2008 D e c i sion s O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit
7-16-2008 

# S o ve r ei g n B a nk v

. B J W holes ale C lub
P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al D ock e t N o . 06-3392

F o l lo w thi s a nd a dd it ion al w ork s a t : h tt p://d i g it alc ommon s .l a w . v i l l a no v a . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou gh t t o y ou for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t a t e s C our t of Appe al s for the Thir d C ir c uit a t V i l l a no v a U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. I t h as be e n a c c e pt e d for inclusion in 2008 D e c i sion s b y a n a uthor i z e d a dmini s tr a t or of V i l l a no v a U niv e r sit y S choo l of L a

w Di g it al R e posit or y

. F or mor e infor m a t ion, p le as e c on t a ct Be n j a min . C a rl s on@l a

w . v i l l a no v a . e du
. R e c omme nde d C it a t ion

" S o v e r ei gn B a nk v

. B J W ho le s ale C lub " (2008). 2008 D e cisio n s . P ape r 759. h tt p://d i g it alc ommon s .l a

w . v i l l a no v a . e du/thir dc ir c uit_2008/7591 PR EC ED EN TI AL UN I TE D S TA TE S C OU RT OF AP PE AL S FO R T HE TH IRD C IRCU IT Nos
. 06- 3392/ 3405
SO VE RE I GN BANK , Appe l l a nt

No: 06- 3392
v. B J'S WH O L E S A L E C L U B , IN C .; FI FTH THI RD BANCORP

PE NN SY LV AN I A S TA TE EM PL OY EE S C RE DI T UNI ON Appe l l a nt No: 06- 3405
v. FI FT H T HI RD BANK ; BJ ' S W HOLESALE CLUB, I NC. BJ ' S W HOLESALE CLUB, I NC. De fe nd a nt

/ Th i r d- Party

Pl a i nt i ff2 v. I NT ER NA TI ON AL BU SINE SS MA CH I NE S CORPORATI ON, I NC. Thi r d- Pa rty

De fe nda nt A p p eals f ro m th e U n itedS tates D istrict C o u rt f o r th e M id d le D istrict o f

P en n sy lv an ia ( Ci v. Nos
. 05- c v- 01150/ 04- c v- 01554) D istrict Ju d g e: H o n . William W. C ald w ell Ar gue d: June 19, 2007 Be for e : Mc KEE, FI SHER a nd CHAGARES,

Circ uit Jud ges ( Opi ni on fi l e d: Jul y

16, 2008) J OSEPH W OLFSON, ESQ. ( Ar gue d) ST AC EY A. SC RI VANI , ES Q. Stevens & Lee 62 0 F re edom

Bu si ness Center P. O. Box 62330 Ki ng of Pr

us s i a , PA 19406 At t orne y s for

a ppe l l a nt , Sove r e i gn Ba nk DONALD B. KAUFMAN, ESQ. ( Ar gue d) DE VI N C HW AS TY K, ES Q. Mc Ne e s W a l l a c e & Nu r i c k L LC 10 0 P ine Str ee t3 P. O. Box 1166 Ha r r i s bur g, PA 17108 A tto rn ey s f

o r ap p ellan t, P en n sylv an ia St a t e Em pl oy e e s Cr e di t

Uni on J AMES W
. PRENDERGAST, ESQ. ( Ar gue d) J ENNI FE R L
. CA RP EN TE R, ES Q. W i l m e r Cu t l e r Pi c ke r i ng Ha l e a ndDo rr LL P 60 Stat e Str ee t Bos t on, MA 02109 GO RD ON PE AR SO N, ES Q. MA RI O J
. W EB ER , ES Q. W i l m e r Cu t l e r Pi c ke r i ng Ha l l a ndDo rr

LL P 18 75 Pe nn s y l vani aAv e . , NW W a s hi ngt on, D. C. 2006 RI CH AR D L
. KR EM NI CK , ES Q. CH RI ST OP HE R A
. LE W I S, ES Q. LE W I S W
. SC HL OS SB ER G, ES Q. Bl a nk Ro m e LL P On e Log an Sq uare 1 8 th & C h erry

S treets Phi l a de l phi a , PA 19103 Attorney s for appell ee , BJ’ s W ho le sa le Club , I nc. W
. BRECK W EI GEL, ESQ. ( Ar gue d) Vo ry s , Sat e r , Se y

m ou r & Pe a s e LL P 22 1 E as t Fou rth S tr ee t Ci nc i nna t i , OH 452024 AN DR EWL. SW OP E, ES Q. AB RA M D
. BU RN ET T I I I , ES Q. Ki rkp a tr i c k & Lo c kh a rt

Pr e s t on Ga t e s El l i s LL P 17 N. Se c ond Str e e t , 18th Fl oor Ha r r i s bur g, PA 17101 At t orne y s for

a ppe l l e e , Fi fth Thi r d Ba nk

OP I NI ON McKE E, Circ uit Jud ge. I n the s e c ons ol i da t e d a

ppe a l s , Sove r e i gn Ba nk a nd the Penn sylvania

Stat e Em

pl o y ee s Cre dit Union appeal orders dism is si ng cl ai m s that ar ose from the theft of

ce rt ai n cre dit c ar d i nform a t i on fr om

ar e t a i l e r ’ s c om

put e r fi l e s . For

the r e a s ons th a t f o l l ow , w e w i ll rev erse in p art, an daf f irm th o se o rd ers in p art. I . BA CK GR OU ND Th es e c on soli date d app ea ls invo lve two law suits that
a r os e fr om

the the ft

of c r e di t

c a rd i nform a t i on fr om

the
co m p u ter f i l e s o f a p ro m in en t retailer. V isa U .S .A ., In c., is a5 corporat ion, co m

pris ed of

an as soci at ion o f f inanci al i ns t it utions, which op er at es a c re dit c ar d p ay m ent s y s t e m kn ow n as “V isa.” S o v ereig n B an kan dth e P en n sy lv an ia S tate Em pl oy e e s Cr e di t Uni on ( “ PSECU” ) a r e both m e m be r s of the V isa n etw o rk . S o v ereig n an dP S E C U h av e a M e mb ersh ip A g reem e n t w i t h V isa th at allo w s th em to issu e V isa card s to th eir resp ectiv e cu sto m ers an dm em b ers. With in th e V isa
n et w o rk , S o v ereig n an dP S E C U are ref erred to as “Issu ers,” whi c h m e a ns tha t

the y i s s ue Vi s a c a r ds t o c a r dhol de r s pur s ua nt to th e co n tracts th ey

en ter in to w ith th em . Fi fth Thi r d Ba nk i s a l s o a m e m be r of the Vi s ane twork,
a nd i t a l s o ha s aMe m

be r s hi p Agr e e m e nt wi th Vi s a . W i thi n the network, Fifth T hird is re ferred to as an “Acqu ir er ,” wh ic h
m ean s th at F if

th T h irden ters in to co n tractu al relatio n sh ip s w ith b u sin esses th at ag ree to accep t V isa card s as p ay m en t f o r th eir g o o d s an dserv ices (“ M e r c h an ts”). A cq u irers p ro cess th o se6 tr a ns a c t i ons on be ha l f of the Me r c ha nt s . BJ ’ s W hol e s a l e Cl ub, I n c . , i s aM e r c h a n t
. A c c o r d i n g l y , F i f th T h i r da n dB J ’ s h a ve
en tered in to a M erch an t A g reem en t. A lth o u g h M e r c h an ts p articip ate in th e V isa n etw o rk , t h e y are n o t m em

b ers. O n ly financia l in st it

utions ar e e li gible for m em bers hip. Th er efore, Merc hants have no c on tr ac tual re lati on ship dire ct ly with Visa
. E v e ry t i m e ac a r d h o l d e r u s e s aV i s ac a r dt o p a y a Me r c ha nt for goods or

s e rvi c e s , the I s su er, Ac qui r e r a nd Me r c ha nt m us t i nt e r a c t t o pr oc e s s a nd c om

pl e t e the tr a ns a c t i on. Th e Mer chant’ s c om

pu te r s cann er s f

i r s t “ r ea d” the “ Cardho lder I nform a t i on” c ont a i ne d in the m a gne t i c s tr i pe on the ba c k of Visa cards a s they

ar e s wiped throu gh the fam il iar te rm inal at the c he c kout
. The Me r c ha nt the n s e nds the pe rt i ne nt

a c c ount info rm at ion t

hrou gh the Visa network t o the Is suer . Th e I ss uer
rev iew s th e C ard h o ld er In f o r ma t i o n an d , assu m in g th e card is
va l i d wi th s uffi c i e nt

a va i l abl e c r e di t, th e I s s ue r author i z e s theVisa of fers bo th cr edit

cards and debit c ar ds. Since 1 th e d istin ctio n is n o t relev an t h ere, w e w ill sim p ly ref er to “cred it card s.” 7 tr ansa ct ion, and so n otifie s the Merchant. Up on re ce iving that not i fi c a t i on, th e M e r c ha nt c om pl e t e s the tr a ns a c t i on wi th the
c a r dhol de r , a nd the n forwa r ds the r e c e i pt t o the Ac qui r e r

who pay s the Merchant pursuant t o t h ei r ag re em ent. Th e Acquirer the n not i fi e s the I s s ue r tha t pa y m e nt ha s be e n r e c e i ve d, a nd the Is suer pay s the Acqu ir er

and charges t

he cardho lder
. Vi s aha s c r e a t e d a n e xt e ns i ve s e t of “ Ope r a ti ng Re gulatio ns ” t o both gove rn a nd fa c i l i t a t e tr a ns a c t i ons in v o lv in g V i sa card s. T h o se R eg u latio n s ad d ress v irtu ally 1
ev ery asp ect o f

th e V isa p ay

m en t sy stem , an dimp o se b o th ge ne r a l a nd s pe c i fi c r e qui r e m e nt s on pa rt i c i pa nt s i n the
ne twork. T h e d isp u tes in th ese ap p eals c en ter o n certain8 s e c ur i ty r e gul a t i ons i nc l udi ng the Ca r dhol de r I nform ation S ecu rity P ro g ra m (“C IS P ”). T h e C IS P p ro v isio n s ap p ly to Issu ers an d A cq u irers an d in clu d e b ro adsecu rity req u irem en ts in ten d edto p ro tect C a rd h o ld er In f o rm atio n . T h o se
r e qui r e m e nt s i nc l ude apr ohi bi t i on a ga i ns t r e t a i ni ng or

s t or i ng the da t a e nc ode d i n the fa m i l i a r m a gne t i c s tr i pe on the ba c k of cred it card s, i.e ., Cardho lder Info rm at ion, afte r a

consum er tran sactio n is co m

p leted
. On e prov is ion of the Op er atin g R eg u la ti o n s, enti tl ed “Enf orce m ent, ” d efines procedures by wh ic h V is a c an enfo rc e
c om pl i a nc e wi th the Ope r a t i ng Re gul a t i ons . Tha t pr ovi s i on
ex p ressly allo w s V isa to tak e sp ecif ied rem ed ial actio n s ag ain st M em b ers w h o d o n o t co m

p ly w ith th e O p eratin g R eg u latio n s, incl ud ing levying f

ines and p enal ti es . Enf

orce m ent ac ti on s c an be appeal ed to Visa ’s Bo ar d of Dir ec tors , bu t t h e B o ar d’s de c i s i on i s fi na l
. The Ope r a t i ng Re gul a t i o n s g ive Vi s a , a ndA “ c ha r ge ba c k” i s the r e t urn of atr a ns a c t i on fr om the 2 Is suer to the Acquire r, som et im es beca use the Is suer ’s c us t om e r ha s adi s put e wi th the Me r c ha nt or be c aus e the cu sto m er d o es n o t reco g n ize th e tran sactio n . A 9 onl y Vi s a , the r i ght

t o i nt e r pr e t a nd e nfo rce th e Ope r a t i ng R e g u l a t i o n s , a n do n l y

V i s ac a n d e t e rm i n e w h e th e r av i o l a t i on of the Ope r a t i ng Re gul a t i ons ha s oc c urr e d. The Ope r a t i ng Re gul a t i ons a lso i m pos e e xt e ns i ve
s e c ur i ty r e qui r e m e nt s on I s s ue r s a nd Ac qui r e r s . Se c t i on 2. 3 of th e O p eratin g R eg u latio n s req u ires Issu ers an dA cq u irers to
en su re th at th eir ag en ts, serv ice p ro v id ers an dM erch an ts
co m p ly w ith th e O p eratin g R eg u latio n s. The Vi s a Ope r a t i ng Re gul a t i ons a l s o in c l ude
co m p reh en siv e p ro v isio n s f

o r reso lv in g d isp u tes b etw een V isa
m e m be r s . The s e pr ovi s i ons allo w m e m be r s t o c ha l l e nge di s put e d c ha r ge s thr ough “ c ha r ge ba c k” an d r e pr e s e ntm e nt pr oc e dur e s , i n a c c or da nc e wi th r i s k a l l oc a t i on judgm e nt s m a de

