Berney Kubetz, partner in Eaton Peabody’s (Maine) litigation practice, recently spearheaded the successful defense of a federal court class action lawsuit against a valued client. The client operates a popular restaurant in Maine, visited annually by tens of thousands of customers from Maine and from away. The lawsuit claimed that the restaurant owner had violated the Fair and Accurate Credit Transactions Act (“FACTA”). That federal statute, last amended by Congress in 2008, is designed to prevent credit card fraud and identity theft. FACTA specifically requires merchants who accept credit and debit cards for point of sale transactions to truncate the cardholder’s account number to no more than the last 5 digits and to remove the card expiration date on the customer’s copy of the receipt.
We can only surmise how many more merchants throughout Maine continue unwittingly to include the card expiration date on their customer receipts. The lawsuit exposed our client to damages exceeding $20 million and could have driven the company, and many others like it, out of business. At the time the lawsuit was filed, no Maine court had been asked to interpret FACTA and its potential to impose ruinous damages on Maine businesses, even in situations where no customer’s identity or private financial information was compromised.
Berney and Jeff Spaulding of Eaton Peabody collaborated in crafting a motion to dismiss the lawsuit at an early stage, before a class was ever certified and before the costly expense of complex discovery was incurred by our client. Following a hotly contested hearing in this case of first impression in Maine, the federal court judge granted our motion and dismissed the lawsuit. This was potentially a “break the bank case” and the early win was much appreciated by our relieved client.
