Hammer v. Sam's E., Inc.
| Decision Date | 05 June 2014 |
| Docket Number | Nos. 12–3724,12–3858.,s. 12–3724 |
| Citation | 754 F.3d 492 |
| Parties | Steven E. HAMMER, individually and on behalf of all others similarly situated; Michael D. White, individually and on behalf of all others similarly situated, Plaintiffs–Appellants United States of America, Intervenor v. SAM'S EAST, INC., doing business as Sam's Club; Does, 1–10, inclusive; Sam's West, Inc., doing business as Sam's Club; Wal–Mart Stores, Inc., individually, doing business as Sam's Club, doing business as Sam's Wholesale Club; Does, 1–8, inclusive, Defendants–Appellees Steven E. Hammer, individually and on behalf of all others similarly situated; Michael D. White, individually and on behalf of all others similarly situated, Plaintiffs–Appellees United States of America, Intervenor v. Sam's East, Inc., doing business as Sam's Club, Defendant–Appellant Does, 1–10, inclusive, Defendant Sam's West, Inc., doing business as Sam's Club; Wal–Mart Stores, Inc., individually, doing business as Sam's Club, doing business as Sam's Wholesale Club, Defendants–Appellants Does, 1–8, inclusive, Defendant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
OPINION TEXT STARTS HERE
Roy F. Walters, argued, Kansas City, MO, for Appellant/Cross–Appellee.
Karen W. Renwick, Matthew R. Crimmins, on the brief, Kansas City, MO, for Appellant/Cross–Appellee.
James R. Eiszner, Patrik A. Shah, argued, Kansas City, MO, for Appellees/Cross–Appellants.
Rebecca J. Schwartz, on the brief, for Appellees/Cross–Appellants.
Michael Jay Singer, Christine Noel Kohl, on the brief, Washington, DC, for Intervenor.
Before RILEY, Chief Judge, BRIGHT and BYE, Circuit Judges.
In this action, plaintiffs (appellants) Steven Hammer and Michael White allege that Wal–Mart Stores, Inc., Sam's East, Inc., and Sam's West, Inc. (collectively “Sam's Club”) 1 willfully violated a provision of the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. § 1681c(g)(1), which prohibits a person accepting credit or debit cards for a consumer transaction from “print[ing] more than the last five digits of the card number ... upon any receipt provided to the cardholder.” Despite its conclusion that Sam's Club violated FACTA, the district court 2 granted summary judgment of dismissal in favor of Sam's Club on the ground that the violation was not willful. We agree, and therefore affirm.
Sam's Club, a membership-only retailer, requires customers to have a membership card and number in order to shop at a Sam's Club store. Sam's Club members may also apply for a Sam's Club Private Label Credit Card, which doubles as a membership card and a credit card. The card has a 19–digit credit card number. The first seven digits comprise the Bank Identification Number, which identifies the banking institution issuing the card, and is identical on all cards and publicly available. Eleven of the remaining twelve digitsare unique to the credit card holder. It is undisputed that prior to the initiation of this action, Sam's Club designed its Private Label Credit Cards such that the last twelve digits of that card number read identical to the last twelve digits of the cardholder's membership number.
The appellants hold Sam's Club Private Label Credit Cards. On multiple occasions from 2007–2008, they purchased products at Sam's Club stores in Kansas and Missouri using their cards and were given electronically-printed receipts at the point of sale. The receipts disclosed only the last four digits of appellants' credit card numbers; however, the receipts also showed separately the last ten consecutive digits of their membership numbers. Thus, given that Sam's Club designed the last twelve digits of membership and credit card numbers to be the same, the receipts showing the appellants' “member” number in fact disclosed the last 10 consecutive digits of appellants' credit card numbers.
The following example illustrates how the receipts disclosed the appellants' membership numbers (“V Member”) and credit card numbers (“Account # ”):
V Member: 101–00123456789
In this example, the bold numbers comprise the last ten digits of the consumer's credit card number.
Appellants subsequently filed this action on behalf of themselves and others similarly situated asserting that Sam's Club in its receipts provided to consumers with Private Label Credit Cards violated FACTA's receipt limitation requirement, 15 U.S.C. § 1681c(g)(1), reading:
[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.
