754 F.3d 492 (8th Cir. 2014), 12-3724, Hammer v. Sam's East, Inc.

Docket Nº:12-3724, 12-3858
Citation:754 F.3d 492
Opinion Judge:BRIGHT, Circuit Judge.
Party Name:Steven E. Hammer, individually and on behalf of all others similarly situated; Michael D. White, individually and on behalf of all others similary situated, Plaintiffs - Appellants, 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 bus
Attorney:For Steven E. Hammer, individually and on behalf of all others similarly situated (12-3724, 12-3858), Plaintiff - Appellant: Kenneth Eugene Cox, Kelly L. McClelland, Ryan L. McClelland, Jerome M. Patience, MCCLELLAND LAW FIRM, Liberty, MO; Matthew R. Crimmins, Karen W. Renwick, Roy Frederick Walt...
Judge Panel:Before RILEY, Chief Judge, BRIGHT and BYE, Circuit Judges. RILEY, Chief Judge, dissenting.
Case Date:June 05, 2014
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 492

754 F.3d 492 (8th Cir. 2014)

Steven E. Hammer, individually and on behalf of all others similarly situated; Michael D. White, individually and on behalf of all others similary 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 similary 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

Nos. 12-3724, 12-3858

United States Court of Appeals, Eighth Circuit

June 5, 2014

Submitted September 25, 2013

Page 493

[Copyrighted Material Omitted]

Page 494

Appeal from United States District Court for the Western District of Missouri - Kansas City.

For Steven E. Hammer, individually and on behalf of all others similarly situated (12-3724, 12-3858), Plaintiff - Appellant: Kenneth Eugene Cox, Kelly L. McClelland, Ryan L. McClelland, Jerome M. Patience, MCCLELLAND LAW FIRM, Liberty, MO; Matthew R. Crimmins, Karen W. Renwick, Roy Frederick Walters, WALTERS & BENDER, Kansas City, MO.

For Michael D. White, individually and on behalf of all others similary situated (12-3724, 12-3858), Plaintiff - Appellant: Kenneth Eugene Cox, Kelly L. McClelland, Ryan L. McClelland, Jerome M. Patience, MCCLELLAND LAW FIRM, Liberty, MO; Matthew R. Crimmins, Roy Frederick Walters, WALTERS & BENDER, Kansas City, MO.

For United States (12-3724, 12-3858), Intervenor: Christine Noel Kohl, U.S. DEPARTMENT OF JUSTICE, Civil Division, Appellate Staff, Washington, DC; Michael Jay Singer, U.S. DEPARTMENT OF JUSTICE, Civil Rights Division, Appellate Section, Washington, DC.

For Sam's East, 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 - Appellees (12-3724): Ze-wen Julius Chen, Pratik A. Shah, AKIN & GUMP, Washington, DC; James R. Eiszner, Rebecca Joy Schwartz, Gregory Khan Wu, SHOOK & HARDY, Kansas City, MO.

For Does, 1-10, inclusive, Defendant - Appellee (12-3724): Rebecca Joy Schwartz, SHOOK & HARDY, Kansas City, MO.

For Sam's West, Inc., doing business as Sam's Club, Defendant - Appellee (12-3724): Scott H. Aripoli, James R. Eiszner, Rebecca Joy Schwartz, Gregory Khan Wu, SHOOK & HARDY, Kansas City, MO; Ze-wen Julius Chen, Pratik A. Shah, AKIN & GUMP, Washington, DC.

For Does, 1-8, inclusive, Defendant - Appellee (12-3724): James R. Eiszner, Rebecca Joy Schwartz, SHOOK & HARDY, Kansas City, MO.

For Sam's East, Inc., doing business as Sam's Club, Defendant - Appellant (12-3858): James R. Eiszner, Rebecca Joy Schwartz, Gregory Khan Wu, SHOOK & HARDY, Kansas City, MO; Pratik A. Shah, AKIN & GUMP, Washington, DC.

For 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 (12-3858): Scott H. Aripoli, James R. Eiszner, Rebecca Joy Schwartz, Gregory Khan Wu, SHOOK & HARDY, Kansas City, MO; Pratik A. Shah, AKIN & GUMP, Washington, DC.

Before RILEY, Chief Judge, BRIGHT and BYE, Circuit Judges.

OPINION

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BRIGHT, Circuit Judge.

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 court2 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.

I. Background

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 digits

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are 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

Account #: 6789

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

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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...

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