Tyler v. Michaels Stores, Inc.

Filing 21

Judge William G. Young: ORDER entered. MEMORANDUM AND ORDER: "For the reasons, this Court GRANTS Michaels' motion to dismiss ECF No. 9 it is entirety, and a judgment of dismissal shall enter one week from the date of the issuance of this memorandum of decision" SO ORDERED... (Paine, Matthew)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS

)
)
)
)
)
Plaintiffs, )
)
v.
)
)
MICHAELS STORES, INC.
)
)
Defendants. )
)
MELISSA TYLER on behalf of
herself and all others
similarly situated,

CIVIL ACTION
NO. 11-10920-WGY

MEMORANDUM AND ORDER
YOUNG, D.J.

I.

January 6, 2012

INTRODUCTION
[F]or all its faults, the civil justice system remains a
remarkable achievement. It is there that an individual
who is injured, neither wealthy nor well connected, can
hail a powerful adversary into court on equal footing and
ask the court to hold it accountable for its wrongful
conduct.
Only in an American courtroom — not in legislative
chambers or executive suites — can an individual seek
full redress, standing at the bar on an equal basis with
a powerful and influential adversary. The political and
economic advantages that one might enjoy in other arenas
dissolve in the courtroom. That [is] something that we
should not ever look to give up.

Robert S. Peck, Emerging Civil Justice Issues (Dec. 5, 2010), in
7 J.L. Econ. & Pol’y 195, 195-96 (2010).
Here, a dispute between a determined shopper and a
multistate retail chain gives rise to a case of first impression.

The issue is one of construction of a Massachusetts statute, a
matter of law.

Melissa Tyler (“Tyler”) brings this suit against

Michaels Stores, Inc. (“Michaels”) for violation of Massachusetts
General Laws, chapter 93, section 105(a) (the “Act” or “Section
105(a)”).

Tyler has sued on behalf of herself and a putative

class, claiming that Michaels illegally requested customers’ ZIP
codes when processing their credit card transactions in violation
of the Act.

She brings a three count complaint alleging that the

violation of the Act amounted to a per se violation of
Massachusetts General Laws, chapter 93A, section 9, caused unjust
enrichment, and entitles Tyler to declaratory relief pursuant to
28 U.S.C. §§ 2201-2202.

Michaels has filed a motion to dismiss

the complaint in its entirety, which motion is presently before
this Court.

Michaels argues that Tyler has failed to plead a

violation of the Act, allege a legally cognizable injury, and
assert facts sufficient to establish unjust enrichment or to
warrant declaratory relief.

Michaels denies that customers’ ZIP

codes constitute “personal identification information” or that
the retailers’s electric credit card terminal creates a “credit
card transaction form” as those phrases are used in the Act.

A.

Procedural Posture

Tyler filed a putative class action on May 23, 2011 against
Michaels.

Class Action Compl. (“Compl.”), ECF No. 1.

2

Subsequently, on July 22, 2011, Michaels filed the present motion
to dismiss.

Def.’s Mot. Dismiss (“Michaels’ Mot.”), ECF No. 9.

On September 2, 2011, Tyler filed her memorandum in opposition to
Michaels’ motion to dismiss.

Mem. L. Opp’n Def.’s Mot. Dismiss

(“Tyler’s Mem.”), ECF No. 15.

On September 16, 2011, Michaels

filed its reply memorandum.
No. 17.

Reply Supp. Def.’s Mot. Dismiss, ECF

On September 30, 2011, Tyler filed her sur-reply.

Sur-

Reply Opp’n Def.’s Mot. Dismiss Compl. (“Sur-Reply”), ECF No. 18.
This Court heard oral arguments on the motion on October 20,
2011.

Michaels’ motion to dismiss is presently before this

Court.
B.

Factual Allegations

On several occasions during the past year, Tyler made credit
card purchases at Michaels in Everett, Massachusetts, at which
she was asked to provide her ZIP code number.

Compl. ¶ 6.

Tyler

provided the information, under the mistaken impression that she
was required to do so to complete the transaction.

Id. ¶¶ 6, 20.

Tyler alleges that Michaels’ employees entered her and other
customers’ ZIP codes on the computerized check-out register used
to process the point-of-sale transaction.

Id. ¶ 20.

The cash

register created an electronic “form” containing the credit card
number, the card holder’s name, and ZIP code.

Id. ¶¶ 7, 20.

The credit card issuer did not require Michaels to request
its customers’ ZIP codes to process their transactions, id. ¶ 1,

3

nor did Michaels request the ZIP code for verification of the
card holder’s identity, id.

Rather, Michaels used Tyler’s name

and ZIP code in conjunction with other commercially available
databases to find her address and phone number.

Id. ¶ 21.

then received unwanted marketing materials from Michaels.

Tyler
Id. ¶

6.
C.

Federal Jurisdiction

Jurisdiction is proper under 28 U.S.C. § 1332(d).

There is

minimal diversity among the parties (Tyler is domiciled in
Massachusetts and Michaels is domiciled in Delaware and Texas),
there are more than 100 class members, and the amount in
controversy is in excess of $5,000,000, exclusive of interest and
costs.
II.

ANALYSIS
A.

Legal Standard

Under Federal Rule of Civil Procedure 8(a)(2), a pleading
must contain a “short and plain statement of the claim showing
that the pleader is entitled to relief.”

To survive a 12(b)(6)

motion to dismiss, “a complaint must contain sufficient factual
matter, accepted as true, to state a claim to relief that is
plausible on its face.”

Ashcroft v. Iqbal, 556 U.S. 662, 129 S.

Ct. 1937, 1949 (2009) (citations omitted) (internal quotation
marks omitted).

“A pleading that offers ‘labels and conclusions’

or ‘a formulaic recitation of the elements of a cause of action
4

will not do.’”

Id.

(citations omitted).

