FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MICHAEL BATEMAN, individually 

and on behalf of all others No. 09-55108

similarly situated, D.C. No.

Plaintiff-Appellant,  2:07-cv-00171-

v. FMC-AJW

AMERICAN MULTI-CINEMA, INC., OPINION

Defendant-Appellee. 

Appeal from the United States District Court

for the Central District of California

Florence-Marie Cooper, District Judge, Presiding

Argued and Submitted

May 4, 2010—Pasadena, California

Filed September 27, 2010

Before: Betty B. Fletcher and Richard A. Paez,

Circuit Judges, and Donald E. Walter, Senior District Judge.*

Opinion by Judge Paez

*The Honorable Donald E. Walter, Senior United States District Judge

for the Western District of Louisiana, sitting by designation. 

16357
COUNSEL

Gregory N. Karasik, Spiro Moss LLP, Los Angeles, California, for plaintiff-appellant Michael Bateman. 

Robert H. Platt, Manatt, Phelps & Phillips LLP, Los Angeles,

California, for defendant-appellee American Multi-Cinema,

Inc.

Adel James Chareq, Hudson Cook LLP, Washington D.C., for

amicus curiae Consumer Data Industry Association.

OPINION

PAEZ, Circuit Judge:

In this Fair and Accurate Credit Transactions Act

(“FACTA”) case, Plaintiff-Appellant Michael Bateman

appeals the district court’s denial of class certification. Bateman sued American Multi-Cinema, Inc., (“AMC”) on behalf

of a class of similarly situated individuals, alleging that AMC

violated FACTA by printing more than the last five digits of

consumers’ credit or debit card numbers on electronically

printed receipts in December 2006 and January 2007. See 15

U.S.C. § 1681c(g) (2005). On behalf of himself and other

consumers who received such receipts, Bateman sought to

recover statutory damages ranging from $100 to $1,000 for

BATEMAN v. AMERICAN MULTI-CINEMA 16361
each willful violation of FACTA. The district court denied

class certification under Federal Rule of Civil Procedure

23(b)(3) (“Rule 23(b)(3)”), finding that a class action was not

the superior method of litigating the case because AMC had

made a good faith effort to comply with FACTA after this

lawsuit was filed and the magnitude of AMC’s potential

liability—$29 million to $290 million—was enormous and

out of proportion to any harm suffered by the class. See Bateman v. Am. Multi-Cinema, Inc., 252 F.R.D 647, 648, 650-51

(C.D. Cal. 2008) (order). Bateman appeals, arguing that the

district court abused its discretion in denying class certification. We agree that none of these three grounds—the disproportionality between the potential liability and the actual harm

suffered, the enormity of the potential damages, or AMC’s

good faith compliance—justified the denial of class certification on superiority grounds and that the district court abused

its discretion in relying on them. We therefore reverse the

denial of class certification and remand for further proceedings.

I

In 2007, Bateman filed a complaint against AMC, on

behalf of himself and those individuals similarly situated,

alleging violations of FACTA. Bateman alleged that from

December 2006 to January 2007, AMC issued credit and debit

card receipts from some of its automated box offices that

included both the first four and the last four digits of the credit

card, a violation of FACTA. To protect against identity theft,

FACTA requires, in relevant part, that credit and debit card

receipts issued to consumers not reflect the expiration date or

more than the last five digits of the card number. See 15

U.S.C. § 1681c(g)(1). FACTA incorporates the Fair Credit

Reporting Act’s (“FCRA”) statutory damages provision,

which allows a consumer to recover damages between $100

and $1,000 for each willful1 violation of FACTA without hav1A “willful” violation under the FCRA includes “not only knowing violations of a standard, but reckless ones as well.” Safeco Ins. Co. of Am. v.

16362 BATEMAN v. AMERICAN MULTI-CINEMA
ing to prove actual damages. See id. § 1681n. In the complaint, Bateman did not allege any actual harm to his identity

resulting from the claimed violations.

After conducting discovery, Bateman filed a motion for

class certification under Rule 23(b)(3). Bateman sought to

certify a class of individuals who, between December 4, 2006,

and January 29, 2007, had used a credit card or debit card to

purchase a movie ticket from an automated box office at an

AMC theater and who received a receipt that included the first

four and last four digits of the person’s credit/debit card number. An AMC internal review conducted after the lawsuit was

filed revealed that more than 290,000 receipts had been

printed in violation of FACTA during the relevant period.

The district court denied Bateman’s motion for class certification without prejudice, concluding that Bateman had failed

to demonstrate that a class action would be superior to other

available methods of adjudicating his claim, as required under

Rule 23(b)(3). In particular, the district court denied certification because, in its opinion, class treatment could result in

enormous liability completely out of proportion to any harm

suffered by the plaintiff. The district court further concluded

that class certification was not appropriate because AMC

demonstrated good faith by complying with FACTA within a

few weeks of the filing of Bateman’s complaint.2

Burr, 551 U.S. 47, 57 (2007). A defendant acts in reckless disregard if the

defendant’s action “is not only a violation under a reasonable reading of

the statute’s terms, but shows that the company ran a risk of violating the

law substantially greater than the risk associated with a reading that was

merely careless.” Id. at 69. That is, the defendant must have taken action

involving “ ‘an unjustifiably high risk of harm that is either known or so

obvious that it should be known.’ ” Id. at 68 (quoting Farmer v. Brennan,

511 U.S. 825, 836 (1994)). Where a plaintiff alleges a negligent violation

of FACTA, as opposed to a willful one, only actual damages are available.

15 U.S.C. § 1681o. 

2Within two weeks of the filing of Bateman’s complaint, AMC modified its machines to comply with FACTA. 

