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McCloud v. Save-A-Lot Knoxville, LLC

United States District Court, E.D. Tennessee, Knoxville

May 24, 2019

LARRY McCLOUD, Plaintiff,
v.
SAVE-A-LOT KNOXVILLE, LLC, et al., Defendants.

          Debra C. Poplin, Magistrate Judge

          MEMORANDUM

          CURTIS L. COLLIER, UNITED STATES DISTRICT JUDGE

         Before the Court is a motion to dismiss by Defendants Moran Foods, LLC and Save-a-lot, LTD. (Doc. 20.) On March 26, 2019, the Court granted a motion by Defendants Newcorp, LLC, and Save-a-lot Knoxville, LLC to join in the motion to dismiss. (Doc. 27.) Plaintiff Larry McCloud has responded in opposition to the motion to dismiss (Doc. 30), and Defendants Moran Foods, LLC, Save-a-lot, LTD., Newcorp, LLC, and Save-a-lot, Knoxville, LLC (“Defendants”[1]) have replied (Doc. 33). Also before the Court is a motion by Plaintiff for oral argument on the motion to dismiss, as well as an amended motion for oral argument on the motion to dismiss. (Docs. 34, 35.) Defendants have responded in opposition to Plaintiff's motions for oral argument. (Doc. 36.)

         Upon review of the submissions of the parties, the docketed record, and applicable law, the Court finds that a hearing is not necessary to resolve the issues before it. The Court will DENY Plaintiff's motion for oral argument (Docs. 34, 35). For the following reasons, the Court will GRANT Defendants' motion to dismiss (Doc. 20) and will DISMISS this action WITHOUT PREJUDICE for lack of jurisdiction.

         I. BACKGROUND

         On November 15, 2018, Plaintiff filed this case as a putative class action, alleging in a one-count complaint that Defendants violated the Fair and Accurate Credit Transactions Act (“FACTA”), 15 U.S.C. § 1681, et seq. (Doc. 1.) Plaintiff states that Defendants transgressed a portion of FACTA which prohibits printing more than the last five digits of a consumer's credit or debit card number on any transactional receipt. Plaintiff alleges that Defendants printed at least the first six and the last four digits of the credit or debit card number on receipts given to Plaintiff and putative class members. Plaintiff has attached a redacted receipt to his response brief showing that he made a purchase at a Save-A-Lot store in Knoxville, Tennessee for a total of $23.53 in goods on April 6, 2018. (Doc. 30-2.) Plaintiff seeks statutory damages, punitive damages, costs, and attorney's fees, all of which are made available by FACTA. See 15 U.S.C. § 1681n.

         On March 12, 2019, Defendants moved to dismiss Plaintiff's complaint under Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction, or alternatively, under Rule 12(b)(6) for failure to state a claim. (Doc. 20.)

         II. STANDARD OF REVIEW

         When a defendant moves to dismiss for a lack of subject-matter jurisdiction under Rule 12(b)(1), 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).

         Defendants do not specify here, but appear to generally make a facial attack on the sufficiency of Plaintiff's pleadings. While Defendants make some factual arguments, [2] they do not attach any extrinsic evidence to their motion to dismiss in support of those points. In addition, Plaintiff characterizes Defendants' motion as presenting a facial attack in his response brief (Doc. 30 at 5)-a claim which Defendants do not address or dispute in their reply brief. The Court will thus review the motion as presenting a facial attack.

         “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); O'Bryan v. Holy See, 556 F.3d 361, 376 (6th Cir. 2009).[3]

         III. ANALYSIS

         In support of their motion to dismiss, Defendants argue that Plaintiff has not suffered an injury in fact, that Plaintiff does not fall within the zone of interests of FACTA, [4] and that Plaintiff has not alleged a willful violation of FACTA. (Doc. 20-1.) Defendants also argue that Plaintiff should be ordered to provide a more definite statement under Rule 12(e), should the Court not dismiss Plaintiff's case on jurisdictional grounds or for failure to state a claim. (Id.) The Court, however, agrees with Defendants that it does not have jurisdiction: Plaintiff has not suffered an injury in fact.

         The Court first provides some background information regarding FACTA before turning to a discussion of the legal standard for alleging an injury in fact in the context of consumer protection statutes like FACTA, as well as an analysis of Plaintiff's alleged injuries as compared to that legal standard.

         1. FACTA

         Title Fifteen, United States Code Section 1681c(g) is entitled “Truncation of credit card and debit card numbers, ” and states, (1) In general

         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.

         (2) Limitation

         This subsection shall apply only to receipts that are electronically printed, and shall not apply to transactions in which the sole means of recording a credit card or debit card account number is by handwriting or by an imprint or copy of the card.

         (3) Effective date

         This subsection shall become effective-

         (A) 3 years after December 4, 2003, with respect to any cash register or other machine or device that electronically prints receipts for credit card or debit card transactions that is in use before January 1, 2005; and

         (B) 1 year after December 4, 2003, with respect to any cash register or other machine or device that electronically prints receipts for credit card or debit card transactions that is first put into use on or after January 1, 2005.

15 U.S.C. § 1681c(g). Congress enacted this provision of FACTA as an amendment to the Fair Credit Reporting Act (the “FCRA”) in a 2003 effort to prevent identity theft. Kamal, 918 F.3d at 106. The provision was “included . . . to limit the number of opportunities for identity thieves to ‘pick off' key card account information.” Id. (quoting S. Rep. No. 108-166, at 13 (2003)).

         In May of 2007, the Federal Trade Commission (“FTC”) issued a notice reminding businesses that the law had gone into effect, and that under it, businesses “may include no more than the last five digits of the card number, and [that they] must delete the card's expiration date.” Slip Showing? Federal Law Requires All Businesses to Truncate Credit Card Information on Receipts, Federal Trade Commission (May 2007), https://www.ftc.gov/tips-advice/business-center/guidance/slip-showing-federal-law-requires-all-businesses-truncate. The FTC stated, “[f]or example, a receipt that truncates the credit card number and deletes the expiration date could look like this:

ACCT: ***********12345
EXP: ****[.]”

Id. The FTC stated it was important for businesses to comply with the law in order to prevent “fraudsters and identity thieves, ” but also because “[n]oncompliance could open a company up to an FTC law enforcement action, including civil penalties and injunctive relief.” Id. The FTC also noted that, “the law allows consumers to sue businesses that don't comply and to collect damages and attorney's fees.” Id.

         The parties dispute the significance of a development regarding FACTA which took place around that same time. By 2007, FACTA was resulting in a consequence Congress had not anticipated-“hundreds of lawsuits were filed” which Congress saw as “abusive” and which did “not protect consumers but only result in increased cost to business and potentially increased prices to consumers.” Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, 122 Stat. 1565 (June 3, 2008). In particular, Congress was concerned with lawsuits which alleged that businesses had failed to remove the expiration date of a consumer's card on their receipt, “even where the account number was properly truncated.” Id. § (a)(4). Congress found that “none of [those] lawsuits contained an allegation of harm to any consumer's identity, ” id. § (a)(5), and that “the continued appealing and filing of [those] lawsuits represent[ed] a significant burden on the hundreds of companies that ha[d] been sued and could well raise prices to consumers without corresponding consumer protection benefit[, ]” id. § (a)(7). Accordingly, Congress amended the enforcement provision of the FCRA in the Credit and Debit Card Receipt Clarification Act of 2007 (the “Clarification Act”), Pub. L. No. 110-241, 122 Stat. 1565 (June 3, 2008). Under the Clarification Act, any person who printed an expiration date on a receipt between December 4, 2004 and the date of the enactment of the clarification, ...


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