Diviacchi v. Hess Corporation et al

Filing 57

Judge William G. Young: ORDER entered. FINDINGS OF FACT AND RULINGS OF LAW"For the foregoing reasons, the Court rules in favor of Hess and denies Diviacchis request for an injunction barring Hess from requiring her to enter her zip code when paying for gas with her credit card.SO ORDERED."(Sonnenberg, Elizabeth)

UNITED STATES DISTRICT COURT
DISTRICT OF MASSACHUSETTS
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CAROYLN DIVIACCHI,
Plaintiff,
v.
SPEEDWAY LLC d/b/a HESS RETAIL
STORES LLC,
Defendant.

CIVIL ACTION
NO. 15-10655-WGY

FINDINGS OF FACT AND RULINGS OF LAW
YOUNG, D.J.
I.

June 12, 2015

INTRODUCTION
The plaintiff Carolyn Diviacchi (“Diviacchi”) brings this

action against Speedway LLC d/b/a Hess Retail Stores LLC
(“Hess”) 1 seeking injunctive relief arising out of Hess’s
collection of her zip code while processing credit card
transactions, which she views as a violation of Massachusetts’
consumer privacy laws.

After holding a two-day bench trial, the

Court now makes the following findings of fact and rulings of
law.

1

Diviacchi originally sued Hess Corporation d/b/a Hess
Retail Operations LLC, Hess Retail Stores LLC, Hess Realty LLC,
and Hess Retail Holdings LLC, see Compl./Jury Demand, ECF No. 1,
but all counts against Hess Corporation were dismissed prior to
the present stage of the litigation, see Stip. Dismissal Count
II Only Hess Corp. Only, ECF No. 42; Tr. Vol. II 4:7-24, ECF No.
48.
[1]

This case began on March 4, 2015, when Diviacchi filed a
two-count complaint.

Compl./Jury Demand (“Compl.”), ECF No. 1.

Count I raised a claim for damages under Massachusetts General
laws chapter 93A sections 2 and 9 (“Chapter 93A”), id. ¶¶ 26-28,
while Count II raised a claim for equitable injunctive relief in
the event that no monetary damages were available, id. ¶¶ 29-30.
Diviacchi filed the complaint as a putative class action with
herself as class representative.

See id. ¶¶ 22-25.

Diviacchi moved for a preliminary injunction on March 15,
2015.

Pl.’s Mot. Prelim. Inj., ECF No. 5.

Hess filed a motion to dismiss.
14.

Two weeks later,

Defs.’ Mot. Dismiss, ECF No.

The Court heard oral argument on both motions on April 2,

2015.

Elec. Clerk’s Notes, ECF No. 27.

Court denied Hess’s motion to dismiss.

At the hearing, the
Id.

Turning to

Diviacchi’s motion for a preliminary injunction, the Court –
following its usual practice - collapsed that motion with trial
on the merits pursuant to Federal Rule of Civil Procedure 65(b)
and set the matter for trial starting April 6.

Id.

Originally,

that trial was to be an exemplar trial dealing only with
Diviacchi’s individual claims; no class-wide issues would be
decided.

Id.

The day after the hearing, Diviacchi filed a notice
dismissing Count I of the complaint.
Count I Only, ECF No. 31.

Pl.’s Notice Dismissal

Diviacchi’s counsel represented that
[2]

this meant that the class claim was thus out of the case
entirely.

Tr. Vol. I 7:12-20, ECF No. 45.

In the wake of the

dismissal of Count I, the Court held a two-day bench trial on
April 6 and 7, 2015 addressing Diviacchi’s individual claim for
injunctive relief under Count II.
48.

At the end of the second day of trial, the Court took the

matter under advisement.
II.

See id.; Tr. Vol. II, ECF No.

Tr. Vol. II 34:25-35:1.

FINDINGS OF FACT
The Court makes its findings of fact based on the four

exhibits received in evidence during the bench trial, a list of
stipulations with attached affidavits, and the testimony of
Diviacchi herself.

Tr. Vol. II 5:11-15.

Diviacchi has been a resident of the Allston neighborhood
of Boston for approximately twenty-five years.
26:13-14, 28:2-3.