Dismissal is proper

“if the facts lend themselves to no viable theories of recovery.”
Luc v. Wyndham Mgmt. Corp., 496 F.3d 85, 88 (1st Cir. 2007).
Here, the parties present differing views on purely legal
questions of statutory interpretation.

See Rhode Island v.

Narragansett Indian Tribe, 19 F.3d 685, 691 (1st Cir. 1994) (“The
search for statutory meaning inevitably reduces to a pure
question of law.”).

Unlike factual allegations, a pleading’s

legal conclusions are not entitled to the assumption of truth.
Ashcroft, 129 S. Ct. at 1949-50.

“Unless specially defined, the

legislature’s words are generally deemed to carry their plain and
ordinary meaning.”

In re Shamus Holdings, LLC, 642 F.3d 263, 265

(1st Cir. 2011) (citing Boivin v. Black, 225 F.3d 36, 40 (1st
Cir. 2000)).
B.

Interpreting The Statute

Here, the underlying facts necessary to resolve the issues
are not in serious dispute.

Rather, the statutory interpretation

of Section 105(a), and the inferences and conclusions of law to
be drawn from the facts form the center of the dispute.
Section 105(a) provides:
No person, firm, partnership, corporation or other
business entity that accepts a credit card for a business
transaction shall write, cause to be written or require
that a credit card holder write personal identification
information, not required by the credit card issuer, on
the credit card transaction form. Personal identification
information shall include, but shall not be limited to,
a credit card holder’s address or telephone number. The
5

provisions of this section shall apply to all credit card
transactions; provided, however, that the provisions of
this section shall not be construed to prevent a person,
firm, partnership, corporation or other business entity
from requesting information that is necessary for
shipping,
delivery
or
installation
of
purchased
merchandise or services or for a warranty when such
information is provided voluntarily by a credit card
holder.
Mass. Gen. Laws ch. 93, § 105(a).

Because Tyler’s complaint is

predicated on an alleged violation of the Act, this Court must
decide whether a ZIP code constitutes “personal identification
information” in a credit card transaction, and whether the
retailers’s electronic card terminal creates a “credit card
transaction form” into which the retailer writes customers’ ZIP
codes.
1.

A ZIP Code Constitutes Personal Identification
Information in a Credit Card Transaction

Section 105(a) prohibits any person or business from writing
“personal identification information” not required by the credit
card issuer.

Mass. Gen. Laws ch. 93, § 105(a).

The Act does not

define the words “personal identification information,” however,
it explains that “[p]ersonal identification information shall
include, but shall not be limited to, a credit card holder’s
address or telephone number.”

Id.

Michaels contends that nowhere in the Act is a ZIP code
classified as personal identification information.

Michaels

further alleges that unlike an address or telephone number that

6

identifies an individual, a ZIP code is a numbered coding system
that only identifies a post office geographic area.1
Conversely, Tyler argues that this Court ought be persuaded
to follow the decision of the California Supreme Court in Pineda
v. Williams-Sonoma Stores, Inc., 246 P.3d 612 (Cal. 2011) and
reach the same conclusion that it reached, viz. that a ZIP code
is part of an address and that the statute was intended to
include all components of the card holder’s address within the
meaning of “personal identification information.”
616-18.

246 P.3d at

Tyler asserts that Section 105(a) of Massachusetts

General Laws is on all fours with the California Statute2 and, as

1

According to the United Stated Postal Service (“USPS”) in its
Domestic Mail Manual (updated July 5, 2011), the purpose of the
ZIP (Zone Improvement Plan) code is to have “a numbered coding
system that facilitates efficient mail processing. The USPS
assigns ZIP Codes [and] [a]ll Post Offices are assigned at least
one unique 5-digit ZIP Code.” Def.’s Mem. Supp. Mot. Dismiss,
Ex. B, ¶ 1.8.1, ECF No. 10-1. By contrast, the most complete ZIP
code is a nine-digit code, called ZIP+4; “[t]ogether, the final
four digits identify geographic units such as a side of a street
between intersections, both sides of a street between
intersections, a building, a floor or group of floors in a
building, a firm within a building, a span of boxes on a rural
route, or a group of Post Office boxes to which a single USPS
employee makes delivery.” Id. at ¶ 1.8.2. There is no evidence
in the record that Michaels requested a ZIP+4 code from any of
its customers.
2

California Civil Code § 1747.08(a) provides:
[N]o
person,
firm,
partnership,
association,
or
corporation that accepts credit cards for the transaction
of business shall do any of the following:
(1) Request, or require as a condition to accepting the
credit card as payment in full or in part for goods or
services, the cardholder to write any personal
7

did the Pineda court, this Court ought conclude that Michaels
cannot require a customer’s ZIP code, a component of her address,
as a means of discovering the customer’s full address and send
unwanted marketing materials.
The Pineda court held that a ZIP code constitutes “personal
identification information” even though it may describe an area
with an undefined group of individuals, noting that addresses and
telephone numbers are not always specific to an individual, but
often refer to multiple persons in a house or workplace.
617.

Id. at

The court also held that a the ZIP code is “information

unnecessary to the sales transaction” and is “similar to [the
card holder’s] address or telephone number,” because “it can be
used, together with the cardholder’s name, to locate his or her
full address.”

Id. (citations omitted).

The California Supreme

Court adopted this broad construction of “personal identification
information” in light of the legislative history of the
California statute which demonstrates that its goal was
preventing retailers from directly or indirectly obtaining
personal identification information for marketing purposes.

Id.

at 617-18.
This Court holds that the General Court of Massachusetts
intended Section 105(a) to have a much narrower scope than the

identification
information
upon
transaction form or otherwise.
8

the

credit

card

California statute.

There is no evidence in the record that the

Massachusetts legislature was concerned about merchants locating
the addresses of their customers through an investigative
process.

