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Walker v. S.W.I.F.T. SCRL

June 12, 2007


The opinion of the court was delivered by: James F. Holderman, Chief Judge


In this proposed class action lawsuit, plaintiffs Ian Walker ("Walker) and Stephen Kruse ("Kruse") allege that defendant S.W.I.F.T. SCRL ("SWIFT") violated their constitutional and statutory rights when it disclosed certain financial records to the United States government.

For the reasons stated below, SWIFT's Motion to Dismiss the Amended Complaint*fn1 for Failure to State a Claim (Dkt. No. 13) is granted in part and denied in part. Count I is dismissed with prejudice. Counts II and III may remain as pleaded. Count IV is dismissed without prejudice. Plaintiffs are granted leave to file a Third Amended Complaint for purposes of correcting the pleading defects in relation to Count IV, as well as including Counts II and III in a renumbered complaint format, on or before June 29, 2007. The date for the filing of defendant's answer will be set thereafter.


On June 23, 2006, the New York Times published an article titled "Bank Data Sifted in Secret by U.S. to Block Terror" ("Article" Dkt. No. 13, Ex. B).*fn2 The Article disclosed that "[u]nder a secret Bush administration program initiated weeks after the Sept. 11 attacks, counterterrorism officials have gained access to financial records from a vast international database and examined banking transactions involving thousands of Americans and others in the United States." (Article at 1). The database, described in the Article as "the nerve center of the global banking industry," belongs to defendant SWIFT. (Article at 2).

SWIFT is an international cooperative consortium based in Brussels, with its principal American place of business in northern Virginia.*fn3 (Dkt. No. 16 at 1). SWIFT's services include "supplying secure, standardized messaging services and interface software to 7,800 financial institutions in more than 200 countries." (2d Am. Compl. ¶ 3). SWIFT routes more than 11 million financial transactions each day, and "virtually every major commercial bank, as well as brokerage houses, fund managers and stock exchanges, uses its services." (2d Am. Compl. ¶ 14). At issue in this case is SWIFT's response to subpoenas issued by the Treasury Department under the International Emergency Economic Powers Act, 50 U.S.C. § 1701, et seq, through a program that eventually became known as the "Terrorist Finance Tracking Program." (2d Am. Compl. ¶¶ 2, 13; Article at 8). Plaintiffs allege that SWIFT's initial response to the government's requests for information was overbroad, in that SWIFT turned over to government officials "the entire SWIFT database." (2d Am. Compl. ¶ 14; Article at 8).

On the same day that the Article was published, having discovered the alleged misconduct, Walker filed a Complaint against SWIFT alleging that his rights had been violated because "Defendant's disclosure of financial records or other information to the United States Government . . . was done without consent or warrants." (Compl. ¶¶ 1-2). Walker's original Complaint specifically alleged that SWIFT had violated section 3402 of the Right to Financial Privacy Act ("RFPA"), 12 U.S.C. §§ 3401 et seq., as well as the Illinois Consumer Fraud and Deceptive Business Practices Act ("CFDBPA"), 815 Ill. Comp. Stat. 505/1 et seq. Walker's Complaint was filed as a class action lawsuit, purporting to represent both a nationwide class and an Illinois subclass. On January 4, 2007, Walker amended his Complaint to add both First Amendment and Fourth Amendment claims and on February 27, 2007, Walker filed a Second Amended Complaint, adding Kruse as a named plaintiff.


Under the Federal Rules of Civil Procedure, a complaint generally need not contain more than "a short and plain statement of the claim showing that the pleader is entitled to relief." Fed. R. Civ. P. 8(a)(2). In 1957, the Supreme Court interpreted this language to mean that "a complaint should not be dismissed for failure to state a claim unless it appears beyond doubt that the plaintiff can prove no set of facts in support of his claim which would entitle him to relief."

Conley v. Gibson, 355 U.S. 41, 47 (1957). In keeping with this long-standing holding, the Seventh Circuit, in an opinion authored by Chief Circuit Judge Easterbrook, recently emphasized that "the plaintiff pleads claims, not facts or legal theories." Vincent v. City Colleges of Chicago, No. 06-3082, 2007 WL 1238745, at *3 (7th Cir. Apr. 30 2007). As Chief Judge Easterbrook bluntly put it, "a judicial order dismissing a complaint because the plaintiff did not plead facts has a short half-life." Id.

On May 21, 2007, however, the Supreme Court determined that Conley's "no set of facts" language "has earned its retirement." Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1969 (May 21, 2007). Noting the plaintiff's "obligation to provide the 'grounds' of his 'entitle[ment] to relief,'" the Supreme Court held that a viable complaint must include "enough facts to state a claim to relief that is plausible on its face." Bell Atlantic, 127 S.Ct. at 1964-65, 1974. In other words, "[f]actual allegations must be enough to raise a right to relief above the speculative level." Id. at 1965. The Supreme Court explained that this new standard "simply calls for enough fact to raise a reasonable expectation that discovery will reveal evidence of [the claim or element]." Id. On the other hand, the Supreme Court noted that "of course, a well-pleaded complaint may proceed even if it strikes a savvy judge that actual proof of the facts alleged is improbable, and 'that a recovery is very remote and unlikely.'" Id. (quoting Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). "[P]rior rulings and considered views of leading commentators" can assist in assessing the plausibility of the plaintiffs' allegations. Id. at 1966.

