Daniel v. Vantiv, Inc et al

Filing 35

OPINION AND ORDER granting Park Service's 33 Motion to Dismiss Third Amended Complaint. Signed by Judge Susan P. Watters on 8/16/2016. (EMH, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONT ANA
BILLINGS DIVISION

FILED
AUG 17 2016
Clerk, U.S. District Court
D1stnct Of Montana
Billings

STEPHANIE DANIEL, on behalf of
herself and all others similarly situated,

CV 16-18-BLG-SPW

Plaintiff,
OPINION and ORDER
vs.
NATIONAL PARK SER VICE and
DOES 1-10,
Defendants.
Plaintiff Stephanie Daniel brought this action against the National Park
Service ("Park Service") under the Fair and Accurate Credit Transaction Act
("F ACTA"), which amended the Fair Credit Reporting Act ("FCRA"). 1 The Park
Service moves to dismiss the action and argues that the FCRA does not contain a
clear and unequivocal waiver of sovereign immunity. The Park Service also
argues that Daniel does not plead a cognizable claim under the FCRA. 2 The Court
agrees that the FCRA does not contain an unequivocal waiver of sovereign
immunity and grants the Park Service's motion.

For simplicity, the Court will only refer to the FCRA, even for those portions
amended by the FACT A.
2 The Park Service also initially raised an argument regarding Daniel's standing to
bring the claim, but noted in its reply briefthat the question would be best
addressed in a summary judgment motion.
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I. Background

The following facts are taken from Daniel's Third Amended Complaint and
are presumed true. In May 2015, Daniel purchased an entrance pass to
Yellowstone National Park with her debit card. The debit card receipt contained
the month and year of her card's expiration date. Sometime after the transaction,
Daniel's debit card was fraudulently used, and Daniel suffered damages from the
stolen identity. Daniel claims that the identity fraud was caused in part by the
inclusion of the expiration date on her debit card receipt from the Park Service.
Daniel brought this action and alleges that the Park Service violated FCRA
by printing her card's expiration date on the receipt. Daniel seeks class
certification of a class of consumers that made credit or debit card purchases from
the Park Service and had their expiration dates included on the receipts. Daniel
claims that over 300 million people visited national parks in 2015. The parties
agree that the Park Service is a government agency. The Park Service moves to
dismiss Daniel's Third Amended Complaint under Fed. R. Civ. P. 12(b)(1) and (6).
II. Legal Standard

Rule 12(b )(1) allows a party to move for the dismissal of a case for "lack of
subject-matter jurisdiction." A motion under Rule 12(b )(1) should be granted if
the Complaint fails to allege facts that establish subject matter jurisdiction. Bruton
v. Gerber Products Co., 961 F. Supp. 2d 1062, 1075 (N.D. Cal. 2013). "The party
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asserting federal subject matter jurisdiction bears the burden of proving its
existence." Chandler v. State Farm Mut. Auto. Ins. Co., 598 F.3d 1115, 1122 (9th
Cir. 2010). While the material facts alleged in the complaint are presumed true,
parties may present additional evidence related to the Court's subject matter
jurisdiction. Savage v. Glendale Union High Sch., Dist. No. 205, Maricopa Cty.,
343 F.3d 1036, 1040 n. 1and2 (9th Cir. 2003).
Rule 12(b )(6) requires a complaint to be dismissed if it fails "to state a claim
upon which relief can be granted." "Dismissal under Rule l 2(b )( 6) is proper only
when the complaint either (I) lacks a cognizable legal theory or (2) fails to allege
sufficient facts to support a cognizable legal theory." Zixiang Liv. Kerry, 710 F.3d
995, 999 (9th Cir. 2013). While all factual allegations are presumed true, the
complaint must contain "factual content that allows the court to draw the
reasonable inference that the defendant is liable for the misconduct alleged."

