Third Circuit Affirms Dismissal of Class Action for Printing Expiration Month on Credit Card Receipts

February 3, 2012

Last week, the U.S. Court of Appeals for the Third Circuit issued an important decision making clear that a defendant cannot be held liable in a civil action for willfully violating a statute if its interpretation of the statute is “objectively reasonable.”  Long v. Tommy Hilfiger U.S.A., Inc., No. 11-1554, __ F.3d __ (3d Cir. Jan. 24, 2012).  Montgomery McCracken represented Tommy Hilfiger U.S.A.

The case involved the printing of expiration dates on credit card receipts.  Plaintiff purchased a tie at a Tommy Hilfiger retail outlet on his credit card and was given an electronically printed receipt that displayed the month, but not the year, of his card’s expiration date.  He subsequently brought suit on behalf of a putative class alleging Hilfiger willfully violated the Fair and Accurate Credit Transactions Act, 15 U.S.C. § 1681(c)(g) (“FACTA”), by printing the month of the expiration date of his credit card.  FACTA provides, in pertinent part, that “no person that accepts credit cards or debit cards for the transaction of business shall print … the expiration date upon any receipt provided to the cardholder.”  Plaintiff sought to recover $100 to $1,000 for every credit and debit card receipt Hilfiger issued since June 2008.

Hilfiger moved to dismiss the complaint on two grounds:  (1) a month by itself is not an expiration date and, thus, Hilfiger did not violate the statute’s prohibition against printing cardholders’ expiration dates; and (2) even if printing the month was a technical violation of the statute, it could not have been a willful violation because Hilfiger’s interpretation of the statute was objectively reasonable.  The district court agreed with Hilfiger on both points and dismissed the complaint.

On appeal, the Third Circuit held that although Hilfiger should not have printed any portion of the plaintiff’s expiration date, dismissal was appropriate because Hilfiger’s interpretation of the statute was objectively reasonable.  Citing the Supreme Court’s opinion in Safeco Insurance Co. of America v. Burr, 551 U.S. 47 (2007), the Third Circuit noted that “there was no guidance from the federal courts of appeal on this issue” and that the handful of district court opinions addressing similar FACTA violations were “not directly on-point because they involve[d] merchants who, unlike here, printed the entire expiration date.”

The Third Circuit’s affirmation that courts should apply an objective standard in determining whether a defendant’s interpretation of a statute is reasonable is especially important because it renders unnecessary any factual analysis and discovery into the defendant’s decision-making process.