Stillmock v. Weis Markets, Inc.

UNPUBLISHED

UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT

No. 09-1632

PATRICK STILLMOCK; JEANNE STILLMOCK; JENNY BARNSTEIN; LEONID
OPACIC, individually and on behalf of a class of all those
similarly situated,

Plaintiffs - Appellants,

v.

WEIS MARKETS, INCORPORATED,

Defendant - Appellee.

Appeal from the United States District Court for the District of
Maryland, at Baltimore. Marvin J. Garbis, Senior District
Judge. (1:07-cv-01342-MJG)

Argued: March 23, 2010 Decided: July 1, 2010

Before TRAXLER, Chief Judge, WILKINSON, Circuit Judge, and
HAMILTON, Senior Circuit Judge.

Vacated and remanded by unpublished opinion. Senior Judge
Hamilton wrote the opinion, in which Chief Judge Traxler joined.
Judge Wilkinson wrote a separate opinion concurring specially.

ARGUED: Martin Eugene Wolf, QUINN, GORDON & WOLF, CHTD, Towson,
Maryland, for Appellants. Charles Mikell Hart, DUANE MORRIS,
LLP, Cherry Hill, New Jersey, for Appellee. ON BRIEF: Richard
S. Gordon, Benjamin H. Carney, QUINN, GORDON & WOLF, CHTD,
Towson, Maryland; Cory L. Zajdel, Z LAW, LLC, Towson, Maryland;
Katherine B. Bornstein, BARROWAY, TOPAZ, KESSLER, MELTZER &
CHECK, Radnor, Pennsylvania; David A. Searles, DONOVAN SEARLES,
LLC, Philadelphia, Pennsylvania, for Appellants. Dana B.
Klinges, Robert M. Palumbos, DUANE MORRIS, LLP, Philadelphia,
Pennsylvania, for Appellee.

Unpublished opinions are not binding precedent in this circuit.

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HAMILTON, Senior Circuit Judge:

In an effort to curb identity theft, Congress enacted the

Fair and Accurate Credit Transactions Act of 2003 (FACTA),

thereby amending the Fair Credit Reporting Act (FCRA), 15 U.S.C.

§§ 1681 - 1681x, to provide that “no person that accepts credit

cards or debit cards for the transaction of business shall

[electronically] print more than the last 5 digits of the card

number . . . upon any receipt provided to the cardholder at the

point of the sale or transaction.” 15 U.S.C. § 1681c(g)(1).

This statutory provision is commonly known as FACTA’s truncation

requirement. “Any person who willfully fails to comply with”

FACTA’s truncation requirement “with respect to any consumer is

liable to that consumer in an amount equal to the sum of . . .

any actual damages sustained by the consumer as a result of the

failure or [statutory] damages of not less than $100 and not

more than $1,000,” id. § 1681n(a)(1)(A), plus “such amount of

punitive damages as the court may allow,” id. § 1681n(a)(2),

and, “in the case of any successful action to enforce any

liability under this section, the costs of the action together

with reasonable attorney’s fees as determined by the court,” id.

§ 1681n(a)(3). 1

1
FCRA also imposes liability for negligent violations of
FACTA’s truncation requirement, 15 U.S.C. § 1681o(a), but such
provision is not at issue in the present appeal.

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 In this interlocutory appeal, plaintiff-appellants Patrick

Stillmock, Jeanne Stillmock, Jenny Barnstein, and Leonid Opacic

(collectively Plaintiffs) challenge the district court’s denial

of their motion for class action certification on behalf of

themselves and all other customers of retail stores owned and

operated by Weis Markets, Inc. (Weis Markets), which customers

received credit card and debit card receipts printed in

violation of FACTA’s truncation requirement. 2 The putative class

expressly excluded customers of Weis Markets’ stores who

suffered actual damages due to identity theft and any persons

who had ever been executives of Weis Markets. For reasons that

follow, we vacate the district court’s denial of Plaintiffs’

motion for class certification and remand for further

proceedings. 3

2
Originally, Patrick Stillmock and Jeanne Stillmock filed
their own separate action seeking class action certification,
Jenny Barnstein filed her own seeking the same, as well did
Leonid Opacic. The district court subsequently dismissed the
actions filed by Jenny Barnstein and Leonid Opacic and added
them as plaintiffs in the action filed by the Stillmocks.
Stillmock v. Weis Markets, Inc., 2009 WL 595642 *1 (D. Md. March
5, 2009).
3
On June 3, 2009, we granted Plaintiffs’ petition for
permission to file this interlocutory appeal.

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 I.

Federal Rule of Civil Procedure 23 “states that ‘[a] class

action may be maintained’ if two conditions are met: The suit

must satisfy the criteria set forth in subdivision (a) (i.e.,

numerousity, commonality, typicality, and adequacy of

representation), and it also must fit into one of the three

categories described in subdivision (b).” Shady Grove

Orthopedic Assocs., P.A. v. Allstate Ins. Co., 130 S. Ct. 1431,

1437 (2010) (quoting Fed. R. Civ. P. 23). The only category

described in subdivision (b) at issue in the present appeal is

subdivision (b)(3), which is satisfied if “the court finds that

the questions of law or fact common to class members predominate

over any questions affecting only individual members, and that a

class action is superior to other available methods for fairly

and efficiently adjudicating the controversy.” Fed. R. Civ. P.

23(b)(3). The same subdivision further provides:

The matters pertinent to these findings include:

(A) the class members’ interests in individually
controlling the prosecution or defense of separate
actions;

(B) the extent and nature of any litigation
concerning the controversy already begun by or against
class members;

(C) the desirability or undesirability of
concentrating the litigation of the claims in the
particular forum; and

(D) the likely difficulties in managing a class
action.
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Id. Notably, “‘[c]ertification is only concerned with the

commonality (not the apparent merit) of the claims and the

existence of a sufficiently numerous group of persons who may

assert those claims.’” Brown v. Nucor Corp., 576 F.3d 149, 152

(4th Cir. 2009) (quoting Lilly v. Harris-Teeter Supermarket, 720

F.2d 326, 332-33 (4th Cir. 1983)), cert. denied, Nucor Corp. v.

