Opinion ID: 2677225
Heading Depth: 2
Heading Rank: 2

Heading: Willfulness under Safeco

Text: We now turn to the merits. As discussed, the district court concluded that Sam’s Club violated FACTA’s receipt requirement by printing more than the last five digits of appellants’ credit card numbers on electronically printed receipts despite the fact that those numbers were labeled “member” numbers. However, the district court dismissed appellants’ action on summary judgment, holding that Sam’s Club did not willfully violate the statute. For the purposes of our analysis, we accept the district court’s ruling that Sam’s Club violated FACTA. Nevertheless, we agree with the district court that the violation was not willful. This court reviews a grant of summary judgment de novo, applying the same standard as the district court. Naucke v. City of Park Hills, 284 F.3d 923, 927 (8th Cir. 2002). “Summary judgment is appropriate when the evidence viewed in the light most favorable to the nonmoving party presents no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.” Coates v. Powell, 639 F.3d 471, 475 (8th Cir. 2011). Questions of law are “particularly appropriate for summary judgment.” TeamBank, N.A. v. McClure, 279 F.3d 614, 617 (8th Cir. 2002). Appellants assert that the district court erred in several respects in concluding that Sam’s Club did not willfully violate FACTA. First, they argue that such judgment was inappropriate in light of the district court’s prior conclusion that Sam’s Club violated the “clear” and “unambiguous” language of FACTA’s receipt requirement, 15 U.S.C. § 1681c(g)(1). Second, appellants contend that the district court held them to an “impermissibly high standard of proof.” Finally, appellants argue that the district court inappropriately relied on disputed facts and considered the enormity of potential damages in granting a dismissal. In contrast, Sam’s Club Article III standing. -13- argues that it did not act wilfully because its reading of the statute was objectively reasonable. As we have already observed, a person who fails to comply with FACTA’s receipt requirement does not incur liability for damages unless the violation is willful. 15 U.S.C. § 1681n(a)(1)(A). The Supreme Court has held that a violation becomes “willful” if it is either “knowing” or “reckless.” Safeco, 551 U.S. at 57. A company acts in reckless disregard of FACTA when its “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. In essence, the central inquiry focuses on “objective reasonableness.” Fuges v. Sw. Fin. Servs., Ltd., 707 F.3d 241, 249 (3d Cir. 2012). Thus, even when a court disagrees with a party’s interpretation of FACTA, it may not impose liability unless the party has interpreted the statute in an objectively unreasonable manner. See Safeco, 551 U.S. at 69 (concluding that Safeco’s violation was not reckless because its “reading of the statute, albeit erroneous, was not objectively unreasonable”). In determining whether an interpretation is objectively unreasonable, we assess whether the reading “has a foundation in the statutory text” or whether the party interpreting the statute “had the benefit of guidance from the courts of appeals” or federal regulatory agencies “that might have warned it away from the view it took.” Id. at 69-70. When a party has read the statute in an objectively reasonable manner, we need not consider facts relating to the party’s subjective intent in assessing willfulness. Id. at 70, n.20. Applying the analytical framework set forth in Safeco, we conclude that Sam’s Club’s interpretation of FACTA’s receipt requirement as not applicable to the membership designation on the receipts did not amount to an objectively unreasonable reading of the statute. As we noted, FACTA provides: -14- [N]o 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). Given this language, Sam’s Club reasonably could have assumed that the statute only prohibits printing of more than the last five digits of the credit card number, so labeled. A literal-minded company executive could reasonably read the statute in this manner, even though such a reading may be contrary to the purposes of preventing identity theft or credit card fraud. We conclude that Sam’s Club’s reading of the statute “has a foundation in the statutory text,” even though we acknowledge that the reading may be deemed erroneous under the law. Safeco, 551 U.S. at 69-70. Our conclusion is bolstered by the lack of authoritative guidance available to Sam’s Club. At the time this suit was filed in October 2008, no guidance had been rendered by appellate courts or regulatory agencies on the question of whether a “membership number,” like a “credit card” or “account” number, must be shortened pursuant to the statute. To this court’s knowledge, only one circuit decision has referenced the meaning of “card number” in the context of willfulness under FACTA. See Van Straaten v. Shell Oil Prods. Co, LLC, 678 F.3d 486 (7th Cir. 2012). In that case, the Seventh Circuit recognized the “absence of a statutory or regulatory definition of the phrase ‘card number,’” but concluded that interpreting the term was unnecessary because the alleged FACTA violation was not willful. Id. at 489-91. And in any event, that decision came after appellants filed suit. Appellants also fail to identify any regulatory authority available to Sam’s Club which demonstrated its printing of a customer’s receipt containing a membership number that includes more than the last five digits of the customer’s credit card number violated FACTA. On a final note, we reject appellants’ assertions that the district court committed various legal errors in its analysis of willfulness. To the contrary, the -15- record establishes that the district court correctly focused its inquiry on whether Sam’s Club’s reading of the statute was objectively reasonable in accordance with the standards set forth in Safeco. We conclude that Sam’s Club’s interpretation of FACTA as not applicable to a membership number printed on a customer’s receipt “has a foundation in the statutory text,” Safeco, 551 U.S. at 69-70, and is therefore not objectively unreasonable.5 Accordingly, we affirm the dismissal of appellants’ action on the ground that Sam’s Club’s statutory violation was not willful.