Court Opinion

ID: 9394912
Source: CourtListenerOpinion
Date Created: 2023-05-16 16:08:22.416985+00
Date Added: 2024-06-11T17:19:04.037593
License: Public Domain

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    ASHLEY GENNOCK AND JORDAN                  :   IN THE SUPERIOR COURT OF
    BUDAI, INDIVIDUALLY AND                    :        PENNSYLVANIA
    DERIVATIVELY ON BEHALF OF ALL              :
    OTHERS SIMILARLY SITUATED                  :
                                               :
                                               :
                v.                             :
                                               :
                                               :   No. 462 WDA 2022
    KIRKLAND’S INC.                            :
                                               :
                       Appellant               :

               Appeal from the Order Entered August 20, 2020
      In the Court of Common Pleas of Lawrence County Civil Division at
                          No(s): 11119 OF 2019

BEFORE: BOWES, J., MURRAY, J., and PELLEGRINI, J.*

MEMORANDUM BY BOWES, J.:                             FILED: May 16, 2023

       Kirkland’s Inc. (“Kirkland”) appeals from the order entered on

August 20, 2020, determining that Ashley Gennock and Jordan Budai,

individually and derivatively on behalf of all similarly situated (collectively,

“Plaintiffs”), had standing to assert a cause of action based on Kirkland’s

violation of the federal Fair and Accurate Credit Transactions Act (“FACTA”),

15 U.S.C. § 1681c(g).1 We reverse the order and dismiss Plaintiffs’ complaint.

____________________________________________

*   Retired Senior Judge assigned to the Superior Court.

1 The trial court certified the order for interlocutory appeal pursuant to 42
Pa.C.S. § 702(b).
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       By way of background, Congress enacted FACTA in 2003, as an

amendment to the Fair Credit Reporting Act, to prevent identity theft. See

Kamal v. J. Crew Grp., Inc., 918 F.3d 102, 106 (3d Cir. 2019).2 To achieve

this, FACTA requires, in relevant part, that debit and credit card numbers be

truncated on printed receipts, as follows:

       (g) Truncation of credit card and debit card numbers

              (1) In general

              Except as otherwise provided in this subsection, no person
              that accepts credit cards or debit cards for the transaction
              of business shall print more than the last 5 digits of the card
              number or the expiration date upon any receipt provided to
              the cardholder at the point of the sale or transaction.

              (2) Limitation

              This subsection shall apply only to receipts that are
              electronically printed, and shall not apply to transactions in
              which the sole means of recording a credit card or debit card
              account number is by handwriting or by an imprint or copy
              of the card.

15 U.S.C. § 1681c(g). FACTA provides that “[a]ny person who is negligent in

failing to comply with any requirement imposed under this subchapter with

respect to any consumer is liable to that consumer in an amount equal to the

sum of (1) any actual damages sustained by the consumer as a result of the

____________________________________________

2 We note that decisions from the Third Circuit Court of Appeals, whether
interpreting federal or state law, do not bind our Courts. See Martin v. Hale
Prod., Inc., 699 A.2d 1283, 1287 (Pa.Super. 1997). Rather, “[d]ecisions of
the federal courts lower than the United States Supreme Court possess a
persuasive authority.” Id. (cleaned up). We consider Kamal v. J. Crew
Grp., Inc., 918 F.3d 102 (3d Cir. 2019), accordingly.

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failure” as well as (2) the costs and attorney fees for the successful action.

See 15 U.S.C. § 1681o(a). To remedy willful violations, FACTA provides for

actual damages or statutory damages, plus punitive damages and attorneys’

fees. See 15 U.S.C. § 1681n(a).

      Between February 18 and April 8, 2017, Plaintiffs patronized Kirkland

retail stores and made purchases with their debit and/or credit cards. Each

time the Plaintiffs received a paper receipt, it displayed the first six and the

last four digits of the credit and/or debit cards used for payment. Plaintiffs

filed a class action federal suit against Kirkland, alleging that Kirkland had

willfully violated FACTA. Plaintiffs did not allege that the violation resulted in

their identities being stolen or their card numbers being misappropriated.

Instead, they argued that the FACTA violation placed them at greater risk of

such an occurrence. The federal district court, applying the holding in Kamal,

supra at 117, that “a bare procedural violation. . . does not create Article

III standing[,]” dismissed Plaintiffs’ complaint. See Gennock v. Kirkland’s,

Inc., No. CV 17-454 (W.D.Pa. Oct. 21, 2019) (adopting Report and

Recommendation, 9/24/19).

