Neals v. Par Tech. Corp.

419 F.Supp.3d 1088

Kandice NEALS, individually and on behalf of all others similarly situated, Plaintiff,

v.PAR TECHNOLOGY CORP., Defendant.

No. 19 C 5660

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

Signed December 18, 2019

Benjamin Harris Richman, J. Eli Wade Scott, Schuyler Ufkes, Edelson PC, Chicago, IL, David J. Fish, John C Kunze, Kimberly A. Hilton, The Fish Law Firm, P.C., Naperville, IL, for Plaintiffs.

Richard Henry Tilghman, Henry Caldwell, John T. Ruskusky, Nixon Peabody, LLP, Chicago, IL, for Defendants.

ORDER

Ronald A. Guzmán, United States District Judge

Defendant's motion to dismiss the complaint [19] is granted, and the complaint is dismissed without prejudice. Plaintiff may file by January 15, 2020 an amended complaint to cure the deficiency described in this order. A status hearing is set for January 22, 2020 at 9:30 a.m. The parties are directed to refer to and comply with the Court's requirements for initial appearances, as outlined in the Court's case management procedures, which can be found at www.ilnd.uscourts.gov.

STATEMENT

Plaintiff, Kandice Neals, brought this putative class action in the Circuit Court of Cook County against PAR Technology Corp. ("PAR"), alleging that PAR violated the Illinois Biometric Information Privacy Act, 740 ILCS 14/1 et seq. (the "BIPA" or the "Act"). PAR removed the action to this court on the basis of diversity jurisdiction,¹ and it now moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(6).

When evaluating the sufficiency of a complaint under Rule 12(b)(6), the Court construes the complaint in the light most favorable to the plaintiff, accepts all well-pleaded facts as true, and draws all reasonable inferences in plaintiff's favor. See Bell v. City of Chi. , 835 F.3d 736, 738 (7th Cir. 2016). Federal notice-pleading standards require only "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). That is, a complaint must contain "sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal , 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. (citing Twombly , 550 U.S. at 556, 127 S.Ct. 1955 ).

Neals alleges the following. PAR develops cloud-based point of sale ("POS") systems for the hospitality industry and offers a range of POS systems that enable businesses, primarily restaurants, to track their employees' time by using a biometric finger scanner. In May 2018, Neals began working at a restaurant called Charley's Philly Steaks, which uses PAR's POS system and required Neals to scan her fingerprint into that system so it could track her time. PAR subsequently collected and stored Neals's biometric identifier into its database. Each time Neals began and ended her workday, she was required to scan her fingerprint into the POS system. Neals claims that PAR violated the BIPA by never informing her (1) in writing that her biometric identifier was being collected and stored; (2) about the specific purpose or length of time for which it collected, stored, or used her fingerprint; or (3) of any biometric data retention policy it has developed. Neals alleges that PAR also violated the BIPA by failing to obtain a written release from her that allowed it to collect or store her fingerprint. She seeks to represent a class of persons defined as "[a]ll residents of the State of Illinois who had their fingerprints collected, captured, received, otherwise obtained, or disclosed by PAR Technology while residing in Illinois." (ECF No. 1-1, Compl. ¶ 35.)

PAR first contends that Neals's claims are barred by Illinois's "extraterritoriality doctrine," because Neals has not alleged that PAR engaged in any conduct in Illinois that violated the BIPA. PAR cites Avery v. State Farm Mutual Automobile Insurance Co. , 216 Ill.2d 100, 296 Ill.Dec. 448, 835 N.E.2d 801 (2005), in which the Illinois Supreme Court held that the Illinois Consumer Fraud and Deceptive Business Practices Act does not apply to transactions that take place outside Illinois, applying the principle that a statute is without extraterritorial effect unless a clear intent appears from its express provisions. Id. , at 852-53. The court explained that while there is no bright-line test for determining whether a transaction occurs within the state, a non-resident plaintiff has a claim for statutory fraud only if the circumstances that relate to the disputed transaction occur "primarily and substantially in Illinois." Id. at 853-54.

The BIPA creates a right of action for any person aggrieved by a violation of the Act. 740 ILCS 14/20. It provides as follows in pertinent part:

No private entity may collect, capture, purchase, receive through trade, or otherwise obtain a person's or a customer's biometric identifier or biometric information, unless it first:

(1) informs the subject ... in writing that a biometric identifier or biometric information is being collected or stored;

(2) informs the subject ... in writing of the specific purpose and length of term for which a biometric identifier or biometric information is being collected, stored, and used; and

(3) receives a written release executed by the subject of the biometric identifier or biometric information ....

740 ILCS 14/15(b). PAR asserts that the complaint fails to allege that the relevant circumstances occurred primarily and substantially in Illinois, because PAR is a "non-resident corporation" that offers point-of-sale technology to its customers, not customers' employees, and there is no allegation that PAR holds property in Illinois or stores data in Illinois. (ECF No. 19, Def.'s Mot. at 4.) The Court is unpersuaded. PAR's physical location and property holdings, the location of its servers, and the identity of its customers are not determinative of the Act's application; these factors have little to do with the transaction and conduct at issue—the collection of plaintiff's fingerprint. The Court is also unpersuaded by PAR's contention that plaintiff must "substantiate" her allegation that PAR "collected" her biometric information. (ECF No. 29, Def.'s Reply at 8.) Plaintiff presents "a story that holds together" by alleging that PAR collected such information through its customer's use of PAR's system; nothing more is needed under federal notice-pleading standards. See Swanson v. Citibank, N.A. , 614 F.3d 400, 404 (7th Cir. 2010).

PAR also maintains that Neals fails to allege that PAR collected her fingerprint in Illinois, noting that she fails to identify "where the alleged biometric identifier was stored by PAR." (Id. ) Neals contends that this assertion "makes no sense" because she "scanned her fingerprints at a PAR system sitting on a counter at a restaurant in Illinois." (ECF No. 25, Pl.'s Opp'n at 8.) Neals cites paragraph 28 of the complaint, which does not actually allege such facts. It alleges that "Charley's Philly Steaks required Neals to scan her fingerprint into the PAR POS system so that it could use it as an authentication method to track her time. PAR subsequently collected and stored Neals's biometric identifier into its database." In the Court's view, what is required for plaintiff to avoid application of the extraterritoriality doctrine lies somewhere in between the parties' positions. Contrary to Neals's characterization of her allegations, she does not allege that she scanned her fingerprints into PAR's system in Illinois. And, in light of the fact that Neals does not specify the location of the Charley's Philly Steaks at which she worked, the Court is unable to...