Brown, 130 S. Ct. 1720 (2010).

“When deciding a motion for class certification, a district

court does not accept the plaintiff’s allegations in the

complaint as true; rather, an evidentiary hearing is typically

held on the certification issue.” Monroe v. City of

Charlottesville, Va., 579 F.3d 380, 384 (4th Cir. 2009), cert.

denied, 130 S. Ct. 1740 (2010). Here, the district court

accepted materials submitted by the parties in regard to

Plaintiffs’ motion for class action certification and held an

evidentiary hearing thereon. Unless otherwise specified, we

rely upon the factual findings made by the district court in

ruling on Plaintiffs’ motion for class certification in our

analysis of the issues on appeal.

Patrick and Jeanne Stillmock, husband and wife, and Jenny

Barnstein all reside in Maryland, while Leonid Opacic resides in

Pennsylvania. Weis Markets is a Pennsylvania corporation, which

owns and operates grocery stores throughout Maryland,

Pennsylvania, New Jersey, West Virginia, and New York.

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 Despite being enacted on December 3, 2003, FACTA gave

merchants who accept credit cards and/or debit cards either one

or three years to comply, depending upon when the “cash register

or other machine or device that electronically prints receipts

for credit card or debit card transactions” was first put to

use. 15 U.S.C. § 1681c(g)(3). For purposes of considering

Plaintiffs’ motion for class certification, the district court

assumed January 1, 2005 constituted FACTA’s effective date with

respect to Weis Markets. Based upon that assumption, the

district court found that, starting no later than January 1,

2005, and continuing until about June 2007, Weis Markets

provided to its customers, paying either by credit or debit

card, receipts that had printed thereon a total of ten digits of

their respective card numbers (the first six and the last four).

The district court next found that “[w]hile the record does not

permit a more precise estimate, it appears that at least a

million of such receipts were provided to a hundred thousand or

more individual customers.” 4 Stillmock, 2009 WL 595642 at *1.

Notably, FCRA defines the term “consumer” as “an individual.”

15 U.S.C. § 1681a(c).

4
Weis Markets estimates that it printed 14,578,600 FACTA
violative receipts between December 4, 2006 and June 7, 2007
(the date on which Weis Markets adjusted all of its point-of-
sale electronic receipt systems to print no more than the last
four digits of a customer’s credit or debit card number).

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 Plaintiffs’ motion for class certification proposed that

the district court certify a class consisting of the following

individuals:

“All persons in the United States to whom, or after
the effective and applicable dates for FACTA
compliance and continuing through resolution of this
case, received from Defendant at any of its retail
locations, an electronically printed receipt at the
point of sale or transaction which contained more than
the last five digits of the person’s credit or debit
card number.”

Stillmock, 2009 WL 595642 at *1. In addition to persons who

have ever been executives of Weis Markets, “[e]xcluded from the

[putative] Class are those individuals who have suffered actual

damages due to identity theft caused by Defendant’s FACTA

violations.” Id. at *2.

The district court first held that Plaintiffs’ purported

class action satisfied each of Rule 23(a)’s four criteria.

Notably, Weis Markets does not argue on appeal that the district

court erred in so holding. However, because the district

court’s findings with respect to Rule 23(a)’s four criteria

provide context for our discussion of the Rule 23(b)(3) issues

on appeal, we take time to set forth such findings at this

point.

The first criterion is satisfied if the putative class is

“so numerous that joinder of all members is impracticable.”

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Fed. R. Civ. P. 23(a)(1). With respect to the first criterion,

the district court found:

All the members of the proposed class--consisting
of a substantial percentage of those persons who made
at least one credit or debit card purchase at a Weis
store during a period alleged to be almost 18 months--
could not practicably be joined as party Plaintiffs
herein.

Stillmock, 2009 WL 595642 at *2.

The second criterion is satisfied if there are “questions

of law or fact common to the class.” Fed. R. Civ. P. 23(a)(2).

With respect to the second criterion, the district court found:

There is no doubt that the claims of all the
putative class members present common questions of
fact and law regarding Weis’ liability. At the heart
of each class members’ claims are the undisputed fact
that Weis failed to comply with Section 1681c(g) and
the highly disputed question of whether Weis’ failure
to comply was willful. While there may be some issues
not common to all putative class members, for example
whether a particular claimant was a “consumer” under
the statute, there is no doubt that there are
questions of law and fact pertinent to liability that
are common to . . . all members of the proposed class.

Stillmock, 2009 WL 595642 at *2 (footnotes omitted). Notably,

the Supreme Court has interpreted the phrase “willfully fails to

comply,” in the preamble sentence of 15 U.S.C. § 1681n(a), as

reaching not only knowing violations of FCRA, but reckless ones

as well, Safeco Ins. Co. of Am. v. Burr, 551 U.S. 47, 57 (2007),

and has defined a reckless violation for purposes of § 1681n(a)

as one “entailing an unjustifiably high risk of harm that is

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either known or so obvious that it should be known,” id. at 68

(internal quotation marks omitted).

The third criterion is satisfied if “the claims or defenses

of the representative parties are typical of the claims or

defenses of the class . . . .” Fed. R. Civ. P. 23(a)(3). In

finding this criterion satisfied, the district court credited

Plaintiffs’ claims that each is a typical customer of Weis

Markets and relied upon the fact that Weis Markets agreed that

its pertinent intent was the same with respect to all receipts

that it had issued in violation of FACTA’s truncation

requirement.

The fourth criterion is satisfied if “the representative

parties will fairly and adequately protect the interests of the

class.” Fed. R. Civ. P. 23(a)(4). With respect to this fourth

criterion, the district court found Plaintiffs and their counsel

would fairly and adequately protect the interests of the

putative class members, which members all have the same interest

in establishing willfulness on the part of Weis Markets.