      Thereafter, Plaintiffs transferred the complaint to state court pursuant

to 42 Pa.C.S. § 5103.      Kirkland filed preliminary objections alleging that

Plaintiffs lacked standing and failed to allege facts sufficient to establish a

willful violation of FACTA. Simultaneously, a nearly identical case brought by

Plaintiffs and Andrea Sciola against Country Fair, Inc. (“Country Fair”), was

pending before the same trial court, with Country Fair also challenging the

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plaintiffs’ standing therein. Plaintiffs, Kirkland, Ms. Sciola, and Country Fair

agreed to be bound by a joint ruling as to standing in both cases. The trial

court initially found that the plaintiffs in Country Fair’s case had statutory

standing under FACTA.         However, after granting Country Fair’s motion for

reconsideration, the court determined that FACTA did not confer statutory

standing, but plaintiffs had nonetheless pled sufficient facts to attain standing

under Pennsylvania’s traditional standing principles. See Trial Court Opinion

(“Country Fair”), 8/20/20, at 8.         Based upon the reasoning set forth in the

opinion overruling Country Fair’s preliminary objections, the trial court

overruled Kirkland’s preliminary objections. See Order of Court, 8/20/20.

       This timely appeal followed.3 Kirkland presents a single issue for our

consideration: “Whether the trial court erred when it held that Plaintiffs had

standing to assert a violation of [FACTA], when the only harm they alleged

was a bare technical violation of the statute and where no actual harm, or

substantial risk of harm, was alleged?” Kirkland’s brief at 6.

       We review orders overruling preliminary objections “to determine

whether the trial court committed an error of law. When considering the

appropriateness of a ruling on preliminary objections, the appellate court

must apply the same standard as the trial court.” Am. Interior Constr. &

____________________________________________

3 Although this Court initially denied Kirkland’s petition for permission to
appeal, we subsequently granted the petition following the filing of a motion
for reconsideration. We note that the trial court did not order Kirkland to file
a concise statement pursuant to Pa.R.A.P. 1925(b), and the trial court did not
submit a Rule 1925(a) opinion.

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Blinds Inc. v. Benjamin's Desk, LLC, 206 A.3d 509, 512 (Pa.Super. 2019)

(cleaned up). Standing presents a question of law, “thus, our standard of

review is de novo and our scope of review is plenary.” S.G. v. J.M.G., 186

A.3d 995, 997 (Pa.Super. 2018) (cleaned up).

       A party filing suit in a Pennsylvania court “‘must establish as a threshold

matter that he has standing to maintain the action.’”          Johnson v. Am.

Standard, 8 A.3d 318, 329 (Pa. 2010) (quoting Fumo v. City of

Philadelphia, 972 A.2d 487, 496 (Pa. 2009)). “Unlike the federal courts,

which derive their standing requirements from Article III of the United States

Constitution, standing for Pennsylvania litigants has been created judicially.”4

Id. (citation omitted).

       Specifically, in Pennsylvania there are two avenues for a litigant to

establish standing: (1) by statute, which expressly prescribes the individuals

who have standing to pursue a particular action thereunder; or (2) in the

absence of such a statutory prescription, by satisfying the requirements of

Pennsylvania’s traditional standing doctrine. See Milby v. Pote, 189 A.3d

1065, 1076–77 (Pa.Super. 2018) (“These traditional standing requirements

apply only when a specific statutory provision for standing is lacking.”).
____________________________________________

4 In the federal context, “Article III standing requires a concrete injury even
in the context of a statutory violation.” Spokeo, Inc. v. Robins, 578 U.S.
330, 341 (2016). Accordingly, the Third Circuit has found that a purely
technical violation of FACTA, without further injury by way of, inter alia,
identity theft, does not confer Article III standing. See Kamal, supra at 117
(holding that “absent a sufficient degree of risk, J. Crew’s alleged violation of
FACTA is a bare procedural violation that does not create Article III standing”
(cleaned up)).

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      We begin with an overview of statutory standing. “[W]here the General

Assembly expressly prescribes the parties who may pursue a particular course

of action in Pennsylvania courts, legislative enactments may further enlarge

or distill these judicially-applied principles.” Int. of K.N.L., 284 A.3d 121,

136-37 (Pa. 2022) (citations omitted). In these circumstances, “the question

involved is whether the interest the plaintiff seeks to protect is arguably within

the zone of interests to be protected by the statute. Accordingly, the answer

to any question concerning statutory standing involves a careful analysis of

the relevant statutory scheme.”     Milby, supra at 1077 (cleaned up).        For

example, the Child Custody Act expressly prescribes who may pursue an

action thereunder.    See 23 Pa.C.S. §§ 5324 (“Standing for any form of

physical custody or legal custody”), 5325 (“Standing for partial physical

custody and supervised physical custody”).

