Opinion ID: 615727
Heading Depth: 2
Heading Rank: 1

Heading: Failure to State a Claim as to Theory of Cause of Action

Text: Plaintiffs argue that Hannaford owed a fiduciary duty to protect their credit and debit card data, which it breached. Although plaintiffs concede that the basic grocery purchase transaction does not give rise to a fiduciary relationship, they argue that a fiduciary relationship arises in the context of credit and debit card use because the customer trusts the merchant to safeguard her credit or debit card information. We agree with the district court that the plaintiffs' facts do not make out a confidential relationship [4] with Hannaford and so Hannaford did not owe a fiduciary duty. To state a claim for fiduciary duty under Maine law, a plaintiff must: (1) allege the actual placing of trust and confidence in the defendant; (2) show that there is some disparity in the bargaining positions of the parties; and (3) show that the dominant party has abused its position of trust. Leighton v. Fleet Bank of Me., 634 A.2d 453, 457-58 (Me.1993). The plaintiffs' pleading fails to satisfy these three elements. First, the plaintiffs have not shown the trust and confidence contemplated by Maine confidential relationship cases. Under Maine law, a fiduciary relationship has been described as `something approximating business agency, professional relationship, or family tie impelling or inducing the trusting party to relax the care and vigilance ordinarily exercised.' Bryan R. v. Watchtower Bible & Tract Soc. of N.Y., Inc., 738 A.2d 839, 846 (Me.1999) (quoting L.C. v. R.P., 563 N.W.2d 799, 801-02 (N.D. 1997)). Accordingly, Maine decisions typically find a placing of trust and confidence in the context of family relationships, joint ventures, or partnerships. See, e.g., Ruebsamen v. Maddocks, 340 A.2d 31 (Me.1975) (family context); Wood v. White, 123 Me. 139, 122 A. 177 (1923) (joint venture context). The Maine courts have extended the rule to lender/borrower relationships, but only where one party has a relationship which has permitted it to take advantage of the other in order to use or acquire the other's assets. See Stewart v. Machias Sav. Bank, 762 A.2d 44 (Me. 2000). The plaintiffs do not allege such a relationship here; there are no allegations that this relationship was anything other than an ordinary arms-length commercial transaction. Second, the plaintiffs have not pled facts demonstrating disparate bargaining power between the plaintiffs and Hannaford. In the commercial context, the Maine Law Court has required an especially heightened disparity of power. The plaintiffs must allege diminished emotional or physical capacity or ... the letting down of all guards and bars. Stewart, 762 A.2d at 46 (omission in original) (quoting Diversified Foods, Inc. v. First Nat'l Bank of Bos., 605 A.2d 609, 615 (Me.1992)) (internal quotation marks omitted) (holding that a creditor-debtor relationship is not a confidential relationship without a showing of diminished capacity or special vulnerability). Here, the customer is free to use cash or checks, as well as credit or debit cards, to buy groceries. The customer is free to purchase groceries elsewhere. Indeed, plaintiffs fail to distinguish themselves from any other credit or debit card user in any commercial setting. See Bryan R., 738 A.2d at 847 (dismissing a claim for breach of fiduciary duty where, inter alia, plaintiff did not allege that his relationship with the defendant church was distinct from [the defendant church's] relationships with any other members). Third, the plaintiffs fail to allege facts demonstrating that Hannaford abused a position of trust. Under Maine law, breach of fiduciary duty claims typically require a showing that the dominant party used its position of trust to obtain something from the subordinate party, acquiring rights in that [property] antagonistic to the person with whose interests he has become associated. Wood, 122 A. at 179 (quoting Trice v. Comstock, 121 F. 620, 627 (8th Cir. 1903)) (internal quotation mark omitted). As the district court noted, there is no suggestion in the complaint that Hannaford provided anything but a fair exchange in groceries in return for the customers' payments or somehow took advantage of the system of allowing customers to use cards. In re Hannaford, 613 F.Supp.2d at 123.