Instead, the main concern of the Massachusetts

legislature was to prevent exposing the customer to an
unnecessary risk of identity fraud by using personal
identification information on the transaction form, not otherwise
required for the credit card transaction.
The legislative history of Section 105(a) shows that the
legislature’s main concern was to prevent fraud.

The State House

News Service summarized the testimonies of various individuals
before the Commerce and Labor Committee, which focused on the
need to prevent identity theft balanced against companies’
legitimate need for some verifying information.
A
Research

representative
Group

noted

of
that

Massachusetts
“most

Public

retailers

still

Interest
require

personal information, including home phone and address, to
process credit card purchases. . . [, which] can be used to
defraud the purchaser.”

Mem. L. Supp. Def.’s Mot. Dismiss

(Michaels’ Mem.”), Ex. A, Consumer Protection: Hr’g Before H.
Comm. Commerce & Labor, 1991 Leg., 177th Sess. (Mass. 1991),
ECF No. 10-1.

A public school teacher in Brookline explained

how “drivers license information written on [his] Master Card
receipt was used to fraudulently purchase over $12,000 worth

9

of

goods

in

his

name.”

Id.

A

representative

of

the

Retailer’s Association of Massachusetts, however, justified
the verification of the cardholder’s identity stating that
“merchants need to protect themselves from credit card . . .
fraud,” and emphasizing “the use of drivers’ licenses to
verify signatures.

Id.

Section 105(a) adopts the essence of these testimonies.

The

Act strikes a balance, prohibiting the merchant from recording on
the transaction form any unnecessary personal identification
information, while allowing the merchant to request the
purchaser’s personal information for other purposes unrelated to
the credit card transaction, viz. information “necessary for
shipping, delivery or installation of purchased merchandise or
services or for a warranty.”

Mass. Gen. Laws ch. 93, § 105(a).

Tyler argues that the Massachusetts legislature intended to
shield consumers’ privacy from receiving unwanted marketing,
pointing out that the legislature added Section 105(a) to the
General Laws under the expansive caption “Consumer Privacy in
Commercial Transactions.”
(West).

1991 Mass. Legis. Serv. ch. 414, § 1

Tyler’s reliance on this caption is misplaced.

Title,

headings and captions are accorded limited weight in statutory
construction.

Kaplan v. Contributory Ret. Appeal Bd., 51 Mass.

App. Ct. 201, 205 (2001) (holding that headings cannot control
the plain provisions of the statute, “although they may shed

10

light on ambiguous language” (citing American Family Life
Assurance Co. v. Commissioner of Ins., 388 Mass. 468, 474
(1983)); see also Bay Colony Mktg. Co. v. Fruit Salad, Inc., 41
Mass. App. Ct. 662, 666 n.5 (1996).

There is no indication in

Section 105(a)’s caption alone that the Massachusetts legislature
intended to create a statutory privacy interest so broad as to
shield a consumer from receiving unwanted marketing materials.
The language of the caption makes clear that Section 105(a) is
focused on “[c]onsumer [p]rivacy” in the context of the
“[c]ommercial [t]ransactions” themselves.

To that extent, the

caption does not “shed light” on an otherwise ambiguous statute.
Clarity comes, rather, from the legislative history discussed
above, which shows the legislature was focused on the issue of
identity fraud.
It is not in dispute that Michaels did not request Tyler’s
ZIP code for shipping, installation, or other enumerated
authorized purposes.

The issue becomes whether the ZIP code can

be used, either alone or in conjunction with other information,
as personal identification information in the context of credit
card transactions, and whether recording this information may
pose a risk of identity fraud.
Tyler argues that because retailers can use a customer’s
name and ZIP code to later independently investigate and obtain a
complete mailing address, allowing the retailer’s initial

11

collection of the ZIP code “nullify the protection afforded by
Section 105.”

Tyler’s Mem. 5.

While personal identification

information under Section 105(a) is “not [] limited to” an
address or telephone number, this Court is not persuaded by
Tyler’s argument that the Massachusetts legislature intended the
Act to sweep so broadly as to include any component of the
address simply because the ZIP code could later be used (in
conjunction with other data) to obtain the full address.

Section

105(a) was not enacted to prevent retailers from gathering
customers’ information through other sources independent of the
credit card transaction.3

Nevertheless, this Court holds that a

ZIP code can indeed be personal identification information under
Section 105(a).
In the context of criminalizing identity theft and identity
fraud, that the apposite Massachusetts statute defines “personal
identifying information” as:
[A]ny name or number that may be used, alone or in
conjunction with any other information, to assume the

3

On the other hand, while the language of Section 105(a)
protects only the information recorded “in the transaction form,”
this does not mean, as Michaels contends, see Michaels’ Mem. 10,
that the Act is concerned only with what occurs at the time of
the credit card transaction. Timing is irrelevant, provided
there is a causal relationship between the act of recording the
information (“writes, cause to be written or require”) and the
place where this information is written (the “transaction form”).
Thus, a retailer cannot avoid the reach of Section 105 by
temporarily writing a customer’s personal identification
information on a separate document and later incorporating it
into a “transaction form.”
12

identity of an individual, including any name, address,
telephone number, driver’s license number, social
security
number,
place
of
employment,
employee
identification number, mother’s maiden name, demand
deposit account number, savings account number, credit
card number or computer password identification.
Mass. Gen. Laws ch. 266, § 37E(a).4

This Court disagrees with

Michaels’ argument that this definition “does not include ZIP
codes within its scope.”

See Michaels’ Mem. 6.

The ZIP code may

be used (in conjunction with other data) to identify a specific
individual.

