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Katz v. Donna Karan International, Inc.

United States District Court, S.D. New York

May 17, 2017

YEHUDA KATZ, Individually and on behalf of a class, Plaintiff,

          OPINION & ORDER


         Plaintiff Yehuda Katz ("Plaintiff") brings this class action against Defendants Donna Karan International, Inc., The Donna Karan Company, LLC, and The Donna Karan Store, LLC (collectively, "Defendants"), seeking statutory damages for alleged willful violations of the Fair and Accurate Credit Reporting Act ("FACTA"), 15 U.S.C. § 1681c(g). The Court determines that Article III standing requires a concrete injury in fact, even where there is a statutory violation. Since plaintiff has not been injured, his complaint must be dismissed.

         On January 30, 2015, the Court granted Defendants' motion to dismiss Plaintiffs First Amended Complaint (the "FAC") for failure to state a claim under Fed.R.Civ.P. 12(b)(6), finding the FAC "devoid of any well-pleaded facts which allow the plausible inference that Defendants willfully, knowingly, or recklessly violated FACTA." ECF 43 at 3-4. The Court held that Plaintiff failed to allege "any actual damages. Indeed, based on the facts alleged in the complaint, it is not possible that Plaintiff was harmed." Id. at 3 n. 2. On appeal, the Second Circuit heard argument, but before reaching a decision, the Supreme Court decided Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), which "addressed the issue of what plaintiffs must plead to adequately allege a 'concrete injury' for purposes of Article III standing." Katz v. Donna Karon Co, LLC, 653 Fed.App'x 81, 82 (2d Cir. 2016) (summary order) (quoting Spokeo, 136 S.Ct. at 1549). The Second Circuit remanded "to allow [Plaintiff] an opportunity to replead [his] claims to comport with the pleading standards set forth in Spokeo, and to allow the district court[] to address any standing questions in the first instance." Id. The Court granted Plaintiff limited leave to amend his complaint, and Plaintiff filed a Second Amended Complaint (the "SAC"). ECF 52, 53. Defendants moved to dismiss the SAC for lack of subject matter jurisdiction.[1] ECF 63.

         The Court has reviewed the parties' submissions, including supplemental authority and corresponding letters, and determines that Plaintiff has not suffered a concrete injury in fact as a result of Defendants' conduct. Accordingly, Plaintiff lacks Article III standing. Defendants' motion is GRANTED.


         Plaintiff made two purchases in Defendants' stores using his Visa Credit Card: the first on January 13, 2014, and the second on February 2, 2014.[2] SAC ¶¶ 58-61. At both purchases, Defendants issued Plaintiff electronically-printed receipts that disclosed the first six and last four digits of Plaintiff s credit card number, in apparent violation of FACTA's truncation requirement, which mandates that no more than the final five digits of credit cards be printed on receipts. Id., ¶ 72; see 15 U.S.C. § 1681 c(g)(1). The first six digits do not disclose any information about Plaintiff; but rather "identify the institution that issued the card to the card holder." See Bin List & Bin Ranges: List of Issuer Identification Numbers, Bin Database ~ Industry Standard Fraud Prevention, The contours of the dispute were "super-sized" by Plaintiffs class action on behalf of similarly-situated customers, seeking statutory damages of $ 100 to $ 1, 000 per willful violation, pre- and post-judgment interest, and attorneys' fees and costs. See SAC ¶¶ 75-76; 15 U.S.C. § 168 In. Plaintiff couples his allegation that Defendants were aware of PACTA'S applicability with the allegation that the receipt did not fully comply with FACTA requirements to conclude that Defendants willfully violated FACTA. See SAC ¶¶ 30, 40-41, 68.

         The only new fact the SAC contains is Plaintiffs second purchase and partially-truncated receipt. There is no claim of economic loss or harm; no suggestion that Plaintiff was forced to take protective measures; no suggestion that the receipt was seen by anyone other than the store clerks, the customer (i.e. Plaintiff), and Plaintiffs attorneys; no claim of imminent harm; and no claim of actual identity theft. Instead there are legal arguments and generalized descriptions of nation-wide identity theft. Plaintiffs standing theories boil down to four: (1) PACTA'S truncation requirement is a substantive right, the violation of which, by itself, automatically creates a concrete Article III injury; (2) the disclosure created an increased risk of identity theft, constituting a present intangible harm; (3) the disclosure violated Plaintiffs privacy interests, constituting a concrete injury; and (4) the availability of statutory damages "confirm fs]" Plaintiffs Article III standing. See SAC ¶ 75; ECF 65 at 18-20. None of these arguments is sufficient to establish standing.


         I. Applicable Law

         A. Motions to Dismiss for Lack of Subject Matter

         "A case is properly dismissed for lack of subject matter jurisdiction under Rule 12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it." Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). A "plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of the evidence that it exists." Id.

         B. FACTA

         In 2003, Congress enacted FACTA, an amendment to the Fair Credit Reporting Act of 1970 ("FCRA"), 15 U.S.C. § 1681 et seq. FACTA was designed in part "to prevent 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), 122 Stat. 1565. Among other things, to reduce the risk of third parties obtaining such information from lost or stolen sales receipts, FACTA's "truncation requirement" prohibits merchants who accept credit or debit cards from printing more than the last five digits of a customer's credit card number on receipts. See 15 U.S.C. § 1681c(g)(1). FACTA creates a private cause of action for willful violations of its requirements; and entitles consumers to recover either "any actual damages sustained ... as a result" or the violation or statutory damages of between $100 and $1, 000. Id. § 1681n(a)(i)(A). Plaintiff seeks only statutory damages.

         C. Constitutional Standing and the "Concreteness" Requirement

         The doctrine of judicial standing is grounded in Article Ill's limitation of federal jurisdiction to "cases" and "controversies." U.S. Art. Ill. § 2. To satisfy "the irreducible constitutional minimum of standing, " a plaintiff invoking federal jurisdiction must establish (1) an "injury in fact, " (2) that is "fairly traceable to the challenged action of the defendant, " and (3) is "likely" to be "redressed by a favorable decision." Lujan v. Defenders of Wildlife,504 U.S. 555, 560-61 (1992) (internal quotations and citations omitted). An injury in fact requires that a plaintiff suffer "an invasion of a legally protected interest which is (a) concrete and particularized, ...

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