2“ r e pr e s e ntm e nt ” i s the I s s ue r ’ s or i t s a ge nt ’ s c ha l l e nge t o a c ha r ge ba c k; i t

i nvol ve s r e s ubm i s s i on of i t s r e s pons e t o the ch arg eb ackw ith ad d itio n al in f o rm atio n . 10 by Visa . Dis pu te s a

bo ut the use of

these procedures ar e
r e s ol ve d by

a r bi tr a t i on. Fi na l l y , the Ope r a t i ng Re gul a t i ons a l s o i nc l ude “Com plia nce” prov is ions that apply wh en a Mem

ber’ s violat ion o f a Regu lati on ca uses a financi al lo ss to another Mem ber who cann ot be m ade wh ole by re sort ing to chargeback
or r e pr e s e ntm e nt
. For

e xa m pl e , a l os s r e s ul t i ng fr om

fr audul e nt char ges usin g stolen data is al loca te d to the Is suer . How ever , th e Issu er m ay u se th e C o m p lian ce p ro ceed in g s to sh if t th at lo ss to the Acquire r i f it r es ulte d f rom the Acquire r’ s violati on of an Oper a t i ng Re gul a t i on. The Com pl i a nc e pr ovi s i ons do not el im inat e any

ri gh ts a Mem

ber m ay have to pu rs ue any

le gal
re m edie s that m ay

otherwis e be avail able
.11 P u rsu an t to th eir M em

b ersh ip A g reem en ts w ith V isa, all M em b ers o f th e V isa n etw o rk in clu d in g In su rers an dA cq u irers,
a gr e e t o be bound by

the O p er a t i ng Re gul a t i ons . I n a ddi t i on, b ef o re an A cq u irer can en ter in to a M erch an t A g reem en t w ith
aMe r c ha nt , the Ac qui r e r m us t fi r s t de t e rm i ne tha t

the Me r c ha nt will abide by the Op er at ing Regulat ions. Given the im po rt ance atta ched to un iform

com pliance, an Acqu ir er ’s init ia l d eterm in atio n is d eem edin su f f icien t. R ath er, an A cq u irer m u st
a gr e e t o e ns ur e c ont i nue d c om pl i a nc e wi th the Ope r a t i ng Re gul a t i ons . Fi na l l y , the Ac qui r e r m us t ha ve a M e r c ha nt Agr e e m e nt

wi th each of i t s Me r c ha nt s . The Me r c ha nt Agr e e m e nt s m a y ge ne r a l l y c ont a i n wha t e ve r

e xtr a ne ous pr ovi s i ons the Ac qui r e r

a nd Me r c ha nt

a gr e e upon, but , the Agr e e m e nt

m us t , a t am i ni m um , c ont a i n the pr ovi s i ons of Sect ion 5 .2 of

the Operat ing R egulat ions. Th ese dis pu te s i nvol ve § 5
. 2
. h. 3. b. Tha t

s ubdi vi s i on pr ohi bi t s aMe r c ha nt fr om12 re ta ining o r s tori ng Card h o ld er Info rm at ion after

an Is suer authoriz es a transac ti on . Like al l Vis a Mem bers , Fifth Th ir d’s pr e de c e s s or

a gr e e d t o be bound by the Vi s aOpe r a t i ng Regu lati on s and By -Laws, wh ic h are incorporat ed by re ference in to th e M em

b ersh ip A g reem en t. T h e seed s th at sp ro u tedth is litig atio n w ere sew n in Fe br ua ry 2004, whe n Vi s ai de nt i fi e d apot e nt i a l c om pr om i s e of ele c t r o n ically

sto redC ard h o ld er In f

o rm atio n p ertain in g to
ce rt ai n V is a c ar ds is sued by So vere ign, P S E C U and o ther financia l inst it

utions. Elec tr on ic data on som e cr edit cards had been copied and u se d to fra ud ulentl y ob ta in go od s and se rvic es af ter card h o ld ers h ad u sed th e card s at v ario u s B J’s sto res. V isa
re spon ded b y

is suing a “CAM S al ert” to po te ntia ll y affecte d Is suer s. Su ch CA MS al erts no ti f y V is a m em

bers that Ca r dhol de r

I nform a t i on m a y

ha ve be e n c om

pr om ise d. The CA MS al ert h er e notifie d the Is suer s that Vis a c ar ds wh ic h h adTh e a le rt is pu re ly info rm at ional and do es no t m ean 3 that the a cc ou nts l is te d h ad been com prom is ed. Fifth Th ir d claim s th at an Issu er h as d iscretio n in ch o o sin g h o w it w ill r e s pond t o aCAMS a l e rt
. I t c a n r e s pond by

m oni t or i ng the a ffe c t e d a c c ount s for

fr audul e nt

a c t i vi ty , c a nc e l l i ng the ac coun ts and rei ss uing new V is a c ar ds, or t aking o ther m e a s ur e s ba s e d on the pot e nt i a l for fr aud. 13 b een p ro p erly

p resen tedf

o r p ay m en t at B J’s s to res f

ro m Ju ly 2 0 0 3 th ro u g h F eb ru ary 2 0 0 4 h ad b een co m p ro m isedan dco u ld b e u sedto m ak e f

rau du len t p u rch ases. Sove r e i gn r e s ponde d t o the Fe br ua ry 2 0 0 4 a l e rt

by
c a nc e l l i ng s om e Vi s ac a r ds a nd i s s ui ng ne w Vi s a c a r ds t o the af f ectedcard h o ld ers. S o v ereig n claim s th at th e f rau dw as o n ly 3 pos s i bl e be c aus e BJ ’ s i m pr ope r l y r e t a i ne d a nd s t or e d the Ca r dhol de r

I nfor m a t i on fr om

i t s c us t om e r s ’ c a r d s in st e a d of dele ti ng th e dat a i mm edia te ly afte r a sa le s transac ti on was
c om pl e t e d, a s r e qui r e d by

Vi s aOpe r a tin g Re gul a t i on § 5. 2. h. 3. b. I n Sove r e i gn’ s vi e w, BJ ’ s fa i l ur e t o c om pl y wi th the14 req u irem en ts o f

§ 5 .2 .h .3 .b . b reach eda du ty o w edto So vere ign. So vere ign f

urther co n te nd s that Fifth Th ir d f ai le d to com ply with the Opera ti ng Regu lati on s by fail ing t o ensure th at B J’s co m

p liedw ith § 5 .2 .h .3 .b
. Ac c or di ng t o Sove r e i gn, BJ ’s fa i l ur e t o de l e t e the Ca r dhol de r

I nform a t i on m a gne t i c a l l y s t or e d i n Vi s ac a r ds , a nd Fi fth Thi r d’ s fa i l ur e t o e ns ur e tha t BJ ’ s c om

pl i e d wi th § 5. 3. h. 3. b, a l l owe d th e u n author i z e d a nd fr audul e nt us e of C ard h o l de r

I nfor m at i on . S o v ereig n m ain tain s th at it w as leg ally obl i ga t e d t o r e i m

bur s e i t s c a r dhol de r s for the resu lt i ng f rau du len t ch arg es, an dth at it in cu rredex p en se s , a n dlo st i nc om e a nd fe e s fr om

doi ng s o. Thi s pur

port e dl y i nc l ude d the cost s of iss uing re plac em ent cards to Cardho lder s (i n an eff ort to m it igat e fu rther loss es ), and l oss of go od will of it s c ustom er b ase. Af te r i t dis covered the breac h o f sec urity of Cardho lder15 In f o rm atio n th at h ad b een retain edin B J’s sy stem , P S E C U also
can celedap p ro x im ately 2 0 ,0 0 0 V isa card s th at it h adissu edto it s m em bers wh o h ad used th e c ar ds at BJ’s . I t t

hen rei ss ued Visa cards with n ew acc ou nt nu m bers and n ew Cardho lder In f o rm atio n at a co st o f

ap p ro x im ately

$ 9 8 ,0 0 0
. II. Sov e r e i

gn Bank v

. BJ’ s Whol es al eCl ub and Fi f t h Thi rd Bank ( No. 06- 3392) On J a nua ry

10, 2005, Sove r e i gn s ue d Fif th Thi r d a nd BJ ’ s i n s t a t e co u rt ass e rt i ng ac l a i m for ne gl i ge nc e , br e a c h of
co n tract, an d eq u itab le in d emn if icatio n ag ain st each d ef

en d an t. The s ui t wa s br ought

t o r e c ove r

the l os s e s tha t

r e s ul t e d fr om

the fr audu le nt

us e of Ca r dhol de r s ’ I nform a t i on, l os t fe e s a nd
co mm issio n s, th e v alu e o f th e una ut hor izedp u rch ases an dsales,
an dth e co st o f

rep lacin g V isa card s. BJ’s and F ifth Th ir d rem o v ed the a ct ion to the Un it edThe di s tr i c t c ourt ha d jur i s di c t i on pur s ua nt t o 28 4 U. S. C. § 1332. 16 Stat es Distri ct

Co urt for the Eas te rn Distri ct of Penn sylvania
. 4 Venu e was subsequently tr ansfer re d to the Un it ed Stat es Di s tr i c t Court for the Mi ddl e Di s tr i c t of Pe nns y l va ni a t o a l l ow
c ons ol i da t i on wi th Pe nns

y lv ani a S t a teE m pl oy e es Cr e di t

Uni on v. F ifth T h ird B a n k a n d

B J’s Wh o lesa le C lu b , In c. Tha t a c t i on had b ee n b roug ht by

the PSE CU to re cover the cost s i t i ncurred in re plac ing its m em

bers ’ Vis a c ar ds th at had b ee n
co m p ro m isedb y

th e f rau d
. F o llo w in g th e tran sf

er, B J’s an d F if

th T h i r d sep arately
m o v edto d ism iss th e cl a i ms ag ain st th em p u rsu an t to Fe d. R. Ci v. P. 12( b) ( 6)
. The di s tr i c t c ourt de ni e d BJ ’ s m ot i on on the negligence cl ai m , bu t grante d i t on the brea ch o f co ntra ct
an deq u itab le in d emn if

icatio n claim s. T h e co u rt g ran tedF if th Thi r d’ s m ot i on on the ne gl i ge nc e a nd e qui t abl e i nde mni fi c a t i on17 claim s, b u t d en ied it o n th e b reach o f co n tract claim
. Sov e r e i

gn Ba nk v. BJ’s Wholes ale Club, Inc. , 39 5 F
. Supp . 2d18 3 ( M. D. P a. 2 0 0 5 ). F if th T h irdm o v edf

o r reco n sid eratio n o n th e so le
r e m a i ni ng c l a i m for br e a c h of c ontr a c t
. Sove r e i gn’ s br e a c h of contra ct cl ai m is base d o n a thir d-party or inte nd ed beneficiary th eo ry an d d ep en d s, in p art, up o n w h eth er F if th T h irdan dV isa in ten d edto g iv e S o v e r e i g n en f o rceab le rig h ts u n d er th eir sep arate co n tract ev en th o u g h S o v erei g n i s n o t a p arty to it. Ul t i m a t e l y , the di s tr i c t c ourt c onve rt e d Fi fth Thi r d’ s m ot i on for
r e c ons i de r a t i on i nt o am ot i on for s umm a ry

judgm e nt

a nd
o rd eredt h e p arties to co n du ct d isco v ery o n th e th ird -p arty b en ef iciary issu es, i.e ., wh et h er Fifth T hird’s contra ct ual obl i ga tio n t o Vi s at o c om pl y wi th the Vi s aOpe r a t i ng Re gul a t i ons wa s i nt e nde d t o be ne fi t I s s ue r s l i ke Sove r e i gn. I n the m e a nt i m e , Sove r e i gn fi l e d a n a m e nde d c om pl a i nt18 a s s e rt i ng c l a i m s a ga i ns t BJ ’s f o r ne gl i ge nc e , br e a c h of fid u ic iary du ty and p rom is sory

es topp el . The am ended
co m p lain t restatedth e b reach o f co n tract claim

ag ain st F if

th Th ir d and added a cla im

fo r prom is sory es topp el . Fifth Th ir d
an dB J’s ag ain m o v edto d ism i s s t h e claim s u n d er Ru le 12 (b)( 6), and the dist

ri ct court dism is se d all cl ai m s a gainst BJ’s and d is m is sed all cl ai m s a gainst Fifth T hird exce pt the bre ac h
o f co n tract claim
. So ve re ign Ban k v. BJ’s Wholes ale Club, Inc. , 42 7 F . Sup p. 2d 52 6 (M.D. Pa. 200 6). I n a c c or da nc e wi th the di s tr i c t c ourt ’ s or de r

di r e c t i ng l i m i t e d di s c ove ry

on the thi r d- pa rty

be ne fi c i a ry

i s s ue s , the pa rt i e s e xc ha nge d pa

pe r di s c ove ry

a nd took the de pos i t i on of Visa ’s desi gn at ed re pres enta ti ve, Ale x M il le r. Af te r dis covery
w as co m p leted , th e d istrict co u rt g ran ted su mm ary j u d g m en t in f a v o r o f F i f th T h i r do n th e th i r d

- p a rty b e n e f i c i a ry c l a i m, hol di ng th a t

S o v e r e i g n w a s n o t

a n i n t e n d e db e n e f

i c i a ry o f the19 V isa-F if th T h ird M em

b er A g reem en t. So ve re ign B an k v . BJ’ s Wholes ale Club , I

n c. , 2006 W L 1722398 ( M. D. Pa
. June 16, 20 06 ). Thi s a

p p eal fol l owe d. W i th r e s pe c t t o Fi fth Thi r d, Sove r e i gn a

ppe a l s onl y

the di s tr i c t

c ourt ’ s Rul e 12( b) ( 6) dism is sa l of its equita

ble i nd em nifica ti on cl ai m and the distri ct
co u rt’s g ran t o f su mm ary

j u d g m en t in f

av o r o f F if th T h irdo n its br each o f

c ontr a c t c l a i m . W i th r e s pe c t

t o BJ ’ s , Sove r e i gn ap p eals o n ly th e d istrict co u rt’s Ru le 1 2 (b )(6 )’s d ism issal o f its
n eg lig en ce an deq u itab le in d emn if icatio n claim s. W e di s c us s e a c h of Sove r e i gn’ s a r gum e nt s i n t urn. A. So vere ign’s Bre ach o f C on tr act Claim Ag ainst Fifth T h ird . As not e d, Sove r e i gn’ s c ontr a c t c l a i m i s ba s e d on the theory that it is a th ir d-party

benefici ar

y of Fifth T hird’s Me m be r Agr e e m e nt

wi th Vi s a . As a l s o not e d, tha t a gr e e m e nt20 req u iredF if

th T h ird to en su re th at B J’s co m p liedw ith th e V isa Ope r a t i ng Re gul a t i ons , and § 5. 2. h. 3. b. of tha t a gr e e m e nt pr o h i b i t s M e r c h a n t s f

r o m r e t a i n i n g C a r d h o l d e r

I n f o rm a t i o n. Sove r e i gn c ont e nds tha t

Fi fth Thi r d breach ed tha t c ontr a c t by
n o t en su rin g B J’s co m

p lian ce. Hist oric al ly , und er P en n sy lvania law, “i n o rder

fo r a th irdp arty

b en ef iciary to h av e stan d in g to reco v er o n a co n tract, bo th contra ct ing p arti es m ust have e xp re ss ed an inte ntion that the thi r d- pa rty