Appellants allege that Sam's Club violated this statute by printing more than the last five digits of their credit card numbers on electronically-printed receipts despite the fact that receipts listed the numbers as “member” numbers. Appellants further allege that the violation was willful because Sam's Club persisted in printing credit card numbers on receipts despite knowing and repeatedly being informed about FACTA's receipt requirement. Appellants do not allege actual damages, but seek to recover statutory damages under a provision of the Fair Credit Reporting Act (FCRA), 15 U.S.C. § 1681n, which governs liability for FACTA violations. That provision states:
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 ... 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.
15 U.S.C. § 1681n(a)(1)(A) (hereinafter “the FCRA liability provision”). Appellants also seek punitive damages and reasonable attorneys' fees.
After the district court denied Sam's Club's motion to dismiss under Fed.R.Civ.P. 12(b)(6), appellants moved for summary judgment on the issue of whether Sam's Club violated FACTA's receipt requirement by printing receipts with membership numbers that included more than five digits of customers' credit card numbers. The district court granted the motion, reasoning that “one cannot avoid the prohibition by referring on the receipt to a ‘membership number’ if in fact the collection of numbers includes a long string of more than five digits that are also used as credit card numbers.” (July 24, 2012, Order at 2.) Although the district court concluded that Sam's Club violated FACTA, it reserved for consideration the issue of whether the violation was willful—a statutory precondition to liability.
Sam's Club then moved for summary judgment on the issue of willfulness. The district court granted the motion and dismissed appellants' action. Relying on the Supreme Court's decision in Safeco Ins. Co. v. Burr, 551 U.S. 47, 127 S.Ct. 2201, 167 L.Ed.2d 1045 (2007), the district court concluded that although Sam's Club violated FACTA, the violation was not willful because Sam's Club's interpretation of the statute was not objectively unreasonable. The district court reasoned that Sam's Club's reading of the statute—that the language of the statute only related to shortening of a credit card number, so labeled—“not only seems reasonably possible but rather likely, at least for those not philosophically inclined to think about (or guess at) Congressional purpose.” (Oct. 16, 2012, Order at 6.) The district court also emphasized that Sam's Club had “no guidance except the bare wording of the statute in determining whether a ‘membership number’ as well as a ‘credit card’ or ‘account’ number must be truncated.” ( Id.)
Appellants filed a timely notice of appeal to this court.
Appellants assert (1) that the district court erred by concluding that Sam's Club did not willfully violate FACTA and (2) that the district judge failed to recuse himself in the case after disclosure of a conflict of interest. On cross appeal, Sam's Club challenges the district court's conclusion that it violated FACTA. Sam's Club also argues that appellants lack Article III standing to bring their claim. We address standing before proceeding to the merits.
“Article III standing is a threshold question in every federal court case.” United States v. One Lincoln Navigator 1998, 328 F.3d 1011, 1013 (8th Cir.2003). “The exercise of judicial power under Art. III of the Constitution depends on the existence of a case or controversy.” Preiser v. Newkirk, 422 U.S. 395, 401, 95 S.Ct. 2330, 45 L.Ed.2d 272 (1975). A central component of the requirement is standing, “which requires a plaintiff to demonstrate the now-familiar elements of injury in fact, causation, and redressability.” Lance v. Coffman, 549 U.S. 437, 439, 127 S.Ct. 1194, 167 L.Ed.2d 29 (2007).
With these principles in mind, we requested supplemental briefing from the parties prior to oral argument on the following issues: (1) whether the appellants, having alleged no actual damages, “have suffered an ‘injury in fact,’ ” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992), and (2) whether the appellants have suffered an injury “that is likely to be redressed by a favorable decision,” Simon v. E. Ky. Welfare Rights Org., 426 U.S. 26, 38, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976), in light of dicta from our decision in Dowell v. Wells Fargo Bank, NA, 517 F.3d 1024, 1026 (8th Cir.2008) ().
The parties submitted briefs on the above issues in which they took opposing positions. Appellants Hammer and White argue that Congress may create legal rights via statute, the invasion of which creates standing to sue. Here, they assert, by enacting 15 U.S.C. § 1681n(a)(1)(A), Congress created a statutory right to receive receipts that disclose no more than the...
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