Tr. Vol. I

For the entire duration of her residence in

Allston, Diviacchi has filled her car with gasoline at a Hessbranded gas station on Cambridge Street.
7, 28:4-8.

Id. at 26:15-18, 27:4-

When purchasing gasoline, Diviacchi almost always

uses her credit card rather than cash.

See id. at 37:15-40:9.

At trial, she described the purchasing process as follows:
[Y]ou find an empty pump, . . . you put your card into
the . . . pump with the gas, you put your card in, run
your card through, and wait, and then the . . .
terminal window asks for your zip code and you put
your zip code in and then it accepts your card and you
can proceed to pump the gas.

[3]

Id. at 27:11-16.

She further testified that she does not know

what happens to the zip code after it is entered at the pump.
Id. at 40:10-12.

Diviacchi’s counsel admitted during argument

before the Court that she makes no allegation that Hess sent
marketing materials to her home at any point.

Id. at 11:20-25.

The affidavits provided by Hess shed light both on what
happens to the zip code information after it is entered and why
Hess requires that customers enter their zip code to use their
credit cards at the pump.

The zip code is collected as part of

the Address Verification System (“AVS”) used by First Data
Corporation (“First Data”), Hess’s credit card transaction
processing vendor.

Stipulations, Ex. B, Aff. Paul Smith (“Smith

Aff.”) ¶ 3, ECF No. 43-2.

When a customer inputs her zip code,

that information (along with the credit card number and other
data) are held in the volatile memory of the gas station’s fuel
pump, fuel controller, and a so-called credit appliance.
Stipulations, Ex. A, Aff. Akira Johnson (“Johnson Aff.”) ¶¶ 4-5,
ECF No. 43-1.

From the volatile memory, the data is sent to

First Data; First Data in turn transmits the data to the card
issuer (such as Visa or Mastercard), which compares the provided
zip code with the billing address on record and then sends a
single-letter code to First Data and Hess indicating whether the
zip codes match – and thus whether the transaction is
authorized.

Id. ¶ 8.

Once a transaction is authorized, Hess’s
[4]

credit appliance records the account number, the cardholder
name, and the card expiration date and retains that information
for six days.

Id. ¶ 5.

The zip code, however, is only ever

held in the credit appliance’s volatile memory and is not
recorded or retained at any time.
7.

Id. ¶¶ 5, 8; Smith Aff. ¶¶ 4,

Because the zip code is not recorded, Hess does not have the

ability to access its customers’ zip code data.
9.

Johnson Aff. ¶

As would reasonably follow, Hess thus does not use the zip

codes for marketing purposes, nor does it sell zip code
information to any third parties.

Id. ¶¶ 10-11; Smith Aff. ¶¶

9-10.
Hess attests that it uses the AVS solely for purposes of
fraud prevention.

Johnson Aff. ¶ 7; Smith Aff. ¶ 4.

Because

the pay-at-the-pump system is not supervised by Hess employees
and because the customer is not required to sign a sales draft,
these kinds of purchases are four times more vulnerable to fraud
than standard credit card transactions that take place in the
presence of a clerk or customer service representative.
Stipulations, Ex. C, Aff. Stephanie J. Brown (“Brown Aff.”) ¶ 4,
ECF No. 43-3.

When such fraud takes place, Hess is required to

pay the cost of the transaction.

Id. ¶ 5.

Around 2005 or 2006,

some Hess-branded gas stations in New York City lost $20,000 to
$30,000 each month as a result of fraud.

Smith Aff. ¶ 3.

The

use of AVS has decreased the incidence of fraud between seventy
[5]

and eighty percent in New York and up to sixty percent in
Massachusetts and other states.

Id. ¶ 5; Brown Aff. ¶ 9.

While

credit card issuers like Visa, Mastercard, and Discover do not
affirmatively require the entry of a customer’s zip code during
a pay-at-the-pump transaction, Stipulations ¶ 1, ECF No. 43, the
use of AVS (including entry of the zip code) is considered to be
a “best practice” and is recommended by the credit card issuers,
see Brown Aff. ¶¶ 10-11.
III. RULINGS OF LAW
A.