Turning to the district court’s Rule 23(b)(3) analysis, the

district court first determined that although there would be an

individualized question as to each putative class member’s

status as a consumer, in view of the simplicity of the consumer

status questions, it would assume the common question of Weis

Markets’ willfulness predominated over the individualized

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questions of consumer status. 15 U.S.C. § 1681n(a)(1)(A). The

district court next assumed “that Plaintiffs could propose

methods satisfactorily to solve with the myriad of practical

problems created by certifying the class that they seek.”

Stillmock, 2009 WL 595642 at *4. In this regard, the district

court “assume[d] that the requested class would include only

‘consumers’ who received violative receipts and would not have,

or at least would agree not to claim, more than $100 in actual

damages.” Id.

Interpreting FCRA’s provision concerning a defendant’s

civil liability, in general, for willful noncompliance with a

FCRA requirement, 5 see 15 U.S.C. § 1681n(a)(1)(A), the district

court next rejected Plaintiffs’ contention that a jury could

decide that every class member should receive the same amount of

statutory damages by considering only matters pertaining to Weis

Markets and common to each and every class member. According to

the district court, “a jury could properly consider, in deciding

the discretionary amount between $100 and $1,000 to award a

given class member, the number of times that [a] class member

was issued a non-compliant slip,” reasoning that a one-time

customer who received a single noncompliant receipt should

5
Remember that FACTA’s truncation requirement is one of
FCRA’s requirements.

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receive a lesser amount of statutory damages than a repetitive

customer who received dozens of noncompliant receipts over an

extended period of time. Stillmock, 2009 WL 595642 at *4. The

district court applied the same reasoning in concluding that

individualized factors could come into play in the jury’s award

of punitive damages per class member.

The district court next held that “there would be a slight

predominance of common questions” of liability over

individualized questions of liability, given the relative

complexity of the willfulness issue and the relative simplicity

of the consumer status issue with respect to each putative class

member. 6 Stillmock, 2009 WL 595642 at *5.

Nonetheless, the district court denied class certification

on two grounds. First, the district court denied class

certification on the ground that determining the quantum of

damages with respect to each class member would be too

individualized for class-wide treatment under Rule 23(b)(3).

Second, the district court denied class certification on the

ground that a class action as requested by Plaintiffs “would not

be superior and, indeed, would be inferior to having the

6
In order to invoke consumer status under FCRA, each
putative class member would merely need to show that he or she
was an “individual,” 15 U.S.C. § 1681a(c), as opposed to a
partnership, corporation, etc., id., § 1681a(b).

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Plaintiffs herein proceed on their individual claims and, if

they prevail, having them obtain whatever statutory and punitive

damages might be awarded together with their costs, including

reasonable legal fees.” Stillmock, 2009 WL 595642 at *6. In

this regard, the district court continued:

Should these Plaintiffs prevail on their willfulness
claim, other similarly situated Weis customers would
have the opportunity to file their own actions -- for
many, if not most, in a court that may be more
convenient for them than the District of Maryland.
Moreover, it appears likely that Weis would be
collaterally estopped from denying willfulness. See
Parklane Hosiery Co., Inc. v. Shore, 439 U.S. 322
(1979).

Id. This appeal followed.

II.

On appeal, Plaintiffs challenge the district court’s denial

of their motion for class action certification. We review a

district court’s denial of class action certification for abuse

of discretion, “recognizing, of course, that this discretion

must be exercised within the framework of Rule 23.” Gunnells v.

Healthplan Servs., Inc., 348 F.3d 417, 424 (4th Cir. 2003)

(internal quotation marks omitted).

A. Rule 23(b)(3)’s Commonality-Predominance Requirement.

Plaintiffs first contend that a consumer is entitled to

statutory damages pursuant to 15 U.S.C. § 1681n(a)(1)(A) on a

per violation basis, as opposed to a per consumer basis as

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implicitly held by the district court, and therefore, the

district court’s concern that the quantum of statutory damages

to be awarded with respect to each class member would be too

individualized for class-wide treatment was unfounded. While we

agree with the district court’s implicit holding that statutory

damages under § 1681n(a)(1)(A) are to be awarded on a per

consumer basis, we also agree with Plaintiffs that the district

court erred in concluding that individual issues of damages

would predominate over issues common to the class.

Critically, Rule 23(b)(3)’s commonality-predominance test

is qualitative rather than quantitative. Gunnells, 348 F.3d at

429. Thus, while courts have properly denied class

certification where individual damages issues are especially

complex or burdensome, see, e.g., Pastor v. State Farm Mut.

Auto. Ins. Co., 487 F.3d 1042, 1047 (7th Cir. 2007), where, as

here, the qualitatively overarching issue by far is the

liability issue of the defendant’s willfulness, and the

purported class members were exposed to the same risk of harm

every time the defendant violated the statute in the identical

manner, the individual statutory damages issues are insufficient

to defeat class certification under Rule 23(b)(3). See Murray

v. GMAC Mortg. Corp., 434 F.3d 948, 953 (7th Cir. 2006)

(“Refusing to certify a class because the plaintiff decides not

to make the sort of person-specific arguments that render class

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treatment infeasible would throw away the benefits of

consolidated treatment. Unless a district court finds that

personal injuries are large in relation to statutory damages, a

representative plaintiff must be allowed to forego claims for

compensatory damages in order to achieve class certification.”);

Smilow v. Southwestern Bell Mobile Systems, Inc., 323 F.3d 32,

40 (1st Cir. 2003) (“The individuation of damages in consumer

class actions is rarely determinative under Rule 23(b)(3).

Where . . . common questions predominate regarding liability,

then courts generally find the predominance requirement to be

satisfied even if individual damages issues remain.”). Here,

the putative class members were exposed to the identical risk of

identity theft in the identical manner by the repeated identical

conduct of the same defendant, and none suffered actual damages

from identity theft. Under these circumstances, it strains

credulity to conclude that the individual damages issues

presented by the purported class which Plaintiffs seek to

certify would be anything other than simple and straightforward.

