Darby v. Pilot Corporation et al

Filing 52

MEMORANDUM GRANTING (27 in 3:16-cv-00139-CLC-CCS, 25 in 3:16-cv-00138-CLC-CCS) MOTION to Dismiss Plaintiffs' Consolidated Amended Class Action Complaint filed by Pilot Corporation, Pilot Travel Centers, LLC.Signed by District Judge Curtis L Collier on 7/28/17. Associated Cases: 3:16-cv-00138-CLC-CCS, 3:16-cv-00139-CLC-CCS(KFB, )

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF TENNESSEE
AT KNOXVILLE
NOLAN C. DARBY, et al.,

)
)
Plaintiffs,
)
) 3:16-CV-138
v.
)
) Collier/Shirley
PILOT CORPORATION, et al.,
)
)
Defendants.
)
______________________________________________________________________________
KEVIN THOMPSON, et al.,
Plaintiffs,
v.
LOVE’S TRAVEL STOPS & COUNTRY
STORES, INC.,
Defendant.

)
)
)
)
)
)
)
)
)
)

3:16-CV-143
Collier/Shirley

MEMORANDUM
Before the Court are motions to dismiss Plaintiffs’ complaints in each of the abovecaptioned actions. (Doc. 25 in Case No. 3:16-cv-138 (the “Darby/Pilot Action”); Doc. 24 in
Case No. 3:16-cv-143 (the “Thompson/Love’s Action”).) Defendants, Pilot Corporation and
Pilot Travel Centers, LLC doing business as Pilot Flying J (collectively, “Pilot”) in the
Darby/Pilot Action, and Love’s Travel Stops & Country Stores, Inc. (“Love’s”) in the
Thompson/Love’s Action, seek dismissal of the complaints against them pursuant to Rule
12(b)(1) of the Federal Rules of Civil Procedure on the grounds that Plaintiffs lack standing.1
1

In the alternative, Defendants move to dismiss the complaints under Rule 12(b)(6) on
the grounds that Plaintiffs fail to state claims upon which relief can be granted. Because the
Court concludes Plaintiffs lack standing to bring these actions, the Court does not address
Defendants’ alternative arguments under Rule 12(b)(6).

Plaintiffs, Nolan Darby, Dorene Ivy, Laurie Anderson, and Chase Mosely2 in the Darby/Pilot
Action, and Kevin Thompson in the Thompson/Love’s Action, responded in opposition to the
motions to dismiss.

(Darby/Pilot Doc. 29; Thompson/Love’s Doc. 32.)

Plaintiffs replied.

(Darby/Pilot Doc. 30; Thompson/Love’s Doc. 37.) The Court held a hearing on the motions on
May 23, 2017. (Darby/Pilot Doc. 47; Thompson/Love’s Doc. 45.) Plaintiffs filed notices of
supplemental authority on May 24, 2017. (Darby/Pilot Doc. 46; Thompson/Love’s Doc. 44.)
Defendants responded on May 30, 2017. (Darby/Pilot Doc. 49; Thompson/Love’s Doc. 47.) For
the following reasons, the Court will GRANT Defendant’s motions (Darby/Pilot Doc. 25;
Thompson/Love’s Doc. 24) and DISMISS these actions WITH PREJUDICE.

I.

BACKGROUND
These putative class actions address the size and length of the holds placed on Plaintiffs’

credit-card accounts when Plaintiffs used their cards to buy gasoline through pay-at-the-pump
devices at gas stations owned by one of the Defendants.3 In each such transaction, the Defendant
seller first makes an authorization charge, usually for one dollar, to make sure the card is valid.
This initial authorization charge is almost immediately removed from the customer’s account.
The Defendant then places a preauthorization hold on the customer’s credit line in a predetermined amount allegedly designed to cover the maximum cost of a fill-up. The amounts of
the preauthorization holds placed by Pilot range from $75 to $100 for passenger vehicles. The
holds placed by Love’s are typically $125 for passenger vehicles.
2

Plaintiff Mosely is identified as “Chase Mosely” in the case caption and parts of the
Complaint and as “Chad Mosely” in other parts of the Complaint. (Doc. 23 in Case No. 3:16-cv139.)
3

To the extent there are any variations in the parties’ statements of the facts, the Court
interprets the facts in the light most favorable to Plaintiff. See Bassett v. Nat’l Collegiate
Athletic Ass’n, 528 F.3d 426, 430 (6th Cir. 2008).
2