Availability of Injunctive Relief

As a preliminary matter, the parties contest whether
injunctive relief is available under the relevant statutory
framework given that – because she has not received any
marketing materials from Hess, see Tr. Vol. I 11:20-11:25 –
Diviacchi has not suffered any concrete injury under the law.
The dispute arises from the wording of the relevant statutory
framework and the shifting interpretations given to that
framework over time by the Massachusetts Supreme Judicial Court
(“SJC”).
The substantive core of Diviacchi’s claim is Massachusetts
General Laws chapter 93 section 105 (“Section 105”), which
states in relevant part that:
(a) No person, firm, partnership, corporation or other
business entity that accepts a credit card for a
business transaction shall write, cause to be written
[6]

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.
. . .
(d) Any 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.

Whereas Section 105 lays out the

substantive contours of Diviacchi’s claim, section 9 of Chapter
93A grants her the actual cause of action:
Any 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 or any
rule or regulation issued thereunder . . . may bring
an action in the superior court . . . for damages and
such equitable relief, including an injunction, as the
court deems to be necessary and proper.
Mass. Gen. Laws ch. 93A, § 9.
The parties’ argument over the availability of injunctive
relief absent injury arises from the tension between two key SJC
opinions interpreting these two statutes.

In the first, Leardi

v. Brown, the SJC faced a case centered on tenants’ claims
arising out of impermissible language their landlord had
inserted into their leases, despite the fact that the tenants
were never aware of nor were subjected to enforcement of the
illegal provisions.

394 Mass. 151, 152 (1985).

that:

[7]

The SJC held

[U]nder circumstances where there has been an invasion
of a legally protected interest, but no harm for which
actual damages can be awarded, . . . [Chapter 93A]
provides for the recovery of minimum damages in the
amount of $25. . . . [I]n amending [Chapter 93A], the
Legislature exercised its prerogative to create a
legal right, the invasion of which, without more,
constitutes an injury.
Id. at 160.
The second key case, Tyler v. Michaels Stores, Inc., 464
Mass. 492 (2013), examined the scope and purpose of Section 105
as well as the relationship between that statute, Chapter 93A,
and Leardi.

As a threshold matter, the SJC in Tyler held that a

credit card user’s zip code qualifies as “personal
identification information” as contemplated by Section 105,
relying on the idea that Section 105 is designed to protect
consumer privacy rather than to prevent identity fraud.
499-501.

Id. at

More important to the present dispute, however, was

the SJC’s treatment of Leardi.

After calling the above-cited

language “a source of some confusion in the years since 1985,”
the SJC stated that:
Later decisions of this court have interpreted the
Leardi case and the [above-cited language] in
different ways. Nevertheless, our recent decisions
generally establish the following. The invasion of a
consumer’s legal right (a right, for example,
established by statute or regulation), without more,
may be a violation of [Chapter 93A, section 2] and
even a per se violation of § 2, but the fact that
there is such a violation does not necessarily mean
the consumer has suffered an injury or a loss
entitling her to at least nominal damages and
attorney’s fees; instead, the violation of the legal
[8]

right that has created the unfair or deceptive act or
practice must cause the consumer some kind of
separate, identifiable harm arising from the violation
itself. To the extent that the quoted passage from
Leardi can be read to signify that the “invasion” of a
consumer plaintiff’s established legal right in a
manner that qualifies as an unfair or deceptive act
under [Chapter 93A, section 2] automatically entitles
the plaintiff to at least nominal damages (and
attorney’s fees), we do not follow the Leardi
decision. Rather, as [several other post-Leardi]
decisions indicate, a plaintiff bringing an action for
damages under [Chapter 93A, section 9] must allege and
ultimately prove that she has, as a result, suffered a
distinct injury or harm that arises from the claimed
unfair or deceptive act itself.
Id. at 502-03 (internal footnotes and citations omitted).

The

SJC went on to identify two injuries that might arise from a
violation of Section 105: the unwanted receipt of marketing
materials and the sale of a consumer’s private information to a
third party.

Id. at 503-04.

It is undisputed that Diviacchi suffered neither of the
injuries contemplated by the SJC in Tyler and that she now seeks
only injunctive relief through Count II of her complaint.

