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Diviacchi v. Speedway LLC

United States District Court, D. Massachusetts

June 12, 2015

CAROYLN DIVIACCHI, Plaintiff,
v.
SPEEDWAY LLC d/b/a HESS RETAIL, STORES LLC, Defendant.

FINDINGS OF FACT AND RULINGS OF LAW

WILLIAM G. YOUNG, District Judge.

I. INTRODUCTION

The plaintiff Carolyn Diviacchi ("Diviacchi") brings this action against Speedway LLC d/b/a Hess Retail Stores LLC ("Hess")[1] seeking injunctive relief arising out of Hess's collection of her zip code while processing credit card transactions, which she views as a violation of Massachusetts' consumer privacy laws. After holding a two-day bench trial, the Court now makes the following findings of fact and rulings of law.

This case began on March 4, 2015, when Diviacchi filed a two-count complaint. Compl./Jury Demand ("Compl."), ECF No. 1. Count I raised a claim for damages under Massachusetts General laws chapter 93A sections 2 and 9 ("Chapter 93A"), id. ¶¶ 26-28, while Count II raised a claim for equitable injunctive relief in the event that no monetary damages were available, id. ¶¶ 29-30. Diviacchi filed the complaint as a putative class action with herself as class representative. See id. ¶¶ 22-25.

Diviacchi moved for a preliminary injunction on March 15, 2015. Pl.'s Mot. Prelim. Inj., ECF No. 5. Two weeks later, Hess filed a motion to dismiss. Defs.' Mot. Dismiss, ECF No. 14. The Court heard oral argument on both motions on April 2, 2015. Elec. Clerk's Notes, ECF No. 27. At the hearing, the Court denied Hess's motion to dismiss. Id . Turning to Diviacchi's motion for a preliminary injunction, the Court - following its usual practice - collapsed that motion with trial on the merits pursuant to Federal Rule of Civil Procedure 65(b) and set the matter for trial starting April 6. Id . Originally, that trial was to be an exemplar trial dealing only with Diviacchi's individual claims; no class-wide issues would be decided. Id.

The day after the hearing, Diviacchi filed a notice dismissing Count I of the complaint. Pl.'s Notice Dismissal Count I Only, ECF No. 31. Diviacchi's counsel represented that this meant that the class claim was thus out of the case entirely. Tr. Vol. I 7:12-20, ECF No. 45. In the wake of the dismissal of Count I, the Court held a two-day bench trial on April 6 and 7, 2015 addressing Diviacchi's individual claim for injunctive relief under Count II. See id.; Tr. Vol. II, ECF No. 48. At the end of the second day of trial, the Court took the matter under advisement. Tr. Vol. II 34:25-35:1.

II. FINDINGS OF FACT

The Court makes its findings of fact based on the four exhibits received in evidence during the bench trial, a list of stipulations with attached affidavits, and the testimony of Diviacchi herself. Tr. Vol. II 5:11-15.

Diviacchi has been a resident of the Allston neighborhood of Boston for approximately twenty-five years. Tr. Vol. I 26:13-14, 28:2-3. For the entire duration of her residence in Allston, Diviacchi has filled her car with gasoline at a Hess-branded gas station on Cambridge Street. Id. at 26:15-18, 27:4-7, 28:4-8. When purchasing gasoline, Diviacchi almost always uses her credit card rather than cash. See id. at 37:15-40:9. At trial, she described the purchasing process as follows:

[Y]ou find an empty pump, ... you put your card into the... pump with the gas, you put your card in, run your card through, and wait, and then the... terminal window asks for your zip code and you put your zip code in and then it accepts your card and you can proceed to pump the gas.

Id. at 27:11-16. She further testified that she does not know what happens to the zip code after it is entered at the pump. Id. at 40:10-12. Diviacchi's counsel admitted during argument before the Court that she makes no allegation that Hess sent marketing materials to her home at any point. Id. at 11:20-25.

The affidavits provided by Hess shed light both on what happens to the zip code information after it is entered and why Hess requires that customers enter their zip code to use their credit cards at the pump. The zip code is collected as part of the Address Verification System ("AVS") used by First Data Corporation ("First Data"), Hess's credit card transaction processing vendor. Stipulations, Ex. B, Aff. Paul Smith ("Smith Aff.") ¶ 3, ECF No. 43-2. When a customer inputs her zip code, that information (along with the credit card number and other data) are held in the volatile memory of the gas station's fuel pump, fuel controller, and a so-called credit appliance. Stipulations, Ex. A, Aff. Akira Johnson ("Johnson Aff.") ¶¶ 4-5, ECF No. 43-1. From the volatile memory, the data is sent to First Data; First Data in turn transmits the data to the card issuer (such as Visa or Mastercard), which compares the provided zip code with the billing address on record and then sends a single-letter code to First Data and Hess indicating whether the zip codes match - and thus whether the transaction is authorized. Id . ¶ 8. Once a transaction is authorized, Hess's credit appliance records the account number, the cardholder name, and the card expiration date and retains that information for six days. Id . ¶ 5. The zip code, however, is only ever held in the credit appliance's volatile memory and is not recorded or retained at any time. Id . ¶¶ 5, 8; Smith Aff. ¶¶ 4, 7. Because the zip code is not recorded, Hess does not have the ability to access its customers' zip code data. Johnson Aff. ¶ 9. As would reasonably follow, Hess thus does not use the zip codes for marketing purposes, nor does it sell zip code information to any third parties. Id . ¶¶ 10-11; Smith Aff. ¶¶ 9-10.

Hess attests that it uses the AVS solely for purposes of fraud prevention. Johnson Aff. ¶ 7; Smith Aff. ¶ 4. Because the pay-at-the-pump system is not supervised by Hess employees and because the customer is not required to sign a sales draft, these kinds of purchases are four times more vulnerable to fraud than standard credit card transactions that take place in the presence of a clerk or customer service representative. Stipulations, Ex. C, Aff. Stephanie J. Brown ("Brown Aff.") ¶ 4, ECF No. 43-3. When such fraud takes place, Hess is required to pay the cost of the transaction. Id . ¶ 5. Around 2005 or 2006, some Hess-branded gas stations in New York City lost $20, 000 to $30, 000 each month as a result of fraud. Smith Aff. ¶ 3. The use of AVS has decreased the incidence of fraud between seventy and eighty percent in New York and up to sixty percent in Massachusetts and other states. Id . ¶ 5; Brown Aff. ¶ 9. While credit card issuers like Visa, Mastercard, and Discover do not affirmatively require ...


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