Neither Pilot nor Love’s notifies its customers of the use, size, or duration of any credit
hold it may employ. Preauthorization holds are not used if a customer goes inside a store to pay
for a gas purchase with a credit card. Holds also do not apply to debit-card purchases or, of
course, to cash purchases.
A preauthorization hold generally remains on a customer’s account for several days. The
issuer of the customer’s credit card determines how long the pre-authorization hold stays on the
account.
Plaintiffs used their credit cards to buy gasoline through pay-at-the-pump devices on the
following occasions:
Plaintiff
Darby
Ivy
Anderson
Mosely
Thompson

Location
Ellenton, Fla.
Ocala, Fla.
Sevier or Jefferson
Cty., Tenn.
Sevier Cty., Tenn.
Loudon Cty., Tenn.

Date
2/13/16
4/9/13
2/26/16

Card
Visa
Am. Ex.
Visa

Purchase
$23.04
$24.00
$23.58

Defendant
Pilot
Pilot
Pilot

2/25/16
2/18/16

Am. Ex.
Visa

$47.99
$14.75

Pilot
Love’s

(Darby/Pilot Doc. 23 (“Darby Compl.”) ¶¶ 11, 13, 15, 17, 52; Thompson/Love’s Doc. 22
(“Thompson Compl.”) ¶ 11.)
Plaintiff Thompson is the only one of the Plaintiffs who actually saw a hold on his
account after he made a purchase. He saw the hold when he checked his account the morning
after he bought gas from Love’s. (Thompson Compl. ¶ 12.) He talked to the manager of the
Love’s store, who told him they “don’t do that” and “we don’t own the machines.” (Id.) The
hold was in the amount of $125.00, which was more than eight times the amount of his $14.75
purchase. The hold lasted for seventy-two hours.
Each Complaint includes a section titled “Plaintiffs’ Injuries-in-Fact and Damages.”
(Darby Compl. ¶¶ 70–74; Thompson Compl. ¶¶ 39-43.) Plaintiffs acknowledge they have not

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alleged they were “deprived . . . of basic needs, insufficient funds to cover expenses, or overdraft
charges,” but claim it is probable other, unnamed class members have suffered such deprivations.
(Darby Compl. ¶ 70; Thompson Compl. ¶ 39.) Plaintiffs nevertheless say they “allege much
more than a temporary diminution in their available credit. They have suffered a demonstrable
loss of credit . . . . This loss of credit resulted in actual harm. Thus, they suffered concrete and
tangible injuries and real-world harm . . . .” (Darby Compl. ¶ 71; see also Thompson Compl.
¶ 40.) Plaintiffs assert they have consulted an economist, who would testify their damages
“reflect the opportunity cost of the credit card holds placed in excess of the actual purchases
made,” which they also describe as denied spending power. (Darby Compl. ¶ 72; Thompson
Compl. ¶ 41.) The economist can calculate Plaintiffs’ damages using the average duration of the
holds and the average interest factor. (Id.)
The Complaints also allege the preauthorization holds “affected the prices of the fuel
purchased by Plaintiffs . . . by unilaterally increasing the consideration required to make the
purchases.” (Darby Compl. ¶ 33; see also Thompson Compl. ¶ 30.) Plaintiffs say they would
not have bought fuel at the pay-at-the-pump machines if they had known that holds substantially
exceeding the price of the fuel would be imposed. (Id.)
Plaintiffs in the Darby/Pilot Action assert six causes of action against Pilot: breach of
implied-in-fact contract, breach of implied-in-law contract/unjust enrichment; violation of the
Tennessee Consumer Protection Act, Tenn. Code Ann. §§ 47-18-101 et seq.; violation of the
Florida Deceptive & Unfair Trade Practices Act, Fla. Stat. §§ 501.201 et seq.; violation of other
states’ unfair or deceptive trade practices acts; and fraudulent concealment.4 (Darby Compl.

4

Plaintiff Ivy asserted a violation of the Georgia Fair Business Practices Act, O.C.G.A.
§§ 10-1-390 et seq. Plaintiffs consent to dismiss this claim. (Darby/Pilot Doc. 29 at 1 n.2.).
4

¶¶ 94–158.) Plaintiff Thompson asserts the same causes of action against Love’s, omitting only
the claim specific to Florida. (Thompson Compl. ¶¶ 63–108.)

II.