be abe nefi c i a ry , a nd tha t i nt e nt i on m

us t ha ve affirm at ivel y

appeare d in the contra ct it se lf.” Scarpit ti

v. Web o rg , 609 A.2d 14 7, 1 4 9 (P a. 19 92 ) ( ci tati on om itte d). Sove r e i gn a

ppr opr i a t e l y

c onc e de s tha t

i t i s not a n e xpr e s s thi r dp arty b en ef iciary o f th e V isa

- F i f

t h T h irdM em

b er A g reem en t. Howe ve r , i n S

ca rp itti , the Penn sylva

ni a Su pr e m e Co ur

t a dopted § 3 0 2 o f th e R estatem en t (S eco n d ) o f C o n tracts. Id
. Th at prov is i on a l l ow s a n “ i nt ended b enefic iary” t o rec ov er fo r bre ac h21 of c ontr a c t

e ve n though the a c t

ua l pa rt i e s t o the c ontr a c t

di d not
e xpr e s s a n i nt e nt

t o be ne fi t

the th ird pa rty . Se c t i on 302 p ro v id es as f

o llo w s: Inte nd ed and Incidental Benefici ar ie s ( 1) Unless othe rwi s e a gr e e d be twe e n pr om i s or and p rom is ee , a

benefici ar

y of a prom is e i s an in ten d edb en ef

ic i a r y if reco g n itio n o f

a rig h t to p erf o rm an ce in th e b en ef

iciary is a p p ro p riate to effectuat e the inte ntions of the parti es and either (a ) the perform ance of the p rom is e w il l s at is fy an ob l i g a t i o n o f th e p r o m i s e e t o p a y m o n e y t o t he be ne fi c i a ry ; or (b) the ci rc um st ance s indica te that the p ro m is ee i nt e nds t o gi ve the be ne fi c i a ry the be ne fi t

of the prom is ed perform ance . ( 2) An i nc i de nt a l be ne fi c i a ry i s a be ne fi c i a ry who i s n o t a n i n t e n d e db e n e f

i c i a ry. Unde r § 302, Sove r ei gn’ s c ontr a c t c l a i m de pe nds on
w h eth er th e “ r e c o g n itio n o f a rig h t to p erf

o rm an ce” in S o v ereig n “is ap p ro p riate to ef f ect u a t e th e in ten tio n s o f

” b o th Vi s aa nd Fi fth Thi r d i n e nter i ng i nt o the i r m e m be r a gr e e m e nt
a nd whe the r

“ the circu m s t a nc e s i ndi c a t e tha t ” Vi s a( the22 pr om i s e e ) “ i nt e nd[e d]” t o gi ve Sove r e i gn “ the be ne fi t of the prom is ed perform ance .” As no te d ear li e r , t

he di s t r i c t c ourt conv erte d F ifth Th ir d’s Ru le 12 (b)( 6) m otion to d is miss to a m otion f or summ ar

y ju dg m ent and ordered l im it ed disc ov er y . T he ensuing d is covery i nc l ude d pr oduc t i on of num e r ous d o cu m e nt s a s we l l a s the depo si ti on of

Visa ’s desi gn at ed re pres enta ti ve, Ale x M il le r. Fi fth Thi r d r e l i e s i n pa rt on Mi l l e r ’ s t e s t i m ony tha t he wa s not
a wa r e tha t Vi s a i nt e nde d t o c r e a t e adi r e c t r i ght of e nfor c e m e nt
un der the Op er at ing R egulat ions am on g M em bers an d h e has
n ev er seen a d o cu m en t th at w o u ld allo w a M em b er “to step in to Vi s a ’ s s hoe s unde r

i t s c ontr a c t

wi th oth er m e m

be r s ” a nd enfo rc e the Op er at ing R egulat ions. Mil le r t es ti fied in part as f o llo w s: [T]he c or e pur

pos e of the Ope r a t i ng Re gul a t i ons i s t o s e t up the c ondi t i ons for pa rt i c i pa t i on i n the sy st em , t o set

up th e r ules and stand ar ds that23 ap p ly to th at u ltim ately

f o r th e b en ef

it o f th e V isa p ay m en t sy stem , t h e mem

b ers th at p articip ate in it an do th er stak eh o ld e rs su ch as card h o ld ers, m e r c ha nt s , a nd othe r s who m a y pa rt i c i pa t e i n the sy stem as w ell. Fifth T h ird f

urther contends that

Mill er al so m ade i t c le ar

that the Ope r a t i ng Re gul a t i ons ’ pr ohi bi t i on a ga i ns t r etai ni ng Cardho lder

Info rm at ion, wh ic h Fifth Th ir d c la im s was e nact ed lo n g af te r i t en teredin to its ag reem en t w ith V isa, w as n o t to b e n e f i t a n y i ndi v i dual

m em ber or cla ss of

m em be rs. Rather,
acco rd in g to M iller: [ t] h e p u rp o se o f

th e C IS P p ro g ram

. . . i s to m axim iz e the value t o the Visa sy st em as a who le
. Th at can include the prote ct ion o f any enti ty that m a y be i nvol ve d in th e us e or – or ha ndl i ng of cardho lder

data , s o it’ s t o p rotect a c ar dh older, th e p riv acy

o f th eir in f o rm atio n , to p ro tect th e ir co n f idence in using the Visa

sy st em , t o p rote ct issu ers, to p ro tect acq u irers, to p ro tect m erch an ts; and b y cr ea ti ng a s y st em that

protec ts cardho lder da ta, ge ne r a l l y

i t ’ s t o m a xi m i z e the us a ge a nd v alu e o f th e V isa p ay

m en t sy stem

f o r all o f th o se p articip an ts.24 Mi l l e r wa s a s ke d wh e the r , e ve n tho ug h the r e m a y have been
m ul t i pl e pur

pos e s for r e qui r i ng the Ac qui r e r

t o e n s ur e M e r c h a

nt
co m p lian ce w ith th e reg u latio n s, at least o n e su ch reaso n w as to p ro tect Issu ers. M iller resp o n d edas f o llo w s: T h e p art o f

y o u r q u esti o n I ’ m

stru g g lin g w ith is t o s a y w h eth er th at w as th e p u rp o se o r n o t. I th in kI su mm arizedw h at th e p u rp o se w as. One o f th e e n t i t i e s th a t i s i m p a c t e d b y

t he Cardho lder

In fo rm at ion P rogram

is is suer s, as we l l a s a c qui r e r s , m e r c ha nt s a nd c a r dhol de r s . So my unde r s t a ndi ng wa s the pur pos e wa s not d irectedat a n y

o n e o f th o se en tities b u t to m a xi m i z e th e v alue of the s y s t e m i n pr ot e c t i ng card h o ld er in f

o rm atio n f

o r all o f th e p articip an ts.
Fi na l l y , Fi fth Thi r d not e s tha t i n r e s pondi ng t o aque s t i on about whe the r Vi s ai nt e nde d t o gi ve Issu ers the be ne fi t of the Ac qui r e r ’ s c om

pl i a nc e wi th the CI SP, Mi l l e r t e s t i fi e d: Vi s ade s i gne d the C I SP pr ogr a m t o be ne fi t

the Vi s a s y s t e m a s a whol e , t o dr i ve c onfi de nc e i n the inte grity of the Vis a s y st em , to d ri ve great er , g r e a t e r e f f i c i e n c y, t o d r i v e c a r d h o l d e r s e c u r i ty,25 an dto d o th at f

ro m req u irem en ts th at ap p ly to all Vi s am e m

be r s tha t de s i gne d ul t i m a t e l y t o yi e l d a m o re ef f icien t sy stem

o n b eh alf

o f all th o se p articip an ts. I n s um , Fi fth Th ird c ont e nds tha t Mi l l e r ’ s de pos i t i on t e s t i m ony c l e a r l y s hows tha t

the i nt e nt o f the Ope r a t i ng Re gul a t i ons , a nd m or e pa rt i c ul a r l y the pr ohi bi t i on on Me r c ha nt reten tio n o f

C ard h o l d e rIn f

o rm atio n , is to b en ef

it th e V isa sy stem as a w h o le an dn o t S o v ereig n o r an y p articu lar Issu er in p articu lar. A cco rd in g ly , F if th T h irdarg u es th at it is en titledto
su mm ary j u d g m en t o n S o v ereig n ’s b reach o f co n tract claim
. Sove r e i gn r e s ponds tha t the r e i s age nu in e is s ue of
m at er ia l fac t a s t o V is a’ s i ntent which precl ud es summ ar y ju dg m ent. So vere ign n otes that in Au gu st

19 93 , Visa

wrote a
m em o ran du m

en titled“R eten tio n o f M ag n etic-S trip e D ataTh e m em orandu m was wri tt en by

Vincent La Pagli a, 5 V isa’s V ice P resid en t, C ardO p eratio n s. 26 Pr ohi bi t e d. ” The m e m or a ndum de s c r i be d ane w s e c t i on of the 5 Op er at ing R egulat ions proh ibit ing th e s tora ge of m agneti cstrip e d ata, i.e ., Cardho lder Info rm at io n . It re ad in part as f o llo w s: To pr ot e c t

the Vi s as y s t e m

a nd I s s ue r s fr om pot e nt i a l fr aud e xpos ur e c r e a t e d by da t aba s e s of m agneti c- stri pe info rm at ion, Section 6 .21 h as be e n r e vi s e d. Effe c t i ve Se p tem be r 1, 1993, the reten tio n o r sto rag e o f m ag n etic strip e d ata su b seq u en t to th e au th o rizatio n o f a tran sactio n is proh ibit ed. Acquirer s ar e obligat ed to ensure that the i r m e r c ha nt s do n ot

s t or e the m a gne t i c - s tr i pe i nform a t i on fr om

Vi s a Ca r ds for

a ny s ubs e que nt use. So ve r e i gn c on t e nd s tha t thi s Au gu s t 19 93 m e m or a ndum s ho ws that Visa un ders tood and cle ar ly

inte nd ed that Is suer s s uch as Sove r e i gn ( a nd PSECU) woul d obt a i n di r e c t be ne fi t s fr om the
r e qui r i ng m e m

be r s t o e ns ur e tha t

m a gne t i c - s tr i pe da t awa s not27 r e t a i ne d. So vere ign f

urther contends that other e vidence obtai ned from V is a sho ws that

Visa expres sl y

un ders tood and intended tha t the pr ohi bi t i on woul d pr ovi de di r e c t be ne fi t s t o I s s ue r s a nd th at th e ty

p e o f h arm su f f eredb y S o v ereig n w as sp ecif

ically i nt e nde d t o be a voi de d by c om pl i a nc e wi th the pr ohi bi t i on. Visa pu blis hed an on -l ine art ic le enti tl ed “I ss uers and A cquire rs Are At Ris k When M ag n et ic -S tr ipe Dat a I s Store d,” i n M ay 2 0 0 3 . T h e a r t i cle statedth at th e C IS P “w as estab lish edto pr e c l ude ac om

pr om i s e tha t

co u l d l e a d t o the dupl i c a t i on of
v alidm ag n etic-strip e d a t a o n co u n terf eit o r altered card s,” b ecau se su ch a d ata co m p ro m ise “im

p acts Issu ers, A cq u irers, card h o ld er g o o d w ill an dth e in teg rity o f th e p ay

m en t sy stem .” So v e r e i gn s ubm i t s tha t

thi s a rt i c l e i s a ddi t i ona l e vi de nc e tha t the proh ibit ion against re ta ining C ar dh older I nf orm at ion con ta ined in th e m ag n etic strip w as in ten d edto d irectly b en ef it Issu ers.28 Fi na l l y , Sove r e i gn r e l i e s on the fol l owi ng e xc ha nge du rin g M iller’s d ep o sitio n : Q: [b y Fifth T hird’s coun se l] Is it fair to say that th e o p eratin g reg u latio n s are n o t in ten d edto b en ef it a sin g le g ro up o f

p articip an ts, b u t th e V isa pay m ent s y st em

as a who le ? Obje c t i on. Le a di ng. A : [ b y M iller] It’s f

air to say th at th e co re p u rp o se of the ope r a t i ng r eg u l a t i ons i s t o s e t up the cond it ions fo r par ti ci pati on in the s y st em , t o set up rule s and st andards that a pp ly to that ul t i mat e l yf or t he be ne f i t of th e V i s a pay me nt s y s t e m, t he me mbe r

s th a t p ar t i c i

pat e i n i t and o th er sta keh o ld ers su ch as ca rd h o ld ers, me r c hant s and ot he r s who maypar t i c i

pat e i n t he system a s w ell . ( em

ph as is added). Q: Th ey m ay have som e incidenta l b enefit ; i s that co rrect? Obje c t i on Le a di ng, a nd c a l l s for

al e ga l c onc l us i on. A : T h e b y law s an d o p eratin g reg u latio n s, b y th eir t e rm s , a ppl y onl y t o m e m

be r s . So t o t

he e x t e nt y o u m e a n t

h e ym i g h t h a v e b e n e

f i t s b e y o n d t he29 rules t ha t app lyto other s take ho lder s, that’s co rrect. T

h ey’re n o t

d irectly p a rties to th ese ru les. ( e m

pha s i s a dde d) So vere ig n ar gu es that , des pite the bes t e ff orts of Fifth T hird’s
c ouns e l , the i t a l i c i z e d port i on s o f Mi l l e r ’ s t e s t i m ony dem on stra te that