Hannaford cross-appeals from the district court's determination that plaintiffs have made out a claim for an implied contract. [5] Under Maine law, a contract includes not only the promises set forth in express words, but, in addition, all such implied provisions as are indispensable to effectuate the intention of the parties and as arise from the language of the contract and the circumstances under which it was made. Seashore Performing Arts Ctr., Inc. v. Town of Old Orchard Beach, 676 A.2d 482, 484 (Me.1996) (quoting Top of the Track Assocs. v. Lewiston Raceways, Inc., 654 A.2d 1293, 1295 (Me.1995)). The existence of such an implied contract term is determined by the jury, which considers whether the term is indispensable to effectuate the intention of the parties. The district court correctly concluded that a jury could reasonably find an implied contract between Hannaford and its customers that Hannaford would not use the credit card data for other people's purchases, would not sell the data to others, and would take reasonable measures to protect the information. In re Hannaford, 613 F.Supp.2d at 119. When a customer uses a credit card in a commercial transaction, she intends to provide that data to the merchant only. Ordinarily, a customer does not expectand certainly does not intendthe merchant to allow unauthorized third-parties to access that data. A jury could reasonably conclude, therefore, that an implicit agreement to safeguard the data is necessary to effectuate the contract.
The district court held that the plaintiffs' allegations stated a claim under the Maine UTPA that Hannaford's failure to disclose the data theft promptly, and possibly its failure to maintain reasonable security systems, was unfair and deceptive. Id. at 128-31. Nonetheless, the district court concluded that the claim failed because the plaintiffs did not allege substantial loss. Id. at 134. We agree that the plaintiffs' claim fails, but for different reasons. Section 207 of the Maine UTPA, entitled Unlawful Acts and Conduct, provides that [u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are declared unlawful. Me.Rev.Stat. tit. 5, § 207. Under the statute, in defining whether a practice is unlawful, the Maine legislature directed that guidance be sought from the interpretations of the Federal Trade Commission Act (FTCA). Id. § 207(1) (It is the intent of the Legislature that in construing this section the courts will be guided by the interpretations given by the Federal Trade Commission and the Federal Courts to Section 45(a)(1) of the Federal Trade Commission Act (15 U.S.C. § 45(a)(1)), as from time to time amended.). The Maine courts have looked generally to the FTCA to determine whether the act or practice causes or is likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition. Searles v. Fleetwood Homes of Pa., Inc., 878 A.2d 509, 519 n. 10 (Me.2005) (quoting 15 U.S.C. § 45(n)) (internal quotation marks omitted). Further, [i]n determining whether an act or practice is unfair, Maine courts consider established public policies as evidence to be considered with all other evidence. Such public policy considerations may not serve as a primary basis for such determination. Id. (quoting 15 U.S.C. § 45(n)) (internal quotation marks omitted). The Maine UTPA provides for two different enforcement mechanisms: enforcement by the state's Attorney General, Me. Rev.Stat. tit. 5, § 209, and a private cause of action, id. § 213. The Attorney General may seek injunctive relief and may also seek civil penalties for violation of the injunction, including restoration to private individuals of any ascertainable loss. Id. § 209. The issue here concerns the limits for private causes of action. Section 213, entitled Private Remedies, as amended in 1991, provides a private cause of action under the statute: Any person who purchases or leases goods, services or property, real or personal, primarily for personal, family or household purposes and thereby suffers any loss of money or property, real or personal, as a result of the use or employment by another person of a method, act or practice declared unlawful by section 207 or by any rule or regulation issued under section 207, subsection 2 may bring an action either in the Superior Court or District Court for actual damages, restitution and for such other equitable relief, including an injunction, as the court determines to be necessary and proper. Id. § 213(1). The text requires that the plaintiff suffer a loss of money or