Budai, J. v. Country Fair Inc.

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2023 PA Super 85JORDAN BUDAI, ANDREA SCIOLA, : IN THE SUPERIOR COURT OF
AND ASHLEY GENNOCK, : PENNSYLVANIA
INDIVIDUALLY AND ON BEHALF OF :
ALL OTHER SIMILARLY SITUATED :
:
:
v. :
:
: No. 461 WDA 2022
COUNTRY FAIR, INC. :
:
Appellant :
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 BY BOWES, J.: FILED: May 17, 2023
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
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* Retired Senior Judge assigned to the Superior Court.
1 The trial court certified the order for interlocutory appeal pursuant to 42
Pa.C.S. § 702(b).
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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
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2 We note that decisions from the Third Circuit Court of Appeals, whether
interpreting federal or state law, do not bind our Courts. See Martin v. Hale
Prod., Inc., 699 A.2d 1283, 1287 (Pa.Super. 1997). Rather, “[d]ecisions of
the federal courts lower than the United States Supreme Court possess a
persuasive authority.” Id. (cleaned up). We consider the federal cases cited
herein accordingly.
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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.
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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.
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3 Although this Court initially denied Country Fair’s petition for permission to
appeal, we subsequently granted the petition following the filing of a motion
for reconsideration. We note that the trial court did not order Country Fair to
file a concise statement pursuant to Pa.R.A.P. 1925(b), and the trial court did
not submit a Rule 1925(a) opinion.
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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 standard of review is de novo and our
scope of review is plenary.” S.G. v. J.M.G., 186 A.3d 995, 997 (Pa.Super.
2018) (cleaned up).
A party filing suit in a Pennsylvania court “‘must establish as a threshold
matter that he has standing to maintain the action.’” Johnson v. Am.
Standard, 8 A.3d 318, 329 (Pa. 2010) (quoting Fumo v. City of
Philadelphia, 972 A.2d 487, 496 (Pa. 2009)). “Unlike the federal courts,
which derive their standing requirements from Article III of the United States
Constitution, standing for Pennsylvania litigants has been created judicially.”4
Id. (citation omitted).
Specifically, in Pennsylvania there are two avenues for a litigant to
establish standing: (1) by statute, which expressly prescribes the individuals
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4 In the federal context, “Article III standing requires a concrete injury even
in the context of a statutory violation.” Spokeo, Inc. v. Robins, 578 U.S.
330, 341 (2016). Accordingly, the Third Circuit has found that a purely
technical violation of FACTA, without further injury by way of, inter alia,
identity theft, does not confer Article III standing. See Kamal v. J. Crew
Grp., Inc., 918 F.3d 102, 117 (3d Cir. 2019) (holding that “absent a sufficient
degree of risk, J. Crew’s alleged violation of FACTA is a bare procedural
violation that does not create Article III standing” (cleaned up)).
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who have standing to pursue a particular action thereunder; or (2) in the
absence of such a statutory prescription, by satisfying the requirements of
Pennsylvania’s traditional standing doctrine. See Milby v. Pote, 189 A.3d
1065, 1076–77 (Pa.Super. 2018) (“These traditional standing requirements
apply only when a specific statutory provision for standing is lacking.”).5
We begin with an overview of statutory standing. “[W]here the General
Assembly expressly prescribes the parties who may pursue a particular course
of action in Pennsylvania courts, legislative enactments may further enlarge
or distill these judicially-applied principles.” Int. of K.N.L., 284 A.3d 121,
136-37 (Pa. 2022) (citations omitted). In these circumstances, “the question
involved is whether the interest the plaintiff seeks to protect is arguably within
the zone of interests to be protected by the statute. Accordingly, the answer
to any question concerning statutory standing involves a careful analysis of
the relevant statutory scheme.” Milby, supra at 1077 (cleaned up). For
example, the Child Custody Act expressly prescribes who may pursue an
action thereunder. See 23 Pa.C.S. §§ 5324 (“Standing for any form of
physical custody or legal custody”), 5325 (“Standing for partial physical
custody and supervised physical custody”).