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
III. Sovereign Immunity

The Park Service argues that this Court lacks subject matter jurisdiction as
there is no clear and unambiguous waiver of sovereign immunity in the FCRA.
Citing a series of district court decisions, the Park Service contends that
government agencies are not a "person" that can be held liable under the FCRA.
The Park Service also posits that legislative history shows that Congress never
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intended for government agencies to be held liable under the FCRA. Daniel
counters that Congress waived sovereign immunity by specifically including
government agencies in the statutory definition of"person." Daniel relies upon a
decision by the Seventh Circuit Court of Appeals. The Court agrees with the Park
Service.
"It is axiomatic that the United States may not be sued without its consent

and that the existence of consent is a prerequisite for jurisdiction." United States v.
Mitchell, 463 U.S. 206, 212 (1983 ). A waiver of sovereign immunity "must be

unequivocally expressed in statutory text. .. and will not be implied." Lane v. Pena,
518 U.S. 187, 192 (1996) (internal citations omitted).

Ambiguities are construed

in favor of immunity. FA.A. v. Cooper, 132 S. Ct. 1441, 1448 (2012) (internal
citation omitted). "Ambiguity exists ifthere is a plausible interpretation of the
statute that would not authorize money damages against the Government." Id.
Plaintiffs bear the burden of demonstrating an unequivocal waiver. Cunningham v.
United States, 786 F.2d 1445, 1446 (9th Cir. 1986).

Daniel alleges that the Park Service violated the FCRA by printing her
card's expiration date on the receipt. Relevant to Daniel's claim, the FCRA
provides that:
[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.
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15 U.S.C. § 1681 c(g)(l ). A "person" is defined as "any individual, partnership,
corporation, trust, estate, cooperative, association, government or governmental
subdivision or agency, or other entity." 15 U.S.C. § 1681 a(b) (emphasis added).
A person who willfully fails to comply is liable for automatic statutory damages
and possible punitive damages. 15 U.S.C. § 168ln(a)(2). Only actual damages are
recoverable in cases of negligent noncompliance. 15 U.S.C. § 16810. In addition
to civil suits instituted by consumers, the Federal Trade Commission and state
governments can bring enforcement actions under the FCRA. 15 U.S.C. § 1681 s.
Neither the Supreme Court nor the Ninth Circuit Court of Appeals has
addressed whether the FCRA contains a waiver of sovereign immunity. There is a
split of persuasive authority on the subject. A number of district courts in this
Circuit have determined that the FCRA does not contain an unequivocal waiver of
sovereign immunity. For example, the Northern District of California reasoned
that "most other federal statutes that have unequivocally waived sovereign
immunity have done so in much clearer terms than [the FCRA]." Echols v. Morpho
Detection, Inc., 2013 WL 752629, at *5 (N.D. Cal. Feb. 27, 2013). This perceived
lack of clarity led the court to hold that FCRA did not waive sovereign immunity
for the federal government. Id. The District of Arizona also held that the FCRA
does not contain a waiver of sovereign immunity, as the plaintiff did "not allege
that any federal defendant is a credit reporting agency for purposes of the FCRA"

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or point to any other applicable waivers. Taylor v. United States, 2011 WL
1843286, at * 5 (D. Ariz. May 16, 2011 ). In a case where a pro se plaintiff
apparently failed to argue sovereign immunity, the Central District of California
held that the plaintiff failed to meet "his burden of establishing that the otherwiseapplicable sovereign immunity doctrine does not bar him from bringing his present
claim against the Commissioner [of Social Security] under [the FCRA]." Kenney
v. Barnhart, 2006 WL 2092607, at *9 (C.D. Cal. July 26, 2006).
Echols, Taylor, and Kenney do not reference the explicit inclusion of

government agencies in the definition of "person" at § 1681 a(b) or the subsequent
use of"person" throughout the FCRA. In Al-Malik v. US. Dep't ofEduc., the
Northern District of California noted that there was a disagreement among courts
on whether the definition of"person" in the FCRA constitutes an unequivocal
waiver of sovereign immunity. 2011WL3809866, at *3 (N.D. Cal. Aug. 29,
2011 ). While the prose plaintiff did not show facts that would establish subject
matter jurisdiction, the Al-Malik court stated that "the fact that this particular
plaintiff failed to show that sovereign immunity has been waived under the FCRA
does not foreclose the possibility that some other plaintiff might succeed in doing
so in the future." Id.
District courts from other circuits have also held that the FCRA does not
contain an unequivocal waiver of sovereign immunity. The Western District of
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Arkansas found the argument that the FCRA's definition of"person" waives
sovereign immunity to be "unconvincing." Gillert v. U.S. Dep't ofEduc., 2010
WL 3582945, at *3 (W.D. Ark. Sept. 7, 2010). The court found that no provision
ofFCRA, even the use of the defined term "person," constituted an express waiver.
Id. In a separate case where a pro se plaintiff failed to respond to a motion to

