A divided state appeals panel ruled Walgreens — and likely other retailers — cannot escape state court lawsuits accusing them of violating a federal law dictating the number of payment card digits that can be printed on receipts.
In September 2023, the Illinois Supreme Court granted Walgreens’ petition to hear its appeal of decisions from Lake County judges. But in May 2024 that court changed course and instead ordered the Illinois Second District Appellate Court to consider the matter. At stake is a class action worth potentially hundreds of millions of dollars from people throughout the U.S. who had some prepaid debit card numbers included on the receipt they received when they loaded cash onto those cards at Walgreens stores.
The case started in Waukegan in 2019, when named plaintiff Calley Fausett alleged Walgreens violated the Fair and Accurate Credit Transactions Act. She claimed that during a March 2019 transaction in Phoenix she loaded money onto a so-called “general purpose reloadable card” using the retailer’s Universal Swipe fund load system. She said she received two receipts, each containing “the first six and last four digits of her debit card account number,” while FACTA said receipts should only include the last five digits.
Justice Margaret Mullen wrote the majority opinion, filed Dec. 18; Justice Ann Jorgensen concurred. Justice Robert McLaren dissented.
On appeal, Walgreens said Lake County Circuit Court Judge Donna-Jo Vorderstrasse shouldn’t have certified the class because Fausett lacked standing. But the majority said that ruling was correct because unlike federal court, which requires allegations of a concrete injury, state law principles allow certification for allegations of a technical violation of statutory rights even if there is no allegation of actual harm.
Walgreens noted the first six numbers shown on the receipt identify a bank and are not unique to Fausett. It said allowing her to continue a “no-injury FACTA claim” would strip the state supreme court of certain powers and allow Congress “to tax the courts of Illinois to resolve disputes that Congress knows federal courts will not consider because they are unworthy of federal judicial time, attention and resources,” according to Mullen.
The majority disagreed, noting Fausett alleged Walgreens violated FACTA and that she is not suing as a generalized member of the public but a customer of the retailer who conducted a specific type of transaction. It emphasized that FACTA is written with provisions for statutory damages of between $100 and $1,000 for a willful violation in the event a consumer does not have actual damages exceeding those penalties.
“When a person willfully fails to comply with FACTA’s truncation requirement, the (Fair Credit Reporting Act) provides a private cause of action for statutory damages. Actual damages need not be pleaded or proved,” Mullen wrote. “Allowing an individual to seek statutory damages pursuant to FACTA, even in the absence of an actual injury or adverse effect beyond a statutory violation, furthers FACTA’s (preventive) and deterrent purposes by providing a strong incentive to comply with the law and preventing problems before they occur and cannot be undone.”
In his dissent, McLaren said the majority “engaged in piecemeal litigation and rendered a speculative, advisory opinion on only one independent aspect of class certification.”
McLaren said the majority could only reach its conclusion by presuming Fausett’s claims to be valid and without addressing affirmative defenses, factual disputes or the propriety of certification.
“The majority notes that a trial court must determine whether there is an actionable claim as a threshold matter and a class cannot be certified unless the named plaintiff has a cause of action,” McLaren wrote, which means the opinion could have agreed on standing, but should not have affirmed certification.”
McLaren also said the majority’s “finding that there is standing and then concluding that the class certification was proper is an improper conclusion based upon the hypothetical and presumed premises that standing and the allegations in the complaint remain valid and will not be affected by motions to dismiss or summary judgment in favor of the defendant. I contend that the matter should be remanded to the trial court to address the full panoply of issues and arguments relating to how a class certification should be addressed and adjudicated.”
The plaintiffs were represented before the Appeals Court by former Illinois Supreme Court Justice Thomas Kilbride and attorney Adam Vaught, a lawyer with deep ties to powerful Illinois Democratic politicians, including former House Speaker Michael Madigan.
Kilbride was removed from the state high court in 2020 when he failed to win retention in his district in north central Illinois.
Walgreens is represented by attorneys with the firm of Sidley Austin, of Chicago.
Walgreens said it would not comment on the litigation.
The U.S. Chamber of Commerce filed a brief in support of Walgreens' position. The Chamber was represented by attorneys with the firm of Shook, Hardy & Bacon, of Chicago and Washington, D.C.