Arcilla v. Adidas Promotional Retail Operations

• Citation: 488 F.Supp.2d 965
• Decision Date: 04 May 2007
• Docket Number: No. CV07-0211GAF (SHX).,CV07-0211GAF (SHX).
• Court: U.S. District Court — Central District of California
• Parties: Eugelio ARCILLA, individually and on behalf of all others similarly situated Plaintiff, v. ADIDAS PROMOTIONAL RETAIL OPERATIONS, INC., Defendants.

488 F.Supp.2d 965

Eugelio ARCILLA, individually and on behalf of all others similarly situated Plaintiff, v. ADIDAS PROMOTIONAL RETAIL OPERATIONS, INC., Defendants.

No. CV07-0211GAF (SHX).

United States District Court, C.D. California.

May 4, 2007.

COPYRIGHT MATERIAL OMITTED

Ira Spiro, James Mark Moore, Spiro Moss Barness, Los Angeles, CA, for Plaintiff.

Martin L. Fineman, Sameh N. Dawood, Davis Wright Tremaine, San Francisco, CA, for Defendants.

ORDER RE: DEFENDANT'S MOTION TO DISMISS AND MOTION TO STRIKE

FEESS, District Judge.

I. INTRODUCTION & BACKGROUND

This putative class action is one of as many as 70 filed in the Ninth Circuit under a provision of the Fair and Accurate Credit Transactions Act of 2003 ("FACTA"), which requires retailers to truncate the information on customers' credit card receipts. The allegations in this case apparently resemble those in the others. Plaintiff Eugelio Arcilla claims that on January 3, 2007, he bought an item at a retail store operated by Defendant Adidas Promotional Retail Operations ("Adidas"), and that Adidas printed him a receipt containing information that FACTA prohibited — namely, the expiration date of his credit card. (Compl. ¶ 10.) Arcilla claims Adidas printed this information knowingly and that in doing so, it knowingly violated his FACTA rights or at least recklessly disregarded them. (Id. ¶ 11.) Arcilla also alleges Adidas has printed improper information on the receipts of approximately 10,000 other consumers, including expiration dates as well as more than the last five digits of the card numbers. (Id. ¶¶ 13, 18a.)

On behalf of this putative class, Arcilla asserts a single claim for violation of the FACTA and seeks: (1) statutory damages of between $100 and $1000 per prohibited transaction; (2) punitive damages; and (3) costs, attorney's fees, interest, and nominal damages. (Id. at 9-10.) And although Arcilla disclaims actual damages as too difficult to prove, he alleges that he and potential class members suffered actual harm due to increased risk of identity theft. (Id. ¶ 23.)

Adidas now moves to dismiss the Complaint for failure to state a claim or, alternatively, to strike the prayer for punitive damages. Adidas argues: (1) it could not have willfully violated the FACTA because the statute is vague and ambiguous; (2) the Complaint seeks statutory damages that would be constitutionally excessive and thus violate due process because no actual harm has been suffered; (3) the statutory damages would violate "principles of tort law" because Plaintiff and the potential class members have suffered no actual harm; (4) the request for punitive damages is improper because any such damages would be excessive absent an allegation of actual harm.

For the reasons discussed below, none of these arguments presents a close question and the motions to dismiss are DENIED.

II. DISCUSSION

A. THE LEGAL STANDARD

1. MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

Under the familiar standard, a court may not dismiss a complaint for failure to state a claim "unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief." Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 2 L.Ed.2d 80 (1957); Fed.R.Civ.P. 12(b)(6). Thus, dismissal pursuant to Rule 12(b)(6) is proper only where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balistreri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir.1988). The Court accepts all factual allegations pleaded in the complaint as true; in addition, it construes those facts and draws all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mut. Ins. Co., 80 F.3d 336, 337-38 (9th Cir.1996).

2. MOTION TO STRIKE

Rule 12(f) of the Federal Rules of Civil Procedure permits a court to "order stricken from any pleading ... any redundant, immaterial, impertinent, or scandalous matter." Fed.R.Civ.P. 12(f); Sidney-Vinstein v. A.H. Robins Co., 697 F.2d 880, 885 (9th Cir.1983). Under this Rule, courts have authority to strike a prayer for relief seeking damages that are not recoverable as a matter of law. See Tapley v. Lockwood Green Engineers, Inc., 502 F.2d 559, 560 (8th Cir.1974).