dismiss, the District of Colorado relied upon Kenney to summarily conclude that
the United States has not waived its sovereign immunity under the FCRA. Ralph v.
U.S. Air Force MGIB, 2007 WL 3232593, at *3 (D. Colo. Oct. 31, 2007). Finally,

the District of Minnesota provided seven reasons why it believed the government's
inclusion in the definition of"person" in the FCRA did not constitute an
unequivocal waiver of sovereign immunity. Ste/lick v. U.S. Dep't of Educ., 2013
WL 673856, at *3 (D. Minn. Feb. 25, 2013). The Stellick court noted that the
FCRA permits the imposition of punitive damages and criminal liability in cases of
willful FCRA violations, and it concluded that it was unlikely that Congress would
have been willing to expose government entities to punitive damages and criminal
penalties. Id. at *4. The Ste/lick court also noted that "the United States
government is one of the world's largest creditors" and that the "consequences of
holding that the federal government can be held liable for any violation of the
FCRA would be immense." Id. Given the potential consequences, "it is
particularly important to insist that Congress waive sovereign immunity expressly
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and clearly." Id. Finally, Stellick noted that the majority of district courts have
concluded that the FCRA did not waive sovereign immunity and cited the cases
referenced above. Id.
In contrast to the above-cited district court opinions, in 2014 the Seventh
Circuit Court of Appeals concluded that the FCRA waived the government's
sovereign immunity. Bormes v. United States, 759 F.3d 793 (7th Cir. 2014). In

Bormes, the plaintiff sued the government under the FCRA after a government
website emailed him a receipt containing his card's expiration date. Id. at 795. On
remand from the Supreme Court, the Seventh Circuit became the first appellate
court to consider whether the FCRA authorizes suits against the government. Id.
The Seventh Circuit concluded that the plain language of the FCRA
constituted an unequivocal waiver of sovereign immunity. Id. at 797. In reaching
that conclusion, the Seventh Circuit noted that government agencies are
specifically included in the definition of"person" found at 15 U.S.C. § 168la(b).

Id. at 795. The same term - "person" - is used in both the FCRA's substantive
requirements and in the damages provisions. Id. Seventh Circuit determined that
there is no basis to distinguish a "person" for purpose of duties under the FCRA
and a "person" for the purpose of remedies. Id.
The Seventh Circuit considered the legislative history of the FCRA. Id.
While acknowledging the absence of any discussion of sovereign immunity, the
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Seventh Circuit noted that Congress used plain language when it included the
government under the definition of "person" and used the term "person" under the
FCRA's substantive and remedial provisions. Id. at 795-96. Further explanation
of a clearly defined term was unnecessary; "Congress need not add 'we really
mean it!' to make statutes effectual." Id. at 796. The Seventh Circuit pointed out
that unequivocal waivers of sovereign immunity are found in a statute's plain
language, not in committee reports. Id.
The Seventh Circuit also addressed the argument that Congress had not
intended to expose the government to potential punitive damages and criminal
liability. Id. While the government has traditionally limited its liability as to
punitive damages, nothing prevents Congress from authorizing it. Id. If using the
defined term of "person" in the remedial portions of the FCRA exposes the
government to excessive liability, "then the solution is an amendment, not judicial
rewriting of a pellucid definitional clause." Id. Further, the Seventh Circuit did
not find the possibility that a government official could be subject to criminal
prosecution for willful violations of the FCRA "so outlandish" as to ignore the
plain definition of "person." Id.
Finally, the Seventh Circuit acknowledged that the FCRA's definition of
"person" treats states and the federal government identically. Id. The Seventh
Circuit noted that while state sovereign immunity prohibits the federal government
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from exposing states to private litigation, the federal government has the authority
to enforce the FCRA against the states and collect damages. Id. Further, "federal
statutes can apply to the national government even if principles of sovereign
immunity prevent awards of damages against the states." Id. at 797.
The Western District of Kentucky relied on Bormes as persuasive authority
and found that the FCRA contained an unequivocal waiver of sovereign immunity.
Mooneyham v. Equifax Info. Servs., LLC, 99 F. Supp. 3d 720, 725 (W.D. Ky.
2015 ). The Mooneyham court found that Congress plainly intended for the
government to be held to the standards of other entities when it included
government agencies under the FCRA's definition of"person." Id.
After reviewing these authorities, the Court believes that the district court
opinions from this circuit are more persuasive than Bormes and finds that the
FCRA does not contain an unequivocal waiver of sovereign immunity. The FCRA
is ambiguous as to whether plaintiffs can recover damages against government
entities, as federal statutes typically waive sovereign immunity in clearer terms.
Echols, 2013 WL 752629, at *5. For example, the Federal Torts Claims Act
specifically authorizes "claims against the United States, for money damages" for
injuries "caused by the negligent or wrongful act or omission of any employee of
the Government." 28 U.S.C. § 1346(b)(l). Including the phrases "government" or

