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September 14, 2011


The opinion of the court was delivered by: P. Kevin Castel, District Judge.


Plaintiff Paul Engel brings this putative class action against defendant Scully & Scully, Inc., under the Fair and Accurate Credit Transactions Act ("FACTA"), 15 U.S.C. § 1681c(g). Engel has moved for class certification under Rule 23, Fed. R. Civ. P., and the defendant opposes and moves to dismiss under Rule 12(b), Fed. R. Civ. P. For the reasons below, the defendant's motion to dismiss is denied in part and granted in part, and the plaintiff's motion for class certification is granted.


On December 4, 2003, Congress enacted FACTA, which provides 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). This provision applies only to electronic receipts, and not to handwritten or imprint copy receipts. Id. at § 1681c(g)(2). The statue became effective on December 4, 2006, for those receipt-printing machines put into use before January 1, 2005, but was effective December 4, 2004, for any such machine put into use after January 1, 2005. Id. at § 1681c(g)(3).

Scully & Scully, Inc., is a New York home furnishings retailer. Engel alleges that he made a purchase at the defendant's business using a credit card, and that he received an electronically printed receipt displaying all sixteen digits of his credit card number, as well as the card's expiration date. (Am. Compl. ¶ 8, Engel Aff. ¶¶ 6-7.) He alleges on behalf of the putative class that it was the defendant's regular business practice to print such receipts and provide them to consumers. (Am. Compl. ¶¶ 26--27.)

Engel did not attach a receipt to the complaint, but in connection with his motion for class certification he submitted a copy of the receipt and a declaration, which states that he purchased merchandise from the defendant and received a receipt which did not truncate his credit card number or expiration date. The receipt submitted on this motion by the plaintiff displays all sixteen digits of the credit card number (redacted for filing per Rule 5.2(a), Fed. R. Civ. P.), and the expiration date. (Declaration of Joseph Goljan dated Jan. 26, 2011 ("Goljan Decl."), Exh. 1.)*fn1 At the bottom of this receipt, the words "Merchant Copy" are printed. (Id.)

Engel also submitted the affidavit of Stephen O. Robinson, a former employee of Scully & Scully. (Goljan Decl., Exh. 3 ("Robinson Aff.").) Robinson was employed by the defendant as a sales associate from September 2007 until April 2010. (Robinson Aff., ¶ 2--3.) He affirms, based on personal knowledge, that under the "standard procedure for each sale" using a debit or credit card in defendant's store, a sales employee would use one of three processing machines to electronically print "two identical receipts containing all sixteen (16) digits of the customer's credit or debit account number as well as the credit or debit card's expiration date." (Id. at ¶¶ 6, 8.b.) Robinson further states that "[o]n both copies of the electronically printed receipt, the words 'merchant copy' appear." (Id.) He also affirms that on at least three occasions he notified the defendant's management that it was violating FACTA. (Id. at ¶ 20.)

The defendant submitted the declaration of a Scully & Scully employee, Tomas Villanueva. (Declaration of Tomas Villanueva dated March 7, 2011 ("Villanueva Decl.").) Villanueva was the defendant's comptroller from April, 1995 through October 2009. (Villanueva Decl., ¶ 2.) Since October 2009, he has worked part-time for the defendant, but his position of employment is not specified. (Id.) He states that "[a]t the time [he] stopped working full time, the machines printed out two receipts, one labeled merchant copy and the other labeled customer copy. The customer copy was truncated so that all the digits on the credit card number [did] not appear." (Id. at ¶ 5.) He does not specify the source of his knowledge, and does not state whether he worked on the sales floor of the store or personally used the receipt-printing machines. Finally, he states that "the only change in [the sales] procedure that I am aware of occurred sometime in 2010, when Scully got new machines that truncate the merchant copy receipt in addition to customer copy receipt." (Id. at ¶ 6.)


I. Motion to dismiss

Defendant moves to dismiss the complaint under Rules 12(b)(1) and 12(b)(6), Fed. R. Civ. P., arguing that there is no subject matter jurisdiction because the plaintiff lacks standing to bring his claim, and that the plaintiff fails to state a claim upon which relief can be granted. Both the standing and merits arguments assert that the plaintiff's claim fails because the words "Merchant Copy" appear on the receipt provided to the plaintiff. I conclude that despite this fact, the plaintiff has standing and has stated a claim upon which relief can be granted.

a. Legal Standard

Rule 8(a)(2), Fed. R. Civ. P., requires "a short and plain statement of the claim showing that the pleader is entitled to relief, in order to give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (quoting Conley v. Gibson, 355 U.S. 41, 47 (1957)) (ellipsis in original). To survive a motion to dismiss under Rule 12(b)(6), a plaintiff must provide the grounds upon which the claims rest, through factual allegations sufficient to raise a right to relief above the speculative level. ATSI Commc'ns, Inc. v. Shaar Fund, Ltd., 493 F.3d 87, 98 (2d Cir. 2007) (quoting Twombly, 127 S.Ct. at 1965). "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." Ashcroft v. Iqbal, ___ U.S. ____, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009). "The plausibility standard . . . asks for more than a sheer possibility that a defendant has acted unlawfully." Id. Legal conclusions and "[t]hreadbare recitals of the elements of a cause of action" do not suffice to state a claim, as "Rule 8 . . . does not unlock the doors of discovery for a plaintiff armed with nothing more than conclusions." Id. at 1949--50. The Supreme Court has described the motion to dismiss standard as encompassing a "two-pronged approach" that requires a court first to construe a complaint's allegations as true, while not bound to accept the veracity of a legal conclusion couched as a factual allegation. Id. Second, a court must then consider whether the complaint "states a plausible claim for relief," which is "a context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Id.