BATEMAN v. AMERICAN MULTI-CINEMA 16363
After denying Bateman’s motion to certify, the district

court approved the parties’ stipulation to stay the case pending the outcome of an appeal in a different case raising an

issue identical to the one presented here. See Soualian v. Int’l

Coffee & Tea, LLC, No. CV 07-0502-RGK (JCx), 2008 WL

410618 (C.D. Cal. Feb. 9, 2008). That case, however, settled

while the appeal was pending. In the meantime, Congress

amended FACTA to address prevalent misunderstandings

about FACTA’s requirements and to provide businesses some

measure of protection from lawsuits resulting from those misunderstandings. See Credit and Debit Card Receipt Clarification Act of 2007, Pub. L. No. 110-241, 122 Stat. 1565 (2008)

(“Clarification Act”). The district court subsequently

instructed the parties to file supplemental briefing on the

appropriateness of class certification in light of that amendment. After considering the supplemental briefs, the district

court denied with prejudice Bateman’s renewed motion for

class certification for largely the same reasons as before,

although the court additionally noted that, because Bateman

had alleged no actual harm, class certification would not further the purpose and policy of FACTA. See Bateman, 252

F.R.D at 650. Pursuant to Federal Rule of Civil Procedure

23(f), Bateman petitioned this court for permission to appeal

the denial of class certification. We granted his request.

II

Under Federal Rule of Civil Procedure 23, “[a] class action

may be maintained if two conditions are met: The suit must

satisfy the criteria set forth in subdivision (a) (i.e., numerosity, commonality, typicality, and adequacy of representation), and it also must fit into one of the three categories

described in subdivision (b).” Shady Grove Orthopedic

Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431, 1437 (2010)

(internal quotation marks omitted). Subdivision (b)(3), at

issue in this appeal, is satisfied if “the court finds that the

questions of law or fact common to class members predominate over any questions affecting only individual members,

16364 BATEMAN v. AMERICAN MULTI-CINEMA
and that a class action is superior to other available methods

for fairly and efficiently adjudicating the controversy.” Fed.

R. Civ. P. 23(b)(3). 

The decision to grant or deny class certification is within

the trial court’s discretion. Yamamoto v. Omiya, 564 F.2d

1319, 1325 (9th Cir. 1977). District courts are “in the best

position to consider the most fair and efficient procedure for

conducting any given litigation,” Doniger v. Pac. N.W. Bell,

Inc., 564 F.2d 1304, 1309 (9th Cir. 1977), and so must be

given “wide discretion” to evaluate superiority, Lerwill v.

Inflight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir.

1978). We thus review for abuse of discretion a district

court’s order denying a motion for class certification. Zinser

v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir.

2001). A district court abuses its discretion when it makes an

error of law. Yokoyama v. Midland Nat’l Life Ins. Co., 594

F.3d 1087, 1091 (9th Cir. 2010). Additionally, in the context

of class certification, “[a]buse exists in three circumstances:

(1) reliance on an improper factor, (2) omission of a substantial factor, or (3) a clear error of judgment in weighing the

correct mix of factors.” In re Wells Fargo Home Mortg. Overtime Pay Litig., 571 F.3d 953, 957 (9th Cir. 2009).

III

The district court refused to certify the class because it concluded that the proposed class failed to meet Rule 23(b)(3)’s

superiority requirement. See Bateman, 252 F.R.D. at 650-51.

At the heart of its ruling, the district court determined that

class treatment would render the magnitude of the defendant’s

potential liability “enormous and completely out of proportion

to any harm suffered by Plaintiff.” Id. at 651. In its first order

denying class certification without prejudice, the court also

considered significant AMC’s good faith efforts to bring its

machines into compliance with FACTA shortly after the lawsuit was filed. We conclude that none of these three grounds

—the disproportionality between the potential liability and the

BATEMAN v. AMERICAN MULTI-CINEMA 16365
actual harm suffered, the enormity of the potential damages,

or AMC’s good faith—justified the denial of class certification and hold that the district court abused its discretion in

relying on them.

A. Proportionality Between Liability and Actual

Harm

The district court denied class certification in part because

it concluded that AMC’s liability would be “completely out

of proportion to any harm suffered by Plaintiff.” Id. at 651.

We therefore must consider whether Rule 23(b) permits consideration of such a factor when deciding whether to certify

a class in a FACTA case. We hold that it does not.

[1] Rule 23 provides little, if any, guidance on this question.3

The rule provides a non-exhaustive list of factors relevant to

the superiority inquiry:

(A) the class members’ interests in individually controlling the prosecution or defense of separate

actions;

(B) the extent and nature of any litigation concerning

the controversy already begun by or against class

members;

(C) the desirability or undesirability of concentrating

the litigation of the claims in the particular forum;

and

(D) the likely difficulties in managing a class action.

3We reserve judgment, however, on whether Rule 23(b)(3) per se prohibits consideration of a defendant’s potential liability in deciding whether

to certify a class. Because we conclude that considering such liability contravenes congressional intent under FACTA, we need not decide that

broader question. 

16366 BATEMAN v. AMERICAN MULTI-CINEMA
Fed. R. Civ. P. 23(b)(3). None of these enumerated factors

appear to authorize a court to consider whether certifying a

class would result in disproportionate damages. A court may

consider other, non-listed factors, however, and we have suggested that a broad inquiry is appropriate:

“Superiority must be looked at from the point of

view (1) of the judicial system, (2) of the potential

class members, (3) of the present plaintiff, (4) of the

attorneys for the litigants, (5) of the public at large

and (6) of the defendant. The listing is not necessarily in order of importance of the respective interests.

Superiority must also be looked at from the point of

view of the issues.”

Kamm v. Cal. City Dev. Co., 509 F.2d 205, 212 (9th Cir.

1975) (quoting Katz v. Carte Blanche Corp., 496 F.2d 747,

760 (3d Cir. 1974)). That list, however, leaves two key questions unanswered: (1) what does it mean to look at superiority

from “the point of view” of a defendant, and (2) can that

inquiry consider whether the defendant’s potential liability is

proportional to the actual harm alleged?

