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Stewart v. Gino's East Restaurant Corp.

July 8, 2008

ANNE L. STEWART, PLAINTIFF,
v.
GINO'S EAST RESTAURANT CORP., BRAVO RESTAURANTS, INC., BG EAST, LLC, EG SERVICES CORP., GINO'S EAST SERVICES, LLC, AND DOES 1-10, DEFENDANTS.



The opinion of the court was delivered by: David H. Coar United States District Judge

HONORABLE DAVID H. COAR

MEMORANDUM OPINION AND ORDER

Plaintiff Anne Stewart has filed a class action suit against Gino's East Restaurant Corporation, Bravo Restaurants, Inc., BG East, LLC, EG Services Corp., Gino's East Services, LLC and Does 1-10, for failure to comply with the Fair and Accurate Credit Transactions Act (FACTA), 15 U.S.C. § 1681 (2008). Plaintiff has not moved for class certification. FACTA prohibits businesses accepting credit or debit card payment from including the expiration date of the card on customers' receipts. Id. § 1681c(g). Plaintiff Stewart alleges that the named restaurants violated FACTA by including expiration dates on their receipts.

BG East (BG) is a Defendant in the alleged class action and the Third Party Plaintiff in the present action. BG has filed a Third Party Complaint against Data Wave, Inc. for breach of contract. Data Wave is a vendor and service provider of software and hardware used by merchants to process credit card transactions. BG alleges that Data Wave breached an agreement between the two parties that required Data Wave to ensure that BG's credit card processing system was compliant with FACTA.

Data Wave has moved to dismiss BG's Third Party Complaint pursuant to Federal Rule of Civil Procedure Rule 12(b)(6), for failure to state a claim upon which relief may be granted. Data Wave contends that BG has failed to state a claim against Data Wave because the Construction Contract appended to BG's Third Party Complaint is materially inconsistent with BG's allegations. (Def.'s Mem. in Supp. of Mot. to Dismiss 3-4.)

I. FACTS

In the summer of 2006, BG purchased a Joey Buona's restaurant, including equipment provided to that restaurant in 2002 by Data Wave. (Third Party Compl. ¶¶ 10-11.) On May 24, 2006, BG retained Data Wave to provide it with equipment and labor for the installation of a Point of Sale (POS) system to process customers' credit and debit card transactions and to print customer receipts. (Id. at ¶ 12.) BG alleges in its Third Party Complaint that Data Wave was to provide any necessary upgrades and revisions to the existing software and hardware located at the former Joey Buona's location so that it could be used for credit processing by a new Gino's East restaurant. (Id.)

BG alleges that the software and hardware Data Wave provided to BG failed to suppress the expiration date on customers' receipts as required by FACTA and that Data Wave failed to advise BG that the expiration date needed to be suppressed, in breach of an agreement between the two parties represented by a Construction Contract and Service Invoice. (Id. at ¶¶ 13-14; see also Exhibit A to Third Party Compl.) BG contends that, as part of its agreement with Data Wave, "Data Wave was to assure that the software and hardware were in compliance with all applicable laws." (Third Party Compl. ¶ 12.) Therefore, BG seeks indemnification from Data Wave in the event that it is found liable for FACTA violations. (Id. at ¶ 16.)

Data Wave responds that nothing in the agreement between the two parties obligated it to ensure that BG's POS system was compliant with FACTA. The Construction Contract, dated May 24, 2006, states that Data Wave is "authorized to furnish all labor and equipment to do the POS set up for the building." (Ex. A to Third Party Compl.) The contract also states that "[t]he work is intended to be complete and fully useable as a finished product or system," that Data Wave "shall comply with all safety measure, applicable laws, rules regulations for the safety of all persons and property at the premises," and that Data Wave warrants "that all material and equipment supplied for this job shall be new and free from faults and defects." (Id.) Also appended to the Third Party Complaint is a Service Invoice dated June 15, 2006. The invoice lists as billed to the new Gino's East location an "Aloha Annual Phone Help Desk Contract: 18 Stations." (Id.)

Data Wave contends that nothing in this contract language refers to FACTA (Def.'s Mem. in Supp. of Mot. to Dismiss 3-4) and that this court may not add terms to the contract that would require Data Wave to ensure that BG's POS system was legally compliant. (Id. at 5.) Data Wave argues that by attaching the contract to its Complaint, BG has therefore pled itself out of court. (Id.)

II. LEGAL STANDARD

When considering a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), courts take the allegations in the complaint as true, drawing all possible inferences in favor of the plaintiff. Killingsworth v. HSBC Bank Nevada, N.A., 507 F.3d 614, 618 (7th Cir. 2007).

To state a claim under federal pleading standards, a plaintiff need only provide a "short and plain statement of the claim showing that the pleader is entitled to relief," sufficient to provide the defendant with "fair notice" of the claim and its basis. Fed. R. Civ. P. 8(a)(2); Bell Atlantic Corp. v. Twombly, 127 S.Ct. 1955, 1964 (2007). In Bell Atlantic, however, the Supreme Court seemingly raised the level of factual development required to state a claim, requiring a complaint to contain more than "labels and conclusions," id. at 1964-65, and "enough facts to state a claim to relief that is plausible on its face." Id. at 1974.

The Seventh Circuit has emphasized that Bell Atlantic "did not . supplant the basic notice pleading standard." Tamayo v. Blagojevich, No. 07-2975, 2008 WL 2168638, at *8 (7th Cir. May 27, 2008). The essential requirement of a complaint is that it "give the defendant sufficient notice to enable him to begin to investigate and prepare a defense." Id. But after Bell Atlantic, the Seventh Circuit has also recognized that "the factual detail in a complaint may be so sketchy that the complaint does not provide the type of notice of the claim to which the defendant is ...


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