Under Chapter 266, Section 37E(a), a criminal fraud

may be committed when a person uses any “number,” e.g. a ZIP
code, coupled with any other card holder information to assume
the identity of the individual.
In this way, the input of a ZIP code during a credit card
transaction is the equivalent to the input of a Personal
Identification Number (“PIN number”) in a debit card
transaction.5

E.g., Commonwealth v. Ryan, 79 Mass. App. Ct. 179,

4

A Federal statute that criminalizes identity theft and identity
fraud uses a similar definition. See 18 U.S.C. § 1028(d)(7).
The term “means of identification” in 18 U.S.C. § 1028(d)(7) is
defined as “any name or number that may be used, alone or in
conjunction with any other information, to identify a specific
individual.”
5

Merchants who accept credit cards are contractually bound to
comply with the card issuer’s operating regulations. These
“regulations prohibit merchants and acquirers from storing
magnetic stripe data from the back of credit cards, in whole or
in part, after a transaction is completed.” See Cumis Ins.
Soc’y, Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 463
(2009). According to Visa’s operating regulations, a merchant
may require a ZIP code for verification of the card holder’s
13

184 & n.7 (2011) (holding that “a debit card is the functional
equivalent of a credit card” for the purposes of assessing a
scheme involving theft of card data) (citing Cumis Ins. Soc’y,
Inc. v. BJ’s Wholesale Club, Inc., 455 Mass. 458, 462–63 (2009));
see United States v. Hristov, Criminal No. 10–10056–PBS, 2011 WL
1443348, at *4 (D. Mass. Apr. 14, 2011) (Saris, J.) (explaining
that because “[t]he PIN does not appear on the magnetic strip and
is either selected by the customer or issued by the bank,”
cameras in conjunction with skimmers were used to capture the PIN
number of cards); see also United States v. Stepanian, 570 F.3d
51, 53 (1st Cir. 2009) (altering terminals to record “debit card
numbers, PIN codes, and credit card numbers whenever customers
swiped their cards to make purchases” allowed thieves to steal
roughly $132,300).
Because in some circumstances the credit card issuer may
require the ZIP code to authorize a transfer of funds, as a debit
card issuer requires a PIN number, both a ZIP code and a PIN

identity (e.g., in an Automated Fuel Dispenser transaction), but
the merchant is prohibited from “requir[ing] the Cardholder’s ZIP
code as a condition of honoring the Card.” See Visa Int’l
Operating Regulations 359, 450 (2011), available at
http://corporate.visa.com/_media/visa-international-operating-reg
ulations.pdf. MasterCard’s operating regulations, in contrast,
provide that the ZIP code is part of the card holder’s
identification information and a merchant “may require the
Cardholder’s ZIP or postal code to complete a CardholderActivated Terminal (CAT) Transaction.” See MasterCard Rules §
5.8.4 (2011), available at
http://www.mastercard.com/us/merchant/pdf/BM-Entire_Manual_public
.pdf
14

number may be used fraudulently to assume the identity of the
card holder.

Just as a merchant who records a PIN number in the

transaction form puts the customer at risk of identity fraud, so
too does a merchant who records a ZIP code in the transaction
form.

Therefore, this Court holds that ZIP code numbers are

“personal identification information” under Section 105(a),
because a ZIP code number may be necessary to the credit card
issuer to identify the card holder in order to complete the
transaction.

This construction is more consistent with the

Massachusetts legislative intent to prevent fraud than a
statutory construction that simply views the ZIP code as a
component of an address that later can be used to obtain a full
address for marketing purposes.
2.

A Retailers’s Electronic Card Terminal May Contain
a Credit Card Transaction Form

Section 105(a) prohibits any person or business to “write
personal identification information . . . on the credit card
transaction form.”

Mass. Gen. Laws ch. 93, § 105(a).

The Act

does not define the meaning of “transaction form.”
Tyler has alleged that Michaels’ cashier entered Tyler’s ZIP
code, together with her credit card number and name, into the
electronic card terminal, which contained a computerized
“transaction form.”

See Tyler’s Mem. 6.

Michaels contends that

the language of the Act does not include an electronically stored
transaction form, such as a database, and that the “transaction
15

form” must be a physical document, e.g. a printed slip or
receipt.6

Michaels’ Mem. 11-12.

For several reasons, this Court rejects Michaels’ argument.
The Act provides that Section 105(a) “shall apply to all credit
card transactions,”

Mass. Gen. Laws ch. 93, § 105(a), thus the

plain meaning of the words naturally includes all such
transactions, whether they are processed manually,
electronically, or by some other method.

See In re Shamus

Holdings, 642 F.3d at 265 (“Unless specially defined, the
legislature’s words are generally deemed to carry their plain and
ordinary meaning.” (citing Boivin, 225 F.3d at 40)).

The point-

of-sale transaction terminal may allow the merchant to write the
information into the machine to be electronically stored.

See

BJ’s Wholesale Club, Inc., 455 Mass. at 463 (“[The] transaction
processing software used by BJ’s [] permanently stor[ed] the
magnetic stripe data in transaction logs.”).

The natural

language of the Act does not distinguish between paper and
electronic transaction forms, and an individual who creates an
electronic form violates the Act just as does an individual who

6

Michaels points out that the California Supreme Court in
Pineda did not consider the meaning of the term “credit card
transaction form,” because the California statute provides a
broad prohibition against writing a customer’s information “upon
“the credit card transaction form or otherwise,” Cal. Civ. Code §
1747.08(a)(1), while the Massachusetts Act only prohibits writing
“on the credit card transaction form,” Mass. Gen. Laws ch. 93, §
105(a). Michaels’ Mem. 11.
16

writes on a paper form.

Both methods may create a transaction

form and pose the same risk of identity fraud to the customer.
Therefore, the plain meaning of the words “credit card
transaction form” under Section 105(a) refer equally to an
electronic or a paper transaction form.
Furthermore, following the language of Section 105(a), the
“credit card transaction form” shall not contain information
other than information “required by the credit card issuer.”
Mass. Gen. Laws ch. 93, § 105(a).