Nor do the Advisory Committee Notes shed any light on

the question. In its Note to Amended Rule 23, the Advisory

Committee explains: 

Subdivision (b)(3) encompasses those cases in which

a class action would achieve economies of time,

effort, and expense, and promote uniformity of decision as to persons similarly situated, without sacrificing procedural fairness or bringing about other

undesirable results.

39 F.R.D. 69, 102-03 (emphasis added). AMC contends that

imposing potential enormous and disproportional liability

would constitute just such “undesirable results.” The Advisory Committee, however, gives no further explanation of

BATEMAN v. AMERICAN MULTI-CINEMA 16367
what constitutes an “undesirable result[ ],” or of whether the

term contemplates only procedurally undesirable results (e.g.,

prejudicing individual plaintiffs’ ability to seek redress) or

also refers to substantively undesirable results (e.g., potentially exposing a defendant to bankruptcy as a result of enormous liability). Cf. Wolin v. Jaguar Land Rover N. Am., LLC,

Nos. 09-55104, 09-55105, 2010 WL 3222091, at *6 (9th Cir.

Aug. 17, 2010) (“Rule 23(b)(3)’s superiority test requires the

court to determine whether maintenance of . . . litigation as a

class action is efficient and whether it is fair.”).

[2] Although neither the Rule nor its legislative history

clearly expresses whether the proportionality between the

actual harm caused and the defendant’s potential liability is a

proper superiority consideration, many courts have assumed

as much. Ratner v. Chemical Bank New York Trust Co., 54

F.R.D. 412 (S.D.N.Y. 1972), was the first and seminal case to

deny class certification for proportionality reasons. There, the

district court denied class certification in a suit against Chemical Bank for disclosure violations under the Truth in Lending

Act (“TILA”). Id. at 413, 416. The plaintiff sought to certify

a class of approximately 130,000 cardholders, each of whom

would have been entitled to at least a minimum statutory damages award of $100 under the statute. Id. at 414. In denying

class certification, the district court concluded that a class

action was not the superior method of adjudicating the claim

because the plaintiff had alleged only “technical” violations,

id. at 416,4 and “the allowance of thousands of minimum

recoveries like plaintiff’s would carry to an absurd and stultifying extreme the specific and essentially inconsistent remedy

Congress prescribed as the means of private enforcement,” id.

at 414.

4Unlike the “technical” violations alleged in Ratner, Bateman has

alleged “willful” violations of FACTA. A “willful” violation is not merely

“technical.” In order to prevail in the lawsuit, Bateman must demonstrate

either a “knowing” or “reckless” violation of the Act. See Safeco, 551 U.S.

at 57. 

16368 BATEMAN v. AMERICAN MULTI-CINEMA
Courts have heavily relied on Ratner’s reasoning for the

proposition that Rule 23(b)(3)’s superiority requirement

authorizes consideration of the proportionality between the

potential damages and the actual harm.5See, e.g., Klay v.

Humana, Inc., 382 F.3d 1241, 1271 (11th Cir. 2004); Kline v.

Coldwell, Banker & Co., 508 F.2d 226, 234-35 (9th Cir.

1974); Wilcox v. Commerce Bank of Kansas City, 474 F.2d

336, 347 (10th Cir. 1973). In the context of plaintiffs seeking

to certify classes in FACTA cases, Ratner’s reasoning has

prevailed in the vast majority of district courts within this circuit. See, e.g., Azoiani v. Love’s Travel Stops and Country

Stores, Inc., No. EDCV 07-90 ODW (OPx), 2007 WL

4811627 (C.D. Cal. Dec. 18, 2007); Vartanian v. Estyle, Inc.,

No. CV 07-0307 DSF (RCx), 2007 WL 4812286 (C.D. Cal.

Nov. 26, 2007); Saunders v. Trattoria, No. CV 07-1060 SJO

(PJWx), 2007 WL 4812287 (C.D. Cal. Oct. 23 2007); Price

v. Lucky Strike Entm’t Inc., No. CV 07-960-ODW (MANx),

2007 WL 4812281 (C.D. Cal. Aug. 31, 2007); Najarian v.

Avis Rent A Car Sys., No. CV 07-588-RGK (Ex), 2007 WL

4682071 (C.D. Cal. June 11, 2007). But see Medrano v. WCG

Holdings, Inc., No. SACV 07-0506 JVS (RNBx), 2007 WL

4592113 (C.D. Cal. Oct. 15, 2007) (certifying a plaintiff class

despite noting the potential for disproportionate and enormous

liability). 

By contrast, the one federal court of appeals to have

addressed this issue in the context of the FCRA rejected Ratner’s reasoning. See Murray v. GMAC Mort. Corp., 434 F.3d

948 (7th Cir. 2006). There, the Seventh Circuit reversed the

district court’s denial of class certification, holding that considering a defendant’s potential enormous liability in the Rule

5

It is somewhat ironic that Ratner has played such a prominent role in

shaping the scope of the Rule 23 superiority analysis. The district judge

there specifically distanced himself from the “sweeping pronouncements”

about the role of Rule 23 made by the respective parties, and instead

emphasized his “molecular purpose” to rule only on the “specific case at

hand.” 54 F.R.D. at 413. 

BATEMAN v. AMERICAN MULTI-CINEMA 16369
23(b)(3) superiority analysis was improper. Id. at 953-54.

Although that case did not involve an alleged violation of

FACTA, the Seventh Circuit’s analysis and conclusion are

instructive because FACTA and other provisions of the FCRA

share the same statutory damages provision, see 15 U.S.C.

§ 1681n. Accordingly, we discuss it in greater detail below.

