Katz v. ABP Corporation

Filing 27

MEMORANDUM AND ORDER. ABP's motion to dismiss #20 is denied. See attached order for further details. Ordered by Judge Eric N. Vitaliano on 5/31/2013. (Siegfried, Evan)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

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YEHUDA KATZ,
individually and on behalf of a class,

MEMORANDUM AND ORDER
12-CV-4173 (ENV)

Plaintiff,
-againstABP CORPORATION and DOES 1-10,
Defendants.

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]{

VITALIANO, D.J.

Plaintiff Yehuda Katz commenced this action against defendants ABP Corporation ("ABP" or
"Au Bon Pain") and "Does 1-1 0" (unidentified individual officers, directors, employees and agents of
ABP), alleging violations of the Fair and Accurate Credit Transactions Act ("FACTA") amendment to
the Fair Credit Reporting Act ("FCRA"), 15 U.S.C. § 1681 et seq. ABP moves, pursuant to Federal
Rule of Civil Procedure 12(b)(6), to dismiss. For the reasons set forth below, ABP's motion is denied.
Background

On August 5, 2012, plaintiff received a computer-generated cash register receipt at the Au Bon
Pain establishment located in La Guardia Airport's Jet Blue terminal. (Amend. Compl.

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22, Dkt. No.

12). The receipt stated at the bottom in bold letters "CUSTOMER COPY." It also included both the
e]{piration date and first four and last four digits of plaintiffs credit card. (I d. at ~ 23 ).
This action spotlights the consumer credit transaction information disclosed on the receipt Katz
alleges Au Bon Pain issued. He claims the disclosure by ABP violates a section of FACTA, 15 U.S.C. §
168lc(g), which 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 e]{piration date upon any receipt
provided to the cardholder at the point of sale or transaction." Further, Katz claims that ABP's FACTA

noncompliance was willful, and thus mandates statutory damages of $100 to $1 000 per violation,
attorney's fees and expenses, and any other reliefthe Court might deem proper, including punitive
damages. 15 U.S.C. § 1681(n); (Orig. Compl. ,55).
On December 13,2012, with the consent of the Court, Katz filed an amended complaint, which
did not discernibly alter the facts or claims alleged in the original complaint. Roughly two months later,
on February 12, 2013, ABP filed the present motion to dismiss, arguing that plaintiffs complaint failed
to plausibly plead a willful violation ofF ACTA.
Standard of Review

Federal Rule of Civil Procedure 8(a)(2) requires "a short and plain statement ofthe claim
showing that the pleader is entitled to relief." This rule does not compel a litigant to supply "detailed
factual allegations" in support of his claims, Bell Atlantic Com. v. Twombly, 550 U.S. 544, 555, 127 S.
Ct. 1955, 1964 (2007), "but it demands more than an unadorned, the-defendant-unlawfully-harmed-me
accusation." Ashcroft v. Iqbal, 556 U.S. 662, 667, 129 S. Ct. 1937, 1949 (2009). "A pleading that
offers 'labels and conclusions' ... will not do." Id. (quoting Twombly. 550 U.S. at 555); see also In re
NYSE Specialists Sec. Litig., 503 F. 3d 89, .95 (2d Cir. 2007). "Nor does a complaint suffice if it tenders
'naked assertions' devoid of 'further factual enhancement."' Iqbal, 556 U.S. at 678 (quoting Twombly,
550 U.S. at 557).
Moreover, under Rule 12(b)( 6), a complaint must be dismissed if it does not "contain sufficient
factual matter, accepted as true, to 'state a claim to relief that is plausible on its face."' Id. (quoting
Twombly, 550 U.S. at 570). "A claim has facial plausibility when the plaintiff pleads factual content
that allows the court to draw the reasonable inference that the defendant is liable for the misconduct
alleged." Id. Determining plausibility is "a context-specific task that requires the reviewing court to
draw on its judicial experience and common sense." Id. at 1950.

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That said, "a complaint need not pin plaintiff's claim for relief to a precise legal theory" nor
provide "an exposition of his legal argument." Skinner v. Switzer, 131 S. Ct. 1289, 1296 (2011). The
focus is on the facts. Moreover, in analyzing well-pled facts, a court will draw all reasonable inferences
in favor of their pleader. See Gorman v. Consol. Edison Corp., 488 F.3d 586, 591-92 (2d Cir. 2007).
Further, on a motion to dismiss, a district court may only consider the pleading itself, documents that are
attached to or referenced in the complaint, documents that the plaintiff relied on in bringing suit and that
are either in the plaintiffs possession or that the plaintiff knew of when bringing suit, and matters of
which judicial notice may be taken. See Chambers v. Time Warner, Inc., 282 F.3d 147, !53 (2d Cir.
2002); Int'l Audiotext Network. Inc. v. Am. Tel.& Tel. Co., 62 F.3d 69, 72 (2d Cir. 1995).
Discussion