      In the absence of a statutory prescription, our traditional standing

doctrine applies, which “is a judicially-created tool intended to ‘winnow out’

litigants with no direct interest in the matter, and to otherwise protect against

improper parties.” Int. of K.N.L., supra at 136 (citation omitted). As our

Supreme Court recently explained:

      The “core concept” of standing is that the litigant must be
      “adversely affected” in some way. Under this Court’s precedent,
      the prerequisites to standing are satisfied where the complaining
      party’s interest is substantial, direct, and immediate, meaning
      that the party’s interest surpasses that of the general public in
      procuring obedience to the law, the harm alleged was caused by
      the matter complained of, and the harm is not remote and
      speculative.

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Trust Under Will of Ashton, 260 A.3d 81, 88 (Pa. 2021) (cleaned up). “In

particular, it is not sufficient for the person claiming to be ‘aggrieved’ to assert

the common interest of all citizens in procuring obedience to the law.” Wm.

Penn Parking Garage, Inc. v. City of Pittsburgh, 346 A.2d 269, 280-81

(Pa. 1975) (cleaned up). Moreover, “[t]he doctrine of standing stems from

the principle that judicial intervention is appropriate only where the underlying

controversy is real and concrete, rather than abstract.”         Firearm Owners

Against Crime v. Papenfuse, 261 A.3d 467, 481 (Pa. 2021) (cleaned up).

      In the case sub judice, the trial court held that FACTA did not confer

statutory standing.    It further concluded that the Third Circuit’s holding in

Kamal regarding Article III standing in FACTA cases was not compelling since

Pennsylvania does not adhere to Article III’s concrete-injury requirement.

Instead, applying Pennsylvania’s traditional standing principles to the above

facts, the trial court concluded that Plaintiffs had standing. See Trial Court

Opinion (Country Fair), 8/20/20, at 8.

      Kirkland’s argument is simple:        the trial court erred in finding that

Plaintiffs had standing under Pennsylvania law where they have not suffered

any actual harm. See Kirkland’s brief at 35. Plaintiffs, on the other hand,

contend that Kirkland’s argument improperly restricts Pennsylvania’s standing

doctrine to the federal courts’ Article III-based “‘concrete injury’ framework.”

Plaintiffs’ brief at 22. Essentially, Plaintiffs contend that the trial court reached

the correct result for the wrong reason. Relying on Ashton, supra, Plaintiffs

argue that they do have statutory “standing to enforce an interest arising

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purely out of law, irrespective of any ‘actual’ or monetary harm, subject only

to the condition that the plaintiff personally possesses the legal right under

which the cause of action is brought.” Id. at 21-23. Thus, Plaintiffs aver that

they did not need to meet Pennsylvania’s traditional standing requirements

and insist that “[g]iven [Plaintiffs’] clear qualification to bring a FACTA claim

against Kirkland’s, and Pennsylvania courts’ clear concurrent jurisdiction to

hear FACTA claims, this Court should rule that [Plaintiffs] have statutory

standing[.]” Id. at 22-23, 28. Alternatively, Plaintiffs agree with the trial

court’s conclusion that they satisfied Pennsylvania’s traditional standing

doctrine. Id. at 29.

       We disagree with Plaintiffs’ contention that FACTA conferred upon them

statutory standing. Notably absent from FACTA is a provision, like those in

the Child Custody Act, delineating who has standing to pursue an action

thereunder.5 Thus, while FACTA includes liability provisions that create private

rights of action, there is no standing provision that “expressly prescribes the

parties who may pursue a [FACTA] action in Pennsylvania courts[.]” Int. of

K.N.L., supra at 136 (citation omitted). A statute setting forth a private right

of action does not automatically confer standing. See Jackson v. Garland,

622 A.2d 969, 971 (Pa.Super. 1993) (“The law of standing provides that one

cannot invoke the jurisdiction of the court to enforce private rights or to

____________________________________________

5 Cf. also, e.g., 13 Pa.C.S. § 2A531 (“Standing to sue third parties for injury
to goods”), 53 P.S. § 11701.202 (“The following have standing to request a
determination of municipal financial distress from the secretary. . . .”).