Whether the credit card is

processed manually or by swiping the magnetic stripe, the card
issuer collects information to authorize the transaction in
accordance with the card issuer’s requirements.

The transaction

receipt, i.e., the printed copy recording the transaction for the
customer, may contain information different than the “transaction
form.”

For example, federal law requires that the card holder’s

printed receipt must suppress or disguise the credit card number
other than the last five digits and omit the card’s expiration
date.

15 U.S.C. § 1681c(g); see generally Hristov, 2011 WL

1443348, at *4 (describing the information stored in the magnetic
strip of a debit card necessary to authorize the transfer of
moneys).

In other words, the transaction form includes the

template in which the credit card information is entered, whether
it is entered manually or electronically, and the receipt or slip
is an imprinted or printed copy of the transaction form at the

17

end of the transaction, which the card holder retains in the
event of a disputed charge.

The receipt is a printout of the

permissible information on the transaction form, but it is not
the transaction form itself.7
3.

Tyler Sufficiently Alleges Violations of Section
105(a)

To prove a violation of Section 105(a), the plaintiff must
show that the defendant (1) wrote or caused to be written, (2)
personal identification information, (3) on a credit card
transaction form, (4) which information is not required by the
credit card issuer.

Mass. Gen. Laws ch. 93, § 105(a).

Here, Tyler has sufficiently alleged that she made several
credit card purchases at Michaels in Everett, Massachusetts,
where she was asked to provide her ZIP code number.

A ZIP code

constitutes personal identification information within the
meaning of Section 105(a).

Tyler alleges that Michaels’

employees entered her ZIP code in an electronic transaction form
in the computerized check-out register.

The Act does not

distinguish between electronic transaction forms and paper forms;
recordation in either form constitutes a violation of Section
7

If the personal identification information is recorded on
the receipt, this would also be a violation of Section 105(a),
because the Act provides that a merchant shall not “cause to be
written or require that a credit card holder write” such
information on the transaction form. Mass. Gen. Laws ch. 93, §
105(a). While the receipt may be a redacted copy of the
transaction form, it too is a “transaction form” as that phrase
is used in the Act.
18

105(a).

Tyler also alleges that Michaels does not request the

ZIP code for verification of the card holders’ identity.

It is

reasonable to infer based on this allegation that the credit card
issuer did not require Tyler’s ZIP code to verify her identity,
but that Michaels independently caused the ZIP code to be
disclosed.

Therefore, Tyler has sufficiently alleged facts in

support of her claim that Michaels violated Section 105(a).
C.

Tyler Fails to Allege a Causal Connection Between
Michaels’ Deceptive Act and Any Injury Cognizable Under
Chapter 93A

Section 105(d) provides that “[a]ny violation of the
provisions of this chapter shall be deemed to be an unfair and
deceptive trade practice, as defined in section 2 of chapter
93A.”

Mass. Gen. Laws ch. 93, § 105(d).

Chapter 93A provides

that “[a]ny person . . . who has been injured by another person’s
use or employment of any method, act or practice declared to be
unlawful by section two . . . may bring an action in the superior
court . . . .”

Mass. Gen. Laws ch. 93A, § 9(1).

A successful

claim under Chapter 93A thus requires a showing of (1) a
deceptive act or practice on the part of the defendant; (2) an
injury or loss suffered by the consumer; and (3) a causal
connection between the defendant’s deceptive act or practice and
the consumer’s injury.

See Hershenow v. Enterprise Rent–A–Car

Co. of Bos., Inc., 445 Mass. 790, 797 (2006); Casavant v.
Norwegian Cruise Line, Ltd., 76 Mass. App. Ct. 73, 76 (2009).

19

“A

consumer is not, however, entitled to redress under [Chapter
93A], where no loss [economic or noneconomic] has occurred.”
Hershenow, 445 Mass. at 802.
The scope of cognizable injury under chapter 93A is somewhat
uncertain.

On the expansive end of the spectrum is Leardi v.

Brown, 394 Mass. 151 (1985), which is still good law.

In Leardi,

the court held that a deceptive landlord’s contract caused an
injury to tenants because the terms of the contract violated the
statutory lease provisions and misled the tenants as to the
landlord’s obligation to maintain the premises in a habitable
condition.

Id. at 156-57.

Recent case law has refused to

overrule Leardi because the “illegal lease terms acted as a
powerful obstacle to a tenant’s exercise of his legal rights”
and, but for the unlawful contract provisions, tenants would not
have been placed in a worse and untenable position.

See

Hershenow, 445 Mass. at 800.
More recently, in Aspinall v. Phillip Morris Cos., Inc., 442
Mass. 381 (2004), the court held that deceptive advertising that
“could reasonably be found to have caused a person to act
differently from the way he [or she] otherwise would have acted”
constituted cognizable injury under chapter 93A.

Id. at 394

(citations omitted) (internal quotation marks omitted).
Similarly, in Iannacchino v. Ford Motor Co., 451 Mass. 623
(2008), the court held that defective door latches in a vehicle,

20

which had not yet caused harm to consumers, constituted a
compensable injury under chapter 93A because the manufacturer’s
noncompliant vehicles were worth less due to this risk than what
consumers were caused to pay.

Id. at 630-31.

In contrast, at the more restrictive end of the spectrum is
Hershenow, where the court held that an automobile rental
contract did not cause an injury to the customer based solely on
the fact that the collision damage waiver purchased by the rentor
contained onerous restrictions in violation of state law.

In

Hershenow, the court stated that a rental car had to have been
damaged and the onerous restrictions applied before the renter
could seek recovery pursuant to the unlawful provision.
Mass. at 800.

445

Subsequent case law follows the view that, absent

deception causing an injury, a potential risk does not
“constitute[] damages merely because it existed at an earlier
stage,” therefore “an undisclosed risk that [was] never realized
and [could] never be realized in the future” is not an injury
under chapter 93A.