FACT A was passed in 2003 as an amendment to the FCRA. Fair and Accurate Credit
Transactions Act of2003, Pub.L. No. 108-159, § I, 117 Stat.l952, 1952 (2003). Section !68lc(g) of
FACTA imposes restrictions on the disclosure of credit and debit card information by those who accept
such cards for point of sale commercial transactions. It provides:
Except as otherwise provided in this subsection, no 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.
15 U.S.C. § 168lc(g)(l) (2009).

FACTA§ !68!n outlines civil liability for willful noncompliance, stating in part:
Any person who willfully fails to comply with any requirement imposed under this
subchapter with respect to any consumer is liable to that consumer in an amount equal to
the sum of(I) (A) any actual damages sustained by the consumer as a result of the failure or
damages of not less than $100 and not more than $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and
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(3) in the case of any successful action to enforce any liability under this section, the
costs of the action together with reasonable attorney's fees as determined by the court. · .
15 U.S.C. § 1681n (2009) (emphasis added).
Katz does not claim actual damages and seeks only the statutory damages of $100 to $1000 per
violation, attorney's fees and costs. (Amend. Compl.~ 68). He argues that the ABP receipt he received at
ABP's La Guardia location violated FACTA because it contained eight digits of his credit card number
and its expiration date. ABP argues that any purported violations ofF ACTA were not willful, and thus
the company is not liable under § 168ln. (De f.'s Mem. at 7, Dkt, No. 21 ). ABP argues furtherthat
plaintiff did not include enough facts in his amended complaint to plausibly suggest that ABP had a
willful state of mind. (I d.)
The scope of the term "willfulness" in FCRA statute was derivatively discussed by the Supreme
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Court in Safeco Insurance Company of America v. Burr. 551 U.S. 47 (2007). In that case, consumers
sued insurers for violation ofFCRA § 1681m(a), which requires that notice be provided to any
consumer subjected to "adverse action ... based in whole or in part on any information contained in a
consumer [credit] report." Safeco, 551 U.S. at 52. In parallel language, FACTA and its parent statute,
FCRA, pin civil liability to a showing of willfulness under § 1681 n. Cf id. The Safe co Court, more
importantly, held that "willful" noncompliance with FCRA includes both knowing and reckless
noncompliance. Id. (emphasis added). Plus, the Court held that a regulated entity cannot be in willful
noncompliance when its interpretation of the statute is "not objectively unreasonable ... "explaining that
"a company subject to FCRA does not act in reckless disregard of it unless the action is not only a
violation under a reasonable reading of the statute's terms, but shows that the company ran a risk of
violating the law substantially greater than the risk associated with a reading that was merely careless."

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The Safeco Court ultimately concluded that Safeco's reading ofFCRA [albeit incorrect] was not
objectively unreasonable and therefore "falls well short of violating the statute necessary for reckless
liability." Id. at 69.
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Id. at 68-70, 69. There is no reason that the ratio of Safeco should not hold here.
Applying the methodology counseled in Safeco, Katz can state a plausible FACT A willful
violation claim by first alleging ABP issued a receipt to him in connection with a consumer credit
transaction-and that the receipt contained personal credit card identifiers prohibited by FACTA. Yet,
such facts alone, of course, would not suffice and the pleading does not stop there. He alleges the receipt
was issued from a cash register exclusively maintained, programmed, and operated by or solely at the
request of ABP. It is reasonable to infer on such allegations that such is so and that ABP either intended,
or recklessly permitted, such identifying information to appear on the receipt. Saftco teaches that either
of these "states of mind"-reckless or intentional-can support a claim of willful violation ofF ACTA
and that a complaint alleging such facts with the reasonable inferences they permit, satisfies the
plausibility requirement of Rule 8(a)(2). Safeco also teaches that ABP might have a defense if it acted
with a not unreasonable interpretation of the same FACTA language relied upon by Katz. Clearly, such
a clash of facts is inappropriate for resolution on a Rule 12(b)(6) motion to dismiss, which requires all of
the plaintiff's factual allegations be deemed true and all reasonable inferences be drawn in his favor.
Conclusion

For the foregoing reasons, ABP's motion is denied.
So Ordered.
Dated: Brooklyn, New York
May 31,2013

s/ ENV
ERIC N. VITALIANO ,.... -. ...--=
United States District Judge

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