Ramirez v. Midwest Airlines, Inc.

Decision Date12 March 2008
Docket NumberCase No. 07-2173-JWL.
Citation537 F.Supp.2d 1161
PartiesLety RAMIREZ, on behalf of herself and all others similarly situated, Plaintiff, v. MIDWEST AIRLINES, INC., Defendant.
CourtU.S. District Court — District of Kansas

Greg K. Hafif, Law Offices of Herbert Hafif, Claremont, CA, Joseph A. Kronawitter, Robert A. Horn, Horn, Aylward & Bandy LLC, Kansas City, MO, for Plaintiff.

Brian C. Fries, Lathrop & Gage, LC, Kansas City, MO, Jeremy P. Levinson, Robert H. Friebert, Friebert Finerty & St. John, Milwaukee, WI, for Defendant.


JOHN W. LUNGSTRUM, District Judge.

The Fair and Accurate Credit Transactions Act of 2003 (FACTA) amended the Fair Credit Reporting Act (FCRA) to, among other things, include the following truncation requirement: "[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). Plaintiff Lety Ramirez filed this putative class action lawsuit alleging that defendant Midwest Airlines, Inc. violated this statute by giving her a receipt that included her credit card's expiration date. She seeks statutory damages, punitive damages, costs, and attorneys fees as permitted for a consumer to recover for a willful violation of FCRA. Id. § 1681n. This matter is currently before the court on Midwest's motions for judgment on the pleadings or, alternatively, summary judgment (docs. # 18 & # 20).1 As explained below, the court finds Midwest's arguments to be without merit, and therefore both motions are denied.


Midwest has styled its motions as ones for judgment on the pleadings or, alternatively, for summary judgment. In support of the motions, it relies on affidavits and other materials attached to the motions. And, in response to Midwest's motions, plaintiff relies on similar types of materials. It would be improper for the court to consider materials outside the complaint in resolving a motion for judgment on the pleadings. See Park Univ. Enters., Inc. v. Am. Cas. Co., 442 F.3d 1239, 1244 (10th Cir.2006) (Rule 12(c) motion for judgment on the pleadings is analyzed using standard for Rule 12(b)(6) motion to dismiss); Burnham v. Humphrey Hospitality Reit Trust, Inc., 403 F.3d 709, 713 (10th Cir. 2005) (court must convert a motion to dismiss into one for summary judgment if it relies on materials from outside the complaint). Consequently, Midwest's motions are more properly viewed as ones for summary judgment and the court will construe them as such. Consistent with the well established standard for evaluating a motion for summary judgment, then, the following facts are either uncontroverted or stated in the light most favorable to plaintiff, the nonmoving party.

On November 1, 2006, Midwest entered into a software license and services agreement with ABANCO International LLC relating to the use of ABANCO credit card processing software and hardware for consumer in-flight purchases on Midwest's flights. On or after December 4, 2006, Midwest began using handheld devices provided by ABANCO to process credit card transactions for in-flight purchases of meals, drinks, and other items. Midwest used the devices on twenty-six test flights that month. As of January 1, 2007, Midwest began accepting credit cards on flights other than test flights.

At some time after December 4, 2006, plaintiff made an on-board, in-flight purchase on one of Midwest's airplanes using her credit card. It is undisputed that the receipt she was given contained the last four digits of her credit card number as well as her card's expiration date. She filed this lawsuit on April 27, 2007, alleging that the inclusion of the card's expiration date on the receipt violated FACTA.2 Midwest's registered agent received the complaint on May 10, 2007. On May 25, 2007, Midwest notified ABANCO and an action plan was established to fix the information printed on the receipts. As of June 7, 2007, the ABANCO systems were updated so that they no longer print the credit or debit card expiration dates on any receipts provided to customers.

Midwest's first motion for summary judgment is based on what it contends is a lack of harm to Ms. Ramirez.3 In support of this motion, Midwest has submitted a declaration from Mari J. Frank, who is purportedly qualified to testify as an expert concerning privacy and identity theft issues. Ms. Frank states that the printing of the credit card expiration number on receipts does not foster credit card fraud or identity theft. Her rationale is that truncating the credit card number on the receipt by masking all but the last four digits of the card number is sufficient to thwart an imposter from making a fraudulent purchase because the complete account number must be input for a credit or debit card transaction to process at all. She further explains that the critical information needed to process a card in a card-not-present transaction is the complete credit card number in addition to the cardholder's address, zip code, and security code, which is the three-digit code number on the back of the card, not the expiration date.