Rule v. Fort Dodge Animal Health, Inc., 607

F.3d 250, 254 (1st Cir. 2010).
In the area of identity fraud, a judge in this district has
similarly held that where there were no instances of actual data
loss or misappropriation, the failure to comply with minimum
statutory security standards did not cause cognizable injury
because the added risk of identity fraud did not actually cause

21

harm to the plaintiff.

Katz v. Pershing, LLC, Civil Action No.

10–12227-RGS, 2011 WL 3678720, at *4 (D. Mass. Aug. 23, 2011)
(Stearns, J).
As explained above, Tyler has sufficiently alleged that
Michaels’ conduct was deceptive because Michaels violated Section
105(a) by writing customers’ ZIP codes on an electronic
transaction form when the credit card issuer did not require the
ZIP code to process the transaction.

Michaels’ violation of the

Act thus constitutes a per se violation of chapter 93A.

Tyler

still has the burden of proving that this violation caused a
cognizable injury.
Tyler’s arguments as to her loss are unavailing.

Tyler

argues that Section 105(a) creates a legally protected privacy
interest “in not having her personal identification information
deceptively taken as part of a credit card transaction.”
Mem. 10-11; 16.

Tyler’s

But the Massachusetts legislature never intended

to create a free standing privacy right derived from Section
105(a); rather, Section 105(a) was enacted to prevent fraud.
Thus the simple fact of the statutory violation standing alone
constitutes no redressable injury.8

8

The Court would reach the same conclusion were it to
analyze Tyler’s complaint as a question of standing to sue. To
have Article III standing to maintain an action in federal court,
a plaintiff bears the burden of alleging facts sufficient to
establish that “(1) [the plaintiff] has suffered an ‘injury in
fact’ that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical; (2) the injury is
22

fairly traceable to the challenged action of the defendant; and
(3) it is likely, as opposed to merely speculative, that the
injury will be redressed by a favorable decision.” Friends of
the Earth, Inc. v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S.
167, 180-81 (2000) (citation omitted); Coggeshall v.
Massachusetts Bd. of Registration of Psychologists, 604 F.3d 658,
666 (1st Cir. 2010) (citing Lujan v. Defenders of Wildlife, 504
U.S. 555, 560-61 (1992)). A challenge to standing, “which calls
into question [a court’s] subject-matter jurisdiction, rests on
Federal Rule of Civil Procedure 12(b)(1).” United Seniors Ass’n,
Inc. v. Philip Morris USA, 500 F.3d 19, 23 (1st Cir. 2007).
Standing is a “threshold” question in every case; “[i]f a party
lacks standing to bring a matter before the court, the court
lacks jurisdiction to decide the merits of the underlying case.”
United States v. AVX Corp., 962 F.2d 108, 113 (1st Cir. 1992).
Here, Tyler contends that because Section 105(a) creates
legal rights and provides her with a private right of action (in
instances of loss of privacy under chapter 93A), she does not
need to allege an injury beyond the violation of those enumerated
rights. Tyler’s Mem. 11-12.
The current Supreme Court jurisprudence is not entirely
clear as to whether a defendant’s violation of a statute that
confers a private right of action in and of itself constitutes an
“injury in fact” to those protected under the statute. In Warth
v. Seldin, 422 U.S. 490 (1975), the Supreme Court stated that
“[t]he actual or threatened injury required by Article III may
exist solely by virtue of ‘statutes creating legal rights, the
invasion of which creates standing . . ..’” Id. at 500 (citing
Linda R.S. v. Richard D., 410 U.S. 614, 617 n.3 (1973)). Later
in the same paragraph, the Supreme Court went on to state that
“Article III’s requirement remains: the plaintiff still must
allege a distinct and palpable injury to himself.” Id. at 501.
More recently, the Supreme Court ruled in Lujan v. Defenders of
Wildlife, 504 U.S. 555 (1992), that “[t]he party invoking federal
jurisdiction bears the burden of establishing” that the plaintiff
“suffered an ‘injury in fact’ - an invasion of a legally
protected interest which is (a) concrete and particularized and
(b) ‘actual or imminent, not conjectural or hypothetical.’” Id.
at 560-61 (citations omitted).
Clarity on this issue is likely forthcoming, since on June
20, 2011, the Supreme Court granted certiorari in Edwards v.
First Am. Corp., 610 F.3d 514 (9th Cir. 2010), to review the
question whether plaintiffs who allege a statutory right
violation, but suffered no actual injury, have standing. See
First Am. Fin. Corp. v. Edwards, 131 S. Ct. 3022 (2011).
The First Circuit in Conservation Law Found. of New England,
23