Pragmatically, the only substantive difference between putative

class members for purposes of affixing the statutory damages

figure within the statutory damages range of $100 to $1,000 or

in awarding punitive damages is the number of receipts received

by a single class member during the approximately eighteen

months at issue. And indeed, this difference does not

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complicate matters very much at all given that the class can be

broken down into subcategories based upon the number of

violating receipts received per putative class member. In sum,

we hold that common questions of law and fact predominate over

the individual issues presented by Plaintiffs’ purported class

action, thus satisfying Rule 23(b)(3)’s commonality-predominance

test. See Klay v. Humana, Inc., 382 F.3d 1241, 1255 (11th Cir.

2004) (“Common issues of fact and law predominate if they have a

direct impact on every class member’s effort to establish

liability and on every class member’s entitlement to injunctive

and monetary relief.”) (internal quotation marks and alteration

marks omitted).

B. Rule 23(b)(3)’s Superiority Requirement.

We now turn to consider the district court’s ruling that

Plaintiffs’ purported class action failed Rule 23(b)(3)’s second

requirement, i.e., that the purported class action be superior

to other available methods for the fair and efficient

adjudication of the controversy. Plaintiffs challenge the

district court’s superiority ruling on the basis that the

district court impermissibly looked outside of Rule 23 to find

the test-case method more to its liking, though not actually

superior to the class action. Under the test-case method, if

Plaintiffs win their individual claims against Weis Markets in a

non-class action, other similarly situated Weis Markets

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customers would have the opportunity to file their own

individual actions against Weis Markets and assert offensive

collateral estoppel on the issues of liability and willfulness.

We agree with Plaintiffs that the district court erred in

its superiority-of-method determination. As the well-respected

treatise Federal Practice and Procedure explains the relevant

considerations:

Although a determination of superiority necessarily
depends greatly on the circumstances surrounding each
case, some generalizations can be made about the kinds
of factors the courts will consider in evaluating this
portion of Rule 23(b)(3).

The rule requires the court to find that the
objectives of the class-action procedure really will
be achieved in the particular case. In determining
whether the answer to this inquiry is to be
affirmative, the court initially must consider what
other procedures, if any, exist for disposing of the
dispute before it. The court must compare the
possible alternatives to determine whether Rule 23 is
sufficiently effective to justify the expenditure of
the judicial time and energy that is necessary to
adjudicate a class action and to assume the risk of
prejudice to the rights of those who are not directly
before the court.

7AA Charles Alan Wright, Arthur R. Miller, & Mary Kay Kane,

Federal Practice and Procedure § 1779 (3d ed. 2005).

Here, the district court held that a test case by

Plaintiffs and then future plaintiffs asserting offensive

collateral estoppel with respect to liability issues was a

superior litigation method to the class action method proposed

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by Plaintiffs. The totality of the district court’s analysis on

this issue is as follows:

[T]he Court concludes that [a class action as
requested by Plaintiffs] would not be superior and,
indeed, would be inferior to having the Plaintiffs
herein proceed on their individual claims and, if they
prevail, having them obtain whatever statutory and
punitive damages might be awarded together with their
costs, including reasonable legal fees. Should these
Plaintiffs prevail on their willfulness claim, other
similarly situated Weis customers would have the
opportunity to file their own actions -- for many, if
not most, in a court that may be more convenient for
them than the District of Maryland. Moreover, it
appears likely that Weis would be collaterally
estopped from denying willfulness.

Stillmock, 2009 WL 595642 at *6.

Other than the inconvenience of the forum consideration,

the district court’s analysis fails to explain why it believes

the class action method is inferior to the

test-case-with-future-individual-actions method. Apparently

sensing the shallowness of the district court’s analysis, Weis

Markets argues that the availability of attorney’s fees and

punitive damages under FCRA makes individual lawsuits feasible.

Weis Markets’ argument is without merit. First, the low

amount of statutory damages available means no big punitive

damages award on the horizon, thus making an individual action

unattractive from a plaintiff’s perspective. Second, there is

no reasoned basis to conclude that the fact that an individual

plaintiff can recover attorney’s fees in addition to statutory

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damages of up to $1,000 will result in enforcement of FCRA by

individual actions of a scale comparable to the potential

enforcement by way of class action. See Bertulli v. Independent

Ass’n of Continental Pilots, 242 F.3d 290, 299 (5th Cir. 2001)

(Rule 23(b)(3)’s superiority requirement was met by class of

pilots bringing action under Labor-Management Reporting and

Disclosure Act (LMRDA) and Railway Labor Act alleging they

suffered loss of seniority as result of restoration of seniority

of 11 strike participants; any relief received by vast majority

of class members would be primarily injunctive, feasibility of

individual actions due to availability of attorney’s fees under

LMRDA did not undercut conclusion that class device was

superior, and, although some damages calculations might be

burdensome, economies weighed in favor of class treatment);

Tchoboian v. Parking Concepts, Inc., 2009 WL 2169883 at *9 (C.D.

Cal. July 16, 2009) (“The Court is not convinced that the fact

that an individual plaintiff can recover attorney’s fees in

addition to statutory damages of up to $1,000 will result in

enforcement of the FCRA by individual actions of a scale

comparable to the potential enforcement by way of class

action.”).

Other factors also cut definitively in favor of concluding

that the class action which Plaintiffs propose is superior to

individual cases. First, there is no indication in this case

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that class members would have a strong interest in individual

litigation. Second, class certification promotes consistency of

results, giving Weis Markets the benefit of finality and repose.

Gunnells, 348 F.3d at 429 (in contrast to class action

proceeding, individual actions make a defendant vulnerable to

the asymmetry of collateral estoppel, thus, class certification

promotes consistency of results, giving defendant benefit of

finality and repose).

III.