In response to Ms. Frank's assertions, plaintiff has submitted a declaration from Patrick Faith, the Vice President of Encryption and Authentication Processing for Visa U.S.A. Inc. Mr. Faith states that "[t]he primary purpose of the expiration date on a Visa card is fraud detection and prevention." Faith Decl. ¶ 2, at 1. Mr. Faith further explains that Visa publishes Rules for Visa Merchants: Card Acceptance and Chargeback Management Guidelines that is a comprehensive manual for all United States merchants that accept Visa transactions. In those Rules, Visa discusses its fraud prevention policies, guidelines, and services for card-not-present merchants. The Rules suggest that a card-not-present merchant ask the cardholder for the card expiration date and that the merchant include that information in the transaction authorization request. Mr. Faith explains in more detail as follows:

Including the expiration date helps to verify that the card and transaction are legitimate. A mail, telephone or internet order containing an invalid or missing expiration date may indicate counterfeit or other unauthorized use. If the merchant elects not to obtain the card expiration date and include that information in the transaction authorization request, the merchant is increasing its exposure to fraud and potentially to liability from chargebacks.

7. Card-not-present merchants may also elect to take advantage of Visa's Card Verification Value 2 ("CVV2") validation as part of the authorization request. The CVV2 is a three-digit security number printed on the back of Visa payment cards to help validate that a merchant's customer is in possession of a legitimate card at the time of the order. To obtain CVV2 validation as part of the authorization request, the merchant needs to request from the cardholder and submit as part of the authorization request, the CVV2 number from the back of the Visa payment card, the card expiration date, and the card number. If the expiration date obtained from the customer is incorrect, the CVV2 result code would show N for "No Match." A "No Match" response is a sign of potential fraud, which the merchant should take into account along with the authorization response and any other verification data.

Id. ¶¶ 6-7, at 2-3.

Based on this factual background, Midwest has filed two motions in which it argues that it is entitled to summary judgment on plaintiffs claim. Therein, Midwest raises essentially two categories of arguments. In the first motion, Midwest argues that Ms. Frank's declaration establishes that the fact that plaintiffs receipt contained four digits of her credit card number and the card's expiration date did not and could not have placed her or anyone else at risk of being the victim of fraud or identity theft and, consequently, (1) plaintiff cannot show the "injury-in-fact" required for Article III standing; (2) plaintiff is not eligible for the windfall of statutory damages she seeks pursuant to § 1681n(a)(1)(A); and (3) an award of any such damages would violate principles of Due Process. In the second motion, Midwest argues that even if the receipt violated § 1681c(g), (1) Midwest cannot be held to have "willfully" violated that statute because the alleged violation conforms to an interpretation of the statute that has a foundation in the statutory text, and (2) the statute is unconstitutionally vague and ambiguous on its face.


Summary judgment is appropriate if the moving party demonstrates that there is "no genuine issue as to any material fact" and that it is "entitled to a judgment as a matter of law." Fed.R.Civ.P. 56(c). In applying this standard, the court views the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party. Spaulding v. United Transp. Union, 279 F.3d 901, 904 (10th Cir.2002). A fact is "material" if, under the applicable substantive law, it is "essential to the proper disposition of the claim." Wright ex rel. Trust Co. v. Abbott Labs., Inc., 259 F.3d 1226, 1231-32 (10th Cir. 2001) (citing Adler v. Wal-Mart Stores, Inc., 144 F.3d 664, 670 (10th Cir.1998)). An issue of fact is "genuine" if "there is sufficient evidence on each side so that a rational trier of fact could resolve the issue either way." Adler, 144 F.3d at 670 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986)).

The moving party bears the initial burden of demonstrating an absence of a genuine issue of material fact and entitlement to judgment as a matter of law. Spaulding, 279 F.3d at 904 (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). In attempting to meet that...

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