Gennock v. Kirkland's Inc.
| Decision Date | 16 May 2023 |
| Docket Number | 462 WDA 2022,J-A02007-23 |
| Parties | ASHLEY GENNOCK AND JORDAN BUDAI, INDIVIDUALLY AND DERIVATIVELY ON BEHALF OF ALL OTHERS SIMILARLY SITUATED v. KIRKLAND'S INC. Appellant |
| Court | Pennsylvania Superior Court |
NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
Appeal from the Order Entered August 20, 2020 In the Court of Common Pleas of Lawrence County Civil Division at No(s): 11119 OF 2019
Joseph D. Seletyn, Esq.
BEFORE: BOWES, J., MURRAY, J., and PELLEGRINI, J. [*]
Kirkland's Inc. ("Kirkland") appeals from the order entered on August 20, 2020, determining that Ashley Gennock and Jordan Budai, individually and derivatively on behalf of all similarly situated (collectively, "Plaintiffs") had standing to assert a cause of action based on Kirkland's violation of the federal Fair and Accurate Credit Transactions Act ("FACTA"), 15 U.S.C. § 1681c(g).[1] We reverse the order and dismiss Plaintiffs' complaint.
By way of background, Congress enacted FACTA in 2003, as an amendment to the Fair Credit Reporting Act, to prevent identity theft. See Kamal v. J. Crew Grp., Inc., 918 F.3d 102, 106 (3d Cir. 2019).[2] To achieve this, FACTA requires in relevant part, that debit and credit card numbers be truncated on printed receipts, as follows:
(g) Truncation of credit card and debit card numbers
15 U.S.C. § 1681c(g). FACTA provides that "[a]ny person who is negligent in failing 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) any actual damages sustained by the consumer as a result of the failure" as well as (2) the costs and attorney fees for the successful action. See 15 U.S.C. § 1681o(a). To remedy willful violations, FACTA provides for actual damages or statutory damages, plus punitive damages and attorneys' fees. See 15 U.S.C. § 1681n(a).
Between February 18 and April 8, 2017, Plaintiffs patronized Kirkland retail stores and made purchases with their debit and/or credit cards. Each time the Plaintiffs received a paper receipt, it displayed the first six and the last four digits of the credit and/or debit cards used for payment. Plaintiffs filed a class action federal suit against Kirkland, alleging that Kirkland had willfully violated FACTA. Plaintiffs did not allege that the violation resulted in their identities being stolen or their card numbers being misappropriated. Instead, they argued that the FACTA violation placed them at greater risk of such an occurrence. The federal district court, applying the holding in Kamal, supra at 117, that "a bare procedural violation. . . does not create Article III standing[,]" dismissed Plaintiffs' complaint. See Gennock v. Kirkland's, Inc., No. CV 17-454 (W.D.Pa. Oct. 21, 2019) (adopting Report and Recommendation, 9/24/19).
Thereafter, Plaintiffs transferred the complaint to state court pursuant to 42 Pa.C.S. § 5103. Kirkland filed preliminary objections alleging that Plaintiffs lacked standing and failed to allege facts sufficient to establish a willful violation of FACTA. Simultaneously, a nearly identical case brought by Plaintiffs and Andrea Sciola against Country Fair, Inc. ("Country Fair"), was pending before the same trial court, with Country Fair also challenging the plaintiffs' standing therein. Plaintiffs, Kirkland, Ms. Sciola, and Country Fair agreed to be bound by a joint ruling as to standing in both cases. The trial court initially found that the plaintiffs in Country Fair's case had statutory standing under FACTA. However, after granting Country Fair's motion for reconsideration, the court determined that FACTA did not confer statutory standing, but plaintiffs had nonetheless pled sufficient facts to attain standing under Pennsylvania's traditional standing principles. See Trial Court Opinion ("Country Fair"), 8/20/20, at 8. Based upon the reasoning set forth in the opinion overruling Country Fair's preliminary objections, the trial court overruled Kirkland's preliminary objections. See Order of Court, 8/20/20.