Visa un ders tood that

Is suer s a re m ore than in cid en tal b en ef

iciaries o f th e M em

b er A g reem en ts. R ath er, it
s hows tha t

Vi s ae xpr e s s l y

unde r s t ood tha t

othe r c l a s s e s of p articip an ts, su ch as Issu ers, w ere in ten d edan df o reseeab le be ne fi c i a r i e s of aMe m

be r Agr e e m e nt , e ve n though the y a r e not p arties to a p articu lar ag reem en t. So v erei gn al so ar gu es that in granti ng summ ar

y j u d g m en t to F if

th T h ird , th e d istrict co u rt d idn o t ap p ly w ellsettledsu mm ary

j u d g m en t stan d ard s. R ath er, a cco rd in g to Sove r e i gn, the di s tr i c t c ourt a c t e d l i ke a fa c t - fi nde r by we i ghi ng
co n f lictin g o r am

b ig u o u s ev id en ce an dma k in g cred ib ility d eterm in atio n s. T h e d istrict co u rt ex p lain ed :30 In th e f ace o f th is ev id en ce o f

V isa’s in ten t [ i.e., Mi l l e r ’ s de pos i t i on t e s t i m ony ], we do not be l i e ve th at th e sin g le A u g u s t 1 9 9 3 ref eren ce to benefitt ing iss uers no r the am bigu ou s “ core p u rp o se” statem en t i

s s uf f i c i e nt e v i de nc e t o l e ad a r e as onabl e j ur

yt o f i nd f or [ Sov er e i gn] on t he c on tr ac t c lai m. 20 06 WL 17 22 39 8 a t *1 2 ( em ph as is added). It f

u rt h er
c omm e nt e d: I t c a nnot be di s put e d tha t

Sove r e i gn be n e f

i t s fr om the pr ohi bi t i on on the r e t e nt i o no f m a g n e t i c - s tr i pe d ata. It is p ro b ab l y also tru e th at as an issu er it ha s the gr e a t e s t

ne e d for s uc h apr ohi bi t i on, a nd b en ef its th e m o st f

ro m it, sin ce its card h o ld ers’ in f o rm atio n is at riskif

a m erch an t o r o th er en tity r e t a i ns s uc h da t a s o tha t i t i s s ubje c t t o the ft
. But o n e e s s e n t i a l p a rt

o f th e t e s t f o r th i r d

- p a rtybenefici ar

y st at us is that the prom is ee , here Visa , m u s t h a v e i n t e n d e d t o b e n e f i t th e th i r dp a rty. T h e re is su

fficien t evid

en ce o n su m m a ry j udgme nt t o s tat e t

hat Vi s a had no s uc h i nt e nt . I n su m , as F if

th T h ird arg u es, S o v ereig n is at m o st an i nc i de nt a l be ne fi c i a ry of the m e mber agre em ent between Visa and Fifth Th ir d, and an inci dental beneficiar y has no right to enfo rc e a c ontr a c t , no m a t t e r how gr e a t a s t a ke it m i ght ha ve i n doi ng s o.31 Id . (em p h asis ad d ed ). We disa gree with So vere ign’s c la i m t ha t t he di s t r i ct court did n ot apply

well -s ettl ed summ ar

y ju dg m ent s tand ar ds. I n Sal dana v

. Kmar t

Cor p. , 260 F.3d 22 8 ( 3dCi r . 20 01 ) , we d iscu ssedth e f

am iliar p rin cip les g o v ern in g su mm ar y j u d g m en t: When revi ewing an o rder g ranting summ ar y j u d g m en t, w e ex ercise p len ary rev iew an dap p ly the s am e t es t a d is tr ic t c ou rt applie s. Un der F ed eral Ru le o f C iv il P ro ced u re 5 6 (c), th at test is wh ether there is a genuine is sue of m ater ia l fac t an d , if n o t, w h eth er th e m o v in g p arty is en titledto j u d g m en t as a m atter o f

law . In so d ecid in g , a co u rt m u st v iew th e f

acts in th e lig h t m o st f av o rab le to th e n o n m o v in g p arty an dd raw all in f e r e n ces in th e p arty ’s f

av o r. A co u rt sh o u ld f in df o r th e m o v in g p arty

if th e p lead in g s, de pos i t i ons , a ns we r s t o i nt e rr oga t o ri e s , a nd ad m issio n s o n f

ile, to g eth er w ith th e af

f id av its, if a ny , s how tha t the r e i s no ge nui ne i s s ue a s t o a ny m at er ia l fac t and that the m ov ing par ty is enti tl ed to j u d g m en t as a m atter o f law . T h e p a r ty oppos i ng s umm a ry

judgm e nt m ay

not r e s t upon th e m ere alleg atio n s o r d en ials o f th e p lead in g ; its re sp on se , by

affidavits or as otherwis e provided i n thi s t i t l e , m

us t s e t forth s pe c i fi c fa c t s s howi ng th at th ere is a g en u in e issu e f o r trial. The r e i

s no32 is sue f or tr ial unles s t

here is suff

ic ie nt ev idence fa vo rin g th e n o n m o vin g p a rty fo r a ju ry to retu rn a ver d ic t f or that pa rt

y. Su ch affi rmativ e e v i de nc e – r e

gardl es s of

whe t he r i t i s di r e c t or c i r c ums tant i al

– mus t amount t o mor e t

han a s c i nt i l la , b u t

m a ya m o u n t

t o l es s (

i n t he ev alua ti on of the c ou rt

) than a p re

po nderan ce . Id . at 231
- 32 ( c i t a t i on s om i t t e d) ( e m ph a s i s a dd e d)
. I n a

l a t er case, I n r e CI TX Cor p. , 44 8 F
. 3d67 2, 67 7 ( 3dCi r . 20 06 ) , we
c o mme n t e dth a t

“ t o s u rv i v e s u mma ry

j u d g m e n t

o n h i s c l a i m .

. . [a no nm ov a nt ] m

us t pr es ent s uf fi c i e nt e vi de nc e t o a l l ow a
reaso n ab le j u ry

to f in din h is f

av o r.” Mo re ov er , i n o ne of

the l ea ding , and of

t- ci te d, summ ar

y j u d g m en t stan d ardcases, An ders on v. Libert y L ob by, I

nc. , 477 U.S. 24 2 (19 86 ), the Sup re m e Cou rt no ted th at “[b] y

it s ver y t e rm s , ” Ru l e 5 6 ( c ) “ p r o v i d e s th a t th e m e r e e x i s t e n c e o f s om e al le g ed fact

ual dis pu te betwee n the part ie s wil l not defeat an
o th erw ise p ro p erly

sup p o rtedm o tio n f

o r su mm ary

j u d g m en t; th e r e qui r e m e nt

i s tha t the r e be no ge nui ne i s s ue of m a t e r i al33 fact .” Id
. a t

247- 248 ( e m

pha s i s i n or i gi na l )
. T h e Court we nt on t o e xpl a i n: As t o m a t e r i a l i ty , the s ub s t a nt i ve l a w w i l l i de nt i fy w h ich f acts are m aterial. O n ly

d isp u tes o v er f

acts th a t m i gh t a ff e c t the ou t c om e of

the s ui t un de r gove rni ng l a w wi l l pr ope r l y pr e c l ude the e ntry of summ ary ju dg m e nt
. Fa c t

ua l di s pu t e s tha t

a re irrelev an t o r u n n ecessary w ill n o t b e co u n ted
. ********** Mo re im po rt ant for prese nt pu rp o se s, summ ar y j u d g m en t w ill n o t l ie if th e d isp u te ab o u t a m at er ia l f ac t is “ genu ine, ” that i s, if the e vidence i s s uc h tha t

ar e a s onabl e jury

c oul d return a v e r d i c t f o r th e n o n m o v i n g p a rty. Id . at 2 4 8
. T h erefore , the di s tr i c t c ourt di d not e rr i n r e fe rr i ng t o a “r e a s on abl e ju ry ” or

“ s ub s t a nt i a l e vi de nc e ” i n i t s s um m ary j u d g m en t an aly sis. H o w ev er, ev en th o u g h w e d o n o t ag ree w ith S o v ereig n ’s co n ten tio n th at th e d istrict co u rt m isstatedth e ru le fo r g ranting summ ar

y ju dg m ent, we agree that the c ou rt34 m is applie d tho se princi pl es and erroneously grante d summ ar

y j u d g m en t. In o rd er to b e an in ten d edb en ef iciary o f th e V isa-F if

th Thi r d M em

be r Agr e e m e nt , Sove r e i gn ha s the bur de n of p ro du cin g , in ter a lia , su f f icien t ev id en ce th at V isa in ten d edto give it the benefit of the Fifth Third’s prom is e to Visa to ensure that BJ’s com

plie d w it

h the prov is ion o f the Mem ber Ag re em ent prohibiti n g M er chants from re ta ining C ar dh older I nform a t i on. W e be l i e ve tha t Sove r e i gn m e t

tha t bur de n. We d o n o t, h o w ev er, reg ard th e M ay 2 0 0 3 o n -lin e article enti tl ed “I ss uers an d A cquire rs Are At Ris k When M agneti cStri pe Is Stored” a s i nd ic at ive of an i ntent to benefit a parti cular Is suer such as So vere ign o r PS EC U. Th at arti cl e s im

ply st at es the re as on fo r the proh ibit ion against re te ntion o f C ar dh older I nform a t i o n , v iz
. , ada t ac om pr om i s e tha t

c oul d r e s ul t

fr om sto rag e o f

m ag n etic-strip e d ata “im p acts Is su ers, A cq u irers,35 cardho l de r

good will , and the i ntegri ty of the s y st em .” Ho wever, we do beli eve that Visa ’s Au gu st 19 93 m em orandu m , e ntit le d “Ret enti on of

M agneti c- Stri pe Date Proh ibit ed,” and M il le r’ s

“ c or e pur pos e ” de pos i t i on t e s t im o n y r a i s e age nui ne i s s ue of
m a t e r i a l fa c t r e gar di ng the i nt e nt of the Vi s a a nd Fi ft h T hird Me m be r A gr e e m e nt
. Tha t

wa s s uffi c i e nt

t o pr e c l ude the gr a nt
o f s u mma ry j u d g me n t

o n S o v e r e i g n ’ s b r e a c h o f c o n tr a c t c l a i m. I n hi s de pos i t i on, Mi l l e r t e s t i fi e d tha t the c or e pur

pos e of the Ope r a t i ng Re gul a t i ons wa s t o be ne fi t the Vi s asy stema nd

“ the m e m be r s tha t pa rt i c i pa t e i n i t
. ” Adm i t t e dl y , a ny i ndi c a t i on
o f an i n t e n t b y

V isa to sp ecif

ically b en ef it Issu ers is arg u ab ly
un derm ined by Mill er ’s re ference s to “other shar eholders such
a s c a r dhol de r s , m e r c ha nt s a nd othe r s who m a y pa rt i c i pa t e i n the sy st em as well .” No nethel es s, his t es ti m on y cl earl y sugg es ts an inte nt by Visa to benefit I ss uers . An argum ent t o the contrary is t a nt a m ount

t o c l a i m i ng tha t

s i nc e Vi s ai nt e nde d t o be ne fit36 ev ery o n e w h o w as p art o f th e V isa sy stem , it d id n o t sp ecif ically in ten dto b en ef

it an y o n e. H o w ev er, th e f act th at it in ten d edto b en ef it sev eral M em

b ers o r classes o f M em

b ers d o es n o t n eg ate the possi bili ty

that it inte nd ed to benefit i nd ividual I ss uers such as S o v ereig n . Moreo v e r , a s r e c i t e d e a r l i e r , the Augus t 1993
m em o ran du m

p ro v id es, in rel e v an t p art: “T o p ro tect th e V isa
s y s t e m a nd Issu ers fr om

po t e nt i a l fr aude xp os ur e cre at e d by databas es of

magne t i c - s trip e i nf

ormat i on . . . . Acqu ir er s are obl i ga t e d t o e ns ur e tha t the i r m e r c ha nt s do not

s t or e the
m a gne t i c - s tr i p e i nform a t i on fr om Vi s aCa r ds for

a ny
s ubs e que nt

us e . ” (emp ha s i s a dde d)
. Thus , the m e m or a ndum
c l e ar l y s t a t e s th a t A c q u i r e r s m u s t a c t t o p r o t e c t I s s u e r s by
ensu r i ng that

the i r Me r c hant s do no t

r e t a i n C a r dh ol de r In f o rm atio n . A cco rd in g ly , th e A u g u st 1 9 9 3 m em o ran du m is
s uf f i c i e n t e v i d e n c e b y

i t s e l f t o c r e a t e ag e n u i n e i s s u e ab o utA f ter o ral arg u m en t, co u n sel f o r F if th T h irdsen t a 6 l e t t e r t o the Cl e rk, pur s ua nt

t o Fe d. R. App. P. 28(

j) , i nform i ng he r of ade c i s i on of the Uni t e d St a t e s Di s tr i c t Court for the Di s tr i c t of Ma s s a c hus e t t s i n In re T JX Co m p a n ies R eta il Se c ur i t yBr e ac h Li t i

gat i on , 5 2 4 F . S up p . 2 d8 3 (D . M ass. 2 0 0 7 ), a case th at is f

actu ally id en tical to th e tw o ap p eals b ef o re u s. T JX is th e M erch an t in th at case an dF if th T h irdis the Ac qui r e r . I n TJX