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5 Insofar as Country Fair assails this jurisprudence because “the Pennsylvania
Supreme Court has never issued such a ruling,” Country Fair’s reply brief at
6, we remind Country Fair that this Court is bound by our prior published
decisions. See Czimmer v. Janssen Pharms., Inc., 122 A.3d 1043, 1064
n.19 (Pa.Super. 2015) (recognizing “that it is beyond the power of a Superior
Court panel to overrule a prior decision of the Superior Court except in
circumstances where intervening authority by our Supreme Court calls into
question a previous decision of this Court” (cleaned up)).
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In the absence of a statutory prescription, our traditional standing
doctrine applies, which “is a judicially-created tool intended to ‘winnow out’
litigants with no direct interest in the matter, and to otherwise protect against
improper parties.” Int. of K.N.L., supra at 136 (citation omitted). As our
Supreme Court recently explained:
The “core concept” of standing is that the litigant must be
“adversely affected” in some way. Under this Court’s precedent,
the prerequisites to standing are satisfied where the complaining
party’s interest is substantial, direct, and immediate, meaning
that the party’s interest surpasses that of the general public in
procuring obedience to the law, the harm alleged was caused by
the matter complained of, and the harm is not remote and
speculative.
Trust Under Will of Ashton, 260 A.3d 81, 88 (Pa. 2021) (cleaned up). “In
particular, it is not sufficient for the person claiming to be ‘aggrieved’ to assert
the common interest of all citizens in procuring obedience to the law.” Wm.
Penn Parking Garage, Inc. v. City of Pittsburgh, 346 A.2d 269, 280-81
(Pa. 1975) (cleaned up). Moreover, “[t]he doctrine of standing stems from
the principle that judicial intervention is appropriate only where the underlying
controversy is real and concrete, rather than abstract.” Firearm Owners
Against Crime v. Papenfuse, 261 A.3d 467, 481 (Pa. 2021) (cleaned up).
As noted hereinabove, the trial court in the case sub judice determined
that FACTA did not confer statutory standing but that Plaintiffs had
nonetheless established standing pursuant to Pennsylvania’s traditional
standing doctrine. See Trial Court Opinion, 8/20/20, at 8.
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Country Fair argues that “Congress never created a statutory right to
sue in state court based on a technical violation of FACTA that does not
implicate any harm” and that Plaintiffs cannot satisfy Pennsylvania’s
traditional tripartite test because they have not “suffer[ed] a concrete injury
that is actual or imminent.” Country Fair’s brief at 22-23. Plaintiffs, on the
other hand, allege that the trial court correctly concluded they had established
standing pursuant to Pennsylvania law. See Plaintiffs’ brief at 20. However,
they contend that the court erred in finding that they lacked statutory
standing. Id. According to Plaintiffs, they “have standing to bring their FACTA
claims because the statute specifically vested in them a right to receive a
properly truncated receipt, and the law authorizes their cause of action to sue
Country Fair for its violation of that right.” Id. at 24. Thus, they argue that
“[g]iven [Plaintiffs’] clear qualification to bring a FACTA claim against Country
Fair, and Pennsylvania courts’ clear concurrent jurisdiction to hear FACTA
claims, this Court should rule that [Plaintiffs] have statutory standing, and
affirm the trial court’s order on that alternative basis.” Id. at 26. If this Court
is not so inclined, Plaintiffs urge us to affirm based upon the trial court’s
conclusion that they satisfied Pennsylvania’s traditional three-part test for
standing. See id. at 27.
We disagree with Plaintiffs’ contention that FACTA conferred upon them
statutory standing. Notably absent from FACTA is a provision, like those in
the Child Custody Act, delineating who has standing to pursue an action
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thereunder.6 Thus, while FACTA includes liability provisions that create private
rights of action, there is no standing provision that “expressly prescribes the
parties who may pursue a [FACTA] action in Pennsylvania courts[.]” Int. of
K.N.L., supra at 136 (citation omitted). A statute setting forth a private right
of action does not automatically confer standing. See Jackson v. Garland,
622 A.2d 969, 971 (Pa.Super. 1993) (“The law of standing provides that one
cannot invoke the jurisdiction of the court to enforce private rights or to
maintain a civil action for the enforcement of such rights, unless he or she
has, in an individual or representative capacity, some real interest in the cause
of action, or a legal right, title or interest in the subject matter or
controversy.”). As FACTA contains no standing provision, Plaintiffs may not
invoke statutory standing to pursue their action in state court. Lacking
statutory standing, Pennsylvania’s traditional standing doctrine applies.