Inc. v. Reilly, 950 F.2d 38, 40 (1st Cir. 1991), has held that a
statutory violation for which a private right of action is
conferred does not create standing without a plaintiff’s
additional showing of a “distinct and palpable injury” caused by
the violation. The court emphasized that “Congress may not
expand by statute the standing limitations imposed upon it by
Article III,” id. at 41, and rejected the district court’s
holding that the statute’s citizen-suit provision “remove[d] the
prudential limits on standing,” id. The Reilly court therefore
held that the plaintiffs did not have standing to obtain
nationwide injunctive relief where they had ties only to a few
federal facilities, with respect to which they had standing, and
otherwise only alleged the general harm of “injury to plaintiffs’
environmental interests” through the statutory violation. Id;
see In re iPhone Application Litig., No. 11-MD-02250-LHK, 2011 WL
4403963, at *5 (N.D. Cal. Sept. 20, 2011) (holding that
“[p]laintiffs have not identified a concrete harm from the
alleged collection and tracking of their personal information
sufficient to create injury in fact,” where the plaintiffs merely
stated general allegations about the defendants such as lost
opportunity costs and value-for-value exchanges); La Court v.
Specific Media, Inc., No. SACV 10-1256-GW(JCGx), 2011 WL 2473399,
at *3-*5 (C.D. Cal. Apr. 28, 2011) (holding that the court “lacks
subject matter jurisdiction” because the plaintiffs have failed
to allege the plausibility of an “injury in fact”).
Moreover, at least in some cases where courts have held that
a statutory violation alone constitutes an “injury in fact,” the
statute was clear that no additional injury beyond the violation
itself was required for a private right of action. See In re
Facebook Privacy Litig., 791 F. Supp. 2d 705, 712 (N.D. Cal.
2011) (holding that the plaintiffs had standing because the
Wiretap Act creates a private right of action for any person
whose electronic communication is “intercepted, disclosed, or
intentionally used,” and does not require any further injury).
The issue of Tyler’s standing does not fall within any of
the “gray areas” aforementioned, however. Tyler’s standing rests
squarely on the private right of action conferred under Chapter
93A which states that “[a]ny person . . . who has been injured by
another person’s use or employment of any method, act or practice
declared to be unlawful by section two . . . may bring an action
in the superior court.” Mass. Gen. Laws ch. 93A, § 9(1)
(emphasis added). Thus, in direct contrast to In re Facebook
Privacy Litigation, where the statute stipulated no additional
injury provision, in the present case, the statute explicitly
requires a plaintiff to have been injured by the statutory
violation. See In re iPhone Application Litig., 2011 WL 4403963,
24

Tyler also argues that she was injured by the
misappropriation of her valuable address information.

Id. at 18.

The facts alleged by Tyler, taken as true, establish that
Michaels recorded her name, credit card number, and ZIP code.
Tyler does not allege that this recorded information was sold,
thus potentially causing her an unreasonable risk of fraud,
putting her in a worse and untenable position vis a vis Michaels,
see Hershenow, 445 Mass. at 800, or diminishing her
creditworthiness, see Iannacchino, 451 Mass. at 630-31.

Instead,

Tyler argues that Michaels used Tyler’s name and ZIP code in
conjunction with other commercially available databases to
ascertain her address and phone number.

Therefore, Tyler’s own

allegations suggest that, once her ZIP code was known, her full
address could be derived from some other available database.
There is no allegation that Michaels did not act legally in
accessing such database.

Consequently, Tyler defeats her own

argument that her address was misappropriated by Michaels.
Drawing all reasonable inferences in favor of Tyler, her factual

at *6 (“Plaintiffs, in the instant case, do not allege a
violation of an analogous statute [to the Wiretap Act in In re
Facebook Privacy Litigation] which does not require a showing of
injury.”). Because Tyler has not sufficiently pled any injury
beyond Michael’s violation of Section 105(a), Tyler lacks
standing under an Article III analysis.
25

allegations simply do not support the conclusion that Michaels
misappropriated Tyler’s address.
Tyler further alleged injury in that she received unwanted
mail.

This alleged injury actually makes some sense.

That is,

drawing all inferences in Tyler’s favor, it is a reasonable
inference that learning Tyler’s ZIP code allowed Michaels to
obtain her full address, which in turn brought on what, to Tyler,
no doubt seems to be a deluge of unwanted mail.

Even so,

receiving unwanted commercial advertising through the mail is
simply not an injury cognizable under chapter 93A, since Section
105(a) was enacted to prevent fraud.9
D.

Tyler Failed to State Facts Sufficient to Sustain a
Claim For Unjust Enrichment

To succeed in a claim for unjust enrichment, a plaintiff
must show: “(1) a benefit conferred upon the defendant by the
plaintiff; (2) an appreciation or knowledge by the defendant of
the benefit; and (3) acceptance or retention by the defendant of
the benefit under circumstances [which make such acceptance or
retention] inequitable without payment for its value.”
Massachusetts Eye and Ear Infirmary v. QLT Phototherapeutics,
Inc., 552 F.3d 47, 57 (1st Cir. 2009) (citing 26 Samuel Williston
& Richard A. Lord, A Treatise on the Law of Contracts § 68:5 (4th

9

Michaels also raised the issue of Tyler’s allegedly insufficient demand
letter. Given that the Court holds that Tyler’s 93A claim otherwise falls for
lack of injury, the issue of the demand letter is moot.

26

ed. 1993)).

“The benefit must be unjust, a quality that turns on

the reasonable expectations of the parties.”

See Community

Builders, Inc. v. Indian Motocycle Assoc., Inc., 44 Mass. App.
Ct. 537, 560 (1998).

“Usually, that means that the parties were

dealing with each other in such a way, or in such circumstances,
that reasonable people would expect payment by the defendant to
the plaintiff for some benefit conferred by the plaintiff on the
defendant.”

Hessleton v. BankNorth, N.A., No. 03347, 2004 WL

1588255, at *3 (Mass. Super. Ct. May 11, 2004) (Billings, J.)
(citing 12 Williston on Contracts § 1479 (3d ed. 1957)).
Tyler argues that she has stated a claim for unjust
enrichment because “reasonable people would expect consideration”
for the “valuable resource” of a customer’s personal
identification information.

Tyler’s Mem. 19.

Yet, Tyler has not

cited any Massachusetts case in support of her argument that a
reasonable person would expect compensation for providing a ZIP
code to a merchant.

Tyler claims that her ZIP code is valuable

to Michaels, demonstrated by its effort to record its customers’
ZIP codes in order to identify those customers in commercially
available mailing lists.

Id. at 19-20.

The fact that Michaels

had a policy of recording ZIP codes does imply that Michaels
appreciated the value of accurate and updated lists of customers’
addresses.

Arguably identifying the customers interested in

Michaels’ products out of thousands of other people on those
27

mailing lists has value to it.

This is different from saying,

however, that a single customer’s ZIP code by itself has a value
to Michaels, without the independent work and cross-referencing
necessary to obtain the full address.