AMC relies heavily on our opinion in Kline v. Coldwell,

Banker & Co. to defend the district court’s denial of class certification. In Kline, we considered an action brought against

Los Angeles County real estate brokers who had allegedly

conspired to fix brokerage commissions in violation of the

Sherman Act. 508 F.2d at 228. The plaintiffs in that case estimated that, on the basis of 400,000 sales that occurred in Los

Angeles County during the relevant class period, their collective injury potentially amounted to $250 million. Id. at 234 &

n.5. They therefore claimed that they were entitled to approximately $750 million in damages under the treble damages

provision of the Sherman Act. Id. The district court certified

both a class of plaintiffs and of defendants, and an interlocutory appeal followed. Id. at 228-29. We reversed, holding that

the action could not be maintained as a class action and that

the district court abused its discretion in conducting its superiority analysis. Id. at 236. 

Of the three justifications for our holding, one was our significant concern over the amount of damages that might be

imposed jointly and severally on the individual defendants. Id.

at 235. Specifically, we noted that, if the plaintiffs were successful, the defendants in the class would be jointly and severally liable for $750 million. Id. at 234. In reversing, we

reasoned that, “when 2,000 [defendant class members] are

joined in an action in which each is jointly and severally liable, the liability is increased in geometric progression. Such

an award against each of 2,000 real estate broker defendants

would shock the conscience” and lead to an “ad absurdum

result.” Id. at 234-35. We further noted that “ ‘the allowance

of thousands of minimum recoveries like plaintiff’s would

16370 BATEMAN v. AMERICAN MULTI-CINEMA
carry to an absurd and stultifying extreme the specific and

essentially inconsistent remedy Congress prescribed as the

means of private enforcement.’ ” Id. at 234-35 (quoting Ratner, 54 F.R.D. at 414). Thus, we held that a class action was

not the superior method of adjudicating the controversy. Id. at

235.

Kline, AMC argues, created binding circuit precedent that

Rule 23(b)(3) permits consideration of the proportionality of

the potential liability. That is an overbroad reading of Kline.

The basis of Kline’s conclusion was not simply that potential

liability would be disproportional to the harm incurred, but

rather that such liability would be inconsistent with congressional intent in enacting the statutory damages provision. As

Kline explains, the treble damages provisions in the Clayton

and Sherman Acts act as statutory punitive measures in which

“ ‘two thirds of the recovery is not remedial and inevitably

presupposes a punitive purpose.’ ” Id. (quoting Lyons v. Westinghouse Elec. Corp., 222 F.2d 184, 189 (2d Cir. 1955)).

Thus, we concluded:

The intent of Congress under section 4 of the Clayton Act, 15 U.S.C. [§ ] 15, appears to have been to

impose punishment upon the violator of section 1 of

the Sherman Act for his own malefactions[,] not to

subject him to vicarious liability by the coincidence

of a class action for the staggering damages of the

multitude. 

Id. (emphasis added). That conclusion about congressional

intent was particularly sound given that the Clayton and Sherman Acts were enacted before the Supreme Court created the

presumption that class actions are available unless Congress

expressed its contrary intent. See Califano v. Yamasaki, 442

U.S. 682, 700 (1979) (“In the absence of a direct expression

by Congress of its intent to depart from the usual course of

trying ‘all suits of civil nature’ under the Rules established for

that purpose, class relief is appropriate in civil actions brought

BATEMAN v. AMERICAN MULTI-CINEMA 16371
in federal court . . . .”). Accordingly, Congress would not necessarily have expected class actions to be available when it

created the statutory damages provisions in the Clayton and

Sherman Acts, and, unlike here, the Kline panel could not

assume as much. 

[3] The court in Ratner also focused on whether the potentially enormous liability would be consistent with congressional intent in creating the statutory damages provision. See 54

F.R.D. at 414 (“[T]he allowance of thousands of minimum

recoveries like plaintiff’s would carry to an absurd and stultifying extreme the specific and essentially inconsistent remedy

Congress prescribed as the means of private enforcement.”

(emphasis added)). We think it clear that the Rule 23(b)(3)

superiority analysis must be consistent with the congressional

intent in enacting a particular statutory damages provision.

While Rule 23 affords district courts “wide discretion” in

deciding whether to certify a class, Dukes v. Wal-Mart Stores,

Inc., 603 F.3d 571, 594 (9th Cir. 2010) (en banc), the district

court was obliged to exercise that discretion in light of the

objectives of FACTA. Cf. Hecht Co. v. Bowles, 321 U.S. 321,

331 (1944) (holding that, in considering whether to impose an

injunction under the Emergency Price Control Act, the district

court’s discretion “must be exercised in light of the objectives

of the Act”); Thorne v. City of El Segundo, 802 F.2d 1131,

1133 (9th Cir. 1986) (“Although the district court has wide

discretion in fashioning appropriate Title VII remedies, that

discretion must be exercised in light of the objectives of Title

VII . . . .”); see also Albemarle Paper Co. v. Moody, 422 U.S.

405, 416 (1975) (noting that a decision calling for the exercise

of discretion “hardly means that it is unfettered by meaningful

standards or shielded from thorough appellate review”); Watkins v. Simmons & Clark, Inc., 618 F.2d 398, 402 (6th Cir.

1980) (noting that while “ ‘(s)tudents of [Rule 23] have been

led generally to recognize that its broad and open-ended terms

call for the exercise of some considerable discretion of a pragmatic nature,’ that discretion must often be limited by consid16372 BATEMAN v. AMERICAN MULTI-CINEMA
erations in addition to those set forth in the Rule” (quoting

Ratner, 54 F.R.D. at 416)).

[4] Therefore, in accord with these principles and Kline’s

reasoning, we look to FACTA itself for evidence of congressional intent as to the appropriateness of class certification in

such cases. Specifically, we must examine FACTA to determine whether the denial of class certification is consistent

with congressional intent and FACTA’s remedial scheme

where a district court concludes that potential liability is disproportionate to any actual harm.

1. Background on FACTA

[5] In an effort to combat identity theft, in 2003 Congress

enacted FACTA, which amended the FCRA, 15 U.S.C.

§§ 1681-1681x. See Pub. L. 108-159, 117 Stat. 1952 (2003).

FACTA provides, in relevant part, that “no person that

accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number

or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.” 15 U.S.C.