, a pu tati ve cl as s of Iss uers as se rt ed thi r d- pa rty

be ne fi c i a ry

c l a i m s a ga i ns t

Fi fth Thi r d a r i s i ng fr om a d ata secu rity

b reach relatin g to u n au th o rizedaccess to V isa Cardho lder

Info rm at ion ret ai ned b y

TJX. Th e dis tr ic t c ou rt d ism issedth e th ird -p arty

b en ef iciary claim s p u rsu an t to Fe d. R. Ci v. P. 12( b) ( 6) , hol di ng tha t i n as e c t i on of the Ope r a t i ng Re gul a t i ons , Vi s ae xpr e s s l y i nt e nde d t o pr e c l ude thir d-party

benefici ar ie s. 52 4 F . Sup p.2d at 89 . How ever , tha t s e c t i on of the Ope r a t i ng Re gul a t i ons i s i n al a t e r ve r s i on of the Operat ing R egulat ions adop te d after the e vents that o ccu rredh ere. A cco rd in g ly , In re TJX is n o t at all h elp f

u l to 37 w h eth er V isa in ten d edto g iv e S o v ereig n th e b en ef it o f F if th Thi r d’ s pr om i s e t o Vi s at o e ns ur e B J’s c om pl i a nc e wi th the p rovi s i ons of the Vi s a - Fi fth Thi r d Me m be r Agr e e m e nt. Th er efore, we wil l r ever se the dist ri ct court’ s grant of

summ ar y judgm e nt t o Fi fth Thi r d on the br e a c h of c ontract c l a i m a nd
r e ma n df o r f u rth e r p r o c e e d i n g s o n th a t

c l a i m. 6o u r an aly sis. Th e s tand ar d o f revie w f

or a dis m is sa l und er 7 F ed .R .C iv .P . 1 2 (b )(6 ) is d e n o v o . Phi l l i ps v . Count

yof Al l e ghe ny , 5 1 5 F .3 d2 2 4 , 2 3 0 (3 dC ir. 2 0 0 8 ). We m u st r e vi e w the c om

pl a i nt i n l i ght of the Supr e m e Court ’ s de c i s i on i n B ell A tla n tic Co rp . v. T w o m b ly , U. S. , 127 S. Ct
. 1955 ( 2007) a nd our

r e c e nt opi ni on i n Phi l l i

ps v . Count

yof Al l e ghe ny , su p ra , both o f w hich were i ss ued after t he distri ct c ourt ’ s de c i s i on. I n T

w o m b ly , a n a n t i tr

u s t c a s e , th e S up r e me Court r e je c t e d the l a ngua ge i n Conl e yv . Gi bs on , 355 U. S. 41, 4 5 -4 6 (1 9 5 7 ), th at a d istrict co u rt m ay n o t d ism iss a c om pl a i nt “ un l e s s i t

a pp e a r s be y on d d ou

bt tha t the pl a i nt i ff can p ro v e n o set o f

f acts in sup p o rt o f

h is claim w h ich w o u ld e n t i t l e h i m t o r e l i e f

. ” I n r e j e c t i n g th a t

l a n g u a g e , th e S up r e me C o u rt ex p lain edth at th e alleg atio n s o f th e co m p lain t sh o u ld “p lau sib ly

su g g est[ ] ” th at th e p lead er is en titledto relief
. 38 B
. S o v ereig n ’s E q u ita b le In d em n if ica tio n C la im s A g a in st F if th T h ird a n d B J ’s. A s n o ted , B J’s an dF if

th T h irdsep arate ly

m o v edto d ism iss th ese eq u itab le in d emn if icatio n claim s p u rsu an t to Ru le 12( b) ( 6) , a nd the di s tr i c t

c ourt gr a nt e d both m ot i ons. 395 F. Su p p . 2d 18 3 (M.D. Pa. 200 5). Sov er ei gn contends that was
er ror. 7I n Phi l l i ps , ac a s e br ou gh t

un de r 42 U. S. C. § 1 98 3, we h eldth at T

w o m b ly ’s “p lau sib ility ” stan d ardis n o t restrictedto anti tr ust c as es . 515 F.3d at

23 4. Althou gh we comm ente d that the e xa c t bo un dar i e s of T

w o m b lya r e no t

y e t kn ow n, we readit to m ean th at “[ f

] actu al alleg atio n s m

u st b e en o u g h to ra is e a ri gh t t o rel ie f abo ve the s pecula ti ve le vel. ” Id
. ( quot i ng T

w o m b ly , 1 2 7 S
. C t
. a t

1 9 6 5 )
. P u t

a n o th e r w a y, “‘ st at ing . . . a c la im

re qu ir es a c om

plai nt with enou gh fact

ual m atte r ( taken as true) to sugg es t’ the r equire d ele m ent. ” Id
. ( quot i ng T

w o m b ly , 1 2 7 S .C t. at 1 9 6 5 ). T h e co m p lain t m u st st at e “ ‘e no ug h f

ac ts to ra is e a

re as on able expect at ion that disc ov er y will re veal evidence of’ the neces sary el em ent. ” Id
. ( quot i ng T

w o m b ly , 127 S.Ct. at 196 5). “ Th at is to say , there m u st b e so m e sh o w in g su f

f icien t to j u stif

y m o v in g th e case bey on d the plea ding to the next s ta ge of li ti gati on .” Id . a t 2 3 4 -3 5
. I n Wi lk er son v. New Media T

ec hn olog y Cha rter Scho ol, I nc. , 522 F.3d 31 5, 32 2 (3dCir. 20 08 ), we exte nd ed
“ our hol di ng i n Phi l l i

ps t o the e m

pl oy m e nt di s c r i m i na t i on c ont e xt
. The pl aus i bi l i ty pa r a di gm

a nnounc e d i n T

w o m b ly a p p l i e s w i th e q u a l f

o r c e t o a n a l y

z i n g th e a d e q u a c y

o f c l a i ms of e m pl oy m e nt di s c r i m i na t i on. ” W e s e e no r e a s on why T w o m b ly ’ s pl aus i bi l i ty

s t a nda r d doe s not

a ppl y t o the co m p lain t b ef o re u s n o w .
39 I nd e m ni fica ti on is “a

fault s hifting m ec hanism .” S ir i anni40 v. Nu gent Bros., Inc. , 5 0 6 A .2 d8 6 8 , 8 7 1 , (P a. 1 9 8 6 ). Th e r ight of

indemnity

re st s upo n a diff

er ence be twe e n the pr i m a ry

a nd the s e c onda ry

l i abi l i ty of two pe r s ons e a c h of whi c h i s m a de r e s pons i bl e by the l aw to an in

j u re d party . I t i s a

ri gh t which e n u r e s t o ap e r s o n w h o , w i th o u t a c t i v e f au l t on hi s own pa rt , ha s b een c om pe l l e d, by

r e a s on of som e l egal ob li gati on , t o p ay dam ag e s oc c a si on ed by t he n e g l i g e n c e o f

a n o th e r , a n df

o r w h i c h he him se lf is on ly

se cond ar il y

li able . The diff

er ence b etw een p rim ary

liab ility an dseco n d ary

liab ility

. . . de pe nds on adi ffe r e n ce in the c ha r a c t e r or k in do f th e w ro n g s w h ich cau se th e in j u ry an din the na t ur e of the l e ga l obl i ga t i on owe d by e a c h of th e w ro n g d o ers to th e in j u redp erso n . . . . [S ]econd ar

y as dist ingu is hed f

rom prim ar y l i abi l i ty r e s t s upon a faul t tha t i s i m put e d or con st ru ct ive only , bei ng base d o n som e l egal r e l a t i o n b e tw e e n th e p a rt i e s , o r a r i s i n g f r o m s o me pos i t i ve r

ul e of c omm on or

s t a t ut ory l a w or beca use of a fail ure to disc ov er or corr ec t a defect or r e m e dy a da nge r ous c ondi t i on c aus e d b y the ac t of the on e pri m ar il y

re spon si ble. Build ers Su

ppl yCo. v . Mc Cabe , 77 A .2d 3 68 , 370 , 371 (Pa. 1 9 5 1 ) (em

p h asis o m itted ). S o v er ei g n cl ai ms a r ig h t t o in d emn if ic at io n b ec au se B J’s41 and F ifth Th ir d are prim ar il y li able (pre sum ably

to So vere ign’s
c a r dhol de r s ) ba s e d on the i r ne gl i ge nt l y

a l l owi ng the r e t e nt i on
o f th e C ard h o ld er In f

o rm at io n . S o v ereig n b eliev es th at it is
o n ly seco n d arily

liab le b ecau se o f th e o p eratio n o f th e T ru th in Lend ing Act (“TILA”), 15 U.S.C. § 16 43 (a ), (d), wh ic h cre at es
a c ei li ng of $5 0 f

or cardho lder

li abil it y fo r unautho ri ze d ch arg es. S o v er e i g n claim s th at its statu s o f seco n d ary

liab ility
a r i s e s be c aus e , w h en ac r e di t c a r d pur c ha s e i s m a de , the
cardho lder ’s ac coun t is char ged, or debite d, within day s for that pur c ha s e a nd i t

be c om e s the c a r dhol de r ’ s obl i ga t i on t o pa y the ch arg es in cu rred ; th is is tru e ev en if th e p u rch ase is f rau du len t. Howe ve r , onc e a c a r dhol de r be c om e s a wa r e of fr audul e nt
ac tivity on his/ her a cc ou nt and n otifie s the card Is suer , that I s s ue r i s obl i ga t e d t o r e ve r s e the c ha r ge s , o r cred it the
c a r dhol de r , for

the a m ount

of thos e fr audul e nt

c ha r ge s l e s s $50,42 u n d er th e T IL A . T h u s, alth o u g h § 1 6 4 3 o n its f ace o n ly lim its
ac a r dhol de r ’ s l i abi l i ty , i t c reates a c onc om i t a nt

duty i n the I s s ue r t o r e i m bur s e the c a r dhol de r ’ s a c c ount for a l l fr audul e nt
c ha r ge s i n e xc e s s of the $50 c e i l i ng. So vere ign sub m it s that i ts cardho lder s had al re ady been
c harge d the ful l a m ount

of the fr audul e nt

c ha r ge s be for e the f rau dw as d isco v ered . T h u s, in o rd er to k eep card h o ld ers’ liab ility b elo w t h e $ 5 0 lim itatio n , S o v ereig n w as o b lig atedto
r e i m bur s e the c a r dhol de r

a c c ount s for

the am ount

of the fr audul e nt

c ha r ge s l e s s $50. Ac c or di ng t o Sove r e i gn, thi s i s the prec is e s it

uati on the do ctri ne of

equita ble i nd em nifica ti on was d esig n edto ad d ress. We d isag ree. Sove r e i gn c a n poi nt

t o no author i ty t o s upport i t s a t t e m pt t o for ge a n e qui t abl e i nde mni fi c a t i on c l a i m fr om the pr ovi s i ons of the TILA, and we have fo un d non e. Th e TILA is a c on sum er p r o tectio n statu te. Fa ir le y v . Turan -FoleyImpo rt s, Inc. , 6543 F .3 d4 7 5 , 4 7 9 (5 th C ir. 1 9 9 5 )
. T IL A § 1 6 4 3 d o es n o t im p o se
an y o b lig atio n o n issu ers o f cred it card s to p ay

th e co sts
asso ciatedw ith u n au th o rizedo r f rau du len t u se o f

cred it card s. It sim p ly lim its th e liab ility o f card h o ld ers, u n d er certain circu m stan ces, to a m ax im u m o f $ 5 0 f o r u n au th o rizedch arg es. I nde e d, §1643 doe s not a ddr e s s , nor i s i t e ve n c onc e rne d wi th, the l ia bili ty of an Is suer or any party other than the cardho lder for unauthor i z e d c ha r ge s on ac r e di t c a r d. Se c t i on 1643 i m pos e s l i abi l i ty onl y

upon the c a r dhol de r . Si nc e TI LA § 1643 d o es n o t o b lig ate S o v ereig n to reim b u rse its card h o ld ers’
acco u n ts, th e d istrict co u rt co rrectly d i s mi s s edth e eq u itab le in d emn if icatio n claim s ag ain st F if th T h irdan dB J’s. C . S o v ereig n ’s N eg lig en ce C la im A g a in st B J ’s. Th e dis tr ic t c ou rt

dism is se d S ov er ei gn ’s negligence claim p u rsu an t to F ed . R . C i v . P . 1 2 (b )(6 ) b ecau se th e claim was b arre d b y

the e c on om i c l os s do c tr i ne . 42 7 F
. Supp . 2dat44 533.

“ The Ec onom i c Los s Doc tr i ne pr ovi de s tha t no c aus e of actio n ex ists f

o r n eg lig en ce th at resu lts so lely in eco n o m ic d am ag es u n acco m

p an iedb y

p h y sic a l o r p ro p erty

d am ag e.” Ad am s v . Co op e r

Be ac h T ow nh ome C

om mu ni t i es , L. P. , 816 A .2 d3 0 1 , 3 0 5 (P a. S up er. 2 0 0 3 ). “[ T ] h e E co n o m ic L o ss Doc tr i ne i s c onc e rne d wi th two m a i n fa c t or s : for e s e e abi l i ty a nd li m it at ion o f lia

bili ty .” I d. a t 307 Pe nns y l v a

n i a a p p e l l at e c o ur

t s f i r s t d i s c u s s e d t h i s doc tr i ne i n Ai k e ns v . Bal t i m o re & O hi o R. R. Co. , 501 A.2d 27 7 (Pa. Supe r . 1985)
. The r e , e m pl oy e e s of am a nufa c t

ur i ng c om

pa ny
s ue d ar a i l r oa d c om

pa ny t o r e c ove r wa ge s l os t whe n the i r pl a nt ha d t o c l os e be c aus e of da m a ge in f l i c t e d by ade r a i l m e nt
a l l e ge dl y caus e d by

the r a i l r oa d c om

pa ny ’ s ne gl i ge nc e . The
e m pl oy e e s di d not

s uffe r a ny pe r s ona l i njur i es o r lo s s of pr ope rty . I n a

p p ealing the tr i a l c ourt ’ s judgm e nt on the45 pl e a di ngs i n fa vor

of the r a i l r oa d, the e m

pl oy e e s a r gue d tha t

the Pe nns y l va ni aSu p er i or

Court s houl d r e c ogni z e “ ac aus e of actio n to co m

p e n sate a p arty

su f f erin g p u rely

eco n o m ic lo ss, ab sen t an y d irect p h y sical in j u ry o r p ro p erty

d am ag e, as a resu lt of the ne gl i ge nc e of a nothe r pa rty . ” 501 A. 2d at 2 7 8
. The Su peri or Co ur t d ec li ned the invita ti on ; i nste ad, the court
a dopt e d the ge ne r a l r

ul e s e t forth i n the Re s t a t e m e nt

( Se c ond)
o f T o rts § 7 6 6 C . T h at ru le p ro v id es as f o llo w s: Ne gl i ge nt I nt e r fe r e nc e wi th Contr a c t or Pr os pe c t i ve Contr a c t

ua l Re l a t i on. On e i s not liab le to another for pecuniary harm n o t d e riv in g f

ro m p h y sical h arm

to th e o th er, if th at h arm resu lts f ro m th e acto r’s n eg lig en tly ( a ) c au s i n g ath i r dp e r s o n n o t t o p e r f o rm a c ontr a c t wi th the othe r , or (b ) in terf erin g w ith th e o th er’s p erf o rm an ce o f

h is contra ct or m aking the pe rf

o rm ance m ore e xpe ns i ve or

bur de ns om e , or (c ) inte rfer ing w it

h the others ac qu ir ing a contra ct ual r e l a t i on wi th athi r d pe r s on. Th e S u p eri or