In finding that Plaintiffs satisfied the traditional tripartite test, the trial
court held as follows: (1) “Plaintiffs’ interest far outstrips that of ordinary
citizens in procuring obedience to the law, because it was Plaintiffs’ personal
information that was printed on the offending receipts[;]” (2) “there is a causal
relationship between [Country Fair’s] conduct and the harm to Plaintiffs’ rights
to enjoy the protections of FACTA” as a result of Country Fair printing receipts
in violation of FACTA; and (3) “the causal connection has already occurred,
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6 Cf. also, e.g., 13 Pa.C.S. § 2A531 (“Standing to sue third parties for injury
to goods”), 53 P.S. § 11701.202 (“The following have standing to request a
determination of municipal financial distress from the secretary. . . .”).
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and was complete when [Country Fair] tendered the allegedly illegal receipts
to Plaintiffs[.]” Trial Court Opinion, 8/20/20, at 23. “Simply put, [Country
Fair], by its lack of compliance with FACTA, caused the alleged harm to
Plaintiffs’ interests, and this cause-effect connection is neither too remote nor
too speculative to escape adjudication in our courts.” Id. at 24.
The trial court’s conclusion amounts to a finding that the mere printing
of a receipt in violation of FACTA, regardless of the severity of the violation,
per se aggrieves a customer. We cannot countenance such a conclusion.
While not binding, we find the analysis of the Third Circuit in Kamal, supra,particularly pertinent to whether Plaintiffs were aggrieved pursuant to
Pennsylvania’s traditional standing doctrine.
By way of background, Kamal received three receipts from J. Crew, all
of which included the first six and the last four digits of his credit card number.
As a result of this alleged willful violation of FACTA, Kamal filed a federal class
action suit. The District Court dismissed Kamal’s complaint “because Kamal
had alleged only a technical violation of FACTA and not a concrete injury[.]”
Id. at 109.
The Third Circuit reiterated that Article III standing requires, inter alia,
an injury in fact. “To show injury in fact, a plaintiff must allege an invasion of
a legally protected interest that is concrete and particularized and actual or
imminent, not conjectural or hypothetical. The injury must be concrete in
both a qualitative and temporal sense, and an abstract injury will not suffice.”
Id. at 110 (cleaned up). Similarly, it recounted the United States Supreme
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Court’s holding “that a plaintiff does not automatically satisfy the injury-in-
fact requirement whenever a statute grants a person a statutory right and
purports to authorize that person to sue to vindicate that right.” Id. at 110-
11 (cleaned up). Further, the Kamal Court recalled the Supreme Court’s
warning that “Congress cannot statutorily manufacture Article III standing in
the case of a bare procedural violation, divorced from any concrete harm.
Rather, a procedural violation must yield or risk actual harm to meet the
requirements of Article III.” Id. at 111 (cleaned up).
In sum, the Third Circuit interpreted the Supreme Court’s precedent as
follows: “an alleged procedural violation manifests concrete injury if the
violation actually harms or presents a material risk of harm to the underlying
concrete interest. If the violation does not present a material risk of harm to
that underlying interest, however, a plaintiff fails to demonstrate concrete
injury.” Id. at 112-13 (cleaned up).
Kamal alleged two injuries: the printing of the receipt in violation of
FACTA and the increased risk of identity theft as a result of the printing. The
Third Circuit held that “the procedural violation is not itself an injury in fact,
and Kamal has not otherwise alleged a risk of harm that satisfies the
requirement of concreteness.” Id. at 113.
Based on the plain text of FACTA, which requires truncation of all
but the last five digits of a consumer’s credit card number, we
recognize Congress identified the violation alleged here. By
creating a private right of action to enforce FACTA’s provisions and
allowing for statutory damages for willful violations, Congress has
expressed an intent to make the injury redressable.
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But the Clarification Act also expresses Congress’s judgment that
not all procedural violations of FACTA will amount to concrete
harm. The congressional findings underlying the Act are directed
to the risk incurred by printing the expiration date when the card
number is properly truncated. Though expiration date truncation
is not at issue here, Congress’s action to limit FACTA liability to
those claims implicating actual harm accords with our
understanding of Article III.[7]
Id. (cleaned up).