STANDARD OF REVIEW
When a defendant moves to dismiss for lack of subject-matter jurisdiction under Rule

12(b)(1) of the Federal Rules of Civil Procedure, the plaintiff has the burden of proving
jurisdiction. Davis v. United States, 499 F.3d 590, 593–94 (6th Cir. 2007). A Rule 12(b)(1)
motion may present either a facial attack, which questions the sufficiency of the pleadings, or a
factual attack, which challenges the factual existence of subject-matter jurisdiction. United
States v. Ritchie, 15 F.3d 592, 598 (6th Cir. 1994). The parties agree these motions raise facial
attacks. (Darby/Pilot Doc. 27 at 3, Doc. 29 at 11; Thompson/Love’s Doc. 25 at 4, Doc. 32 at 7.)
“When reviewing a facial attack, a district court takes the allegations in the complaint as true,”
though conclusory allegations and legal conclusions will not prevent dismissal. Gentek Bldg.
Prods. v. Sherwin-Williams Claims, 491 F.3d 320, 330 (6th Cir. 2007).

III.

DISCUSSION
For a plaintiff to have standing under Article III of the Constitution, there must be (1) an

injury in fact; (2) a causal link between the injury and the defendant’s action or inaction; and
(3) a likelihood that a decision in the plaintiff’s favor will redress the injury. Lujan v. Defenders
of Wildlife, 504 U.S. 555, 560–61 (1992). The plaintiff has the burden of establishing each of
these elements. Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016).
The type of evidence required to satisfy plaintiff’s burden to establish subject-matter
jurisdiction varies depending on the stage of the litigation. Lujan, 504 U.S. at 561. “At the

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pleading stage, the plaintiff must ‘clearly . . . allege facts demonstrating’ each element” of
jurisdiction. Spokeo, 136 S. Ct. at 1547.
Plaintiffs have failed to allege sufficient facts to demonstrate any of the requirements for
standing is present, let alone all three. The Court examines each requirement in turn.
A.

Injury in Fact

An injury in fact must be “concrete and particularized,” as well as “actual or imminent,
not conjectural or hypothetical.” Lujan, 504 U.S. at 560 (internal quotation marks omitted). A
particularized injury is one that “affect[s] the plaintiff in a personal and individual way,” while a
concrete injury is one that is “real” rather than “abstract”—in other words, it “must actually
exist.” Spokeo, 136 S. Ct. at 1548. An injury must be both concrete and particularized to confer
standing on a plaintiff; one without the other is not enough. See id.; see also Soehnlen v. Fleet
Owners Ins. Fund, 844 F.3d 576, 581–82 (6th Cir. 2016).
An injury in fact does not have to be “tangible,” however. Id. at 1549. When assessing
an intangible harm, “it is instructive to consider whether an alleged intangible harm has a close
relationship to a harm that has traditionally been regarded as providing a basis for a lawsuit in
English or American courts.” Id. In addition, a “risk of real harm” may “satisfy the requirement
of concreteness.” Id.
Defendants argue Plaintiffs have failed to allege any facts showing a concrete, tangible
injury. Defendants argue Plaintiffs instead offer conclusory allegations and circular arguments
on this point. Plaintiffs make the following allegations of injuries in their Complaints:


“The excessive holds, in effect, resulted in losses of credit, depriving
Plaintiff[s] and Class members of access to their otherwise available credit
funds for several days. They proximately caused Plaintiff[s] . . . to suffer
demonstrable, ascertainable, and measurable damages, i.e., not merely
losses of credit, but tangible, pecuniary, and actual harm, as their available
credit disappeared for several days. These damages reflect the opportunity
cost of the credit card holds placed in excess of the actual purchases made.
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That is, the difference between the amount of the credit card hold placed
and the actual purchase represents spending power denied to Plaintiff[s] .
. . by Pilot.” (Darby Compl. ¶ 5; Thompson Compl. ¶ 5 (emphasis in
originals).)


Each named Plaintiff “was injured, suffering a tangible and pecuniary loss
of opportunity and spending power that prevented [him or her] from
having the use of such credit for several days.” (Darby Compl. ¶¶ 11, 13,
15, 17; Thompson Compl. ¶ 13.)



Each named Plaintiff “suffered a demonstrable loss of credit, as a portion
of [his or her] . . . credit line disappeared, artificially and inexplicably
frozen for several days. . . . This loss of credit further resulted in tangible,
pecuniary, and actual harm to [each named Plaintiff]. [Each named
Plaintiff] was damaged by not having access to [his or her] otherwise
available credit card funds in the amount of the hold for the duration of the
hold, causing a tangible and pecuniary loss of opportunity and spending
power.” (Darby Compl. ¶¶ 41–42, 50–51, 59–60, 68–69; see also
Thompson Compl. ¶ 38.)



