

which

it

responded.

Rather,

it

“understood Plaintiff to be asking when it first became aware of
compliance,” and responded by referencing the calls Natale Caputo
received from his cousin-in-law Presta.

Def.’s Reply Br. 6 n.2.

The question, however, is straightforward: “State how and when you
first learned of truncation requirements.”
Statement

Additional

Facts

Ex.

6.

Pl.’s Local Rule 56.1

The

question

does

not

specifically state “FACTA truncation requirements,” but as the
lawsuit concerns a FACTA truncation violation, the question’s
reference to FACTA is presumed.
Defendant asks the Court to weigh competing statements in the
record to determine that it did not know of FACTA’s truncation
requirements prior to this lawsuit.

A factual determination such

as this on a material fact is improper on summary judgment.

See

Anderson, 477 U.S. at 255; Wilson v. Williams, 997 F.2d 348, 350
(7th Cir. 1993).
amended

its

While the Court acknowledges that Defendant has

response

concerning

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when

it

learned

of

FACTA’s

truncation requirements, it will not weigh these statements to
determine when Defendant gained this knowledge.
Plaintiff alleges FACTA violations starting in February 2008,
approximately five months after the date when Defendant stated in
its

interrogatory

requirements.

answer

that

it

knew

of

FACTA’s

truncation

Accordingly, the evidence points to knowing FACTA

violations. Defendant could argue that it did not know that its
credit and debit card receipts violated FACTA despite knowing of
the statute’s truncation requirements. However, if Defendant knew
of these requirements, and did not make efforts to determine if it
complied with the statute, a genuine issue of material fact exists
whether it recklessly violated the statute.

See, e.g., J.I. Case

Credit Corp. v. First Nat. Bank of Madison Cnty., 991 F.2d 1272,
1278 (7th Cir. 1993)(“To consciously ignore or to deliberately
close one’s eyes to a manifest danger is recklessness, a mental
state that the law commonly substitutes for intent or actual
knowledge.”).
Plaintiff contends that Defendant “was bombarded with repeated
warnings and notifications about FACTA and credit card truncation.”
Pl’s Resp. Br. 7.
interrogatory

As such, she argues, even disregarding the

answer

and

whether

Defendant

knowingly violated

FACTA, Defendant recklessly violated the statute.
distorts the evidence.

This assertion

Besides the conversations that Natale had

with Presta, the evidence demonstrating that Defendant received

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FACTA truncation information comprises three mailings from its
credit card processing banks.

Defendant received two of these

mailings prior to opening the Algonquin store — one in September
2004 with documents from American Express Merchant Services and
another in December 2006 from Fifth Third Bank Processing Solutions
that contained a publication by the PCI Security Standards Council.
On July 18, 2008, Fifth Third sent Defendant a billing statement,
which

also

requirements.

included

information

about

FACTA’s

truncation

This evidence, without the interrogatory response,

does not present a genuine issue of material fact that Defendant
willfully violated FACTA.

Plaintiff admits that Natale never

opened or reviewed the mailings from Fifth Third.

Rather, Natale

gave these documents to his accountant without reviewing them.
This

may

constitute

recklessness.

Rather

negligence,
than

the

but

it

deluge

does
of

not

FACTA

establish
truncation

notifications that Plaintiff alleges, Defendant received a trickle
of information, most of which it did not review.
Plaintiff also admits that ISSI selected, installed, and
maintained the point-of-sale system at Defendant’s store, and that
Defendant relied on ISSI to ensure that the equipment and software
complied with applicable laws.

Defendant made the decision to

retain ISSI for its point-of-sale system, and it cannot pass its
duties to comply with FACTA on to ISSI. Plaintiff admits, however,
that ISSI never disclosed to Defendant that the November 2008

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upgrade to the point-of-sale software would make its credit and
debit

card

receipts

FACTA

compliant.

Defendant’s

good-faith

reliance on a company experienced with point-of-sale systems, and
assurances from ISSI that it complied with FACTA, factor against
Defendant acting with the level of recklessness the Supreme Court
enunciated would create a willful FACTA violation. See Safeco, 551
U.S. at 69.
That being said, issues of intent are usually improper to
decide on summary judgment, unless “the undisputed facts make the
outcome clear.”
(7th Cir. 1993).
genuine

dispute

Alexander v. Erie Ins. Exch., 982 F.2d 1153, 1160
In this case, the outcome is not clear, as a
exists

whether

Defendant

truncation requirements in September 2007.

knew

about

FACTA’s

This material fact

could help establish that Defendant willfully violated FACTA.
Accordingly, Defendant’s Motion for Summary Judgment is denied.
Moving forward, the Court notes Plaintiff’s assertion that
documents produced by Defendant verify 294,134 FACTA violations.
Pl’s Resp. Br. 2 n.2.

In the oral ruling granting Plaintiff’s

Motion for Class Certification, the Court stated that the number of
people in the putative class exceeds 300,000. This appears to have
been a misstatement. The Court certified the class as “all persons
to whom the Defendants provided an electronically printed receipt
at the point of sale or transaction, in a transaction occurring in
Illinois after December 4, 2006, which receipt displays more than

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the last five digits of the person’s credit card or debit card
number.”

CM/ECF No. 184, Sept. 21, 2010.

FACTA imposes liability

on a per-consumer basis, rather than on a per-receipt basis.
15 U.S.C. § 1681n(a); see also Stillmock v. Weis Markets, Inc., 385
Fed. Appx. 267, 275–76 (4th Cir. 2010)(Wilkinson, J., concurring).
This is the class that Plaintiff moved to certify.

Plaintiff,

however, has not specified whether each verified FACTA violation is
from

a

separate

individual,

or

multiple noncompliant receipts.

if

some

individuals

received

Consumers frequent their local

grocery stores, and it is reasonable for the Court to presume that
the total number of noncompliant receipts exceeds the number of
individual consumers who received these receipts.
figure

of

the

number

of

individual

consumers

A more accurate
who

received

improperly truncated receipts should help this litigation proceed.
Also, even with the reduced liability associated with a perconsumer figure, the Court cannot fathom how the minimum statutory
damages award for willful FACTA violations in this case — between
$100 and $1,000 per violation — would not violate Defendant’s due
process rights.

See, e.g., BMW N. Am., Inc. v. Gore, 517 U.S. 559,

586 (1996)(finding a $2 million punitive damages award where there
were only $4,000 in compensatory damages “grossly excessive” and in
violation of defendant’s due process rights); State Farm Mut. Ins.
Co. v. Campbell, 538 U.S. 408, 429 (2003)(reversing a $145 million
punitive damages award in a case in which the plaintiff was awarded
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$1 million in compensatory damages).
294,134

FACTA

violations

pertains

If each one of the alleged
to

a

separate

individual,

Defendant faces a minimum liability of approximately $29.4 million
and possibly more than $294 million in statutory damages if a jury
rules against it.

Again, Plaintiff does not allege any actual

damages from Defendant’s alleged violations.
although

authorized

by

statute,

would

be

Such an award,
shocking,

grossly

excessive, and punitive in nature.
IV.

CONCLUSION

For the reasons stated herein, Defendant’s Motion for Summary
Judgment is denied.
IT IS SO ORDERED.

Harry D. Leinenweber, Judge
United States District Court
DATE: 5/5/2011

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