Wolfgang’s Steakhouse Must Face FACTA Class Action Lawsuit

On Friday, a federal judge refused to dismiss claims against Wolfgang’s Steakhouse Inc. and ZMF Restaurants LLC that accused the restaurant companies of violating the Fair and Accurate Credit Transactions Act by printing customer credit card expiration dates on receipts.

In 2013, lead plaintiff Cynthia Fullwood filed a class action lawsuit against the restaurant companies alleging that they violated the Fair and Accurate Credit Transactions Act (FACTA) when they printed customers’ credit card expiration dates on their receipts. The plaintiff alleged that when she paid at the Park Avenue Wolfgang’s Steakhouse location, the receipt included her credit card’s expiration date. The inclusion of this information violated explicit provisions of FACTA, the class action lawsuit alleges.

U.S. District Judge Katherine Polk Failla denied a motion to dismiss filed by ZMF and Wolfgang’s Steakhouse after finding that the proposed FACTA class action lawsuit alleged that the defendants were both notified by the general publicity around FACTA’s requirements and also notified at least monthly by multiple sources of requirements created by the act.

“FACTA’s requirements were widely publicized among merchants, and other businesses changed their practices to comply with the statute,” wrote the judge. “Credit card companies, including Visa and MasterCard, incorporated these requirements into their guidelines distributed to vendors and binding upon them. Visa’s 2011 Card Acceptance Guidelines for Visa Merchants, for example, states on page 13 of 76 that ‘[t]he expiration date should not appear at all on the cardholder copy of the transaction receipt,’ though without reference to FACTA. Similarly, MasterCard’s 2013 Security Rules and Procedures states on page 3-8 (or approximately the twenty-ninth of its 136 pages) that all ‘Cardholder and Merchant receipts … must omit the Card expiration date,’ again without specifically referencing FACTA.”

The judge noted that the defendants negotiated an insurance contract that specifically highlighted the importance of FACTA compliance. “These facts may or may not demonstrate that defendants were sufficiently informed so as to plausibly infer a willful violation,” wrote the judge, “but they go far enough that repleading [and rebriefing] might not be futile.”

Judge Failla also pointed out that plaintiffs can allege that defendants were informed with sufficient depth or frequency of the specific requirements of the statute as it applied to them, so that knowledge of or recklessness of the alleged violations could be “plausibly inferred.”

“The allegations set forth in the proposed complaint come very close to that level,” wrote the judge in her order. “However, in the interests of fairness, the court determines that such a conclusion cannot be appropriately drawn absent briefing from the parties on the proposed complaint rather than the amended complaint.”

This FACTA class action lawsuit was put on hold pending the outcome of a motion in a similar case, Crupar-Weinmann v. Paris Baguette America Inc. The stay was lifted when the judge in that case refused to reconsider dismissal saying the inclusion of credit card expiration dates was a simple mistake and did not suggest a willful violation of FACTA.

Fullwood is represented by Marvin Frank and Bridget Hamill of Murray Frank LLP and Peter Y. Lee.

The Wolfgang’s Steakhouse FACTA Class Action Lawsuit is Fullwood v. Wolfgang’s Steakhouse Inc., et al., Case No. 1:13-cv-07174, in the U.S. District Court for the Southern District of New York.