The

crux of the dispute, then, is whether the language from Tyler
above forecloses the possibility of injunctive relief in the
absence of any injury beyond the mere invasion of a legal right.
Diviacchi argues that Tyler only overruled Leardi’s statement
equating the invasion of a legal right to an actual injury
insofar as it applied to monetary damages; accordingly, Leardi
is still good law to the extent a plaintiff only seeks an

[9]

injunction or other equitable relief.

Tr. Vol. I 12:5-21,

15:16-16:8. 2
Hess offers several arguments for why a plaintiff must have
a concrete injury to obtain an injunction.

First, Hess points

to the text of Chapter 93A itself, which states that “[a]ny
person . . . who has been injured by another person’s use . . .
of any method, act or practice declared to be unlawful by
section two . . . may bring an action . . . for damages and such
equitable relief, including an injunction, as the court deems to
be necessary and proper.”
Laws ch. 93A, § 9(1).

See Tr. Vol. II 32:4-9; Mass. Gen.

Section 105 simply states that violations

2

Diviacchi also alleges that no injury is required if a
plaintiff is acting as a private attorney general. Tr. Vol. II
14:8-9, 16:11-18:10 (citing LeClair v. Norwell, 430 Mass. 328
(1999)). The Court, however, rejects the premise that Diviacchi
is serving as a private attorney general. In Carroll v.
Marzilli, the Massachusetts Appeals Court confronted a case
where the plaintiffs, who had filed suit under the Massachusetts
Civil Rights Act (“MCRA”), contended that they should be treated
as private attorneys general. 75 Mass. App. Ct. 550, 553-55
(2009). In ruling against the plaintiffs, the Appeals Court
relied on the fact that the MCRA has separate sections providing
for suits by the Attorney General and by private parties, thus
“strik[ing] a careful balance between public and private causes
of action.” Id. at 554. The same logic applies to Chapter 93A.
Diviacchi filed her suit under Chapter 93A, section 9, which
expressly provides a cause of action to private parties. Mass.
Gen. Laws ch. 93A, § 9; see also Tyler, 464 Mass. at 501
(stating that this is the source of any claims stemming from
violations of Section 105). Similar to the MCRA, Chapter 93A
has a separate section providing a cause of action to the
Attorney General of the Commonwealth. See Mass. Gen. Laws ch.
93A, § 4. Given this distinction, the Court declines to apply
rules regarding private attorneys general to Diviacchi’s claim.
[10]

of its consumer privacy provisions are deemed to be unlawful
trade practices under section 2 of Chapter 93A.
Laws ch. 93, § 105.

See Mass. Gen.

Hess suggests that the fact that Chapter

93A grants a cause of action to someone injured by such
practices suggests that the mere legal injury alleged here is
not enough.
Hess bolsters this reading by pointing to two post-Tyler
SJC opinions that portray Tyler as requiring an injury distinct
from the unlawful trade practice without reference to Tyler’s
restriction of this holding to cases involving damages.

See Tr.

Vol. II 30:25-31:13 (citing Bellermann v. Fitchburg Gas & Elec.
Light Co., 470 Mass. 43, 53-54 (2014) (citing Tyler for the
proposition that “the injury must be a ‘separate, identifiable
harm’ that is ‘distinct’ from the unfair or deceptive conduct
itself” without citing Tyler’s language about monetary damages);
Auto Flat Car Crushers, Inc. v. Hanover Ins. Co., 469 Mass. 813,
823 & n.12 (2014) (stating that Tyler requires “only that a
plaintiff establish an invasion of a legally protected interest,
in the form of ‘a distinct injury or harm that arises from the
claimed unfair or deceptive act itself,’” and further stating
that recompense for this injury will be statutory damages of
twenty-five dollars “in the absence of actual damages”)).

Hess

further points to a First Circuit case (itself predating Tyler
by a few years) in which that court dealt with the Chapter 93A
[11]

damages claim of a woman who had bought a heartworm drug for her
dog and alleged that the manufacturer had not disclosed certain
risks, although she admitted that her dog was unharmed and that
she had suffered no economic injury.