§ 1681c(g)(1). Congress imposed civil liability for willful

noncompliance in the amount of “any actual damages sustained by the consumer as a result of the failure or damages

of not less than $100 and not more than $1,000.” Id.

§ 1681n(a)(1)(A). In addition, FACTA allows prevailing parties to recover attorneys’ fees and costs. Id. § 1682n(a)(3).

In response to misunderstandings about the truncation

requirements, Congress amended FACTA in 2008 with the

Clarification Act. Apparently, a significant number of merchants had erroneously concluded that merely truncating the

account number down to the last five digits while leaving the

expiration date displayed would satisfy FACTA’s requirements. See Clarification Act § 2(a)(3),122 Stat. at 1565. After

the deadline for compliance passed, hundreds of lawsuits

were filed alleging that the companies’ failure to remove the

BATEMAN v. AMERICAN MULTI-CINEMA 16373
expiration date constituted willful violations of FACTA. Id.

§ 2(a)(4), 122 Stat. at 1565. In response, Congress amended

the “willful noncompliance” requirement of FACTA to insulate from liability any person who printed an expiration date

on a receipt between December 4, 2004, and June 3, 2008, so

long as they otherwise complied with FACTA’s requirements.

Id. § 3(a), 122 Stat. at 1566 (codified at 15 U.S.C.

§ 1681n(d)). As expressly stated in the bill, the Clarification

Act aimed “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.” Id. § 2(b), 122

Stat. at 1566.

2. Statutory Analysis of FACTA

Unfortunately, neither FACTA nor the Clarification Act

addresses the availability of class actions. Where a statute is

silent on the availability of class relief, the Supreme Court has

instructed that we presume it to be available in all “civil

actions brought in federal court.” Califano, 442 U.S. at 700.

Accordingly, as neither FACTA nor the Clarification Act contain a “direct expression” to the contrary, we must presume

that Congress intended class relief to be available. That, of

course, does not mean that a court necessarily must allow a

plaintiff to seek class relief. Rather, it means that a court cannot deny class certification where plaintiffs have otherwise

met the requirements of Rule 23.

We therefore must decide whether a plaintiff satisfies Rule

23’s requirements where certification of a class would

threaten to impose liability disproportionate to the harm

caused. As we have explained, the touchstone of this determination is whether denying class certification on this ground is

consistent with congressional intent. We conclude that it is

not.

16374 BATEMAN v. AMERICAN MULTI-CINEMA
[6] We begin, as always, with the plain language of the

statute. See United States v. Mohrbacher, 182 F.3d 1041,

1048 (9th Cir. 1999). The express terms of the statute provide

that upon proving a willful violation,6 a plaintiff may recover

“any actual damages sustained by the consumer as a result of

the failure or damages of not less than $100 and not more than

$1,000.” 15 U.S.C. § 1681n(a). Importantly, the statute does

not place a cap on these damages in the case of class actions,

does not indicate any threshold at which courts are free to

award less than the minimum statutory damages, and does not

limit the number of individuals that can be certified in a class

or the number of individual actions that can be brought

against a single merchant.

[7] Although the congressional record is silent about why

Congress provided for statutory damages in these amounts,7

we presume that the statutory damages serve a compensatory

function. See L.A. News Serv. v. Reuters Television Int’l., Ltd.,

149 F.3d 987, 996 (9th Cir. 1998) (noting that awards of statutory damages can serve compensatory, punitive and/or deterrent purposes). That Congress provided a consumer the option

of recovering either actual or statutory damages, but not both,

supports the presumption that they serve the same purpose.

We further note that Congress provided for punitive damages

in addition to any actual or statutory damages, see 15 U.S.C

§ 1681n(a)(2), which further suggests that the statutory damages provision has a compensatory, not punitive, purpose. See

Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1312

6

See supra footnote 2. 

7Nor does the legislative history of the FCRA shed any light on the purpose of the statutory damages provision. No committee report accompanied the final bill. In fact, there was no discussion on how Congress

arrived at the range of statutory damages or the appropriateness of that

remedy. A 1993 Senate Report mentions that the civil liability provisions

were added in order to assist consumers in “protect[ing] their privacy” and

to “ensure the accuracy of information in their files.” S. Rep. No. 103-209,

at 6 (1993). That statement of purpose, however, does not speak to Congress’s specific intent in enacting the remedial scheme. 

BATEMAN v. AMERICAN MULTI-CINEMA 16375
(11th Cir. 2009) (concluding that, because FACTA provides

separately for punitive damages, the statutory damages provision is not punitive).

The need for statutory damages to compensate victims is

plain. The actual harm that a willful violation of FACTA will

inflict on a consumer will often be small or difficult to prove.

As the Seventh Circuit similarly noted in Murray, under the

FCRA “individual losses, if any, are likely to be small—a

modest concern about privacy, a slight chance that information would leak out and lead to identity theft. That actual loss

is small and hard to quantify is why statutes such as the Fair

Credit Reporting Act provide for modest damages without

proof of injury.” 434 F.3d at 953.

[8] In addition to that compensatory function, FACTA’s

actual and statutory damages provisions also effectuate the

Act’s deterrent purpose. See L.A. News Serv., 149 F.3d at 996

(noting that statutory damages help “sanction and vindicate

the statutory policy of discouraging infringement” (internal

quotation marks omitted)). In fashioning FACTA, Congress

aimed to “restrict the amount of information available to identity thieves.” 149 Cong. Rec. 26,891 (2003) (statement of Sen.

Shelby). Allowing consumers to recover statutory damages

furthers this purpose by deterring businesses from willfully

making consumer financial data available, even where no

actual harm results.