In sum, we hold the grounds upon which the district court

relied to deny class action certification in this case are

untenable, and therefore, the district court abused its

discretion in denying class certification on such grounds. See

Murray, 434 F.3d at 954 (reversing denial of class certification

in action for statutory damages under FCRA). Accordingly, we

vacate and remand for further proceedings. Finally, while we

express no opinion regarding Weis Markets’ additional arguments

against class certification which the district court expressly

did not address below, see Stillmock, 2009 WL 595642 at *6, we

instruct the district court to consider them on remand in the

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first instance. 7 Singleton v. Wulff, 428 U.S. 106, 120 (1976)

(“It is the general rule, of course, that a federal appellate

court does not consider an issue not passed upon below.”).

VACATED AND REMANDED

7
We also leave it to the district court’s discretion
whether to revisit Weis Markets’ argument that class treatment
would not be manageable because Plaintiffs cannot send adequate
notice to the purported class members. The district court
appeared to assume without deciding that Plaintiffs could send
adequate notice to purported class members. We express no
opinion on this issue.

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WILKINSON, Circuit Judge, concurring specially:

There is much in the court’s opinion with which I agree. I

am pleased that the court adopts a per-consumer rather than a

per-receipt interpretation of 15 U.S.C. § 1681n(a). *

Additionally, I agree with the court that the district court on

remand should consider other factors that bear upon the issue of

class certification. Specifically, neither this court nor the

district court has yet addressed the real possibility that the

suggested class could bankrupt an entire chain of supermarkets,

and the district court retains wide discretion in deciding

whether to certify a class in light of that problem.

I worry that the exponential expansion of statutory damages

through the aggressive use of the class action device is a real

*
Section 1681n provides that any person who willfully
violates the statute “with respect to any consumer is liable to
that consumer” for, among other things, actual or statutory
damages. 15 U.S.C. § 1681n(a) (emphasis added). The statute’s
emphasis on the consumer reflects a per-consumer rather than a
per-receipt approach to damages. This interpretation draws
additional support from Safeco Insurance Company of America v.
Burr, 551 U.S. 47 (2007), where the Supreme Court read the
statute to provide that “the consumer may have actual damages,
or statutory damages . . ., and even punitive damages.” Id. at
53 (emphasis added). Moreover, were we to adopt a per-receipt
approach, FACTA would be transformed from a shield for
protecting consumer privacy into a sword for dismembering
businesses. Opportunistic cardholders could intentionally make
hundreds, if not thousands, of purchases, hoard their receipts,
and stream into federal court to collect statutory damages on
each one. The potential for such abuse counsels against the
plaintiffs’ preferred per-receipt interpretation.

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jobs killer that Congress has not sanctioned. To certify in

cases where no plaintiff has suffered any actual harm from

identity theft and where innocent employees may suffer the

catastrophic fallout could not have been Congress’s intent.

Indeed, the relatively modest range of statutory damages chosen

by Congress suggests that bankrupting entire businesses over

somewhat technical violations was not among Congress’s

objectives.

It is undeniable that Congress passed FACTA to protect

consumers from the real threat of identity theft. It is clear

as well that Congress did not intend willful repeat violators of

FACTA to emerge from litigation with nothing more than a wrist

slap. It is understandable too that this court and many others

have struggled with the interaction of FACTA and Federal Rule of

Civil Procedure 23. I see nothing in the statute, however, that

mandates class action treatment of FACTA claims or precludes a

district court from considering the prospect of annihilative

liability in the certification calculus.

I.

Certainly nothing in 15 U.S.C. § 1681n(a)(1) would lead us

to believe that Congress intended the modest range of statutory

damages to be transformed into corporate death by a thousand

cuts through Rule 23. “A claim of this sort creates a tension

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between the statutory provisions for minimum damages and the

Rule 23 provisions for class actions that probably was not

within the contemplation of those who promulgated either the

statute or the rule.” Parker v. Time Warner Entertainment Co.,

331 F.3d 13, 26 (2d Cir. 2003) (Newman, J., concurring). Simply

put, the present case is a perfect storm in which two

independent provisions combine to create commercial wreckage far

greater than either could alone. As Judge Newman explained in a

similar situation involving statutory damages for cable

subscribers, “I do not believe that in specifying a $1,000

minimum payment for . . . violations, Congress intended to

expose [violators] to liability for billions of dollars.” Id.

at 27. The same statement applies with equal force to FACTA’s

$100 to $1,000 statutory damages range.

A.

The statute itself affords reason to believe that Congress

did not insist on adopting the class mechanism at all costs.

Regardless of whether common liability issues in this case

predominate over individualized damage determinations, it

remains true that Congress did provide for individualized damage

determinations in FACTA. This fact cuts against the argument

that Congress wished to compel consolidated suits through class

certification.

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 There are several indications in FACTA that damages are

individualized. First, statutory damages are not fixed;

instead, Congress provided that they may range anywhere from

$100 to $1,000. 15 U.S.C. § 1681n(a)(1)(A). The statute does

not specify what factors a jury should consider when selecting a

number within this range. But because statutory damages are

intended to address harms that are small or difficult to

quantify, evidence about particular class members is highly

relevant to a jury charged with this task. Had Congress adopted

a set figure for statutory damages rather than a range dependent

on variable evidence, the case for class certification would

have been fortified.

Second, the compensatory nature of FACTA statutory damages

suggests class certification is not congressionally mandated.

The most powerful indication that Congress intended statutory

damages to be compensatory comes from the structure of FACTA’s

remedial provisions. Notably, Congress provided that a consumer

subject to a willful violation of the statute could recover

either actual or statutory damages, but not both. 15 U.S.C.

§ 1681n(a)(1)(A). The fact that statutory damages are available

in lieu of actual damages suggests that they too serve to

compensate individual consumers for their injuries. See In re

Trans Union Corp. Privacy Litig., 211 F.R.D. 328, 342 (N.D. Ill.