Plaintiffs say they “allege much more than a temporary diminution in their
available credit. They have suffered a demonstrable loss of credit . . . .
This loss of credit resulted in actual harm. Thus, they suffered concrete
and tangible injuries and real-world harm . . . .” (Darby Compl. ¶ 71; see
also Thompson Compl. ¶ 40.)

As demonstrated by the excerpts above, Defendants are correct that Plaintiffs have failed
to allege any facts showing a concrete injury. Plaintiffs acknowledged during oral argument that
they are alleging an economic harm, rather than a personal, reputational, or emotional injury.
Their complaints allege they lost “spending power” and the “opportunity cost” of lost credit to
demonstrate they have suffered a concrete injury. These allegations are “merely a description of
the effect of lost credit,” however, not a description of a concrete and tangible injury. (See
Darby/Pilot Doc. 27 at 6.) Plaintiffs have not, for example, alleged the holds stopped them from
making purchases, put them over their credit limits, or even that they had credit limits.
Repeatedly calling an alleged injury “concrete” and “tangible” does not make it so.

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Further, the inability to make hypothetical purchases is not enough to constitute an injury
in fact. In re Barnes & Noble Pin Pad Litig., No. 12-cv-8617, 2013 WL 4759588, at *6 (N.D.
Ill. Sep. 3, 2013). In Barnes & Noble, one of the plaintiffs was without the use of a credit card
while the card was being replaced due to a fraudulent charge. The district court held plaintiff’s
time without her credit card was not an actual injury. Plaintiffs here attempt to distinguish
Barnes & Noble on its facts, first in that it involved a data breach rather than a credit hold, and
second in that there was only the possibility data had been stolen, rather than an “actual[]
seiz[ure]” of Plaintiffs’ credit for several days as in this case. The relevant holding of Barnes &
Noble, however, is directly on point here and the Court finds it persuasive. Losing spending
power for a period of time, without more, does not constitute an injury sufficient to confer
standing.5
In their notice of supplemental authority, Plaintiffs analogize their alleged injury to the
injury in junk-fax cases, in which merely having an unsolicited fax transmission occupy the
recipient’s telephone or fax line for a short period of time can be a concrete injury sufficient to
convey standing. (Darby/Pilot Doc. 46; Thompson/Love’s Doc. 44 (both quoting Compressor
Eng’g Corp. v. Thomas, No. 10-10059, 2016 WL 7473448, at *9–10 (E.D. Mich. Dec. 29,
2016)).) Here, Plaintiffs argue, an excessive and unconsented-to hold occupied their credit in the
same way. But the analogy will not hold. Occupation of a fax line necessarily excludes any
other transmissions that may be attempted at the same time. There is no allegation here that the
credit holds excluded any other financial transactions from occurring. Moreover, Congress has
5

Plaintiffs cite Justice Thomas’s Spokeo concurrence for the proposition that concreteharm requirements are less rigorous where a plaintiff is seeking to vindicate his own rights, as
opposed to rights owed to the public in general. (Darby/Pilot Doc. 29 at 12 (quoting Spokeo, 136
S. Ct. at 1552 (Thomas, J., concurring)).) Plaintiffs still do not explain what is concrete about
the harm they suffered, however. Moreover, Justice Thomas’s non-precedential statements
discussed injury in the context of constitutional rights.
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created a statutory right to be free from unsolicited fax advertisements. See Compressor Eng’g,
2016 WL 7473448, at *10. “Congress may ‘elevat[e] to the status of legally cognizable injuries
concrete, de facto injuries that were previously inadequate in law.’” Spokeo, 136 S. Ct. at 1549
(quoting Lujan, 504 U.S. at 578). Even if Plaintiffs had suffered concrete, de facto injuries, the
reasoning of Compressor Engineering would still not be applicable to their cases, because
Plaintiffs have not alleged the violation of any statutory right.
Plaintiffs argue they have suffered a second kind of damage: the credit holds gave
Defendants valuable protection from fraud for which Defendants paid Plaintiffs nothing.
Plaintiffs have not explained, however, how this benefit to Defendants injured Plaintiffs. When
asked about this alleged harm at oral argument, Plaintiffs referred to the economist they have
retained to calculate the time value of the holds. But the ability to develop a mathematical
formula does not demonstrate either that an injury has been suffered or that the alleged injury is
concrete.
Finally, Plaintiffs argue Defendants are inappropriately conflating the standards for
establishing injury in fact at the pleading stage and for proving damages at trial, in that a plaintiff
may be entitled only to nominal damages and still have standing. Defendants are not, however,
attacking any failure by Plaintiffs to provide proof of their damages. Defendants are attacking
Plaintiffs’ failure to even allege facts demonstrating that they suffered concrete injuries. See
Spokeo, 136 S. Ct. at 1547.
Plaintiffs have repeated the conclusion that they have suffered a concrete injury, but they
have not alleged facts demonstrating they have done so. Plaintiffs therefore lack standing.

