Meyers v. Nicolet Rest. of De Pere, LLC, Case No. 15-C-444
| Decision Date | 01 April 2016 |
| Docket Number | Case No. 15-C-444 |
| Parties | JEREMY MEYERS, individually and on behalf of others similarly situated, Plaintiff, v. NICOLET RESTAURANT OF DE PERE, LLC, a Wisconsin limited liability company, Defendant. |
| Court | U.S. District Court — Eastern District of Wisconsin |
ORDER DENYING MOTION TO CERTIFY CLASS AND DENYING MOTION TO COMPEL DISCOVERY
Plaintiff Jeremy Meyers alleges that Defendant Nicolet Restaurant of De Pere, LLC, violated the Fair and Accurate Credit Transactions Act ("FACTA") amendment to the Fair Credit Reporting Act ("FCRA"), by negligently, recklessly and/or willfully printing the expiration date of the card number on receipts provided to debit card and credit card cardholders transacting business with Defendant. Before me is Plaintiff's motion for class certification pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3) and his related requests that I appoint him as the Class Representative and appoint Ademi & O'Reilly LLP and Zimmerman Law Offices PC as class counsel. Additionally, Defendant has filed a motion to compel discovery pursuant to Federal Rules of Civil Procedure 26 and 34. For the reasons set forth below, Plaintiff's motion to certify class (ECF No. 3) and Defendant's motion to compel discovery (ECF No. 32) are denied.
BACKGROUND
The relevant portion of the FACTA reads: "[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)(1). This poorly worded provision is intended to prohibit merchants from printing on a credit card customer's receipt either the expiration date of the card or more than the last 5 digits of the card number. It serves the laudable goal of "prevent[ing] criminals from obtaining access to consumers' private financial and credit information in order to reduce identity theft and credit card fraud." Pub.L. No. 110-241, § 2(a)(1); Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1306 (11th Cir.2009). The requirements of the law, however, go beyond what is needed to accomplish its goal. This is because leaving the expiration date on an otherwise truncated credit card receipt does not increase the risk of identity theft. Pub. L. No. 110-241 § 2(a)(6) ().
To enforce compliance with the law, Congress authorized any consumer to bring a civil action against a merchant who willfully fails to comply and recover "any actual damages sustained by the consumer as a result of the failure or damages of not less than $100 or more than $1,000." 15 U.S.C. § 1681n(a)(1)(A). The consumer can also recover "such punitive damages as the court may allow" and "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(a)(2) and (3). Willful, as used in the FCRA, includes "reckless disregard of a statutory duty." Safeco Ins. Co. of America v. Burr, 551 U.S. 47, 57 (2007).
For machines that were in use before January 1, 2005, 15 U.S.C. §1681c(g)(3)(A) required compliance with the provisions of 15 U.S.C. § l681c(g)(1) on or after December 4, 2006. Unfortunately, many merchants originally thought that FACTA only required truncating the account number down to the last five digits. This was in part due to the confusing language of the provision and the publicity surrounding the change. The publicity surrounding the enactment of FACTA emphasized the requirement of truncating the account number but ignored the additional requirement that the expiration date be removed from the receipt as well. Pub. L. No. 110-241§ 2(a)(3); Chaplin, Michael E., What's So Fair About The Fair And Accurate Credit Transactions Act?, 92 Marq. L. Rev. 307, 322-23 n.87 (2008) (hereinafter "Chaplin"). Also contributing to the misunderstanding of the provision is the fact that removing the expiration date did not seem likely to further the purpose of the law.
In any event, noncompliant businesses were deluged with lawsuits shortly after the effective date of the provision. Pub. L. No. 110-241 § 2(a)(4). Most, if not all, of the lawsuits were for including the expiration date, as well as the last 5 digits of the account number of the card, on the customer's receipt and sought only statutory damages, since no actual harm occurred. Id. § 2(a)(4) and (5). Most also were filed as putative class actions, which meant that they carried the potential to devastate the business sued since the damages claimed were typically greater than the merchant's net worth.1 Chaplin at 311-12.
