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Komorowski v. All-American Indoor Sports, Inc.

United States District Court, Tenth Circuit

September 4, 2013

AMELIA KOMOROWSKI, et al., Plaintiffs,
v.
ALL-AMERICAN INDOOR SPORTS, INC., Defendant.

MEMORANDUM AND ORDER

Sam A. Crow, U.S. District Senior Judge

This case comes before the Court on Defendant’s motion to dismiss the case for failure to state a claim under Fed. R. Civ. Pro. 12(b)(6).

Plaintiffs bring this putative class action against Defendant under the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681 et seq. Plaintiffs seek statutory damages, costs and attorneys’ fees, and punitive damages pursuant to 15 USC § 1681n. This section creates a private right of action for a willful violation of FCRA. Ramirez v. Midwest Airlines, Inc., 537 F.Supp.2d 1161 (D.Kan. 2008).

FCRA prohibits retailers who accept credit or debit cards from “print[ing] 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. § 1681c(g)(1). Any person who willfully fails to comply with this requirement is subject to civil penalties. 15 U.S.C. § 1681 n(a)(1)(A). The Act defines “person” as “any individual, partnership, corporation, trust, estate, cooperative, association, government or governmental subdivision or agency, or other entity.” § 1681a(b). Defendant contends that Plaintiff’s complaint is deficient in failing to allege a “willful violation” of the act. The Court agrees.

Willful violations of this act include both knowing and reckless violations. See Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 2208–09, 167 L.Ed.2d 1045 (2007). “The term willful means an omission or failure to do an act … voluntarily and knowingly with a purpose [to] disobey or disregard of the law, or with reckless disregard of a known statutory duty under the Fair Credit Reporting Act.” Price v. Trans Union, LLC, 839 F.Supp.2d 785, 808 (E.D.Pa. 2012). Reckless violations include conduct that violates an objective standard: action entailing “an unjustifiably high risk of harm that is either known or so obvious that it should be known.” Safeco, 551 U.S. at 68 (quoting Farmer v. Brennan, 511 U.S. 825, 836, 114 S.Ct. 1970, 128 L.Ed.2d 811 (1994)). It is the “high risk of harm, objectively assessed, that is the essence of recklessness at common law.” Id. at 69. In Safeco, “[t]he Supreme Court …”established a safe harbor against liability for willfulness. A company cannot be said to have willfully violated FCRA if the company acted on a reasonable interpretation of FCRA's coverage.” Fuges v. Southwest Financial Services, Ltd., 707 F.3d 241, 248 (3d Cir. 2012).

Motion to Dismiss Standard

To survive a motion to dismiss, a plaintiff must allege facts sufficient to demonstrate his claim for relief is plausible on its face. Jordan–Arapahoe, LLP v. Board of County Com'rs. of County of Arapahoe, Colo., 633 F.3d 1022, 1025 (10th Cir. 2011); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). “ ‘A claim has facial plausibility when the [pleaded] factual content [ ] allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.’ ” Jordan–Arapahoe, 633 F.3d at 1025 (quoting Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1940, 173 L.Ed.2d 868 (2009)). In making this determination, the court accepts as true all well-pleaded factual allegations included in the complaint. Howard v. Waide, 534 F.3d 1227, 1243 (10th Cir. 2008). The court does not, however, accept legal conclusions, and “[t]hreadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Iqbal, 129 S.Ct. at 1949.

Plaintiff’s Complaint

Plaintiffs’ Complaint includes the following allegations arguably relevant to the issue of willfulness:

17. Even though Defendant AAIS had up to three years to comply, it willfully violated FACTA and failed to protect Plaintiffs and others similarly situated against credit card and debit card fraud and other forms of identity theft by printing the expiration date of the credit card number on receipts provided to cardholders transacting business with Defendant as described herein.
20. FACTA’s requirement that merchants truncate credit and debit card numbers and exclude expiration dates was phased in over a three-year period.
21. During the three year phase-in period, there was extensive publicity regarding FACTA’s requirements.
23. Defendant had actual knowledge of FACTA’s requirements, specifically including the requirement that all but the last five digits of credit and debit card numbers were required to be truncated on receipts presented to consumers at the point of sale and that all expiration dates were to be removed.
57. Defendant knew or should have known about the requirements of FACTA, including specifically FACTA’s requirements concerning the truncation of credit and debit card numbers and ...

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