Court not e d tha t

unde r § 766C, “ r e c ove ry

for46 p u rely eco n o m ic lo ss o ccasio n ed b y to rtu o u s in terf eren ce w ith contra ct o r ec on om ic advantage i s not avai la ble und er

a
n eg lig en ce th eo ry .” 5 0 1 A .2 dat 2 7 8 (citatio n o m itted ). A s th e S up erio r C o u rt ex p lain ed , th e “ro o ts o f th is w elles t abl i s he d r

ul e ” r e a c h b a c k t o the U. S. Supr e m e Co ur t ’s de c i s i on i n Robi ns Dr

yDoc k and Re pai r Co. v . Fl i nt , 275 U. S. 3 0 3 ( 1 9 2 7 )
. T h e S up e r i o r C o u rt q u o t e df r o m th e S up r e me Court ’ s de c i s i on i n Fl i nt , in co n clu d in g th at:
n eg lig e n t h arm

to eco n o m ic ad v an tag e alo n e is too rem ote for rec ov er y un der a

negligence theory . The re as on that a plai ntiff canno t r ec ov er s t e m s fr om

the fa c t tha t the ne gl i ge nt a c t or ha s no knowl e dge of the c ontr a c t or pr os pe c t i ve r e l a t i on a nd thus ha s no r e a s on t o for e s e e a ny ha rm t o the p lain tif f’s in terest. 501 A. 2d a t

279. Mor e ove r , a s the S u

p e r i o r C o ur t s tr e s s e d, the r e a r e s ound p u b lic p o licy

reaso n s to co n d itio n to rt reco v ery o n in j u ry to p e r s o n o r p r o p e rty.47 [A]l l owa nc e of ac aus e of a c t i on for ne gl i ge nt in terf eren ce w ith eco n o m ic ad v an t ag e w o u ld c r e a t e a n undue bur de n upon i ndus tr i a l fr e e dom of a ctio n, a nd woul d c r e a t e adi s pr oport i on be twe e n the l a r ge a m ount of da m a ge s tha t m i ght b e reco v eredan dth e ex ten t o f d ef en d an t’s f au lt. See Rest at em ent ( Second ) of T orts Sec. 76 6c, c omm e nt a( 1979)
. To a l l ow a c aus e of a c t i on for ne gl i ge nt c aus e of pur e l y

e c onom i c l os s woul d be to o p en t h e d o o r to ev ery p erso n o r b u sin ess to br i ng a c aus e of a c t i on. Suc h a n o ut s t a ndi ng b u rd en is clearly

in ap p ro p ri a t e an da d an g er to o u r e c o n o mi c s y s t e m. Id
. Ac c or di ngl y , the Supe r i or Cou rt h el d “ tha t

no c aus e of
ac ti on exis ts fo r negligence that ca uses on ly ec on om ic loss .” I

d. I n its n eg lig en ce claim

ag ain st B J’s, S o v ereig n is s e e ki ng to reco v er th e co sts asso ciated w ith rep lacem en t o f so m e o f its
cu sto m ers’ V isa card s an dth e am o u n ts it p a idto reim b u rse
c us t om e r s whos e m a gne t i c - s tr i pe da t awa s us e d for fr audul e nt pur c ha s e s . Sove r e i gn tr i e s t o ge t a r ound the fa t a l l i m i t a t i on of th e eco n o m ic lo ss d o ctrin e b y relyin g o n th e P e n n sy lv an ia Supr e m e Court ’ s de c i s i on i n Bi l t
- Ri t e Contr ac tor s , I nc . v . The48 A rch itectu ra l S tu d io , 866 A. 2d 270 ( Pa
. 2005)
. Sove r e i gn claim s th at Bilt-Rite s e v e r e ly w eak en edth e eco n o m ic lo ss doc tr i ne a s fi r s t

a nnounc e d i n Ai k

e ns v . Ba l t i mo r e & Oh i o R

. R. Co. , s upr a. S o v erei g n f

irst claim s th at th e d istrict co u rt erred in
a s sessin g its lo sses in p u rely eco n o m ic term s, b ecau se it also in cu rreda lo ss o f

p ro p erty , i.e. m on ey , bec ause of BJ’s al le ged
n e g l i g e n c e . T h e a r g u m e n t i s m e r i t l e s s . N o t

s u r p r i s i n g l y, S o v ereig n cites n o au th o rity to sup p o rt its co n ten tio n th at its fi na nc i a l l os s ne gates th e e c onom i c l os s doc tr i ne . I nde e d, the
a r gum e nt woul d t ot a l l y ev is c e r a t e the e c onom i c l os s doc tr i ne b ecau se an y

eco n o m ic lo ss w o u ldm o rp h in to th e req u iredlo ss of prop er ty and there by

fu rnis h the dam ages re qu ir ed fo r a
n e g l i g e n c e c l a i m. S o v ereig nalso a t t e mp t s t o p i r o u e t t e a ro un d th e eco n o m ic l os s do c tr i ne by

a r gu i ng tha t

i t on l y a pp l i e s wh e n the pl a i nt i ff49 h as su f f eredan u n f

o res e e a b l e lo ss, an dth en claim in g th at its l os s wa s c l e a r l y

afor e s e e abl e r e s ul t

of BJ ’ s ne gl i ge nc e . W e do not doubt tha t Sove r e i gn’ s l os s wa s afor e s e e abl e r e s ul t of not tak in g ap p ro p riate p recau tio n s to p ro tect its card h o ld ers’ in f o rm atio n . H o w e v e r , th a t

d o e s n o t a d v a n c e S o v e r e i g n ’s claim to th e e xtent that Sov er ei gn beli eves . W e a gree that the c ou rt i n Ai k e ns d idex p lain th at th e eco n o m ic lo ss d o ctrin e w as p artly the r es ult of a p o li cy consider at ion to n ot im po se loss fo r an
un fo re se ea

ble r es ult. Ho wever, that is of no consequence here b e c au s e S o v e r e i g n d i dn o t i n c u r a n y l o s s o f

p r o p e rty. M o reo v er, S o v ereig n ’s a

r gum e nt i gnor e s t h e th ru st o f

th e p u b lic pol i c y r a t i ona l e xpl a i ne d i n A iken s. Fi na l l y , Sove r e i gn c l a i m s tha t the de c i s i on i n B ilt-R ite Co n t r a cto rs, In c. v. T

h e A rch itectu ra l S tu d io , su p ra , sev erely weakened the ec on om ic loss do ctri ne by perm itti ng negligence claim s to p ro ceedw ith o u t reg ardto eco n o m ic lo ss. T h ere, B ilt-50 Rite , a g en er al contra ct or, e nter ed into a c on struct ion con tr ac t to b u il d a n e w sch o o l f

o r a sch o o l d istrict. In f

o rm u latin g its winn ing b id fo r the contra ct , Bil t- Rite cl ai m ed that it had rel ie d on the dr a wi ngs a nd s pe c i fi c a t i ons pr e pa r e d by a n a r c hi t e c t who ha d be e n hi r e d by

the s c hool di s tr i c t

for the ve ry pur

pos e of p rep arin g d raw in g s an dsp ecif icatio n s th at w ere to b e u sedto pr e pa r e bi ds
. Howe ve r , during the s ubs e que nt c ons tr uc t i on, Bi l t - Ri t e di s c ove r e d tha t s om e of th e r e pr e s e nt a t i ons i n the
s pe c i fi c a t i ons w ere i na c c ur a t e . Bi l t - Ri t e i nc urr e d s i gni fi c a nt
c os t ove rr uns i n a t t e m

pt i ng t o bui l d the bui l di ng, a nd i t s ue d the arch itect f

o r n eg lig en t m isrep resen tatio n to reco v er its lo sses. Th e tri al court s us ta in ed the arc hite ct ’s prel im inar y obje c t i ons ba s e d on the ope r a t i on of the e c onom i c l os s doc tr i ne
a nd the Pe nns y l va ni aSupe r i or Court a ffi rm e d. On a

ppe a l , the P en n sy lv an ia S up rem e C o u rt h eldth at th e e c o n o m ic lo ss doc tr i ne di d not

ba r the c ontr a c t or ’ s n e g l i g e n t m i s r e p r e s e nt a t i on51 a c t i on. Sove r e i gn r e l i e s on the fol l owi ng lan g u ag e fr om the Pe nns y l va ni aSupr e m e Court ’ s m a jor i ty opi ni on: Here , [the c on tr ac tor] h ad no contra ct ual re lati on ship with [the ar chit ec t]; thu s, re covery under a contr a c t

i s not a va i l abl e t o [the con tr ac tor]. Having f

ou nd that [the contrac tor] s t a t e s a v i a bl e c l a i m for ne gl i ge nt m isrep resen tatio n . . . , an d th at p riv ity is n o t a p rereq u isite f

o r m ain tain in g su ch an actio n , lo g ic di c t a t e s tha t

[the c ontr a c t or ] not

be ba rr e d f

rom r e c ove r i ng the d am a ge s i t i nc ur r e d, i f pr ove n. In d eed , t o a p p ly th e eco n o m ic lo ss d

o ctrin e . . . w o u ld b e n o n -sen sica l: it w o u ld a llo w a p a rty to pur s ue an ac t i on onl

yt o hol d t hat , onc e t he e l e me nt s of t he c aus e o

f a ct i on ar e s hown, t

he p a rty is u n a b le to reco ver fo r its lo sses. 8 6 6 A .2 d at 2 8 8 (em

p h asis is S o v ereig n ’s). S o v ereig n attem p ts t o l e ve r a ge thi s e xc e r

pt f ro m the m a jor i ty opi ni on i n B ilt-R ite into a c la im

that applying the ec on om ic loss do ctri ne here
w o u ldb e eq u ally

n o n sen sical. H o w ev er, th is ar g u me n t is
co m p letely w ith o u t m erit. S o v e r e i g n c o n c e d e s th a t “ th e b u l ko f th e S up r e meMor e ove r , i n r e a c hi ng i t s de c i s i on i n B ilt-R ite , the 8 Court a dopt e d the Re s t a t e m e nt ( Se c ond) of Tort s § 552, whi c h i s e nt i t l e d: “ I nform a t i on Ne gl i ge nt l y Suppl i e d for

the G u id an ce o f

O th ers,” an dw h ich p ro v id es:

52 Co u rt’s opi ni on i n Bilt-Rite f o cu ses n o t o n th e eco n o m ic lo ss doc tr i ne , but o n whe the r or not i n the c ont e xt

of ane gl i ge nt
m is re pres enta ti on cl ai m , p la inti ff could est abli sh the e xist ence
o f a du ty o n th e p art o f

th e arch itect ab sen t p riv ity o f co n tract.” So vere ign’s Br. at

42 . Moreover, the dec is ion d id n o t, as So vere ign cla im s, se vere ly weaken the ec on om ic loss do ctri ne. R ath er, th e C o u r t s i mp ly m ad e an ex cep tio n to th e d o ctrin e to al low a comm er ci al plai ntiff rec ou rs e from an “e xp ert s up plie r of info rm at ion” with wh om th e p la inti ff

has no con tr ac tual
re lati o n sh ip, when the plai ntiff h as re li ed on that pers on ’s “sp ecial ex p ertise” an dth e “sup p lier n eg lig en tly m isrep resen ts the i nf orm at ion to ano ther in p ri vity .” 86 6 A .2d at 286 . That is si m ply no t our ca se . Th e Pennsy lvania Su prem e Cou rt never 8( 1) One who, i n the c our s e of hi s bus i ne s s , pr ofe s s i on or em p lo y m en t, o r in an y

o th er tran sactio n in w h ich h e h as a pecuniar y inte re st , s up plie s fal se info rm at ion f or the guidance o f o th ers in th eir b u sin ess tran sactio n s, is sub j ect to liab ility fo r pec un iary

loss ca used to them

by thei r justi fiable re li ance upon the i nform a t i on, i f he fa i l s t o e xe r c i s e r e a s onabl e c a r e or c om pe t e nc e i n obt a i ni ng or

c omm uni c a t i ng the i nform a t i on. (2 ) E x cep t as statedin S u b sectio n (3 ), th e liab ility statedin Su bsec ti on (1) i s l im it ed to loss suff er ed ( a ) by the pe r s on or

one of al i m i t e d gr oup of pe r s ons for whos e be ne fi t

a nd gui da nc e he i nt e nds t o s uppl y the i nform a t i on or

knows tha t

the r e c i pi e nt

i nt e nds t o s uppl y

i t ; a nd ( b) thr ough r e l i a nc e upon i t i n atr a ns a c t i on tha t

he i nt e nds th e in f o rm atio n to in f

lu en ce o r k n o w s th at th e recip ien t so i nt e nds or i n a s ubs t a nt i a l l y

s i m i l a r tr a ns a c t i on. ( 3) The l i abi l i ty

of one who i s unde r

a publ i c duty

t o gi ve the i nform a t i on e xt e nds t o l os s s uffe r e d by a ny of the c l a s s of pe r s ons for

whos e be ne fi t

the duty i s c r e a t e d, i n a ny

of the tr a n s a c t i o n s i n w h i c h i t

i s i n t e n d e dt o p r o t e c t

th e m.