In deciding whether to grant a 12(b)(6) motion to dismiss, the court assumes that all well-pleaded allegations in the complaint are true. Id. However, if a complaint includes facts that undermine its own allegations, a plaintiff can plead herself out of court. Kolupa v. Roselle Park Dist., 438 F.3d 713, 715 (7th Cir. 2006). "Documents that a defendant attaches to a motion to dismiss are considered part of the pleadings if they are referred to in the plaintiff's complaint and are central to her claim." Venture Associates Corp. v. Zenith Data Systems Corp., 987 F.2d 429, 431 (7th Cir. 1993).


At the outset of its analysis, this court must first determine whether it has proper jurisdiction over the case brought by Walker and Kruse (collectively "Plaintiffs"). The role of Article III standing is to ensure that federal courts only resolve actual cases or controversies before them. Winkler v. Gates, 481 F.3d 977, 979 (7th Cir. 2007). If Plaintiffs do not have standing in the alleged controversy, the court does not have jurisdiction to hear their claims. See Allen v. Wright, 468 U.S. 737, 751 (1984) ("Standing doctrine embraces several judicially self-imposed limits on the exercise of federal jurisdiction [as well as] a core component derived directly from the Constitution"). To establish Article III standing, a plaintiff must have suffered (1) an injury in fact; (2) fairly traceable to defendant's conduct; and (3) likely to be redressed by a favorable decision. Wernsing v. Thompson, 423 F.3d 732, 743 (7th Cir. 2005) (citing Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)). "The party invoking federal jurisdiction bears the burden of establishing these elements." Lujan, 504 U.S. at 561. As the Supreme Court has articulated this burden:

[E]ach element must be supported in the same way as any other matter on which the plaintiff bears the burden of proof, i.e., with the manner and degree of evidence required at the successive stages of the litigation. . . . At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we 'presum[e] that general allegations embrace those specific facts that are necessary to support the claim.'

Id. (citations omitted).

In this case, SWIFT alleges that Plaintiffs do not have standing because they have failed to plead an injury in fact. In other words, they have not demonstrated that they are "among the injured." Id. (citing Sierra Club v. Morton, 405 U.S. 727, 740-741, n. 16 (1972)). An injury in fact must be both concrete and particularized, as well as actual or imminent. Lujan, 504 U.S. at 560. "An interest shared generally with the public at large in the proper application of the Constitution and laws will not do." Arizonans for Official English v. Arizona, 520 U.S. 43, 64 (1997). On the other hand, "standing is not to be denied simply because many people suffer the same injury." United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 687-88 (1973).

For the most part, Plaintiffs do not plead specific facts to establish that they have suffered an injury in fact. Plaintiffs only allege that they "completed numerous domestic financial transactions and at least one international financial transaction since September 11, 2001." (2d Am. Compl. ¶¶ 10-11). They do not otherwise indicate the nature of their financial transactions or the names of the banks or financial institutions through which the transactions were completed; they do not allege that their banks or financial institutions used SWIFT software; and they do not specifically allege that information about their transactions was recorded in the SWIFT database.

Some of these holes are filled in by the New York Times article of June 23, 2006. According to the Article, "[m]ost routine financial transactions confined to this country are not in the database." (Article at 2). However, "a small fraction of SWIFT's records involve transactions entirely within this country." (Article at 3). Also, "virtually every major commercial bank, as well as brokerage houses, fund managers and stock exchanges, uses its services." (Article at 4). "One person involved in the SWIFT program estimated that analysts had reviewed international transfers involving 'many thousands' of people or groups in the United States." (Article at 5). In searching the SWIFT database, "[c]ustomers' names, bank account numbers and other identifying information can be retrieved." (Article at 5). Furthermore, "one person close to the operation" said that SWIFT initially turned over to the federal government "everything -- the entire SWIFT database." (Article at 8).

At this stage in the proceedings, Plaintiffs need not allege the specific factual basis that supports their standing to bring this lawsuit. "[G]eneral factual allegations of injury resulting from the defendant's conduct may suffice." Lujan, 504 U.S. at 561; see also Bell Atlantic Corp., 127 S.Ct. at 1959 ("a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations"). Plaintiffs do allege that "[b]y the acts alleged herein, SWIFT's conduct proximately caused harm to Plaintiffs." (2d Am. Compl. ΒΆ 41). Taken as a whole, the allegations in the Second Amended Complaint and the relevant Article are sufficient to put SWIFT on notice of the particular harm alleged to have been suffered by Walker and Kruse, and it is ...

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