B. OVERVIEW OF THE FACTA

Arcilla alleges that Adidas willfully violated a FACTA provision that provides:

[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.

15 U.S.C. § 1681c(g). Congress enacted this provision in 2003, Pub.L. No. 108-159, 117 Stat.1952, and provided that it would take effect in two phases. With respect to cash registers installed on or after January 1, 2005, compliance was required immediately, while registers in use before that date were required to comply beginning on December 4, 2006. See 15 U.S.C. § 1681c(g)(3).

The FACTA, including § 1681c(g), is part of a broader statutory scheme known as the Fair Credit Reporting Act ("FCRA"),, 15 U.S.C. §§ 1681 et seq. The FCRA creates a private right of action through a provision that provides:

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—

(1)(A) 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; or

(B) in the case of liability of a natural person for obtaining a consumer report under false pretenses or knowingly without a permissible purpose, actual damages sustained by the consumer as a result of the failure or $1,000, whichever is greater;

(2) such amount of punitive damages as the court may allow; and

(3) in the case of any successful action to enforce any liability under this section, the costs of the action together with reasonable attorney's fees as determined by the court.

15 U.S.C. § 1681n (emphases added); see also id. § 16810 (providing civil liability for negligent noncompliance, but only for consumers' actual damages); Nelson v. Chase Manhattan Mortgage Corp., 282 F.3d 1057, 1059 (9th Cir.2002) ("with these words Congress created a private right of action for consumers"). Thus, because Arcilla and the putative class claim to be "consumers," they assert a claim arising under the FRCA and thus properly invoke this Court's subject matter jurisdiction. See 28 U.S.C. § 1331; 15 U.S.C. § 1681p (providing that "[a]n action to enforce any liability created under this subchapter may be brought in any appropriate United States district court").¹

C. ANALYSIS

1. MOTION TO DISMISS

a. Adidas' Vagueness Arguments Fail

Adidas' first argument for dismissal is that it could not have willfully violated § 1681c(g) because the statute is vague and ambiguous. (Mot. at 3.) Though Adidas does not separately delineate them, this argument actually rests on two independent theories. First, Adidas contends that the wording of the statute is unconstitutionally vague and would thus violate Adidas' right to due process if liability were imposed. (Mot. at 4.) Second, and less explicitly, Adidas suggests that its competing interpretations of § 1681c(g) mean that, as a matter of law, it could not have possessed the requisite intent in printing receipts to rise to the level of "willfulness." (See id.) Each argument fails.

i. The Statute is Not Unconstitutionally Vague

"The void-for-vagueness doctrine reflects the principle that a statute which either forbids or requires the doing of an act in terms so vague that persons of common intelligence must necessarily guess at its meaning and differ as to its application, violates the first essential of due process of law." Roberts v. U.S. Jaycees, 468 U.S. 609, 629, 104 S.Ct. 3244, 82 L.Ed.2d 462 (1984) (citation, internal quotation marks, and alteration omitted). However, the requirement that a statute possess a "reasonable" degree of clarity does not demand exacting precision, nor does it require Congress to use the clearest conceivable language in every enactment. "The fact that Congress might, without difficulty, have chosen clearer and more precise language equally capable of achieving the end which it sought does not mean that the statute which it in fact drafted is unconstitutionally vague." United States v. Powell, 423 U.S. 87, 94, 96 S.Ct. 316, 46 L.Ed.2d 228 (1975).

Moreover, as the Supreme Court has emphasized, "economic regulation is subject to a less strict vagueness test [than criminal statutes] because its subject matter is often more narrow, and because businesses, which face economic demands to plan behavior carefully, can be expected to consult relevant legislation in advance of action." Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 498, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982) (footnote omitted); see also Big Bear Super Market No. 3 v. INS, 913 F.2d 754, 757 (9th Cir.1990) ("when the statute regulates the conduct of businesses ... the vagueness test is relaxed, because businesses have a greater ability to determine the meaning of legislation in advance of their conduct than do individuals"). Thus, the question here is essentially whether. § 1681c(g) is sufficiently clear that its prohibitions would be understood by an ordinary person operating a profit-driven business.

Section 1681c(g) easily meets this standard because its words have only one reasonable meaning. "No person ... shall print more than the last 5 digits of the card number or the expiration date upon any receipt" clearly means that (1) no person shall print more than the last 5 digits of the card number, and (2) no person shall print the expiration date. In other words, a retailer must print no more than 5 digits of a card number, and also must omit the...