Rule v. Fort Dodge Animal

Health, Inc., 607 F.3d 250, 251-52 (2010).

After analyzing the

path of the SJC’s jurisprudence from Leardi onwards, the First
Circuit held that “the most recent SJC cases in point appear to
have returned to the notion that injury under chapter 93A means
economic injury in the traditional sense; and, if cases like
Leardi survive as exceptions, it is for the SJC to identify and
define them.”

Id. at 255. 3

3

In addition to its arguments against the availability of
an injunction, Hess further suggests that Diviacchi lacks
standing to pursue one. Tr. Vol. II 32:9-33:5. Specifically,
Hess points to Derby v. Jos. A. Bank Clothiers, Inc., No. 14-cv12347, 2014 WL 7361023 (2014) (Saylor, J.), another case in this
district involving the collection of zip codes. Noting that
standing to seek an injunction requires the risk of a future
injury, that court ruled that future receipt of unwanted
marketing materials (or other conduct stemming from the
defendant’s past collection of the plaintiff’s zip code) could
support standing but that future collection of the zip code
would not qualify as an injury able to support standing, as the
“plaintiff can simply avoid shopping at [the] defendant’s
stores, or avoid using his credit card to make any purchases he
does make at its stores.” Id. at *8. Because Diviacchi seeks
equitable relief regarding only this latter sort of conduct,
Hess says, she lacks standing to seek an injunction.
This Court is satisfied that Diviacchi has standing to seek
an injunction. As the Derby court points out, Diviacchi could
buy her gas elsewhere or pay with cash. But neither of those
alternative courses of action should bar standing here. Looking
first at the argument that Diviacchi need not patronize the
defendant’s gas stations, the Court notes (1) that she has been
using the same gas station for twenty-five years and can
[12]

Both sides present compelling arguments.

Hess is certainly

correct that Tyler and the precedent on which it relies evince a
broad shift away from the notion that invasion of a legal right,
standing alone, is sufficient to support a claim under Chapter
93A.

Reinforcing this trend, the two SJC cases Hess cites that

postdate Tyler both portray that case’s holding in a broad
light, though admittedly neither of those two cases squarely
addressed the question of whether an injury is required for
purely equitable relief.

Moreover, as Hess claims, the section

of Chapter 93A that grants Diviacchi her cause of action does
seem to draw a line between injury on the one hand and a
forbidden trade practice on the other.
Despite its clear intention to move away from the holding
in Leardi, however, Tyler takes great pain to stress that its
holding has to do with claims for damages.

See Tyler, 464 Mass.

reasonably be expected to do so in the future, and (2) that,
because AVS is considered to be a “best practice” industry-wide,
virtually any gas station she would use would likely require her
to input her zip code just as Hess does. Turning to the
argument that Diviacchi could avoid future collection of her zip
code by paying with cash, the Court notes that Diviacchi has
expressed a preference for using a credit card because of the
high cost of gas and the increased ease of recordkeeping. Tr.
Vol. I 37:21-38:3. A system that denies Diviacchi standing
because she could use cash ignores the harms (minor though they
may be) that using cash would create. Moreover, because Section
105 functionally serves to facilitate credit card use by
increasing cardholders’ privacy, it strikes the Court as odd to
deny a plaintiff standing to vindicate these rights just because
she could use cash instead.
[13]

at 503 (“[T]he fact that there is such a violation [of Chapter
93A, section 2] does not necessarily mean the consumer has
suffered an injury or a loss entitling her to at least nominal
damages and attorney’s fees . . . [A] plaintiff bringing an
action for damages . . . must allege and ultimately prove that
she has, as a result, suffered a distinct injury or harm that
arises from the claimed unfair or deceptive act itself.”).

Most

critical is the line of Tyler that describes its relationship to
Leardi:
To the extent that the quoted passage from Leardi
[i.e., the passage discussing “a legal right, the
invasion of which, without more, constitutes an
injury”] can be read to signify that ‘invasion’ of a
consumer plaintiff’s established legal right in a
manner that qualifies as an unfair or deceptive act .
. . automatically entitles the plaintiff to at least
nominal damages (and attorney’s fees), we do not
follow the Leardi decision.
Id. (emphasis added).