2002) (“[Section] 1681n(a)(1)(A) clearly and unambiguously

- 25 -
allows for actual or statutory damages as the measure of

compensatory damages.”) (second emphasis added). Congress also

provided for punitive damages in addition to any actual or

statutory damages. 15 U.S.C. § 1681n(a)(2). That Congress did

so highlights the fact that statutory damages serve a

compensatory, rather than punitive, function in FACTA’s remedial

scheme.

It is not difficult to discern why Congress would allow

consumers to select statutory damages rather than actual damages

as a measure of compensation. While some violations of FACTA

will lead to easily quantifiable harms, other violations may

lead to less tangible ones, such as a loss of privacy,

heightened risk and anxiety over identity theft, or increased

time spent monitoring one’s financial security. In order to

help a jury place a value on these intangible harms, FACTA

provides for statutory damages between $100 and $1,000. It is

still up to a jury, however, to select a figure within this

range, and the individualized nature of this determination is

strong evidence that class treatment may not be the required

course under FACTA.

B.

That the court notes (correctly, in my view) that statutory

damages are available on a per-consumer rather than per-receipt

basis further underscores the point that Congress did not demand

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class certification in FACTA. The per-consumer perspective

places the focus on the characteristics of individual class

members, rather than on the defendant’s conduct that is common

to the entire class. To protect “the right of the defendant to

present facts or raise defenses that are particular to

individual class members,” Thorn v. Jefferson-Pilot Life Ins.

Co., 445 F.3d 311, 318 (4th Cir. 2006), businesses deserve at

least the opportunity to argue that certain individuals should

receive statutory damages at the low end of the range. Weis

Markets, for example, might do so by putting on evidence that

some class members were issued very few noncompliant receipts,

rarely if ever checked their credit reports, or experienced no

heightened apprehension of identity theft. While the class here

excludes those who suffered actual damages due to identity

theft, it surely includes members who experienced varying levels

of less quantifiable harms. Assessing these harms clearly “does

not lend itself to . . . a mechanical calculation.” Windham v.

Am. Brands, Inc., 565 F.2d 59, 68 (4th Cir. 1977) (en banc).

All of these facts suggest that Congress did not contemplate a

class action as the exclusive route for FACTA suits.

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 II.

Congress acts, of course, against the backdrop of the

Federal Rules, and we must assume it knows not only of Rule 23’s

utility, but also that the Rule is not an end unto itself. It

is a case management device, and a flexible one at that. The

Rule is the ultimate expression of flexibility, providing a non-

exclusive list of broad factors for courts to consider. See

Fed. R. Civ. P. 23(b)(3)(A)-(D). Notably, its flexible nature

indicates that district courts have broad discretion to consider

factors that may bear on the desirability of proceeding down the

road of class treatment.

Certifying a class action that would impose annihilative

damages where there has been no actual harm from identity theft

could raise serious constitutional concerns, as plaintiffs

themselves admit. See Reply Br. at 2 n.2. Other courts have

noted that “the potential for a devastatingly large damages

award, out of all reasonable proportion to the actual harm

suffered by members of the plaintiff class, may raise due

process issues.” Parker, 331 F.3d at 22. See also Spikings v.

Cost Plus, Inc., No. CV 06-8125-JFW (AJWx), 2007 U.S. Dist.

LEXIS 44214, at *9, 13 (C.D. Cal. May 25, 2007) (same). Indeed,

this principle has some salience in the punitive damages

context, where the Supreme Court has noted that “[t]he Due

Process Clause of the Fourteenth Amendment prohibits the

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imposition of grossly excessive or arbitrary punishments on a

tortfeasor.” State Farm Mut. Auto. Ins. Co. v. Campbell, 538

U.S. 408, 416 (2003).

Rather than considering annihilative damages as they bear

on due process, however, it is preferable for a district court

to address them in the context of Rule 23(b)(3)’s superiority

requirement. Doing so gives the district court discretion to

avoid a serious constitutional problem in the best tradition of

the Brandeis concurrence in Ashwander v. Tennessee Valley

Authority, 297 U.S. 288 (1936), and permits a district court to

declare that a device is not superior when a plaintiff class

whose members suffered no identity theft of any sort still

threatens to wipe an entire company off the map.

It is fair to observe that a primary focus of Rule 23 is

upon procedural efficiencies, but that is not its sole concern.

A district court has discretion to consider other factors as

well. “Within that discretion . . . is the attaching of

determinative weight to the reality that if class action

treatment were applied in this case where the complaint contains

no indication of any actual damages in substantial or provable

amount, this aggregated relief would be oppressive in

consequence and difficult to justify.” Wilcox v. Commerce Bank

of Kansas City, 474 F.2d 336, 347 (10th Cir. 1973). See also

London v. Wal-Mart Stores, Inc., 340 F.3d 1246, 1255 n.5 (11th

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Cir. 2003) (class action may not be superior where “the

defendants’ potential liability would be enormous and completely

out of proportion to any harm suffered by the plaintiff.”);

Kline v. Coldwell, Banker & Co., 508 F.2d 226, 235 (9th Cir.

1974) (same).

Finally, the flexibility of Rule 23 is also reflected in

the generous abuse of discretion standard under which district

court certification decisions are reviewed. As we have

repeatedly explained, “[a] district court has broad discretion

in deciding whether to certify a class.” Thorn, 445 F.3d at 317

(quoting Lienhart v. Dryvit Sys., Inc., 255 F.3d 138, 146 (4th

Cir. 2001)). Certification decisions “will be reversed only

upon a showing of abuse of that discretion.” Boley v. Brown, 10

F.3d 218, 223 (4th Cir. 1993); McClain v. South Carolina Nat’l

Bank, 105 F.3d 898, 902 (4th Cir. 1997) (same). We afford this

discretion to district courts for good reason. Class

certification is “a practical problem, and primarily a factual

one with which a district court generally has a greater

familiarity and expertise than does a court of appeals.”

Windham, 565 F.2d at 65 (citation omitted). Given this, I would

urge caution in requiring district courts to adopt a procedural

device that cuts against the grain of practical justice as the

trial courts conceive it.

