Budai v. Country Fair, Inc.

Appeal from the Order Entered August 20, 2020 In the Court of Common Pleas of Lawrence County Civil Division at No(s): 10896 OF 2019

BEFORE: BOWES, J., MURRAY, J., and PELLEGRINI, J.^[*]

OPINION

BOWES, J.

Country Fair, Inc. ("Country Fair") appeals from the order entered on August 20, 2020, determining that Jordan Budai, Andrea Sciola, and Ashley Gennock, individually and on behalf of all other similarly situated ("Plaintiffs"), had standing to assert a cause of action based on Country Fair'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

(1) In general

Except as otherwise provided in this subsection, 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

(2) Limitation

This subsection shall apply only to receipts that are electronically printed, and shall not apply to 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). 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 July 28 and July 30, 2017, Plaintiffs patronized Country Fair retail stores and made purchases with their debit or credit cards. Each time the Plaintiffs received a paper receipt, it displayed the first four and the last four digits of the credit or debit cards used for payment. Plaintiffs filed a class action federal suit against Country Fair, alleging that Country Fair had willfully violated FACTA. Plaintiffs did not allege that the violation resulted in their identities being stolen or their card numbers being misappropriated. They did, however, claim that storing the offending receipts to prevent identity theft by a third party who might happen across the discarded receipts was burdensome. The 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 Budai v. Country Fair, Inc., Civ. A. No. 18-1120 (W.D.Pa. Aug. 21, 2019).

Thereafter, Plaintiffs transferred the complaint to state court pursuant to 42 Pa.C.S. § 5103. Country Fair filed preliminary objections alleging that Plaintiffs lacked standing and failed to allege facts sufficient to establish a willful violation of FACTA. The trial court concluded that Plaintiffs had statutory standing under FACTA, such that they did not need to invoke the traditional principles of standing under Pennsylvania law, and that they had sufficiently averred a willful violation of FACTA.

Country Fair filed a motion for reconsideration, which the trial court granted. Upon second review, the court once again overruled Country Fair's preliminary objections, but this time for different reasons. To wit, the trial court reversed its earlier decision, holding instead 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. Rather, applying Pennsylvania's traditional standing principles to the above facts, the trial court concluded that Plaintiffs had standing. See Trial Court Opinion, 8/20/20, at 8.

This timely appeal followed.^[3] Country Fair presents the following issues for our consideration:

1. Whether Plaintiffs - whose one-count complaint alleging a technical violation of [FACTA], was dismissed by the United States District Court for the Western District of Pennsylvania for lack of standing - have standing to pursue that claim under Pennsylvania law?

2. Whether Pennsylvania law allows Plaintiffs to obtain a different result in their federal claim and survive dismissal by walking across the street from federal court to state court?

Country Fair's brief at 5.

We begin with Country's Fair's first issue, noting that we review orders overruling preliminary objections "to determine whether the trial court committed an error of law. When considering the appropriateness of a ruling on preliminary objections, the appellate court must apply the same standard as the trial court." 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...