The process of constantly

updating the ZIP codes was not done by Tyler or any member of the
putative class; rather, the recording of the ZIP codes was done
by Michaels’ employees.

Arguably the recording of these ZIP

codes constitutes a statutory violation, because certain credit
card issuers do not require Michaels to request customers’ ZIP
codes to process the transaction.

Yet even so, there was no

unjust enrichment because Tyler has not sufficiently alleged that
reasonable people would expect to receive payment by the
defendant in these circumstances, and that, had Tyler been fully
informed, she would have requested payment for divulging her ZIP
code.

No facts are alleged that Michaels ever pays for ZIP

codes, or that reasonable people would expect payment for
revealing an individual ZIP code in a routine retail transaction.
Therefore, this Court holds that Tyler has failed to state
sufficient facts to sustain a claim for unjust enrichment.
E.

Tyler Is Not Entitled to Declaratory Relief

Under the Declaratory Judgment Act, a district court “may
declare the rights and other legal relations of any interested
party seeking such declaration” in cases “of actual controversy.
. . , upon the filing of an appropriate pleading.”

28

28 U.S.C. §

2201(a).

Federal courts “retain substantial discretion in

deciding whether to grant declaratory relief.”

Ernst & Young v.

Depositors Econ. Prot. Corp., 45 F.3d 530, 534 (1st Cir. 1995).
As explained above, Tyler has failed here to plead
sufficient facts to sustain either her chapter 93A claim or her
unjust enrichment claim.

The Declaratory Judgment Act is not an

independent grant of federal jurisdiction, see Katz v. Denn,
Civil Action No. 05-40014-FDS, 2007 WL 763896, at *4 (D. Mass.
March 12, 2007) (Saylor, J.) (citing Boston & Maine Corp. v.
Brotherhood of Maint. of Way Emps., 94 F.3d 15, 20 (1st Cir.
1996); Preiser v. Newkirk, 422 U.S. 395, 402 (1975)), so
dismissal of the underlying claims requires dismissal of the
claim for declaratory relief as well.
III. CONCLUSION AND REFLECTIONS
For these reasons, this Court GRANTS Michaels’ motion to
dismiss [ECF No. 9] in its entirety, and a judgment of dismissal
shall enter one week from the date of the issuance of this
memorandum of decision.10

10

As this is a case of first impression, the week’s hiatus
is appropriate to allow either party to move for certification.
A federal district court may certify a question for decision by
the Supreme Judicial Court “if there are involved in any
proceeding before it questions of law of [the Commonwealth of
Massachusetts] which may be determinative of the cause then
pending in the certifying court and as to which it appears to the
certifying court there is no controlling precedent in the
decisions of [the Supreme Judicial Court].” Mass. Sup. Jud. Ct.
R. 1:03, § 1. This Court is aware that here, there is no
29

Since retailers so routinely request a customer’s ZIP code
at the point-of-sale in a credit card transaction, they ought
note here that this Court holds Michaels potentially to have
violated Section 105(a) if such request was made during a
transaction in which the credit card issuer did not require such
disclosure.

See supra note 5.

Relief has been denied here,

however, because receipt of unwanted commercial mail does not
fall within the scope of human activity that Section 105(a) was
intended to prevent and, while irritating, is so inconsequential
that the law does not stop to take note of it.11
This case thus constitutes an example of the balance between
rights and remedies.

It well illustrates why rights and remedies

need to remain proportional.

As Philip K. Howard, an acute

observer of American legal institutions, has recently said so
brilliantly:

controlling precedent, that the interpretation of Massachusetts
General Laws, chapter 93, section 105(a) is purely a question of
Massachusetts state law, and that the cases relied on herein are
primarily those of the lower courts of the Commonwealth. Should
either Tyler or Michaels wish to bring a motion for
certification, this Court will entertain it. Mass. Sup. Jud. Ct.
R. 1:03, § 2 (a question may be certified “upon the motion of any
party to the cause”).
11

The result could well be different in a data breach case where
identity theft were at issue. There, the breach of Section
105(a) could well constitute a violation of a safety statute as
to the persons the statute was designed to protect, i.e.,
negligence sufficient to get such a case to the jury. See Berish
v. Bornstein, 437 Mass. 252, 273 (2002) (“Although violations of
a statute or regulations do not constitute negligence per se,
they may provide evidence of negligence.”).
30

[C]ivil justice is extraordinarily important in a
free society. When you have an anonymous interdependent
society where people can’t count on community norms, you
need a system of justice that Americans trust, to enforce
contracts and to hold people accountable if they act
unreasonably so that people can go through the day
following their star and not worrying about protecting
themselves.
We need incentives for people to make sure they
stop for the red lights and also that they will, when
they’re making products, comply with reasonable safety
norms and that sort of thing. Now, civil justice happens
to be the mechanism by which we make those choices but
we’ve been trained to think that civil justice is just a
dispute resolution mechanism, and I submit that’s not the
case.
Its main goal is actually to be a part of a
platform for a free society. It’s to enable people to
make all these daily choices because again, the backdrop
here is this reliable civil justice system that people
can trust to enforce their contracts, and so on.
Now, if justice is not available, and big companies
can get away with anything, or people can be abusive in
their treatment of workers, then that undermines freedom
because people are very nervous in their daily dealings
because they’re afraid they’re going to be taken
advantage of. But the similar effect occurs if justice
is over inclusive. If any accident, if any disagreement
in the workplace can have a similar effect, and you can
be dragged into litigation for years, then similarly,
people in their daily choices won’t focus on doing the
right thing, they focus on self protection.
Philip K. Howard, The Role of the Civil Justice System in
Allocating Societal Risk (Dec. 5, 2010), in 7 J.L. Econ. & Pol’y
375, 376 (2010).
SO ORDERED.
/s/ William G. Young
WILLIAM G. YOUNG
DISTRICT JUDGE

31