[9] The factors that a court considers when assessing the

superiority of a class action under Rule 23(b)(3) must be consistent with these dual purposes of FACTA’s statutory damages remedy. Cf. Kline, 508 F.2d at 235 (concluding that class

certification would be inconsistent with Congress’s intent to

limit punitive damages to an amount only three times the

harm an individual defendant caused). Congress expressly

created a statutory damages scheme that intended to compensate individuals for actual or potential damages resulting from

FACTA violations, without requiring individuals to prove

16376 BATEMAN v. AMERICAN MULTI-CINEMA
actual harm. Thus, irrespective of whether Bateman and all

the potential class members can demonstrate actual harm

resulting from a willful violation, they are entitled to statutory

damages. There is no language in the statute, nor any indication in the legislative history, that Congress provided for judicial discretion to depart from the $100 to $1000 range where

a district judge finds that damages are disproportionate to

harm. Further, we cannot surmise a principled basis for determining when damages are and are not “proportionate” to

actual harm. Indeed, one might plausibly argue that a $1000

award, or even a $100 award, for a single violation of

FACTA, without any allegation of harm, is not proportionate.

But the plain text of the statute makes absolutely clear that,

in Congress’s judgment, the $100 to $1000 range is proportionate and appropriately compensates the consumer. That

proportionality does not change as more plaintiffs seek relief;

indeed, the size of AMC’s potential liability expands at

exactly the same rate as the class size. In the absence of any

showing that courts have the discretion to modify this remedial scheme, we agree with the Seventh Circuit that “it is not

appropriate to use procedural devices to undermine laws of

which a judge disapproves.” Murray, 434 F.3d at 954. 

[10] To the extent that statutory damages also serve a

deterrent purpose, a court undermines that purpose in denying

class certification on the basis of the proportionality of actual

harm and statutory liability. Congress, in its legislative judgment, specified the range of damages that it considered sufficient to have a deterrent effect. Despite Congress’s awareness

of the availability of class actions, it set no cap on the total

amount of aggregate damages, no limit on the size of a class,

and no limit on the number of individual suits that could be

brought against a merchant. Allowing denial of class certification because of the sheer number of violations and amount of

potential statutory damages would allow the largest violators

of FACTA to escape the pressure of defending class actions

and, in all likelihood, to escape liability for most violations.

In other words, whatever risk of overdeterrence class certifiBATEMAN v. AMERICAN MULTI-CINEMA 16377
cation poses, refusing to certify a class on these grounds poses

the risk of significant underdeterrence.

To deny class certification based on the potential amount of

damages as compared to the extent of harm presumes that

Congress left it to the courts to evaluate the relative amount

of liability necessary to serve the statute’s compensatory and

deterrent purposes. Despite the absence of anything in the text

or legislative history of the statute explicitly delegating such

authority, AMC suggests it can be inferred from language in

the Clarification Act. Specifically, AMC points to the following language in the Clarification Act’s “Findings” section: 

(4) Almost immediately after the deadline for compliance [with FACTA] passed, hundreds of lawsuits

were filed alleging that the failure to remove the

expiration date was a willful violation of the Fair

Credit Reporting Act even where the account number was properly truncated.

(5) None of these lawsuits contained an allegation of

harm to any consumer’s identity. 

(6) Experts in the field agree that proper truncation

of the card number, by itself as required by the

amendment made by the Fair and Accurate Credit

Transactions Act, regardless of the inclusion of the

expiration date, prevents a potential fraudster from

perpetrating identity theft or credit card fraud.

(7) Despite repeatedly being denied class certification, the continued appealing and filing of these lawsuits represents a significant burden on the hundreds

of companies that have been sued and could well

raise prices to consumers without corresponding

consumer protection benefit. 

Clarification Act § 2(a)(3),122 Stat. at 1565-66 (emphasis

added). According to AMC, these findings evidence Con16378 BATEMAN v. AMERICAN MULTI-CINEMA
gress’s approval of court rulings that denied class certification

on the ground that damages would be disproportionate to

actual harm. We disagree. 

While some courts had denied class certification under

FACTA on superiority grounds at the time the Clarification

Act was enacted in June 2008, other courts had granted certification despite superiority arguments like AMC’s. See, e.g.,

Redmon v. Uncle Julio’s of Ill., Inc., 249 F.R.D. 290 (N.D. Ill.

Mar. 7, 2008); Reynoso v. S. Cnty. Concepts, No. SACV07-

373-JVS (RCx), 2007 WL 4592119 (C.D. Cal. Oct. 15, 2007).

Because we must presume that Congress is aware of “past

judicial interpretations and practices” when it legislates, In re

Egebjerg, 574 F.3d 1045, 1050 (9th Cir. 2009), we must presume Congress was aware of this split among district courts

as to whether these types of actions should be certified. In the

midst of this disagreement, Congress stepped in to amend

FACTA, and yet did nothing to limit the availability of class

relief or the amount of aggregate damages. Had Congress

been sufficiently concerned about disproportionate damages

as a result of class actions, it would have limited class availability or aggregate damages. Yet Congress did nothing of the

sort and instead merely imposed a retroactive immunity for a

sub-class of merchants who misunderstood FACTA’s requirements. 

Where Congress in the past has been confronted with concerns over disproportionate, potentially enormous statutory

damage awards, it has acted decisively to make its intent

clear. Responding to the problem identified in Ratner, Congress amended TILA’s civil liability provision in 1974. Act of

Oct. 28, 1974, Pub. L. No. 93-495, § 408(a), 88 Stat. 1500,

1518. As evidenced by the Report of the Senate Banking

Committee, Congress was aware of the potentially enormous

liability facing defendants where TILA claims were pursued

as class actions. In relevant part, that report stated:

A problem has arisen in applying minimum liability

provisions in class action suits involving millions of

BATEMAN v. AMERICAN MULTI-CINEMA 16379
consumers. If each member of the class is entitled to

a minimum award of $100, a creditor’s liability can

be enormous.

. . .

The purpose of the civil penalties section under

Truth in Lending was to provide creditors with a

meaningful incentive to comply with the law without

relying upon an extensive new bureaucracy. However, the Committee feels this objective can be

achieved without subjecting creditors to enormous

penalties for violations which do not involve actual

damages and may be of a technical nature. Putting a

reasonable limit on a creditor’s maximum class

action liability would seem to be in the best interests

of both creditors and consumers.