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 III.

A.

In light of the broad flexibility embodied in Rule 23, I am

pleased that the court instructs the district court on remand to

consider alternative reasons that bear upon class certification.

See Maj. Op. at 20-21. Specifically, the district court

previously reserved ruling on “the contention that the

possibility of ‘annihilating results’ disproportionate to any

harm renders class certification inappropriate.” Stillmock v.

Weis Markets, Inc., 2009 WL 595642, No. MJG-07-1342 at *6 (D.

Md. March 5, 2009). The court rightly permits the district

court to undertake that inquiry.

The risk of financial ruin as a result of class

certification is far from illusory. Weis Markets estimates that

it printed 14,578,600 receipts with improperly truncated account

numbers between the time FACTA became effective on December 4,

2006 and the time the company brought its systems into

compliance on June 7, 2007. Because FACTA establishes statutory

damages between $100 and $1,000, under plaintiffs’ per-receipt

approach, Weis Markets would thus be subject to a massive payout

of between $1.4 and $14 billion.

The court’s per-consumer calculation, while less

astronomical, is no less annihilating to Weis Markets. Both

plaintiffs and Weis Markets have estimated that “there are

- 31 -
potentially over one million Class members.” Multiplying that

estimate by the statutory damages range results in total

liability of between $100 million and $1 billion dollars,

without even accounting for the possibility of punitive damages,

attorney’s fees, and costs, 15 U.S.C. § 1681n(a)(2), (a)(3).

It is no exaggeration to say that a judgment within this

range would devastate Weis Markets. As counsel for Weis Markets

put it, “a hundred million dollars sinks my client.” The

company is traded on the New York Stock Exchange, and its market

capitalization at current prices is just over $900 million

dollars. In other words, this case is not just the proverbial

bet-the-company suit; a class action, if successful, will

shatter the entire company into hundreds of thousands of $100 to

$1,000 bits. The plaintiffs here might as well seek to

distribute every one of Weis Markets’ 26.9 million shares a few

apiece to each receipt holder.

Nor is the destruction of Weis Markets a loss only to

shareholders. If plaintiffs are successful, a substantial

number of people will be left unemployed in one of the toughest

job markets in generations. Weis Markets currently owns and

operates one hundred sixty-four retail grocery stores in

Pennsylvania, Maryland, New York, New Jersey, and West Virginia

as well as twenty-five pet supply stores. Weis Markets, Inc.,

Annual Report (Form 10-K), at 1 (Mar. 11, 2010). Approximately

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17,600 individuals work for the company in either a full- or

part-time capacity. Id. at 2. It is doubtful that Congress

intended to cause these thousands of innocent employees to lose

their jobs and paychecks by bankrupting their employer, in a

situation where no plaintiff suffered identity theft.

None of this is to condone the actions of Weis Markets.

Without prejudging the matter of willfulness, there are

preliminary indications that the company acted very badly.

There is no dispute that Weis Markets printed over 14 million

receipts that violated FACTA; the outstanding liability issues

in this case hinge on whether it did so willfully or merely

negligently. Moreover, compliance with FACTA did not involve

untangling a complex regulatory scheme, but merely issuing

receipts to cardholders revealing no more than the last five

digits of their card number. Still, it must count for something

that this class, by definition, consists of individuals who can

claim only statutory damages. It staggers the imagination to

believe that Congress intended to impose annihilating damages on

an entire company and the people who work for it for lapses of a

somewhat technical nature and in a case where not a single class

member suffered actual harm due to identity theft.

B.

Nor is the problem of annihilating liability by any means

limited to the present case. District courts across the country

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are struggling with what one court termed a “veritable

onslaught” of class action litigation under FACTA, subjecting

companies small and large to extraordinary claims. Palamara v.

Kings Family Restaurants, No. 07-317, 2008 WL 1818453, at *3

(W.D. Pa. Apr. 22, 2008). Ordinarily, a company that violates

FACTA will do so not once or twice, but instead thousands or

even millions of times, owing to the fact that it has not

properly updated its equipment. And because FACTA provides for

statutory damages of at least $100, such suits almost by

definition expose companies to liability that is orders of

magnitude beyond their income or net worth, regardless of the

size of the corporation. “FACTA class actions threaten

businesses of every size with devastating classwide liability

for what may be harmless statutory violations.” 1 McLaughlin on

Class Actions § 2:38 (6th ed.).

On one end of the spectrum, such suits jeopardize “mom and

pop” stores, such as the local restaurant with a mere $40,000 in

net assets that last year faced a $4.6 to $46 million FACTA suit

in which none of the putative class members suffered any actual

injuries as a result of identity theft. Leysoto v. Mama Mia I,

Inc., 255 F.R.D. 693, 697-98 (S.D. Fla. 2009). A similar suit

went a step further, seeking FACTA statutory damages “between

$3.3 million and $33 million” from a company “whose consolidated

financial statements . . . show[ed] a net loss of $5.5 million

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and a total negative net worth of $8.1 million.” Price v. Lucky

Strike Entertainment, Inc., No. CV 07-960-ODW (MANx), 2007 WL

4812281 at *5 (C.D. Cal. Aug. 31, 2007) (emphasis added).

And small or struggling companies are not the only ones

threatened by claims far out of proportion to their ability to

satisfy them. One defendant with net income of just over $68

million recently faced a putative class action seeking between

$198 million and $1.98 billion. Blanco v. CEC Entm’t Concepts

L.P., No. CV 07-0559 GPS (JWJx), 2008 WL 239658, at *2 (C.D.

Cal. Jan. 10, 2008). Other corporations have faced similarly

astronomical claims relative to their size. See, e.g., Spikings

v. Cost Plus, Inc., No. CV 06-8125-JFW (AJWx), 2007 U.S. Dist.