The Court has faith that the SJC chose

its words carefully – and the choice explicitly and repeatedly
to address the role of damages seems to suggest that Leardi’s
core holding was only overruled to the extent that parties
sought damages for invasion of a purely legal right.

This Court

views the SJC’s silence on equitable relief – particularly in
contrast to its highlighting of the issue of damages at least
three times - as implying that Leardi’s holding remains alive as
it pertains to injunctions, even viewed against the trend away
from granting causes of action to address purely legal injuries.
[14]

Accordingly, based on this record and in the absence of further
guidance from the SJC, the Court rules that a plaintiff may
pursue a claim for purely injunctive relief under Section 105
absent any injury distinct from the collection of cardholder
identification information in and of itself.
B.

Scope of Section 105

While the Court is satisfied that a plaintiff may seek an
injunction for a violation of Section 105 absent some other
injury, that is not enough for Diviacchi to prevail here, as
Hess further argues that this case does not fall within the
scope of Section 105 at all.

By its terms, Section 105 forbids

entities like Hess from “writ[ing] . . . personal identification
information, not required by the credit card issuer, on the
credit card transaction form.”
105(a).

Mass. Gen. Laws ch. 93, §

In his closing argument, Hess’s counsel noted that a

customer’s zip code – the “personal identification information”
contemplated by Section 105 – only ever exists in volatile
memory, while the “credit card transaction form” consists of the
account number, cardholder name, and card expiration date that
are written to the gas station’s credit appliance.
22:9-23:6 (citing Johnson Aff. ¶ 5).

Tr. Vol. II

He further stated that

once the credit card issuer has sent its single-letter code
authorizing the transaction, “the zip code disappears forever,
irretrievably.

Hess never had it, but in this information
[15]

transmission, the zip code drops out forever.”

Id. 24:18-22.

Because the zip code is never actually recorded on the credit
card transaction form, Hess says, it does not fall within the
scope of Section 105’s prohibitions.
Hess bolsters this argument that its use of zip codes for
fraud prevention falls outside the ambit of Section 105 by
appealing to the original purpose of the statute.

In Tyler, the

SJC cited a memorandum prepared for Section 105’s principal
author indicating that “the purpose was to safeguard consumer
privacy and more particularly to protect consumers using credit
cards from becoming the recipients of unwanted commercial
solicitations from merchants with access to their identifying
information.”

Tyler, 464 Mass. at 498.

Hess’s counsel further

pointed to a portion of the memorandum that he says suggests
that merchants would be justified in requiring the entry of zip
codes for fraud protection purposes when credit card issuers
would otherwise not cover the cost of fraudulent transactions.
Tr. Vol. II 28:9-21.
The Court finds this argument persuasive.

It is

uncontroverted in the record that a customer’s zip code is only
held in volatile memory and is never recorded or written in any
accessible form, as is required by the explicit terms of Section
105.

While it is by no means dispositive, the legislative

history cited by the SJC in Tyler underscores the notion that it
[16]

is only the recording of and future access to personal
identification information that Section 105 is intended to
combat.
Diviacchi’s counsel attempted to rebut this by arguing that
the transmission of the zip code between First Data and the
credit card issuer could be intercepted, recorded, and used for
forbidden purposes, see Tr. Vol. II 9:16-10:10, but there is
nothing in the record that elevates this argument above bare
conjecture.

This Court must make its decision based on

evidence, and all the evidence in the record that speaks to the
manner in which a customer’s zip code is used – specifically,
the three affidavits that the parties stipulated ought be
admitted – points toward the conclusion that the zip code is
never recorded on the credit card transaction form.
Accordingly, Hess’s practice falls outside the scope of Section
105 (as determined by that statute’s explicit language) – and
thus there is no statutory violation capable of supporting
Diviacchi’s Chapter 93A claim.

[17]

IV.

CONCLUSION
For the foregoing reasons, the Court rules in favor of Hess

and denies Diviacchi’s request for an injunction barring Hess
from requiring her to enter her zip code when paying for gas
with her credit card.
SO ORDERED.

_/s/ William G. Young_
WILLIAM G. YOUNG
DISTRICT JUDGE

[18]