property as a result of the unlawful act. [6] By virtue of a 1991 amendment, damages may be awarded, as well as restitutionary relief. By its literal terms, section 213 does not itself impose a substantial loss requirement, but the Maine Law Court has so interpreted the statute when considering section 207 in conjunction with section 213. See McKinnon v. Honeywell Int'l, Inc., 977 A.2d 420, 427 (Me.2009) ([A] plaintiff [must] suffer `loss of money or property' before bringing a private action to recover ... [and] the injury suffered must be substantial.). The parties actively dispute whether plaintiffs' claims, viewed individually, make out substantial injury, or whether, given the nature of the event, plaintiffs' claims of harm may be viewed as a collective whole as to substantial injury. In Tungate v. MacLean-Stevens Studios, Inc., the Law Court said that [t]he substantial injury requirement is designed to weed out `trivial or merely speculative harms.' 714 A.2d 792, 797 (Me.1998) (quoting Legg v. Castruccio, 100 Md.App. 748, 642 A.2d 906, 917 (1994)) (holding that a $1.25 commission on a $7.00 product did not rise to the level of substantial injury for purposes of establishing a violation under section 207). We do not view the subject matter of this suit as trivial or merely speculative. We see no case in Maine sufficiently like this one to give us clear guidance on this question and are reluctant to venture where the Maine courts have not. What is clear is that the Maine courts have consistently read the private right of action provision of the UTPA narrowly. See, e.g., McKinnon, 977 A.2d at 427 (interpreting the provision's requirement that plaintiffs suffer loss of money or property to mean substantial loss); Bartner v. Carter, 405 A.2d 194, 202-03 (Me.1979) (rejecting a broad definition of restitution in favor of a narrower technical definition); see also Hoglund ex rel. Johnson v. DiamlerChrysler Corp., 102 F.Supp.2d 30, 31 (D.Me.2000) (Historically, however, the Law Court has interpreted the UTPA's private remedial provision narrowly.). This is one purpose of the substantial injury requirement. See McKinnon, 977 A.2d at 427 (The substantial injury requirement is a limitation on the use of the UTPA for a private cause of action.). This narrow application of the private right of action section is consistent with the Maine legislature's choice of statutory language, which is narrower than that of other states. E.g., compare Me. Rev.Stat. tit. 5, § 213(1) (restricting the private right of action to a person who purchases or leases goods, services or property), with Mass. Gen. Laws ch. 93A, § 9(1) (allowing [a]ny person ... who has been injured to bring a private action even if that person is not a consumer and not otherwise in privity with the purchaser). In the seminal case interpreting the private right of action provision of the Maine UTPA, the Law Court in Bartner v. Carter pointed out that [i]n a private suit, the requirement of loss to the plaintiff consumer resulting from defendant's wrongful act unavoidably limits both the scope of section 207 and the use of the FTCA and its interpretation. 405 A.2d at 201. The court commented that the Maine legislature was concerned about the possible coercive and improper use of the private cause of action, and that was one rationale for the narrowing. Id. at 201-02. Pertinently, the court also pointed out, in discussing the restrictions on recovery in private actions under section 213, that [c]ommon law actions for negligence and breach of warranty are available in appropriate cases for non-restitutionary damages in situations where personal injuries or damages to property have occurred. Id. at 203. It seems unlikely to us that Maine would permit plaintiffs, in cases also pleading that the same acts constitute negligence and breach of implied contract, to use the private action provision of the UTPA to recover types of damages which Maine has decided are not reasonably foreseeable or barred for policy reasons when asserted under implied contract, negligence, or other theories. In Searles, the Law Court was explicit that public policy considerations factor into interpretation of the UTPA. See 878 A.2d at 519 n. 10. As this opinion holds elsewhere, most of plaintiffs' damages claims fail for those reasons. As to the recoverable amounts for mitigation of damages under negligence and implied contract, we see no reason why Maine law would not consider those recoveries under those theories sufficient. [7]