Judge Dismisses DKNY FACTA Class Action Lawsuit

On Friday, a federal judge in New York dismissed a class action lawsuit accusing Donna Karan International Inc. of violating the Fair and Accurate Credit Transaction Act (FACTA) when its locations printed the last 10 digits of credit and debit cards.

Lead plaintiff Yehuda Katz alleged in his class action lawsuit filed in February of last year that Donna Karan International, the parent company of popular retail clothing chain DKNY, violated FACTA when it printed his receipts with the first six and last four digits of his credit card. According to the judge’s opinion, two days after the plaintiff alleges he made purchases at two DKNY stores, he “initiated this class action on behalf of similarly situated customers seeking statutory damages of $100 to $1,000 per willful violation, pre- and post-judgment interest, and (you guessed it) attorneys’ fees and costs.”

On Friday, Judge Paul A. Crotty dismissed the DKNY class action lawsuit with prejudice. Judge Crotty had allowed the plaintiff to amend his class action complaint, but the judge found that the plaintiff had not adequately established that DKNY willfully violated FACTA. Judge Crotty rejected the plaintiff’s argument that DKNY’s awareness of FACTA made any violation of that law willful on the part of the defendant.

Judge Crotty also pointed out that DKNY had complied with the law, weakening the plaintiff’s allegations further. “Plaintiff’s claim is rendered further implausible by the complaint’s failure to reconcile defendants’ partial compliance — redacting credit card expiration dates and all digits unique to the cardholder — with its alleged willful noncompliance,” Judge Crotty wrote in his order. According to the order, FACTA requires that only the final four digits can be included on receipts and that the expiration date be removed.

Judge Crotty also pointed out that the plaintiff’s claims that DKNY willfully and recklessly violated FACTA were a higher standard to establish than only negligence. “Plaintiff’s attempt at alleging recklessness — a higher standard, triggering statutory damages — cannot be achieved by merely alleging negligence — a lower standard, triggering actual damages,” said the judge in his order.

“Plaintiff’s complaint is devoid of any well-pleaded facts which allow the plausible inference that Defendants willfully, knowingly, or recklessly violated FACTA. Certainly, there are sufficient factual allegations to infer Defendants knew of FACTA’s applicability, but there are no factual allegations supporting a plausible inference that Defendants knew their conduct violated the truncation requirement or that Defendants consciously chose to violate FACTA,” continued the judge.

“Plaintiff has not alleged any actual damages,” Judge Crotty wrote in his order. “Indeed,” he continued, “based on the facts alleged in the complaint, it is not possible that plaintiff was harmed.”

Katz is represented by Daniel Vladimir Gsovski and Howard Lowell Wexler of Herzfeld & Rubin PC, and Shimshon Wexler of The Law Offices of Shimshon Wexler PC.

The DKNY Sales Receipt FACTA Class Action Lawsuit is Katz v. The Donna Karan Co. LLC, et al., Case No. 1:14-cv-00740, in the U.S. District Court for the Southern District of New York.