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maintain a civil action for the enforcement of such rights, unless he or she

has, in an individual or representative capacity, some real interest in the cause

of action, or a legal right, title or interest in the subject matter or

controversy.”). As FACTA contains no standing provision, Plaintiffs may not

invoke statutory standing to pursue their action in state court.            Lacking

statutory standing, Pennsylvania’s traditional standing doctrine applies.

      In finding that Plaintiffs had satisfied the traditional tripartite test, the

trial court held as follows: (1) “Plaintiffs’ interest far outstrips that of ordinary

citizens in procuring obedience to the law, because it was Plaintiffs’ personal

information that was printed on the offending receipts[;]” (2) “there is a causal

relationship between [Kirkland’s] conduct and the harm to Plaintiffs’ rights to

enjoy the protections of FACTA” as a result of Kirkland printing receipts in

violation of FACTA; and (3) “the causal connection has already occurred, and

was complete when [Kirkland] tendered the allegedly illegal receipts to

Plaintiffs[.]” Trial Court Opinion (Country Fair), 8/20/20, at 23. “Simply put,

[Kirkland], by its lack of compliance with FACTA, caused the alleged harm to

Plaintiffs’ interests, and this cause-effect connection is neither too remote nor

too speculative to escape adjudication in our courts.” Id. at 24.

      The trial court’s conclusion amounts to a finding that the mere printing

of a receipt in violation of FACTA, regardless of the severity of the violation,

per se aggrieves a customer.       We cannot countenance such a conclusion.

While not binding, we find the analysis of the Third Circuit in Kamal, supra,

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particularly pertinent to whether Plaintiffs were aggrieved pursuant to

Pennsylvania’s traditional standing doctrine.

      By way of background, Kamal received three receipts from J. Crew, all

of which included the first six and the last four digits of his credit card number.

As a result of this alleged willful violation of FACTA, Kamal filed a federal class

action suit. The District Court dismissed Kamal’s complaint “because Kamal

had alleged only a technical violation of FACTA and not a concrete injury[.]”

Id. at 109.

      The Third Circuit reiterated that Article III standing requires, inter alia,

an injury in fact. “To show injury in fact, a plaintiff must allege an invasion of

a legally protected interest that is concrete and particularized and actual or

imminent, not conjectural or hypothetical.      The injury must be concrete in

both a qualitative and temporal sense, and an abstract injury will not suffice.”

Id. at 110 (cleaned up). Similarly, it recounted the United States Supreme

Court’s holding “that a plaintiff does not automatically satisfy the injury-in-

fact requirement whenever a statute grants a person a statutory right and

purports to authorize that person to sue to vindicate that right.” Id. at 110-

11 (cleaned up).    Further, the Kamal Court recalled the Supreme Court’s

warning that “Congress cannot statutorily manufacture Article III standing in

the case of a bare procedural violation, divorced from any concrete harm.

Rather, a procedural violation must yield or risk actual harm to meet the

requirements of Article III.” Id. at 111 (cleaned up).

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       In sum, the Third Circuit interpreted the Supreme Court’s precedent as

follows:   “an alleged procedural violation manifests concrete injury if the

violation actually harms or presents a material risk of harm to the underlying

concrete interest. If the violation does not present a material risk of harm to

that underlying interest, however, a plaintiff fails to demonstrate concrete

injury.” Id. at 112-13 (cleaned up).

       Kamal alleged two injuries: the printing of the receipt in violation of

FACTA and the increased risk of identity theft as a result of the printing. The

Third Circuit held that “the procedural violation is not itself an injury in fact,

and Kamal has not otherwise alleged a risk of harm that satisfies the

requirement of concreteness.” Id. at 113.

       Based on the plain text of FACTA, which requires truncation of all
       but the last five digits of a consumer’s credit card number, we
       recognize Congress identified the violation alleged here. By
       creating a private right of action to enforce FACTA’s provisions and
       allowing for statutory damages for willful violations, Congress has
       expressed an intent to make the injury redressable.

       But the Clarification Act also expresses Congress’s judgment that
       not all procedural violations of FACTA will amount to concrete
       harm. The congressional findings underlying the Act are directed
       to the risk incurred by printing the expiration date when the card
       number is properly truncated. Though expiration date truncation
       is not at issue here, Congress’s action to limit FACTA liability to
       those claims implicating actual harm accords with our
       understanding of Article III.[6]
____________________________________________

6 By way of background, after FACTA’s enactment “launched ‘hundreds of
lawsuits’ based on receipts printed with expiration dates ‘even where the
account number was properly truncated,’” Congress passed the Credit and
Debit Card Receipt Clarification Act of 2007 (“Clarification Act”). Thomas v.