53 s ugge s t e d tha t

i t i nt e nde d t o s e ve r e l y

we a ke n or

unde rm i ne the
ec on om ic loss do ctri ne in a c as e s uch as this. It si m ply carved54 out ana rr ow e xc e pt i on whe n l os s e s r e s ul t fr om the r e l i a nc e on th e ad v ice o f

p ro f essio n als. Th us, the distri ct

court c orre ct ly

held that So v er ei gn ’s
n eg lig en ce claim

ag ain st B J’s w as b arred b y th e eco n o m ic lo ss d o ctrin e. D. CONCLUSI ON Fo r the abov e r ea sons, w e w il l rever se the dis tr ic t c ou rt ’s grant of summ ar y ju dg m ent t o F ifth Th ir d o n S ov er ei gn ’s b reach o f co n tract claim

an drem an df

o r f u rth er p ro c e ed in g s. Howe ve r , we wi l l a f

f irm the di s tr i c t

c ourt ’ s di s m i s s a l of S o v ereig n ’s eq u it a b l e in d emn if icatio n claim s ag ain st F if th Th ir d and BJ’s and its dism is sa l of S ov erei g n ’s negligence claim ag ain st B J’s. III. Penn sy lv an ia State Em ployees Cre dit Union v. Fift h T hird Ba nkan d B J’s Who le sale Club , I nc. ( No. 06- 3405) T he Pe nns y l va ni aSt a t e Em pl oy e e s Cr e di t

Uni on i s theIt ap p ears th at P S E C U w en t th ro u g h th e V isa 9 Com pl i a nc e Pr oc e s s a nd wa s m a de whol e by Fi fth Thi r d for the m on ey

paid to PS EC U’s c ar dh olders as a r es ult of B J’ s r e t e nt i on of the Ca r dhol de r I nform a t i on. PSECU i ni t i a t e d the a c t i on i n s t a t e c ourt , but the 10 c a s e wa s s ubs e que nt l y

r e m ove d t o the Mi ddl e Di s tr i c t of P en n sy lv an ia. A f

ter rem o v al, B J’s f

ileda th ird -p arty 55 Is suer of Visa cards to it

m em bers , Fifth Th ir d is t

he Acqu ir er
a nd BJ ’ s i s the Me r c ha nt
. Aft e r d isco ve r i ng the br e a c h of Ca r dhol de r

I nform a t i on r e t a i ne d i n BJ ’ s s y s t e m , PSECU
cancel ed approx im at el y

20 ,000 of it s V is a c ar ds that had b ee n
us e d a t BJ ’ s . I t the n r e i s s ue d Vi s a c a r ds wi th n ew acc ount
num be r s an d n ew Ca r dhol de r I nform a t i on a t

ac os t of approx im at el y

$9 8,00 0. PS EC U b roug ht this ac ti on to re cover relatedco sts. 9 PS EC U fil ed an am ended com plai nt agai nst Fifth Th ir d
an dB J’s alleg in g b reach o f c o n t ract, n eg lig en ce, eq u itab le indemnifica ti on , and un

ju st enri chm ent. Fifth Third and B J’ s 10com plai nt agai nst I nter

nati on al Bu si ness Machines C o rp o ratio n , (“IB M ”) alleg in g th at IB M ’s so f tw are f ailedto com ply with BJ’s inst

ruct ions no t t o ret ai n C ar dh older I nform a t i on. BJ ’ s s ought t o r e c ove r

da m a ge s PSECU m i ght be awarded in it s s uit a gainst BJ’s . How ever , the distri ct court g ran tedIB M ’s m o tio n to d ism iss B J’s th ird -p arty co m p lain t. C o n seq u en tly , th at m atter is n o t b ef o re u s. 56 se para te ly file d Rule 12(b)(6) m otions to dism is s the am ended
c o mp l a i n t
. T h e d i s tr i c t c o u rt d i s mi s s e da l l o f

P S E C U ’ s c l a i ms agai nst BJ’ s p ursuant to BJ’s 12 (b)( 6) m otion. Th e d is tr ic t c ou rt
a l s o di s m i s s e d a l l of PSECU’ s c l a i m s a ga i ns t Fi fth Thi r d e xc e pt f o r P S E C U ’s b reach o f

co n tract claim
. P en n sylva n i a S t a te Empl oy e es Cr e di t Uni on v . Fi f t h Thi rd Bank , 398 F. Supp. 2d 31 7 (M.D. Pa. 200 5). Af te r l im it ed disc ov er

y , the distri ct

court granted
summ ar y ju dg m ent i n f

avor of Fifth T hird on PS EC U’s bre ac h of c ontr a c t c l a i m , hol di ng tha t PSECU, l i ke Sove r e i gn, wa s not an inte nd ed beneficiary of the Vis a- Fifth T h ir d M em ber57 A g reem en t. Penn sy lv an ia State Emp loye es Cre dit Union v. Fi f t h Thi rd Bank , 2 00 6 WL 17 24 57 4 (M.D. P a. June 16 , 200 6). T h is ap p eal f

o llo w ed
. P S E C U ch allen g es th e g ran t o f su mm ary j u d g m en t to Fi fth T h ir d on PSECU’ s br e a c h of c ontr a c t c l a i m a nd the di s tr i ct c ourt ’ s di s m i s s a l of i t s c l a i m s a ga i ns t Fi fth Thi r d a nd B J’s f o r n eg lig en ce an du n

j u st en rich m en t. A. PS EC U’s Bre ach o f C on tr act Claim Ag ainst Fifth

Thi r d. PS EC U’s bre ac h o f contra ct cl ai m para ll el s Sov er ei gn ’s br e a c h of c ontr a c t

c l a i m tha t we jus t di s c us s e d i n No. 06- 3392. PSECU a s s e rt s tha t i t i s a thi r d- pa rty or i nt e nde d be ne fi c i a ry of F if th T h ird ’s M e mb er A g reem en t w ith V IS A req u irin g F if th Thi r d t o e ns ur e BJ ’ s c om pl i a nc e wi th the Vi s aOpe r a t i ng Regu lati on s. PS EC U rel ie s on the sam e docum entary evidence and d eposit ion tes ti m on y that fo rm ed the basi s of S ov er ei gn ’s58 thir d-party

benefici ar

y cl ai m agai nst Fifth Th ir d. PS EC U’s
ar gu m ents on appeal m ir

ror Sov er ei gn ’s thir d p arty benefici ar

y arg u m en ts, an do u r an aly sis o f S o v ereig n ’s th irdp arty beneficiary

cl ai m th er ef

o re ap p li es w it h eq u al f

o rc e t o P SE CU ’s b reach o f co n tract claim
. A cco rd in g ly , f o r th e reaso n s set f

o rth i n 06- 3392, we wi l l rev e r s e the di s tr i c t c ourt ’ s gr a nt

of
s umm a ry judgm e nt

t o Fi fth Thi r d on P S E C U ’ s br e a c h of
co n tract claim

an drem an df

o r f u rth er p ro ceed in g s. B. PS EC U’s Negli gence Claim s Aga instBJ ’s an d F ifth Thi r d. In ass e r t in g n eg lig en ce claim s ag ain st B J’s an dF if th Thi r d, PSE C U a r g u e s th a t B J ’ s h a dadu ty

t o c o m p l y w i th the V isa O p eratin g R eg u latio n s, an dth at F if th T h ird h ad a du ty

to
en sure co m

p li a n c e . P S E C U a l l e g e dth a t b o th p a rt i e s n e g l i g e n t ly b reach edth eir du ties. T h e d istrict co u rt d ism issedb o th negligence cl ai m s bas ed up on the e co n om ic loss do ctri ne that59 we have a l r e a dy

di s c us s e d i n No. 06- 3392. PS E C U m akes two argum ents in contes ti ng the dis tr ic t
c ourt ’ s a ppl i c a t i on of the e c onom i c l os s doc tr i ne . Fi r s t , PSECU
m ain tain s th at B J’s an dF if th T h ird ’s n eg lig en ce resu ltedin phy s i c a l da m a ge t o PSECU’ s pr ope rty – the Vi s a cards - a nd the doctr ine w as ther efore not applica ble. PS EC U’s theory p ro ceed s as f

o llo w s: BJ’s and F ifth Th ir d’s negli gen ce al lowed u n au th o rizedth irdp arties to access th e m ag n etic stri pe data

from thes e Vis a c ar ds and con vert that data to thei r ow n purpo se s. On ce this cr edit card i nform a t i on wa s i n the ha nds of thi r d pa rt i e s , the asso ciatedV isa card s w ere ren d eredu seless, n ecessitatin g th eir rep lacem en t. [ B J ’ s an dF if th T hi r d’ s ] ne gl i ge nc e , the r e for e , r e s ul t e d i n a ph y si ca l a ct

(third party acces s) wh ic h d am aged ph y si ca l property

(the Visa cards) th at belong ed to P S E C U . P S E C U th eref o r e su f f eredp ro p erty d am ag e as a resu lt o f

[ B J ’ s an dF if

th T h ird ’s] ne gl i ge nc e a nd i t s c l a i m s s houl d not be ba rr e d by the e cono m ic loss do ctri ne. PS EC U’s Br. at

39 -40. We cann ot agre e.60 Ev en if we as sum e ar

gue ndo th at d estru ctio n o f th e V isa
c a r ds c ons t i t

ut e s the k in d o f

pr ope rty da m a ge tha t

c a n be
co m p en s a t edin a n eg lig en ce actio n , P S E C U ’s arg u m en t still fa i l s be c aus e i t

i gnor e s the fa c t

tha t the Vi s a card s w er e not dam aged; they were cancel le d. Th er efore, if th e m agneti cst ri pe data

consti tute s phy si ca l property , PSE CU ’s negligence
c l a i m i s s t i l l not a dva nc e d. The da t a wa s c opi e d, not de s tr oy e d. F u rth erm o re, th e card s th em selv es rem ain ed in tact an du seab le unt i l c a nc e l l e d by PSECU. The fr audul e nt tr a ns a c t i ons ha d no phy s i c al ef

f e c t on e i the r

the c a r ds , the da t ae nc ode d on the
c a r ds , or the m a gne t i c -strip e whi c h c ont a i ne d tha t da t a . The fr audul e nt

a c t i vi ty s i m pl y di d not r e nde r the c a r ds us e l e s s . The
cardho lder s c ou ld continue to use them to m ake purchase s a fter th e in f o r m atio n w as co m

p ro m ised . In d eed , as B J’s n o tes, PS E C U d ee m ed the c ar ds usel es s not beca use they were da m a ge d, but

be c au se P S ECU wa s e xpos e d t o l i abi l i ty for61 unauthor i z e d c ha r ge s . P S E C U de c i de d t o l i m i t tha t e xpos ur e by

c anc e l i ng c a r ds a nd r e i s s ui ng ne w o ne s , but , tha t doe s not estab lish th at P S E C U ’s p ro p erty w as d am ag ed
. S eco n d , P S E C U co n ten d s th at th e e co n o m ic lo ss doc tr i ne doe s not

a ppl y be c aus e the pa rt i e s a r e not i n pr i vi ty of contra ct and the ju st ific at ions fo r a pp li ca ti on of

the doctr ine are not a dva nc e d by i t s a

ppl i c a t i on he r e . PSECU r e l i e s on B ilt-R ite Co n tra cto rs, In c. v. T

h e A rch itectu ra l S tu d io , 8 6 6 A. 2d 270 ( Pa
. 200 5 ). P SECU a l s o a r gue s tha t tha t c a s e c ons t i t

ut e d a

“ s we e pi ng de pa rt

ur e fr om pr e vi ous i ncan tat i ons of the
eco n o m ic lo ss d o c trin e.” P S E C U ’s B r. at 4 3 . A cco rd in g to PSECU, i n Bilt-Rite “the Penn sylvania Su prem e C ou rt held that the e c on om i c l os s do c tr i ne m a y no t a pp l y wh e r e the pl a in t i ff has no avai la

ble c on tr ac t r em edy .” PS EC U’s Br. at 41 It base s th a t a r g u me n t

o n th e f o l l o w i n g e x c e r

p t f r o m B ilt-R ite : P en n sy l v an ia h as lo n g reco g n izedth at p u rely62 e c onom i c l os s e s a r e r e c ove r able in ava r i e ty of to rt actio n s . . . . W e a g ree w ith th at co u rt th at a p la in tiff is n o t b a rred fro m reco verin g eco n o m ic lo sses sim p ly b eca u se th e a ctio n so u n d s in to rt r at he r t han c ontr ac t

law. He r e , Bi l t - Ri t e ha d no contra ct ual r el at ionship with TA S; thus, r ec ov er y un der a contra ct is no t avail able to Bilt -Rit e. H av in g f o u n dth at B ilt-R ite states a v iab le claim f o r n eg lig en t rep resen tatio n . . . an dth at p riv ity is not apr e r e qui s i t e for

m a i nt a i ni ng s uc h a n a c t i on, l og ic di c t a t e s tha t

Bi l t - Ri t e not

be ba rr e d fr om r e c ove r i ng the da m a ge s i t i nc urr e d. 8 6 6 A .2 dat 2 8 8 (em

p h asis is P S E C U ’s). H o w ev er, w e h av e alread y ex p lain edth at Bi l t
- Ri te d id
no t h ol d that

the e c on om i c l os s do c tr i ne m a y no t a pp l y wh e re th e p lain tif

f h as n o av ailab le co n tract rem ed y . A s ex p lain edin So vere ign’s a

pp ea l, the Bi l t
- Rite C o urt s im ply carved-out an
e xc e pt i on t o a l l ow a c omm e r c i a l pl a i nt i ff t o s e e k r e c our s e fr om
an “e xp ert sup plie r o f info rm at ion” with wh om the pla inti ff

has
no c ontr a c t

ua l r e l a t i ons hi p, i n ve ry

na rr o w cir c um s t a nc e s not
r e l e v a n t h e r e . 8 6 6 A
. 2 da t

2 6 8
. T h e P e n n s y l v a n i aS up r e me63 C o u rt em

p h asizedth a t i ts h o ld in g w as lim itedto th o se “busines se s” wh ic h p rovide se rvic es and/or in f o rmat ion that th ey k n o w w ill b e relied up o n b y th irdp arties in th eir b u sin ess endeavors. .
. . ” I

d. A co rd in g ly , th e d istrict co u rt d idn o t err in d ism issin g P S E C U ’s n eg lig en ce claim s ag ain st B J’s an dF if th Thi r d. C . P S E C U ’s C la im s F o r U n ju st E n rich m en t A g a in st