In considering a motion to dismiss under Rule 12(b)(6), the Court is limited in its consideration to the facts stated in the complaint, and material outside the pleadings will not be considered with respect to the motion to dismiss. Friedl v. City of New York, 210 F.3d 79, 83--84 (2d Cir. 2000) ("[W]hen matters outside the pleadings are presented in response to a 12(b)(6) motion, a district court must either exclude the additional material and decide the motion on the complaint alone or convert the motion to one for summary judgment under Fed. R. Civ. P. 56 and afford all parties the opportunity to present supporting material." (internal quotations omitted)). The Court may consider exhibits or documents incorporated by reference into the complaint, however, without converting the motion into one for summary judgment. See Int'l Audiotext Network, Inc. v. AT & T, 62 F.3d 69, 72 (2d Cir. 1995).

When deciding a motion to dismiss pursuant to Rule 12(b)(1), Fed. R. Civ. P., a district court "may resolve disputed factual issues by reference to evidence outside the pleadings, including affidavits." State Employees Bargaining Agent Coalition v. Rowland, 494 F.3d 71, 77 n.4 (2d Cir. 2007). The plaintiff has the burden to demonstrate that it has standing to bring a claim, and "each element [of standing] must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation." Carver v. City of New York, 621 F.3d 221, 225 (2d Cir. 2010) (quoting Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992)). Here, "[b]ecause standing is challenged on the basis of the pleadings, [the Court must] accept as true all material allegations of the complaint, and must construe the complaint in favor of the complaining party." Carver, 621 F.3d at 225 (internal quotations omitted)). At the same time, "it is within the trial court's power to allow or to require the plaintiff to supply, by amendment to the complaint or by affidavits, further particularized allegations of fact deemed supportive of plaintiff's standing." Warth v. Seldin, 422 U.S. 490, 501 (1975).

b. Standing "Standing is a federal jurisdictional question 'determining the power of the court

to entertain the suit.'" Carver, 621 F.3d at 225 (quoting Warth, 422 U.S. at 498). The Court must determine "'whether the plaintiff has made out a case or controversy between himself and the defendant within the meaning of Art. III,' and is therefore 'entitled to have the court decide the merits of the dispute or of particular issues.'" Amnesty Intern. USA v. Clapper, 638 F.3d 118, 131 (2d Cir. 2011) (quoting Warth, 422 U.S. at 498). There are three Article III standing requirements: (1) the plaintiff must have suffered an injury-in-fact; (2) there must be a causal connection between the injury and the conduct at issue; and (3) the injury must be likely to be redressed by a favorable decision. Lujan, 504 U.S. at 560--61. In a class action, once standing is established for a named plaintiff, standing is established for the entire class. Central States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, 504 F.3d 229, 241 (2d Cir. 2007).

In determining whether the plaintiff has alleged an injury-in-fact, "[t]he critical question is whether 'the plaintiff has alleged such a personal stake in the outcome of the controversy as to warrant his invocation of federal-court jurisdiction.'" Amnesty Intern., 638 F.3d at 132 (quoting Summers v. Earth Island Inst., 555 U.S. 488 (2009) (emphasis in original)). In certain situations, "'the actual or threatened injury required by Art. III may exist solely by virtue of statutes creating legal rights, the invasion of which creates standing.'"

Kendall v. Employees Retirement Plan of Avon Products, 561 F.3d 112, 118 (2d Cir. 2009) (quoting Warth, 422 U.S. at 500). "'The standing question in such cases is whether the constitutional or statutory provision on which the claim rests properly can be understood as granting persons in the plaintiff's position a right to judicial relief.'" Id. (quoting Warth, 422 U.S. at 500). Even where, as here, the injury exists solely by virtue of a statute, "standing in no way depends on the merits of the plaintiff's contention that particular conduct is illegal." Warth, 422 U.S. at 500.

Plaintiff has alleged facts adequate to create standing, whether or not he has stated a claim for violation of FACTA. Congress created a private right of action for consumers to sue businesses for FACTA violations. 15 U.S.C. § 1681o ("Any 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 . . . ."); Id. § 1681n ("Any person who willfully fails to comply with any requirement imposed under this subchapter with respect to any consumer is liable to that consumer . . . ."). Plaintiff alleges that he is a consumer who made a purchase at defendant's store, and that he "received from Defendant a computer-generated transaction receipt which displayed all 16 digits of [his] credit card as well as the card's expiration date." (Am. Compl. ¶ 8.) Plaintiff has therefore alleged an injury-in-fact and a causal connection between that injury and the conduct at issue. The fact that the receipt provided to the plaintiff was labeled "Merchant Copy" has no bearing on his standing to bring a claim. He is a proper party to bring this suit, as a consumer alleging a statutory violation because his credit card number was not truncated. The potential availability of a defense or affirmative defense does not destroy Article III standing. See Levine v. AtriCure, Inc., 508 F. Supp. 2d 268, 276 (S.D.N.Y. 2007) (plaintiff had constitutional standing where he alleged that he was injured due to defendants' conduct, "subject, of course, to an affirmative defense that this was not the case.").

Whether or not this Court considers the Robinson and Villanueva affidavits, this outcome is the same. Villanueva's affidavit does not reveal whether he has personal knowledge of the matters to which he attests. Even assuming he does, his general averments, that he has "always known Scully & Scully to be compliant with all applicable law" and that "[a]t the time [he] stopped working full time" the receipt printing machines were in compliance, are not specific enough to counter the detailed Robinson affidavit. Robinson's affidavit is based on personal knowledge and specifies the sales procedure employed from at least September 2007 until April 2010. Together with the non-truncated ...

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