Irvine v. 233 Skydeck, LLC

• Citation: 597 F.Supp.2d 799
• Decision Date: 12 February 2009
• Docket Number: Case No. 08 C 4939.
• Court: U.S. District Court — Northern District of Illinois
• Parties: George B. IRVINE, III, Individually and on Behalf of a Class, Plaintiff, and United States of America, Intervenor-Plaintiff, v. 233 SKYDECK, LLC and Does 1-10, Defendants.

597 F.Supp.2d 799

George B. IRVINE, III, Individually and on Behalf of a Class, Plaintiff, and United States of America, Intervenor-Plaintiff, v. 233 SKYDECK, LLC and Does 1-10, Defendants.

Case No. 08 C 4939.

United States District Court, N.D. Illinois, Eastern Division.

February 12, 2009.

COPYRIGHT MATERIAL OMITTED

Daniel A. Edelman, Cathleen M. Combs, James O. Latturner, Thomas Everett Soule, Edelman, Combs, Latturner & Goodwin, LLC, Chicago, IL, for Plaintiff.

Daniel Kadane Crane-Hirsch, Philip M. Toomajian, U.S. Department of Justice, Washington, DC, Thomas P. Walsh, United States Attorney's Office (NDIL), Chicago, IL, for Intervenor-Plaintiff.

George B. Collins, Adrian M. Vuckovich, Christopher Robert Bargione, Collins & Bargione, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court is Defendant's Motion to Dismiss Plaintiff's Complaint, filed pursuant to Federal Rule of Civil Procedure 12(b)(6). For the following reasons, Defendant's Motion is Denied.

I. BACKGROUND

233 Skydeck, LLC (hereinafter, the "Defendant"), operates the Skydeck at the Sears Tower in Chicago, a popular tourist attraction that accepts credit card payment for admission. George R. Irvine, III (hereinafter, the "Plaintiff"), alleges that he visited Skydeck on July 17, 2008, paid for admission with a credit card, and received a computer-generated receipt that contained the expiration date of his card in violation of the Fair and Accurate Credit Transactions Act (the "FACTA"). Plaintiff filed suit on behalf of a putative class seeking statutory damages, punitive damages and attorneys fees and costs. Plaintiff alleges that Defendant willfully violated FACTA but does not allege that he suffered any actual damages as a result of Defendant's conduct. Because Defendant's Motion to Dismiss challenges the constitutionality of FACTA, the Court permitted the United States of America to intervene to defend the statute's constitutionality under 28 U.S.C. § 2403(a).

In 2003, Congress enacted FACTA as an amendment to the Fair Credit Reporting Act (the "FCRA") in response to the growing problem of identity theft. FACTA is aimed at curbing identity theft accomplished through the misappropriation of personal credit card information contained on lost or discarded receipts. Accordingly, FACTA states that "no 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)(1). However, FACTA expressly exempts from this prohibition "transactions in which the sole means of recording a credit card or debit card account number is by handwriting or by an imprint or copy of the card." 15 U.S.C. § 1681c(g)(2). FACTA employs the damages scheme provided by FCRA and permits a plaintiff to recover statutory damages between $100 and $1,000 or actual damages, punitive damages, and attorney's fees and costs for a willful violation of the statute. 15 U.S.C. § 1681n.

Defendant moved to dismiss the Complaint pursuant to Rule 12(b)(6) on the grounds that FACTA is unconstitutional in three respects: (1) FACTA violates due process because the range of statutory damages permitted for a willful violation of the Act (i.e., $100 to $1,000) is impermissibly vague and, combined with the punitive damages provision, would permit excessive damage awards; (2) FACTA violates due process because the provision for punitive damages, in addition to the range of statutory damages, constitutes impermissible "double punishment"; and (3) FACTA violates the Equal Protection Clause of the Fourteenth Amendment because it exempts merchants who issue handwritten or imprinted credit card receipts. The court addresses each of Defendant's arguments in turn.

II. DISCUSSION

A. Standard of Review

In deciding a Rule 12(b)(6) motion to dismiss, the court accepts all well-pleaded facts as true, and draws all reasonable inferences in favor of the plaintiff. See, e.g., Jackson v. E.J. Brach Corp., 176 F.3d 971, 977-78 (7th Cir., 1999). "The issue is not whether a plaintiff will ultimately prevail but whether the claimant is entitled to offer evidence to support the claims.... Rule 12(b)(6) should be employed only when the complaint does not present a legal claim." Smith v. Cash Store Management, Inc., 195 F.3d 325, 327 (7th Cir., 1999) (citing Caremark, Inc. v. Coram Healthcare Corp., 113 F.3d 645, 648 (7th Cir., 1997)). A motion to dismiss will be granted "only if it appears beyond doubt that the plaintiff can prove no set of facts that would entitle him to relief." Venture Associates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 432 (7th Cir., 1993) (citing Beam v. IPCO Corp., 838 F.2d 242, 244 (7th Cir., 1988)).

