REPORT AND RECOMMENDATION

PATRICIA L. DODGE, Magistrate Judge.

I. Recommendation

Upon review and consideration of the Joint Motion for Determination of Subject Matter Jurisdiction filed by the parties, it is respectfully recommended that this case be dismissed for lack of subject matter jurisdiction.

II. Report

Plaintiffs Ashley Gennock and Jordan Budai brought this action individually and on behalf of all others similarly situated against Defendant, Kirkland's, Inc., alleging violations of the Fair and Accurate Credit Transactions Act, 15 U.S.C. § 1681c(g) (FACTA). Specifically, they allege that contrary to the express requirements of the Act, Kirkland's provided them on several occasions with paper receipts that displayed more than the last five digits of their credit card numbers.

Presently before the Court is a Joint Motion for Determination of Subject Matter Jurisdiction (ECF No. 43). The parties request that the Court determine whether, in light of a recent decision by the United States Court of Appeals for the Third Circuit, Plaintiffs have standing to bring this action.

A. Facts Alleged in Complaint

Ashley Gennock alleges that on or about April 8, 2017, she made multiple purchases with her personal credit/debit card at the Kirkland's store located in Grove City, Pennsylvania. She claims that on more than one occasion, Kirkland's provided her with a paper receipt which displayed the first six and last four digits of her personal credit/debit card, in violation of FACTA's requirements. She has retained some, but not all, of her FACTA-violating receipts. She alleges that she "is at increased risk of identity theft and payment card fraud—the precise harm Congress sought to prevent with its passage of FACTA." (Compl. ¶¶ 15-16.)1

Jordan Budai similarly states that on or about February 18, 2017, he made a purchase with a personal credit/debit card at the Kirkland's store in Grove City, Pennsylvania and has made several other purchases from Kirkland's. On more than one occasion, he alleges, Kirkland's provided him with a paper receipt which displayed the first six and last four digits of his personal credit/debit card in violation of FACTA's requirements. He has retained some, but not all, of the FACTA-violating receipts. He alleges that he "is at increased risk of identity theft and payment card fraud—the precise harm Congress sought to prevent with its passage of FACTA." (Compl. ¶¶ 17-18.)

According to the Complaint, Kirkland's operates approximately 376 retail stores in 35 states and routinely provided paper receipts to its customers at the point of sale in its various retail stores which displayed more than the last five digits of the customers' credit and/or debit cards, in violation of the requirements of FACTA. (Compl. ¶¶ 19-20.) Plaintiffs allege that Kirkland's had actual knowledge of FACTA's truncation requirements or acted recklessly with respect to them, specifically with regard to the requirement that no more than the last five digits of credit and debit cards be printed on receipts presented to consumers at the point of sale. They further claim that Kirkland's has had agreements with various credit card issuers, including VISA, Mastercard, American Express and others, which would have apprised Kirkland's of its obligation to truncate credit and debit card account numbers. Plaintiffs further allege that Kirkland's also received periodic communications and monthly statements from credit card issuers and/or its merchant banks advising it of its obligation and that should have also received this information from its Point of Sale provider and from trade association and/or other similar entities. (Compl. ¶¶ 47-52.)

B. Relevant Procedural History

Plaintiffs commenced this class action on April 10, 2017 pursuant to Rule 23(a) and (b) of the Federal Rules of Civil Procedure. (Compl. ¶¶ 53-54.) They seek an order certifying the class and appointing them as class representatives with their counsel as class counsel, an award of statutory damages pursuant to 15 U.S.C. § 1681n(a)(1)(A) for Defendant's willful violations, an award of punitive damages pursuant to 15 U.S.C. § 1681n(a)(2), payment of costs of suit and reasonable attorney's fees pursuant to 15 U.S.C. § 1681n(a)(3), and other and further relief as the Court may deem proper. (Compl. at 18-19.) Federal question jurisdiction is based on the FACTA claim, 28 U.S.C. § 1331; 15 U.S.C. § 1681p.

On January 24, 2018, subsequent to the denial of its Motion to Dismiss, Defendant moved for a stay of this action (ECF No. 31) in light of the pendency of Kamal v. J. Crew Group, Inc., No. 17-2345, which raised the issue of Article III standing in FACTA cases. On January 31, 2018, an order was entered granting Defendant's motion (ECF No. 36) and on February 1, 2018, the case was statistically closed. (ECF No. 37).

Plaintiffs filed a motion to lift the stay (ECF No. 38) on July 23, 2019 after the Court of Appeals issued a decision in Kamal case. Judge Cercone granted the motion, lifted the stay and reopened the case (ECF No. 40), which was then referred to the undersigned.