Kamal argued that Congress had found “all conduct prohibited by FACTA
creates a sufficient risk of identity theft.” Id. at 115 (cleaned up). Noting
that the cited congressional findings related only to instances where retailers
printed the credit card number in full on receipts, the Third Circuit rejected
Kamal’s argument and considered whether he set forth sufficient facts to show
a particular risk of harm. Id. at 115 n.5, 116. Ultimately, it agreed with the
District Court as follows:
Kamal has alleged neither third-party access of his information,
nor that the receipt included enough information to likely enable
identity theft. Our analysis would be different if, for example,
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7 By way of background, after FACTA’s enactment “launched ‘hundreds of
lawsuits’ based on receipts printed with expiration dates ‘even where the
account number was properly truncated,’” Congress passed the Credit and
Debit Card Receipt Clarification Act of 2007 (“Clarification Act”). Thomas v.
TOMS King (Ohio), LLC, 997 F.3d 629, 633 (6th Cir. 2021) (quoting
Clarification Act, Pub. L. No. 110-241 § 2(a)(4)-(5)). Since proper truncation,
irrespective of the inclusion of an expiration date, was found to protect against
identity theft, the Clarification Act amended 15 U.S.C. § 1681n to refine the
meaning of “willful noncompliance” in relation to the inclusion of expiration
dates on printed receipts. In doing so, Congress explained that the stated
purpose of the Clarification Act was “to ensure that consumers suffering from
any actual harm to their credit or identity are protected while simultaneously
limiting abusive lawsuits that do not protect consumers but only result in
increased cost to business and potentially increased prices to consumers.”
Clarification Act § 2(b).
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Kamal had alleged that the receipt included all sixteen digits of his
credit card number, making the potential for fraud significantly
less conjectural. Here, however, we agree with the District Court
that this speculative chain of events does not constitute a material
risk of harm.
Id. at 116 (footnote omitted) (explaining the chain of events as: “Kamal loses
or throws away the receipt, which is then discovered by a hypothetical third
party, who then obtains the six remaining truncated digits along with any
additional information required to use the card, such as the expiration date,
security code or zip code” (cleaned up)).
Thus, the Third Circuit held that “absent a sufficient degree of risk, J.
Crew’s alleged violation of FACTA is a bare procedural violation that does not
create Article III standing.” Id. at 117 (cleaned up). It further found that
“[t]his result falls within the Supreme Court’s admonition that when Congress
adopts procedures designed to decrease the risk of harm to a concrete
interest, a violation of one of those procedural requirements may result in no
harm.” Id. (cleaned up).
We now return to the instant case. As in Kamal, Plaintiffs have “alleged
neither third-party access of [the] information, nor that the receipt included
enough information to likely enable identity theft.” Kamal, supra at 116. All
Plaintiffs have alleged is the same interest of all customers in receiving
receipts in compliance with FACTA, namely, that they be properly truncated
when printed. Plaintiffs’ speculative chain of events that the receipts placed
them at heightened risk for identity theft solely based on their existence
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simply does not amount to an interest that is substantial, direct, and
immediate, which our Supreme Court identified as the foundational
components of standing. See Ashton, supra at 88. Nor does the alleged
burden of storing or destroying the offending receipts. Stated simply, Country
Fair’s conduct has not adversely affected them.8
Based on the foregoing, the core concept of our standing doctrine has
not been satisfied and the trial court erred in overruling Country Fair’s
preliminary objection as to standing. Since we conclude that Plaintiffs lack
standing under Pennsylvania law, we reverse the order overruling Country
Fair’s preliminary objection and dismiss the complaint.9 In light of our
disposition, we decline to address Country Fair’s second issue concerning the
resurrection of Plaintiffs’ federal claim in state court as any purported holding
would be purely advisory.
Order reversed. Complaint dismissed.
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8We observe that our holding aligns with Congress’s intent that FACTA provide
relief for consumers who suffer an “actual harm to their credit or identity[.]”
Clarification Act § 2(b).
9 We grant Plaintiffs’ application for post-submission communication asking
this Court to consider as a supplemental authority our Supreme Court’s
decision in Int. of K.N.L., 284 A.3d 121 (Pa. 2022). See Plaintiffs’ Application
for Post-Submission Communication, 1/18/23.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 5/17/2023
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