B. Defendant's Motion to Dismiss

1. Defendant's Due Process Challenges to FACTA's Damages Scheme

a. Sliding Scale for Statutory Damages

Defendant claims that FACTA violates due process because its statutory damages range of $100-$1,000 per willful violation is vague because it fails to provide juries with any guidance over the precise amount of statutory damages to award.

A statute is impermissibly vague where it fails to give fair warning of what is prohibited, fails to give explicit standards to those enforcing it, creates a risk of discriminatory enforcement and, thus, chills lawful behavior. Anderson v. Milwaukee County, 433 F.3d 975, 978 (7th Cir., 2006). A statute regulating economic activity, such as FACTA, however, is subject to a less stringent 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). In the commercial context, a statute need only be sufficiently clear that its prohibitions would be understood by an ordinary person operating a profit-driven business. See Roberts v. U.S. Jaycees, 468 U.S. 609, 629, 104 S.Ct. 3244, 82 L.Ed.2d 462 (1984).

Defendant does not contend that it failed to understand what activities FACTA prohibits. Rather, Defendant argues that FACTA fails to apprise it of the precise statutory damages that a jury may impose for a violation. However, statutory damages ranges like that enumerated in FACTA are commonplace and courts routinely uphold them. See, e.g., U.S. v. Batchelder, 442 U.S. 114, 99 S.Ct. 2198, 60 L.Ed.2d 755 (1979) (rejecting vagueness challenge where two federal criminal statutes imposed different penalty ranges for the same underlying conduct because the statutes "clearly define the conduct prohibited and the punishment authorized"); Douglas v. Cunningham, 294 U.S. 207, 55 S.Ct. 365, 79 L.Ed. 862 (1935) (holding that damages award within the Copyright Act's statutory range could not be an abuse of discretion); St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63, 40 S.Ct. 71, 64 L.Ed. 139 (1919) (rejecting due process challenge to statutory damages award that was within the range of "not less than fifty dollars nor more than three hundred dollars" per offense); Bartlett v. Heibl, 128 F.3d 497 (7th Cir., 1997); Arrez v. Kelly Services, Inc., 522 F.Supp.2d 997 (N.D.Ill., 2007); U.S. ex rel. Tyson v. Amerigroup Illinois, Inc., 488 F.Supp.2d 719 (N.D.Ill., 2007).

Defendant's vagueness challenge relies on the Northern District of Alabama decision Grimes v. Rave Motion Pictures Birmingham, L.L.C., 552 F.Supp.2d 1302 (N.D.Ala., 2008). The court in Grimes found that FACTA's sliding scale for statutory damages was impermissibly vague because "one jury can decide that a particular violation calls for $100, while another jury can decide that precisely the same violation by the same vendor is worth $1,000, while other juries can, willy nilly, award something in between." Grimes, 552 F.Supp.2d at 1306.

As an initial matter, Grimes is not controlling authority and decisions of other district courts are "entitled to no more weight than their intrinsic persuasiveness merits." Colby v. J.C. Penney Co., Inc., 811 F.2d 1119, 1124 (7th Cir., 1987). The court in Grimes cited no authority for its finding that FACTA was unconstitutionally vague and all other courts that have considered a vagueness challenge to FACTA's sliding scale of statutory damages have rejected it. See Ashby v. Farmers Ins. Co. of Oregon, 592 F.Supp.2d 1307, 1315-16 (D.Or., 2008) (rejecting the reasoning of Grimes because FACTA "clearly sets out the duties required ... and the range of penalties that may be imposed for violating those duties"); Turner v. Creative Hospitality Ventures, Inc., 588 F.Supp.2d 1347, 1348 (S.D.Fla., 2008) (rejecting Grimes and finding that "a reasonable jury tasked with this responsibility will be able to affix the proper amount of damages"); Smith v. MSV Sales & Services, LLC, No. 08-61436, 2008 WL 4921356, at *2 (S.D.Fla., Nov. 18, 2008) (same); Smith v. Casino Ice Cream, LLC, No. 08-61285, 2008 WL 4541013, at *2 (S.D.Fla., Oct. 9, 2008) (same). This court does not find the reasoning of Grimes persuasive and instead sides with those courts that have found that a reasonable jury tasked with determining the proper amount of damages for a FACTA violation will be able to do so within the statutory range.

b. Potential for an Excessive Damages Award

Defendant also challenges the constitutionality of FACTA as applied to it. According to Defendant, the imposition of statutory and punitive damages under FACTA, where plaintiff has alleged no actual damages, would be a penalty so severe and so disproportionate to the actual damages sustained that it would violate due process. Defendant's argument is unpersuasive.

A plaintiff need not allege any actual injury in order to recover statutory...