IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA
January 30, 2008
JACOB B. PATTERSON, INDIVIDUALLY AND ON BEHALF OF ALL OTHERS SIMILARLY SITUATED, PLAINTIFF,
DENNY'S CORPORATION; DFO, LLC; AND WBF ENTERPRISES, INC., DEFENDANTS.
The opinion of the court was delivered by: Mitchell, Magistrate Judge
MEMORANDUM AND OPINION
Presently before the Court is a motion to dismiss the amended complaint filed by defendants Denny's Corporation ("Denny's") and DFO, LLC ("DFO"). For reasons discussed below, the defendants' motion to dismiss (Document No. 12) will be denied.
The plaintiff, Jacob B. Patterson, filed an amended complaint on behalf of himself and all others similarly situated, alleging that Denny's, DFO, and WBF Enterprises, Inc. ("WBF") willfully violated the Fair and Accurate Credit Transactions Act, 15 U.S.C. §§ 1681, et seq. ("FACTA").*fn1 The plaintiff contends that the defendants violated FACTA when on July 12, 2007, he was presented with an electronically printed receipt at a Denny's Restaurant located at 2079 E. State Street in Hermitage, PA, as the receipt contained the expiration date of his Visa card and was presented to him at the point of sale.*fn2
FACTA provides that "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." 15 U.S.C. § 1681c(g)(1). In the transaction at issue here, the plaintiff contends that WBF "was acting as an entity that accepts credit cards or debit cards for the transaction of business", while Denny's and DFO "exercised actual control over the operation of WBF in all material respects."*fn3
In identifying the relationship of the defendants, the plaintiff asserts that WBF is a franchisee of Denny's which operated the Denny's restaurant at 2079 E. State Street in Hermitage, PA; that DFO is a wholly-owned subsidiary of Denny's; and that Denny's, through its operating subsidiaries, including DFO, "exercises actual control over the Companies franchise operations."*fn4 Based on the defendants' complained-of acts, the plaintiff seeks statutory damages, punitive damages, costs and attorneys' fees.*fn5 The Court's federal question jurisdiction is invoked.
Denny's and DFO have moved to dismiss the amended complaint for failure to state a claim against them. They argue that as pled in the amended complaint, neither Denny's nor DFO printed the receipt and provided it to the plaintiff; rather, it was WBF that provided him with the receipt that allegedly violated FACTA. According to Denny's and DFO, FACTA only applies to an entity that prints and provides the customer receipt, not to entities who allegedly exercise control over that entity's operations, as FACTA does not encompass vicarious liability in this instance.
In reviewing a motion to dismiss, all well-pleaded allegations of the complaint must be accepted as true and viewed in a light most favorable to the non-movant. Estelle v. Gamble, 429 U.S. 97 (1976).*fn6 To survive a motion to dismiss, a complainant's "[f]actual allegations must be enough to raise a right to relief above the speculative level." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1965 (2007). A complaint will be dismissed if it does not plead "enough facts to state a claim to relief that is plausible on its face." Id. at 1974.
In their memorandum in support of their motion to dismiss, Denny's and DFO assert that they are unaware of any reported decisions construing which "persons" can be liable under FACTA.*fn7 The parties agree that in case law interpreting vicarious liability under both federal statutes and state common law in the franchise context, the decisive issue is whether a franchisor exercises control over the franchisee's business operations. See, e.g., Drexel v. Union Prescription Centers, Inc., 582 F.2d 781, 785-786 (3d Cir. 1978) ("Whether the control retained by the franchisor is... sufficient to establish a master-servant relationship depends in each case upon the nature and extent of such control as defined in the franchise agreement or by the actual practice of the parties").
In opposing the motion to dismiss, the plaintiff has submitted an excerpt from Denny's 10-K Report filed with the Securities and Exchange Commission for the fiscal year ended December 27, 2006 which discusses its "franchising" operation in part as follows:
The Denny's system is approximately one-third company-operated and two-thirds franchised...
A network of regional franchise operations managers oversee our franchised restaurants to ensure compliance with brand standards, promote operational excellence, and provide general support to our franchisees. These managers visit each franchised unit an average of two to four times per quarter.*fn8
Significantly, the plaintiff contends that Denny's and DFO exercised actual control over the franchise operation of WBF in all material respects.*fn9 Accepting this allegation as true and viewing it in a light most favorable to the plaintiff, we cannot say that the amended complaint fails to state a viable claim against the movants.
An appropriate Order will be entered.
AND NOW, this 30th day of January 2008, for the reasons set forth in the Court's Memorandum and Opinion, IT IS ORDERED that the motion to dismiss the amended complaint filed by defendants Denny's and DFO (Document No. 12) is denied.
ROBERT C. MITCHELL United States Magistrate Judge