In response to the public outcry over the number and nature of the lawsuits being filed, Congress passed and the President signed on June 3, 2008, the Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, 122 Stat 1565 (). Among the purposes of the Clarification Act was "limiting abusive lawsuits that do not protect consumers but only result in increased cost to business and potentially increased prices to consumers." Pub. L. No. 110-241 § 2(b). Toward that end, the Clarification Act added subsection (d) to 15 U.S.C. § 1681n entitled "Clarification of willful noncompliance," which provided that "any person who printed an expiration date on any receipt provided to a consumer cardholder at a point of sale or transaction between December 4, 2004, and the date of the enactment of this section shall not be in willful noncompliance with section 605(g) by reason of printing such expiration date on the receipt." In other words, the Clarification Act simply immunized from suit merchants who were sued for including a credit card expiration date on a receipt prior to June 3, 2008. It did nothing to change the law going forward. It is in this legal context that the present suit arises.
On February 10, 2015—after the statutory deadline to comply with § 1681 c(g)(1)—Meyers alleges that he visited Nicolet Restaurant of De Pere located at 525 Reid St., De Pere, Wisconsin 54115 and received a computer-generated cash register receipt which displayed the last four digits of Plaintiff's credit card number as well as the card's expiration date. Plaintiff is seeking class certification for:
all persons to whom Defendant provided an electronically printed receipt at the point of sale or transaction, in a transaction occurring at the Nicolet Restaurant after June 3, 2008, which receipt displays the expiration date of the person's credit card or debit card.
(Pl.'s Mot. for Class Certification, ECF No. 3 at 1). Plaintiff alleges that over 100,000 credit or debit card transactions occurred during the relevant time period.
ANALYSIS
The plaintiff bears the burden of showing that the class should be certified. Oshana v. Coca-Cola Co., 472 F.3d 506, 513 (7th Cir. 2006). In order to meet his or her burden, the plaintiff must show that the putative class satisfied all four requirements of Federal Rule of Civil Procedure 23(a) and any one of the requirements of Rule 23(b). Id. Under Rule 23(a), a class may be certified "only if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. 23(a). These prerequisites are often called the requirements of "numerosity, commonality, typicality, and adequacy of representation." Oshana, 472 F.3d at 513. Pursuant to Rule 23(b)(3), a class action may be maintained if Rule 23(a)is satisfied and if "the court finds that the questions of law or fact common to class members predominate over any questions affecting only individual members, and that a class action is superior to other available methods for fairly and efficiently adjudicating the controversy." Fed. R. Civ. P. 23(b)(3). "The Federal Rules of Civil Procedure provide the federal district courts with 'broad discretion' to determine whether certification of a class-action lawsuit is appropriate." Keele v. Wexler, 149 F.3d 589, 592 (7th Cir. 1998) (quoting Mira v. Nuclear Measurements Corp., 107 F.3d 466, 474 (7th Cir. 1997) ().
Rule 23(a)(1) requires that the class is so numerous that joinder of all members is impracticable. Although there is no bright line test for numerosity, the Seventh Circuit has held that joinder of a class as small as forty people may be impracticable under Rule 23(a)(1). Swanson v. Am. Consumer Indus., Inc., 415 F.2d 1326, 1333 (7th Cir. 1969); McCabe v. Crawford & Co., 210 F.R.D. 631, 643 (N.D. Ill. 2002). Although courts are able to make common-sense assumptions in determining numerosity, a mere conclusory allegation that joinder is impractical or speculation as to the size of the class is insufficient. Marcial v. Coronet Ins. Co., 880 F.2d 954, 957 (7th Cir. 1989); McCabe, 210 F.R.D. at 643.
Plaintiff alleges on information and belief that there are over 40 or 50 members of the class. Plaintiff bases this number on the fact that between August 26, 2012, the date in which Defendant opened under new ownership, through April 2015, when Defendant began complying with FACTA,Defendant had 105,943 credit card transactions.2 Plaintiff alleges that during this time Defendant was not in compliance with FACTA, meaning that all...
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