S. Rep. No. 93-278, at 14 (1973). Accordingly, Congress

added a provision to TILA limiting aggregate statutory damages. Act of Oct. 28, 1974 § 408(a), 88 Stat. at 1518 (codified

as amended at 15 U.S.C. § 1640(a)(2)(B)) (capping class

action damage awards at $500,000 or one percent of the

defendant’s net worth). Congress has similarly capped class

action awards under other statutes. See 15 U.S.C.

§ 1692k(a)(2)(B) (setting the same limit under Fair Debt Collection Practices Act). Yet here, faced with precisely the same

issue, Congress chose to remain silent and not to impose any

limits on aggregate relief. 

We therefore are not convinced that this passing reference

to denial of class certification is sufficient to overcome the

plain text of the statute and congressional silence on the issue

of class relief, both of which strongly suggest that the proportionality of the damages is an irrelevant consideration in

effectuating FACTA’s compensatory and deterrence purposes.

16380 BATEMAN v. AMERICAN MULTI-CINEMA
We also note an additional problem with AMC’s position.

AMC would have us leave it to the discretion of district courts

to decide whether a potential award would be so disproportionate to the actual harm that a class action would not be the

superior method of adjudication. Yet such unguided discretion

results in decidedly non-uniform decisions about class certification. For example, in Price v. Lucky Strike Entm’t, 2007

WL 4812281, a district court refused to certify a class of

approximately 33,000 plaintiffs seeking damages under

FACTA, none of whom had alleged any actual harm. Meanwhile, a different district court in the same district certified a

class of approximately 32,000 individuals seeking statutory

damages under FACTA who also had alleged no harm, concluding that “the magnitude of the potential damage award

does not affect the superiority of a class action for adjudication of this dispute.” See Medrano v. WCG Holdings, Inc.,

No. SACV 07-0506 JVS (RNBx), 2007 WL 4592113, at *6

(C.D. Cal. Oct. 15, 2007). We cannot ascribe to Congress an

intent to allow FACTA’s deterrent and compensatory impact

to vary according to the discretionary policy judgments of district judges. 

[11] We therefore hold that the district court abused its discretion in considering the proportionality of the potential liability to the actual harm alleged in its Rule 23(b)(3)

superiority analysis. 

B. Enormous Liability

Having concluded that the proportionality of the potential

liability to actual harm was an improper consideration under

FACTA, we turn to the district court’s second justification:

that “class treatment would render the magnitude of the

defendant’s liability enormous.” We hold that such a consideration is not an appropriate reason to deny class certification

under Rule 23(b)(3). 

It is widely accepted that class certification “may force a

defendant to settle rather than incur the costs of defending a

BATEMAN v. AMERICAN MULTI-CINEMA 16381
class action and run the risk of potentially ruinous liability.”

Fed. R. Civ. P. 23, Advisory Committee Notes to 1998

Amendments. Indeed, “[e]ven in the mine-run case, a class

action can result in ‘potentially ruinous liability.’ ” Shady

Grove, 130 S. Ct. at 1465 n.3 (Ginsburg, J., dissenting) (quoting Fed. R. Civ. P. 23, Advisory Committee Notes to 1998

Amendments); see also Prado-Steiman ex rel. Prado v. Bush,

221 F.3d 1266, 1274 (11th Cir. 2000) (“[E]ven ordinary class

certification decisions by their very nature may radically

reshape a lawsuit and significantly alter the risk-benefit calculation of the parties . . . .”); Turoff v. Union Oil Co. of Cal.,

61 F.R.D. 51, 54 (N.D. Ohio 1973) (“In many fields, ranging

from mortgage foreclosures to securities laws, the courts

enforce recoveries which result in bankruptcy without indulging in the legislative function of ruling that the law permitting

such a recovery could not have been intended to harm anyone

to such a degree.”).

The decision to certify a class thus necessarily “places pressure on the defendant to settle even unmeritorious claims.”

Shady Grove, 130 S. Ct. at 1465 n.3 (Ginsburg, J., dissenting).

See also Coopers & Lybrand v. Livesay, 437 U.S. 463, 476

(1978) (“Certification of a large class may so increase the

defendant’s potential damages liability and litigation costs

that he may find it economically prudent to settle and to abandon a meritorious defense.”). We have held, however, that

“[t]he fairness of the pressure i.e., the sociological merits of

the small claims class action[,] is not a question for us to

decide.” Blackie v. Barrack, 524 F.2d 891, 899 (9th Cir. 1975).8

Accord Chamberlan v. Ford Motor Co., 402 F.3d 952, 960

(9th Cir. 2005) (rejecting the notion that certification of a

large class creates pressure to settle that is per se unreason8

Indeed, as the Supreme Court has noted, a defendant’s “aggregate liability . . . does not depend on whether the suit proceeds as a class action,”

because “[e]ach of the . . . members of the putative class could . . . bring

a freestanding suit asserting his individual claim.” Shady Grove, 130 S. Ct.

at 1443 (plurality op.). 

16382 BATEMAN v. AMERICAN MULTI-CINEMA
able); Klay, 382 F.3d at 1275 (“Mere pressure to settle is not

a sufficient reason for a court to avoid certifying an otherwise

meritorious class action suit.”); In re Visa Check/Master

Money Antitrust Litig., 280 F.3d 124, 145 (2d Cir. 2001),

superseded by statute on other grounds as stated in Attenborough v. Constr. & Gen. Bldg. Laborers’ Local 79, 238

F.R.D. 82, 100 (S.D.N.Y. 2006) (holding that the sheer size

of a class—and the concomitant size of liability—“alone cannot defeat an otherwise proper certification”). If the size of a

defendant’s potential liability alone was a sufficient reason to

deny class certification, however, the very purpose of Rule

23(b)(3)—“to allow integration of numerous small individual

claims into a single powerful unit”—would be substantially

undermined. Blackie, 524 F.2d at 899. 