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Id. (cleaned up).

       Kamal argued that Congress had found “all conduct prohibited by FACTA

creates a sufficient risk of identity theft.” Id. at 115 (cleaned up). Noting

that the cited congressional findings related only to instances where retailers

printed the credit card number in full on receipts, the Third Circuit rejected

Kamal’s argument and considered whether he set forth sufficient facts to show

a particular risk of harm. Id. at 115 n.5, 116. Ultimately, it agreed with the

District Court as follows:

       Kamal has alleged neither third-party access of his information,
       nor that the receipt included enough information to likely enable
       identity theft. Our analysis would be different if, for example,
       Kamal had alleged that the receipt included all sixteen digits of his
       credit card number, making the potential for fraud significantly
       less conjectural. Here, however, we agree with the District Court
       that this speculative chain of events does not constitute a material
       risk of harm.

Id. at 116 (footnote omitted) (explaining the chain of events as: “Kamal loses

or throws away the receipt, which is then discovered by a hypothetical third

party, who then obtains the six remaining truncated digits along with any

____________________________________________

TOMS King (Ohio), LLC, 997 F.3d 629, 633 (6th Cir. 2021) (quoting
Clarification Act, Pub. L. No. 110-241 § 2(a)(4)-(5)). Since proper truncation,
irrespective of the inclusion of an expiration date, was found to protect against
identity theft, the Clarification Act amended 15 U.S.C. § 1681n to refine the
meaning of “willful noncompliance” in relation to the inclusion of expiration
dates on printed receipts. In doing so, Congress explained that the stated
purpose of the Clarification Act was “to ensure that consumers suffering from
any actual harm to their credit or identity are protected while simultaneously
limiting abusive lawsuits that do not protect consumers but only result in
increased cost to business and potentially increased prices to consumers.”
Clarification Act § 2(b).

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additional information required to use the card, such as the expiration date,

security code or zip code” (cleaned up)).

      Thus, the Third Circuit held that “absent a sufficient degree of risk, J.

Crew’s alleged violation of FACTA is a bare procedural violation that does not

create Article III standing.” Id. at 117 (cleaned up). It further found that

“[t]his result falls within the Supreme Court’s admonition that when Congress

adopts procedures designed to decrease the risk of harm to a concrete

interest, a violation of one of those procedural requirements may result in no

harm.” Id. (cleaned up).

      We now return to the instant case. As in Kamal, Plaintiffs have “alleged

neither third-party access of [the] information, nor that the receipt included

enough information to likely enable identity theft.” Kamal, supra at 116. All

Plaintiffs have alleged is the same interest of all customers in receiving

receipts in compliance with FACTA, namely, that they be properly truncated

when printed. Plaintiffs’ speculative chain of events that the receipts placed

them at heightened risk for identity theft solely based on their existence

simply does not amount to an interest that is substantial, direct, and

immediate, which our Supreme Court identified as the              foundational

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components of standing. See Ashton, supra at 88. Stated simply, Kirkland’s

conduct has not adversely affected them.7

       Based on the foregoing, the core concept of our standing doctrine has

not been satisfied and the trial court erred in overruling Kirkland’s preliminary

objection as to standing. Since we conclude that Plaintiffs lack standing under

Pennsylvania law, we reverse the order overruling Kirkland’s preliminary

objection and dismiss the complaint.8

       Order reversed. Complaint dismissed.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

____________________________________________

7 We observe that our holding aligns with Congress’s intent that FACTA provide
relief for consumers who suffer an “actual harm to their credit or identity[.]”
Clarification Act § 2(b).
8 Kirkland and Plaintiffs filed applications for post-submission communications

asking this Court to consider supplemental authorities in our analysis. See
Kirkland’s Application for Post-Submission Communication, 1/17/23
(regarding Saleh v. Miami Gardens Square One, Inc., 353 So.3d 1253
(Fla.Dist.Ct.App. 2023)); Plaintiffs’ Application for Post-Submission
Communication, 1/18/23 (regarding Int. of K.N.L., 284 A.3d 121 (Pa.
2022)); Kirkland’s Application for Post-Submission Communication, 4/7/23
(regarding Limon v. Circle K Stores Inc., 300 Cal.Rptr.3d 572 (Cal.Ct.App.
2022)). Those applications are granted insofar as we have reviewed these
decisions and, to the extent we have found it appropriate to do so,
incorporated the relevant authorities into our analysis.

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Date: 5/16/2023

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