LEXIS 44214, at *12 (C.D. Cal. May 29, 2007) (company with net

worth of $316 million faced FACTA class seeking $340 million to

$3.4 billion); Lopez v. KB Toys Retail, Inc., No. CV 07-144-JFW

(CWx), 2007 U.S. Dist. LEXIS 82025, at *14 (C.D. Cal. July 17,

2007) (even $100 per violation in proposed FACTA class was 600%

of defendant’s net worth). I suppose it can be assumed that

shareholders and creditors bear such litigation risks. But

employees? These liabilities will fall hardest on those who are

laid off because of them.

C.

In addition to the risk of bankrupting entire companies for

violations in which no identity theft resulted, there is an

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additional problem with combining statutory damages and class

certification. Companies may be forced to settle in the face of

such annihilating liability, even if they have a strong defense.

In such an event, the substantial costs associated with

settlement will inevitably be passed on to consumers -- the very

ones whom Congress sought to protect.

As the Seventh Circuit explained, there is a serious

concern with forcing these “defendants to stake their companies

on the outcome of a single jury trial, or be forced by fear of

the risk of bankruptcy to settle even if they have no legal

liability.” Matter of Rhone-Poulenc Rorer Inc., 51 F.3d 1293,

1299 (7th Cir. 1995). Indeed, “[t]he risk of facing an all-or-

nothing verdict presents too high a risk, even when the

probability of an adverse judgment is low.” Castano v. Am.

Tobacco Co., 84 F.3d 734, 746 (5th Cir. 1996); see also Coopers

& Lybrand v. Livesay, 437 U.S. 463, 476 (1978) (same). “[O]nce

a class is certified, a statutory damages defendant faces a bet-

the-company proposition and likely will settle rather than risk

shareholder reaction to theoretical billions in exposure even if

the company believes the claim lacks merit.” Sheila B.

Scheuerman, Due Process Forgotten: The Problem of Statutory

Damages and Class Actions, 74 Mo. L. Rev. 103, 104 (2009). At

least the plaintiffs in Rhone-Poulenc and Castano alleged

substantial actual damages; here we face the risk of forcing a

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defendant to settle in the face of billions in liability for

actions that resulted in not a single instance of identity

theft.

Nor does the possibility of appellate review eliminate the

problem of uneconomic settlement. “The reason that an appeal

will come too late to provide effective relief for these

defendants is the sheer magnitude of the risk to which the class

action, in contrast to the individual actions pending or likely,

exposes them.” Rhone-Poulenc, 51 F.3d at 1297 (emphasis in

original). Weis Markets and similar companies could hardly be

blamed if they took a safe route and settled in such

circumstances. “If they settle, the class certification -- the

ruling that will have forced them to settle -- will never be

reviewed.” Id. at 1298. To effectively allow certification to

deprive a party of a defense cannot be what the adversary

process is about.

IV.

Is there a solution -- one that gives the statute its

proper meaning and effect without visiting consequences far in

excess of what Congress intended? Judge Newman, when addressing

a similar statute, has suggested two solutions to the problem.

One is to award class members statutory damages below the amount

authorized by Congress. Parker, 331 F.3d at 27 (Newman, J.

- 37 -
concurring). But as he acknowledges, that suggestion suffers a

prohibitive drawback because it “cannot be reconciled with the

terms of the statute.” Id. His second suggestion of allowing a

district judge to determine “that a class will be certified only

up to some reasonable aggregate amount of [statutory] damages,”

id. at 28, fares little better because unlike similar exercises

of judicial discretion, remittitur for example, the judiciary

here would simply be adding a capping provision to a federal

statute which Congress in its wisdom did not see fit to include.

Congress of course remains free to adopt such a cap, as it has

done for instance in limiting class action recoveries under the

Truth In Lending Act to the lesser of $500,000 or 1 percent of a

creditor’s net worth, 15 U.S.C. § 1640(a)(2)(B), but it has not

done so here.

The question, then, is whether the denial of class action

treatment will allow proven violators of a statute to escape

largely untouched. I do not believe that we are faced with a

choice of class certification and its potentially lethal

consequences or the denial of such certification and the

prospect of impunity for the non-compliant.

There is no shortage of incentives for consumers to bring

individual suits under FACTA. The act provides plaintiffs with

both costs and reasonable attorney’s fees “in the case of any

successful action” establishing willful or negligent violations.

- 38 -
15 U.S.C. §§ 1681n(a)(3), 1681o(a)(2) (emphasis added). These

suits are, therefore, “essentially costless” to winning

plaintiffs. Anderson v. Capital One Bank, 224 F.R.D. 444, 453

(W.D. Wis. 2004). They are potentially quite rewarding as well.

For one thing, actual damages remain available in any case of

identity theft. 15 U.S.C. § 1681n(a)(1)(A). For another, the

possibility of punitive damages exists in cases where their

imposition is needed for appropriate punishment and deterrence.

15 U.S.C. § 1681n(a)(2). For a third, the possibility of

offensive collateral estoppel with regard to liability exists

for prospective plaintiffs, of whom in this case there are many.

See Parklane Hosiery Co. v. Shore, 439 U.S. 322 (1979).

Thus I am not convinced that the denial of class

certification with its possibilities of annihilative

consequences would allow companies who violate the statute to

emerge laughing and unscathed. FACTA “provides sufficient

motivation for adversely affected individuals to bring suit and

for attorneys to represent them.” Campos v. ChoicePoint, Inc.,

237 F.R.D. 478, 490 (N.D. Ga. 2006). This is especially so

since the costs of compliance with the statute remain minor in

comparison to the costs of dealing with litigation, in whatever

form it may assume. For the above reasons, I believe it well

within a district court’s discretion to consider the magnitude

of the costs upon the company and its employees that class

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certification may impose. Allowing such consideration will not

leave the statute toothless, nor fly in the face of any

congressional mandate, nor court the constitutional problems

associated with constraining district court discretion provided

by Federal Rule of Civil Procedure 23. Because I do not

understand the court’s judgment to preclude the exercise of

discretion in this manner upon remand, I respectfully offer this

special concurrence.

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