This timely appeal followed.[3] Kirkland presents a single issue for our consideration: "Whether the trial court erred when it held that Plaintiffs had standing to assert a violation of [FACTA], when the only harm they alleged was a bare technical violation of the statute and where no actual harm, or substantial risk of harm, was alleged?" Kirkland's brief at 6.
We review orders overruling preliminary objections Am. Interior Constr. & Blinds Inc. v. Benjamin's Desk, LLC, 206 A.3d 509, 512 (Pa.Super. 2019) (cleaned up). Standing presents a question of law, "thus, our standard of review is de novo and our scope of review is plenary." S.G. v. J.M.G., 186 A.3d 995, 997 (Pa.Super. 2018) (cleaned up).
A party filing suit in a Pennsylvania court "'must establish as a threshold matter that he has standing to maintain the action.'" Johnson v. Am. Standard, 8 A.3d 318, 329 (Pa. 2010) (quoting Fumo v. City of Philadelphia, 972 A.2d 487, 496 (Pa. 2009)). "Unlike the federal courts, which derive their standing requirements from Article III of the United States Constitution, standing for Pennsylvania litigants has been created judicially."[4]Id. (citation omitted).
Specifically, in Pennsylvania there are two avenues for a litigant to establish standing: (1) by statute, which expressly prescribes the individuals who have standing to pursue a particular action thereunder; or (2) in the absence of such a statutory prescription, by satisfying the requirements of Pennsylvania's traditional standing doctrine. See Milby v. Pote, 189 A.3d 1065, 1076-77 (Pa.Super. 2018) ("These traditional standing requirements apply only when a specific statutory provision for standing is lacking.").
We begin with an overview of statutory standing. "[W]here the General Assembly expressly prescribes the parties who may pursue a particular course of action in Pennsylvania courts, legislative enactments may further enlarge or distill these judicially-applied principles." Int. of K.N.L., 284 A.3d 121, 136-37 (Pa. 2022) (citations omitted). In these circumstances, Milby, supra at 1077 (cleaned up). For example, the Child Custody Act expressly prescribes who may pursue an action thereunder. See 23 Pa.C.S. §§ 5324 (), 5325 ("Standing for partial physical custody and supervised physical custody").
In the absence of a statutory prescription, our traditional standing doctrine applies, which "is a judicially-created tool intended to 'winnow out' litigants with no direct interest in the matter, and to otherwise protect against improper parties." Int. of K.N.L., supra at 136 (citation omitted). As our Supreme Court recently explained:
The "core concept" of standing is that the litigant must be "adversely affected" in some way. Under this Court's precedent, the prerequisites to standing are satisfied where the complaining party's interest is substantial, direct, and immediate, meaning that the party's interest surpasses that of the general public in procuring obedience to the law, the harm alleged was caused by the matter complained of, and the harm is not remote and speculative.
Trust Under Will of Ashton, 260 A.3d 81, 88 (Pa. 2021) (cleaned up). "In particular, it is not sufficient for the person claiming to be 'aggrieved' to assert the common interest of all citizens in procuring obedience to the law." Wm. Penn Parking Garage, Inc. v. City of Pittsburgh, 346 A.2d 269, 280-81 (Pa. 1975) (cleaned up). Moreover, "[t]he doctrine of standing stems from the principle that judicial intervention is appropriate only where the underlying controversy is real and concrete, rather than abstract." Firearm Owners Against Crime v. Papenfuse, 261 A.3d 467, 481 (Pa. 2021) (cleaned up).
In the case sub judice, the trial court held that FACTA did not confer statutory standing. It further concluded that the Third Circuit's holding in Kamal regarding Article III standing in FACTA cases was not compelling since Pennsylvania does not adhere to Article III's concrete-injury requirement. Instead, applying Pennsylvania's traditional standing principles to the above facts, the trial court concluded that Plaintiffs had standing. See Trial Court Opinion (Country Fair), 8/20/20, at 8.
Kirkland's argument is simple: the trial court erred in finding that Plaintiffs had standing under Pennsylvania law where they have not suffered any actual harm. See Kirkland's brief at 35. Plaintiffs, on the other hand contend that Kirkland's argument improperly restricts Pennsylvania's standing doctrine to the federal courts' Article III-based "'concrete injury' framework." ...
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