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"governmental agency" in the FCRA's definition of"person" is not as unequivocal
as specifically mentioning the United States in the remedial provisions.
The ambiguity is further demonstrated by the express waiver of sovereign
immunity found later in the FCRA. Echols, 2013 WL 752629, at *5. A separate
section of the FCRA provides the requirements of disclosures to the Federal
Bureau of Investigation for counterintelligence purposes. 15 U.S.C. § 168lu. The
section provides that "[a]ny agency or department of the United States obtaining or
disclosing any consumer reports, records, or information contained therein in
violation of this section is liable to the consumer ... " 15 U.S.C. § 168luU). The
fact that Congress explicitly named the United States in the remedial provisions
found at§ 1681uU) but not in the remedial provisions found at§§ 168ln and
1681 o demonstrates the equivocal nature of any purported waiver of sovereign
immunity.
Further, the inclusion of the United States into every instance of the use of
the term "person" would open government agencies to criminal liability. For
example, the literal reading proposed by Daniel would allow the Federal Trade
Commission or a state regulatory agency to initiate an action against the Park
Service pursuant to § 1681 s. This potential result would be "patently absurd."
United States v. Singleton, 165 F.3d 1297, 1300 (10th Cir. 1999). The potential for

criminal liability did not trouble the Seventh Circuit, as the prosecution of a federal
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employee who deliberately violates the FCRA "is not so outlandish." Bormes, 759
F.3d at 796. "However, imposing criminal penalties against an office for actions
of the officeholder is a different ball game." Al-Haramain Islamic Found., Inc. v.

Obama, 705 F.3d 845, 854 (9th Cir. 2012). It is not the prosecution of an
individual government employee that is worrisome, but rather the potential
"unprecedented" prosecution of an entire government agency. Id.; Stellick, 2013
WL 673856, at *4. It is unlikely that Congress intended such consequences when

it included government agencies under the definition of "person."
V. Conclusion

The Court finds that including the United States as a "person" every time the
term is used in the FCRA would lead to inconsistent usage and potentially absurd
results. Given these findings, the Court concludes that Congress did not "speak
unequivocally" in waiving the government's sovereign immunity in the FCRA.

Cooper, 132 S. Ct. at 1453. Pursuant to Rule 12(b)(l), the Court must dismiss this
action for lack of subject matter jurisdiction. The Court does not reach the Park
Service's argument under Rule l 2(b )(6) that Daniel has not pied sufficient facts to
maintain an action under § 1681 c(g)(l ).
Accordingly, IT IS HEREBY ORDERED that the Park Service's Motion to
Dismiss Third Amended Complaint (Doc. 33) is GRANTED. The Clerk of Court
shall enter judgment and close this case.
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7""'-

DATED thi' &"day of Augu,t, 2016.

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~--~~~~r.~-M~~~-~c~,
SUSAN P. WATTERS
United States District Judge

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