The parties have now filed the instant Joint Motion for Determination of Subject Matter Jurisdiction (ECF No. 43). Defendant argues that in light of the Kamal decision as well as the Memorandum Order of Judge Hornak in Budai v. Country Fair, Inc., Civ. A. No. 18-1120 (ECF No. 19), Plaintiffs lack Article III standing and therefore, the Court lacks subject matter jurisdiction in this matter. Plaintiffs assert that they have standing because the complaint falls within an exception delineated in a footnote in the Kamal decision.

C. Standing

A party bringing a lawsuit must establish standing to prosecute an action in every federal case. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004). As the United States Supreme Court has explained:

Friends of the Earth, Inc. v. Laidlaw Envt'l Servs (TOC), Inc., 528 U.S. 167, 180-81 (2000).

In Kamal v. J. Crew Group, Inc., 918 F.3d 102, 114-15 (3d Cir. 2019), the plaintiff alleged that a retail store had provided receipts to him on multiple occasions that displayed both the first six digits and last four digits of his credit care in violation of FACTA. The plaintiff contended that he sustained two concrete injuries, i.e., the printing of the receipts and the increased risk of identity theft resulting from the printing. Id. at 108. The Court of Appeals for the Third Circuit, applying the Supreme Court's holding in Spokeo, Inc. v. Robins, 136 S.Ct. 1540 (2016), held that these bare procedural violations of FACTA were not sufficiently concrete injuries to confer Article III standing upon the plaintiff. Although the Kamal Court acknowledged that the Court of Appeals for the Eleventh Circuit found the same FACTA violation created a concrete injury by analogizing the situation to a common law breach of confidence action, Id. at 117 (citing Muransky v. Godiva Chocolatier, Inc., 905 F.3d 1200, 1213 (11th Cir. 2018)), the Third Circuit concluded that a breach of confidence action is not analogous absent third-party disclosure, which was not alleged in the Kamal complaint.2

In a footnote, the Third Circuit Court of Appeals observed that the Muransky court held that in addition to alleging a concrete injury based on the statutory violation, the plaintiff alleged an additional injury of "shouldering the cost of safely keeping or destroying the receipt" to "avoid someone finding [the] credit card number on [the] receipt." Id. at 118 n.10. Because this issue was not raised by the plaintiff, the Third Circuit noted that it need not speculate regarding how such an allegation might change its analysis.

In a recent opinion, Judge Hornak addressed this issue. Budai v. Country Fair, Inc., Civ. A. No. 18-1120 (ECF No. 19) (Aug. 21, 2019). In Budai, the plaintiffs argued that Kamal could be distinguished because they retained some of the non-compliant receipts and were burdened with having to safeguard or destroy them. As Judge Hornak observed, the Kamal court held that the non-compliant receipt in that case did not materially increase the risk of identity theft. Thus, Judge Hornak predicted that the Court of Appeals similarly would hold that the "burden" of destroying a non-FACTA complaint receipt would not constitute a sufficiently concrete injury in fact for Article III standing purposes. Id. at 3 (citing McCloud v. Save-a-lot Knoxville, LLC, 388 F.Supp.3d 954, 969 (E.D. Tenn. 2019)), appeal filed, No. 19-5653 (6th Cir. June 19, 2019). As the court stated in McCloud, while the theory hinges on whether the plaintiff faces any material risk of his identity being stolen, a plaintiff "cannot manufacture his own injury based on speculation about a threat which does not present any material risk of real harm." McCloud, 388 F. Supp. 3d at 969 (citing Clapper v. Amnesty Int'l, USA, 568 U.S. 398, 416 (2013)).

Based upon the holding in Kamal, this Court finds that Plaintiffs do not have Article III standing because they have alleged only a bare procedural violation of FACTA. Moreover, the Court agrees with the prediction in Judge Hornak's well-reasoned opinion that even if the Complaint in this case had alleged the additional "burden" of having to safeguard or destroy receipts, the Court of Appeals would hold that this is insufficient to confer Article III standing because it does not increase the material risk of identity theft. Therefore, the Court lacks subject matter jurisdiction over Plaintiffs' claims.

For these reasons, it is recommended that this action be dismissed without prejudice for lack of subject matter jurisdiction.

Litigants who seek to challenge this Report and Recommendation must seek review by the district judge by filing objections by October 8, 2019. Any party opposing the objections shall file a response by October 22, 2019. Failure to file timely objections will waive the right of appeal.