[12] Rather, in accord with our reasoning under Kline,

whether the potential for enormous liability can justify a

denial of class certification depends on congressional intent.

For substantially the same reasons discussed in Part III.A, we

conclude that allowing consideration of the potential enormity

of any damages award would undermine the compensatory

and deterrent purposes of FACTA. As the Seventh Circuit

noted, the reason that damages can become enormous under

FACTA “does not lie in an ‘abuse’ of Rule 23; it lies in the

legislative decision to authorize awards as high as $1,000 per

person,” combined with multiple violations of the statute.

Murray, 434 F.3d at 953. Nothing in the plain text of the statute or in its legislative history suggests that Congress intended

to place a cap on potentially enormous statutory awards or to

otherwise limit the ability of individuals to seek compensation. Had Congress so intended, the Clarification Act represented a prime opportunity for Congress to clarify its intent

given that this issue was already a matter of heavy debate in

the courts at the time of the Amendment. See, e.g., Redmon,

249 F.R.D. at 296-97; Reynoso, 2007 WL 4592119, at *5-6.

Indeed, as noted above, when Congress has been concerned

about the enormity of potential liability in cases like this one,

it has placed caps on aggregate liability. See, e.g., 15 U.S.C.

BATEMAN v. AMERICAN MULTI-CINEMA 16383
§ 1640(a)(2)(b) (placing a cap on aggregate recovery under

TILA); 15 U.S.C. § 1692k(a)(2)(B)(ii) (placing a cap on

aggregate recovery under the Fair Debt Collection Practices

Act).

[13] In the absence of such affirmative steps to limit liability, we must assume that Congress intended FACTA’s remedial scheme to operate as it was written. To limit class

availability merely on the basis of “enormous” potential liability that Congress explicitly provided for would subvert

congressional intent. 

We note, however, that this is not a case where the defendant has argued or demonstrated that the potential liability

would result in bankruptcy. In the context of Rule 23(f),

which allows for interlocutory appeal of class certification

decisions in some circumstances, we have required an appellant to demonstrate that the potential liability would be “ruinous” before granting interlocutory appeal. See Chamberlan,

402 F.3d at 960-61 (noting that interlocutory appeal is not

warranted merely because the potential liability would be

“ ‘unpleasant to a behemoth’ company” (quoting Waste

Mgmt. Holdings, Inc. v. Mowbray, 208 F.3d 288, 294 (1st Cir.

2000)); Fed. R. Civ. P. 23, Advisory Committee Notes to

1998 Amendments, Subdivision (f). Here, AMC did not argue

before the district court that the potential $290 million liability would put it out of business, nor did it submit any declarations, documents, or other evidence demonstrating that such

liability would be “ruinous.” Bateman, however, submitted

evidence that AMC’s 2006 revenues were approximately

$1.68 billion, with approximately $1.66 billion in costs and

expenses. Bateman also submitted evidence showing that

AMC’s assets were worth approximately $4 billion as of

2007. We reserve judgment as to whether a showing of “ruinous liability” would warrant denial of class certification in a

FACTA or similar action.

[14] We also reserve judgment as to whether, if Bateman

prevails at trial, the district court may be entitled to reduce the

16384 BATEMAN v. AMERICAN MULTI-CINEMA
award if it is unconstitutionally excessive. See Murray, 434

F.3d at 954 (“An award that would be unconstitutionally

excessive may be reduced, see State Farm Mut. Auto. Ins. Co.

v. Campbell, 538 U.S. 408 (2003), but constitutional limits are

best applied after a class has been certified.”). We do, however, conclude that is it not appropriate to evaluate the excessiveness of the award at this stage of the litigation. Because

we do not know what amount of damages Bateman will seek

nor how many individuals will ultimately claim the benefit of

any damages awarded should plaintiffs prevail, any evaluation

of AMC’s potential liability at this time is unduly speculative.

C. Good Faith Compliance

[15] In conducting its Rule 23(b)(3) analysis, the district

court also concluded that a class action would not be a superior method of adjudication because AMC “demonstrated

good faith by complying with FACTA within a few weeks of

the filing of Plaintiff’s Complaint. This limits the deterrent

effect of a class action.” We hold that the district court’s consideration of AMC’s post-complaint good faith compliance

was inconsistent with congressional intent in enacting

FACTA. Congress did not include any safe harbor or otherwise limit damages for good faith compliance with the statute

after an alleged violation. The mere fact that AMC changed

the content of its receipts to comply with FACTA after the

lawsuit was filed does not suggest that certification of the

class would have limited deterrent effect. To the contrary, we

are quite sure that certification of a class here would preserve,

if not amplify, the deterrent effect of FACTA. Because Bateman’s complaint clearly alleged that he was seeking classwide damages, we can reasonably surmise that AMC’s speedy

compliance with FACTA was promoted, at least in part, by

the specter of a substantial damages award. Thus, to deny

class certification on this ground would communicate to other

potential violators that, as long as they comply with FACTA

after a complaint is filed, they may avoid liability for widespread violations. In other words, to deny class certification

BATEMAN v. AMERICAN MULTI-CINEMA 16385
on this ground undermines the deterrent effect of FACTA

itself.

IV

As Judge Easterbrook of the Seventh Circuit mused,

“[m]aybe suits such as this will lead Congress to amend the

[statute]; maybe not. While a statute remains on the books,

however, it must be enforced rather than subverted.” Murray,

434 F.3d at 954. Thus, in light of the foregoing discussion, the

district court’s order denying class certification is vacated,

and the case is remanded for proceedings consistent with this

opinion. Nothing in this opinion should be construed to limit

the district court’s ability to consider other Rule 23(a) and

23(b) factors, including the manageability of a nationwide

class, in deciding whether class certification is appropriate.

REVERSED AND REMANDED.

16386 BATEMAN v. AMERICAN MULTI-CINEMA