F if th T h ird a n d B J ’s. T h e elem en ts o f

u n j u st en rich m en t u n d er P en n sy lv an ia law h av e b een d ef

in edas f o llo w s: ( 1) be ne fi t s c on fe rr e d o n d e fe nd a nt by pl a i nt i ff ; (2 ) ap p reciatio n o f

su ch b en ef

its b y d ef en d an t; and (3) acc eptance and re te ntion o f such b en ef its u n d er su ch circu m stan ces th at it w o u ld be i ne qui t abl e for

de fe nda nt

t o r e t a i n the benefit witho ut pay

m ent of v al ue. L im b a ch Co . L L C

v. C ity o f P h ila d elp h ia , 905 A. 2d 567, 575 ( Pa
. Commw. Ct
. 2006) ( c i t a t i on om i t t e d)
. The c aus e of a c t i on i s s i m i l a r t o a c l a i m fo r e qu it abl e i nd e mni fi c a t i on tha t we64 d iscu ssedin N o . 0 6 -3 3 9 2 . “T o su stain a c l aim o f u n j u st
e nr i c hm e nt , a c l a i m a nt m us t s how tha t

the pa rty a ga i ns t whom
r e c ove ry i s s ought

e i the r wr ongful l y

s e c ur e d or

pa ssiv ely receiv eda b en ef

it th at it w o u ldb e u n co n scio n ab le f o r h er to
re ta in.” T

o rch ia v. T

o rch ia , 499 A.2d 58 1, 58 2 (Pa. Su per. 19 85 ) H ow ever , a cl ai m fo r unj ust e nric hm ent r equire s m ore th a n as h o w i n g th a t

th e d e f e n d a n t ma y h a v e b e n e f

i t t e d i n s o me
wa y fr om the di s put e d c onduc t. W al t e r v . Mage e - W

ome ns H o sp ., 8 7 6 A .2 d4 0 0 , 4 0 7 (P a. S up er. 2 0 0 5 ). PSECU a r gue s tha t BJ ’ s a nd Fi fth Thi r d be ne fi t t e d fr om PSECU’ s c a nc e l l a t i on a nd r e pl a c e m e nt of its V is ac a r ds b ecau se th e can cellatio n sto p p edth e f r a u d u len t u se o f

th o se card s an dp erm ittedP S E C U ’s m em b ers to resu m e u s in g th eir
c a r ds for r e t a i l pur c ha s e s . PSECU’ s a c t i ons a l s o l i m i t e d the l i abi l i ty tha t BJ ’ s a nd Fi fth Thi r d wou ld o the rwi s e ha ve i nc ur r e d t o P SE CU and it s m e m be r s . Th us , a r gu e s PS EC U,65 B J’s an dF if

th T h ird ’s accep tan ce an dreten tio n o f th e b en ef its
c onfe rr e d wi tho u t c om pe ns a t i on t o PSECU, woul d be in eq u itab le. A cco rd in g ly , B J ’ s an dF if th T h irdw ere u n

j u stly
en rich edb y

P S E C U ’s ca n c e l lin g an drep lacin g its m em b ers’ Visa cards. We cann ot agre e. Th e dis tr ic t c ou rt held that BJ’s and F ifth Th ir d rec ei ved
n o b en ef it f ro m P S E C U ’s can cellin g an dreissu in g o f its
m e m be r s ’ Vi s ac a r ds be c aus e PSE C U repl a c e d the c a r ds pur s ua nt t o i t s c ontr a c t

ua l obl i ga t i on wi th i t s c a r dhol de r s . The di s tr i c t c ourt

r e l i e d on A lleg h en

y G en . H o sp . v. P h ilip M

o rris, In c., 2 2 8 F .3 d4 2 9 (3 dC ir. 2 0 0 0 ), in h o l d i n g th at an y b en ef it th at B J’s o r F if

th T h irdm ay

h av e d eriv ed w as p u rely

in cid en tal,
a n dc o u l dn o t

f o rm th e b a s i s o f

a n u n j u s t e n r i c h me n t

c l a i m. 3 9 8 F . S up p . 2 dat 3 3 1
. I n Al l e ghe nyGe n. Hos

pi tal , a grou p of hospita ls su ed
v ario u s to b acco co m

pa ni e s a s s e r t i ng a n unj u st en rich m en t claim66 f o r u n reim b u rsedm ed ical c a r e th e h o sp itals h adp ro v id edto
n o npa yi ng, di s e a s e d s m oke r s . The hos pi t a l s c l a i m e d tha t “ by p ayin g f o r th e m ed ical serv ices req u iredb y n o n p ayin g p atien ts, the Hospita ls disc harged the T ob ac co Co m panies ’ l egal du ti es
a nd s a ve d the m

fr om be a r i ng c os t s c aus e d by

the i r f raudul e nt
an dw ro n g f

u l co n du ct.” 2 2 8 F .3 dat 4 4 7 . We h eldth at a claim for unjus t e nr i c hm e nt m a y

not be ba s e d on the pe r form a nc e of
an o b lig atio n th at is in d ep en d en tly o w edto th irdp arties: In additi on , s ince the Hospita ls had an in d ep en d en t o b lig atio n to p ro v id e h ealt h c a re to the no np a yi ng pa t i e nt s [thr ough Me di c a i d] , in cid en tal b en ef

it to th e T o b acco C o m

p an i e s is not e nough t o m a i nt a i n a n a c t i on; the nonpa yi ng pati ents get the m ai n b enefit , not the Tob ac co co m p an ies. See Re s t a t e m e nt

of Re s t i t ut i on § 106 ( 1937) ( “ A pe r s on who, i nc i de nt a l l y t o the pe r form a nc e of hi s own duty . . . ha s c onfe rr e d a b en ef it u p o n an o th er, is n o t th ereb y en titledto contri bu ti on .” ). Id
. PSECU’ s unjus t

e nr i c hm e nt cla i m s a ga i ns t BJ ’ s a nd67 F if th T h irdare an alo g o u s to th e h o sp ital’s f ailedu n j u st
e nr i ch m ent

c l a i m a ga i ns t the t oba c c o c om

pa ni e s . PSECU
a t t e m pt s t o di s t i ngui s h Al legh eny by a r gui ng tha t , unl i ke the h o sp itals, it d id n o t rep lace its m em b ers’ V isa card s p u rsu an t to an independ ent obligat ion. H o w ev er , PSE CU ’s am ended
c om pl a in t fa t a l l y unde rm i ne s tha t

c ont e nt i on. The r e , PSECU alleg edt h a tit rep lacedits m em b ers’ V isa card s “to f

u lf ill a
c ontr a c t ua l obl i ga t i on t o i t s c us t om e r s . ” Am
. C o mp l. ¶ 65. Al though PSECU’ s a t t e m pt t o s a l va ge i t s unjus t

enr i c hm e nt
c l a i m now r e qui r e s tha t

i t t a ke ac ontr a ry

pos i t i on, the a l l e ga t i on in th e am en d ed co m

p lain t is a b in d in g j u d icial ad m issio n . See Pa ri ll a v. I APWorl dw ide Serv. , V

I, Inc. , 368 F. 3d 269, 275 ( 3d Ci r . 2004) ( “ Judi c i a l a dm i s s i ons a r e form a l c onc e s s i ons i n the plea din g s, or st ipulat ions by the party or it s c ou nsel , that are bi ndi ng upon the pa rty m a ki ng the m . ” ). A c c or di ngl y , the d i s tr i c t c o u rt p r o p e r l y d i s mi s s e dth e u n

j u s t e n r i c h me n t

c l a i m.68 Fi n all y , PSECU tr i e s t o di s t i ngui s h thi s c a s e fr om A lleg h en y. According to P SE CU , this ca se shou ld be go verned b y th e R estatem en t o f

R estitu tio n § 8 1 , w h ich p ro v id es: Un le ss otherwis e a gree d, a per so n w ho has di s c ha r ge d m or e tha n hi s pr oport io na t e s ha r e of aduty owe d by hi m s e l f a nd a nothe r a s t o whi c h, be twe e n the two, ne i the r ha d apr i or

du ty of pe r form a nc e , i s e nt i t l e d t o c ontr i but i on fr om the othe r , e xc e pt

whe r e the p ay o r

i s ba rr e d by

the w ro n g f u l n atu re o f

h is co n du ct. C o mm en t (b ) o f

f ers th e f o llo w in g g u id an ce: Th e r ul e s t a t e d i n thi s Se c t i on a pp l i e s wh e r e two or m or e pe r s ons a r e i nt e r e s t e d i n a n e nt e r pr i s e out of wh ic h the ob li gati on ar is es , whether as prim ar y or se cond ar

y ob li go rs , and wh er e n ei ther of them wi th r e spe c t

t o the othe r

ha s apr i or

duty of p e r f o rm a n c e , i rr e s p e c t i v e o f th e q u e s t i on whe the r , a s be twe e n the m a nd the c r e di t or , one of them appears to be prim ar il y

re spon si ble. Comm e nt ( c ) e xpl a i ns the l i m i t e d s c ope of § 81: T h e ru le stated in th is S ectio n is lim itedto th o se who a r e pa rt i e s t o a s i ngl e tr a ns a c t i on or s e r i e s of tr a ns a c t i ons . I f the r e i s but one de bt or duty , the f ac t th at th ere are a n u m b er o f sep arate69 agre em ents wh ic h g uarantee it s pe r fo r m a nc e do es not pr e ve nt c ontr i but i on be twe e n a l l the seco n d ary

o b lig o rs. Id . at co mm en t (c). P S E C U arg u es th at it en teredin to th e series o f co n tracts th at m ak e up th e V isa sy stem w ith B J’s an dF if

th T h ird , b u t it d o es n o t h av e an y

“p rio r du ty

o f p erf o rm an ce” w ith in th e V isa sy stem
. P S E C U co n ced es th at it d idalleg e th at it rep lacedits
m em b ers’ card s p u rsu an t t o i t s co n tractu al o b lig atio n s w ith in the Vis a s y st em . How ever , i t s ub m it s that Vis a’ s des ignate d
re p re se n ta ti v e’ s d eposit ion tes ti m on y es tablis hes t hat
c a nc e l l a t i on and r e i s s ua nc e of i t s m e m be r s c a r ds i s onl y

one of
a num ber of options an Is suer m ay take in re spon se to a bre ac h
o f C ard h o ld er In f

o rm atio n b y

a M erch an t o r A cq u irer. Ac c or di ng t o PSECU, thi s e s t abl i s he s tha t i t ha d no ob li gati on to cancel and rei ss ue the c ar ds; ra ther , do ing so w as jus t one of PSECU’ s opt i ons unde r the Vi s as y s t e m . PSECU70 claim s th a t b y

p ro m p tly can cellin g an drep lacin g card s, it protec te d B J’ s and Fifth Th ir d f rom grea te r fra

ud loss es , which
w o u ldh av e b een sh if

tedto F if th T h ird ’s co m

p lian ce p ro cess (an dth en sh if

tedto B J’s f

o r in d emn if

icatio n to F if

th T h ird ). P S E C U co n clu d es th at it, B J’s an dF if th T h irdare all “i nter es te d in an enter

pris e [the Vis a s y st em , and it s a ss ocia te d
n etw o rko f co n tracts] o u t o f w h ich [ o b lig atio n s] arise,” as to
w h i c h n o n e o f

th e th ree h av e a p rio r du ty o f p erf o rm an ce.” PSECU’ s Br
. a t

55 ( quot i ng Re s t a t e m e nt of Re s t i t ut i on § 81,
c omm e nt ( b) )
. I t f u rth e r s a y s tha t by c a nc e l l i ng a nd r e i s s ui ng its m em b ers’ V isa card s, it “d isch arg edm o re th an [ its] p ro p o rtio n ate sh are o f

a du ty o w edb y [ P S E C U , B J’s an dF if

th Thi r d]” “ a s t o whi c h, be twe e n the [thr e e ], ne i the r ha d apr i or du ty of perform ance .” Id

. ( quot i ng R est a t e m e nt of Re s t i t ut i on § 8 1 ). T h eref

o re, P S E C U co n ten d s th at it is en titledto
c ontr i but i on fr om

BJ ’ s a nd Fi fth Thi r d on i t s unjus t e nr i c hm e nt71 theory , r egar dles s of w hether PS EC U, BJ ’s o r Fifth T hird “ap p ea r s t o be pr i m a r i l y r e s pons i bl e ” for

r e i s s ua nc e of Vi sa card s. Id
. ( quot i ng Re s t a t e m e nt of Re s t i t ut i on § 81, c omm e nt (b )). Th is ar gu m ent has som e faci al appeal . How ever , PS EC U d i d n ot

m a ke thi s a r gu m e nt

i n t he di s tr i c t c ou rt , a ndwe the r e for e ne e d not de t e rm i ne i t s m e r i t now. “ Ge ne r a l l y , ba rr i ng
exce pti on a l c i r c um s t a

nc e s, li ke an inte rvening chang e i n the law
or the l a c k of r e pr e s e nt a t i on by a n a t t orne y , thi s Court

doe s not
rev iew issu es raisedf

o r th e f irst tim e at th e ap p ellate lev el.” Gleason v. No rwes t Mortgag e, Inc. , 24 3 F.3d 130 , 142 (3d C ir
. 20 01 ). PS EC U d oes not contend that there ar e excepti on al
c i r c u m s t a n c e s p r e s e n t

h e r e , a n dw e d o n o t f i n da n y. Accordingly , this argum ent h as been waived, and we will re ject i t wi thout di s c us s i on. We co n clu d e th at th e d istrict co u rt d idn o t err in72 dism is si ng PS EC U’s unj ust e nric hm ent c la im agai nst eit her BJ ’ s or Fi fth Thi r d. D. CONCLUSI ON Fo r al l of the a bo ve re as on s, we will re vers e the distri ct court’ s grant of

summ ar y ju dg m ent to Fifth Th ir d o n P SE CU ’s b reach o f c ontr a c t

c l a i m , but

a ffi rm tha t c our t ’ s di s m i s s a l of P S E C U ’s n eg li ge nc e a

nd unjus t e nr i ch m en t claim s ag ain st F if th T h irdan dB J’s.