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B.

Causal Connection

Love’s argues any injury Plaintiff Thompson suffered was not fairly traceable to Love’s,
because the Complaint alleges Plaintiff Thompson’s credit-card company determined the length
of the hold. (Thompson/Love’s Doc. 25 at 8 (citing Compl. ¶ 23).) Love’s argues any injury
resulted from the length of the hold, not its size. Plaintiff Thompson responds that proximate
causation is not required to support standing; rather, an indirect injury may be sufficient.
(Thompson/Love’s Doc. 32 at 9–10 (citing Parsons v. United States Dep’t of Justice, 801 F.3d
701, 713 (6th Cir. 2015) (finding harm was fairly traceable to defendant where defendant
motivated conduct, but did not require it)).) The purpose of the traceability requirement is to
eliminate cases in which a third party caused an injury. (Id. (quoting Am. Canoe Ass’n v. City of
Louisa Water & Sewer Comm’n, 389 F.3d 536, 542 (6th Cir. 2004)).) Plaintiff Thompson has
alleged that Love’s imposed the hold and did not provide notice of the hold.
Plaintiffs have not alleged facts demonstrating their alleged injuries are fairly traceable to
Defendants. The complaints allege Plaintiffs’ credit-card companies determined the length of
the holds. Defendants determined only the size of the holds. If anything caused harm in this
scenario, however, it was the length of time the holds were in place. As Plaintiffs conceded
during oral argument, the harm caused by holding a million dollars of credit for one second
would be less than the harm caused by holding a hundred thousand dollars for ten days.
Plaintiffs further conceded it is impossible to put a dollar value on the harm done by an
instantaneous hold.

But the complaints contain no allegations that Defendants controlled

anything other than the size of the holds, which were placed before the Plaintiffs began to pump
any gas into their vehicles.

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Plaintiffs argue their expert can calculate the value of the injury done by holds of a
second or longer, using a standard interest rate, the size of the excess amount of the hold, and the
amount of time the hold lasted. But being able to calculate the harm allegedly done by the
combination of the amount and length of the hold does not make up for the fact that the harm, if
indeed there is any, resulted from the length decided by the credit-card company, not the amount
decided by Defendants.6 Plaintiffs’ failure to allege an injury fairly traceable to the amount of
the holds, rather than the length of the holds, is fatal to Plaintiffs’ claim to have standing.
C.

Redressability

Defendants argue Plaintiffs have failed to allege facts showing any injury could be
redressed by a favorable ruling because the holds have already been removed.

Plaintiff

Thompson argues in response that he is seeking redress in the form of compensatory damages, so
a judgment awarding him compensatory damages would redress his injuries. But identifying a
remedy is not the same as redressability. If redressability required no more than a demand for
money damages, redressability would exist in every case seeking money damages.
Redressability turns on whether the injury the plaintiff suffered can be fixed by an order of the
court. All of the holds were released before the lawsuits were filed. Plaintiffs therefore have not
alleged facts demonstrating any injuries they may have suffered are redressable.

6

Plaintiffs argue Defendants initiated the holds knowing they would last for days, and
Defendants are therefore responsible for the harm caused by the holds. This argument is not
supported by any of the factual allegations in the complaints, however.
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IV.

CONCLUSION
Plaintiffs have not alleged facts demonstrating an injury in fact, a causal connection to

Defendants, or redressability. For each of these reasons independently, Plaintiffs do not have
standing.

The Court will therefore GRANT Defendant’s motions (Darby/Pilot Doc. 25;

Thompson/Love’s Doc. 24) and DISMISS these actions WITH PREJUDICE.
An appropriate Order will enter.

/s/
CURTIS L. COLLIER
UNITED STATES DISTRICT JUDGE

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