UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
Case No.: 1:15-cv-24326-CMA
CARLOS GUARISMA
Plaintiff,
vs.
MICROSOFT CORPORATION,
a Washington Corporation
Defendant.
/
PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S
COMBINED MOTION TO DISMISS OR ALTERNATIVELY COMPEL ARBITRATION
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Microsoft knew FACTA expressly prohibited it from printing point-of-sale transaction
receipts that reveal more than the last five digits of a consumer’s debit and credit card number.
(Complaint ¶19-¶27). Yet it willfully allowed its system to routinely print ten digits, i.e., most, of
its customers’ debit and credit card numbers on its transaction receipts, thus allowing its retail
employees and anyone else who might find the receipts access to this personal and sensitive
information. To make matters worse, Microsoft includes its customers’ first and last names on
the receipts. Now it seeks to avoid the consequences of its illegal conduct by arguing this Court
lacks the power to decide the case. However, neither of the grounds for its motion have merit.
Microsoft’s argument that Plaintiff cannot clear the low “injury in fact” hurdle fails
because Microsoft’s actions caused Plaintiff multiple Article III injuries. First, both Spokeo, Inc.
v. Robins, 136 S. Ct. 1540 (2016) and Church v. Accretive Health, Inc., No. 15-15708 (11th Cir.
July 6, 2016), attached as Exh. 1, establish that Microsoft’s alleged violation of Plaintiff’s
FACTA rights, by itself, is a concrete injury. Second, Spokeo reaffirms that intangible harms
identified by Congress or recognized at common law are also concrete injuries. Congress
determined and the common law recognizes that Microsoft’s inclusion of more than the last five
digits of consumers’ credit card numbers on its transaction receipts violates consumers’ privacy
interests. Congress also determined this practice creates an unacceptable risk of identity theft.
Finally, Spokeo confirms that Plaintiff’s right to recover statutory damages presents a concrete
dispute sufficient to meet Article III. Accordingly, Microsoft’s request for dismissal should be
denied.
Microsoft’s alternative bid to force Plaintiff to arbitrate his claims fails because Plaintiff
never agreed to arbitrate with Microsoft. Microsoft’s argument is based on the terms of a
warranty that states that it only applies to the user of the product that Plaintiff bought. Here,
however, Plaintiff never used the product, or even opened its packaging, because he bought the
product for someone else. Moreover, the arbitration clause is not part Plaintiff’s agreement to
purchase the product because he did not assent to it. Microsoft never mentioned or referenced the
clause in connection with his purchase, and Plaintiff was never made aware of it. Finally, even if
the arbitration clause had been incorporated into Plaintiff’s purchase, it would not reach his
FACTA claim because the clause is narrowly tailored to only cover disputes involving the
product or its warranty. Plaintiff’s claim does not arise from the product or warranty. His claim
arises from Microsoft’s disclosure of private credit card information on its transaction receipts.
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Accordingly, Microsoft’s request to force arbitration also should be denied.
I. Microsoft’s Request for Dismissal for Lack of Standing Should Be Denied Because
Microsoft Subjected Plaintiff to Multiple Concrete Injuries.
Microsoft’s request for dismissal is principally based on its assertion that Spokeo
demonstrates Plaintiff suffered no Article III injury.1 This argument is misplaced because Spokeo
did not even decide if the injury requirement was met in that case. Instead, it ruled the Ninth
Circuit’s analysis was incomplete, and remanded for further consideration. Spokeo, 136 S.Ct. at
1545 (“We take no position as to whether the Ninth Circuit’s ultimate conclusion—that Robins
adequately alleged an injury in fact—was correct.”). Indeed, far from supporting Microsoft,
Spokeo just reiterates a number of long-standing general principles about the injury requirement
that confirm that Plaintiff meets that requirement in several ways.
Spokeo reaffirms the nearly fifty-year old rule that the required injury must be “concrete
and particularized.” Spokeo, 136 S.Ct. at 1545, citing Friends of the Earth, Inc. v. Laidlaw Envtl.
Servs. (TOC), Inc., 528 U.S. 167, 180–81 (2000) (italics in original); see also Schleisinger v.
Reservists Comm. to Stop the War, 418 U.S. 208, 220-21 (1974). Microsoft claims that Plaintiff
does not meet either of these elements, but it fails to present distinct arguments about them.
Instead, its discussion just lumps the two concepts together, which is the very reason Spokeo
reversed the Ninth Circuit. Spokeo, 136 S.Ct. at 1548.
Contrary to Microsoft’s claim, Plaintiff meets the particularization element because he
alleges that Microsoft disclosed too much of his credit card number, thus forcing him to protect
the receipt and its contents from further disclosure instead of just discarding it. (Decl. of Plaintiff
at ¶4, attached as Exh. 2). In other words, Microsoft’s actions affected him “in a personal and
individual way.” Spokeo, 136 S.Ct. at 1548. Accordingly, the only issue is whether Plaintiff
asserts an injury that is “concrete.”
A “concrete” injury is simply one that is real or de facto, i.e., not abstract. Spokeo, 136
S.Ct. at 1548. It does not need to be large or substantial, or even tangible. Not only is an
1 Standing has three elements: (1) injury in fact, (2) fairly traceable to the challenged conduct, (3)
that is likely to be redressed by a favorable decision. Spokeo, 136 S.Ct. at 1547, citing Lujan v.
Defenders of Wildlife, 504 U.S. 555, 560-61 (1992). Microsoft only challenges whether Plaintiff
has an injury in fact. It does not and cannot legitimately dispute that Plaintiff’s injuries are fairly
traceable to the challenged conduct (Microsoft’s disclosure of his credit card information on its
transaction receipt), or that Plaintiff’s injuries are likely to be redressed by a favorable decision
(because Plaintiff can recover statutory damages). See Hammer v. Sam’s East, Inc., 754 F.3d
492, 498 (8th Cir. 2014) (finding Article III standing in a FACTA case).
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intangible harm sufficient, but so is an “identifiable trifle.” Common Cause/Georgia v. Billups,
554 F.3d 1340, 1351 (11th Cir. 2009), citing United States v. Students Challenging Reg. Agency
Procs., 412 U.S. 669, 689, fn.14 (1973). As the Supreme Court explains:
“Injury in fact” reflects the statutory requirement that a person be “adversely
affected” or “aggrieved,” and it serves to distinguish a person with a direct stake
in the outcome of a litigation -- even though small -- from a person with a mere
interest in the problem. We have allowed important interests to be vindicated by
plaintiffs with no more at stake in the outcome of an action than a fraction of a
vote, see Baker v. Carr, 369 U.S. 186; a $ 5 fine and costs, see McGowan v.
Maryland, 366 U.S. 420; and a $ 1.50 poll tax, Harper v. Virginia Bd. of
Elections, 383 U.S. 663. …. As Professor Davis has put it: “The basic idea that
comes out in numerous cases is that an identifiable trifle is enough for standing to
fight out a question of principle; the trifle is the basis for standing and the
principle supplies the motivation.”
Students Challenging Reg. Agency Procs., 412 U.S. at 689, n.14 (citations omitted); and, e.g.,
Palm Beach Golf Ctr.-Boca v. John G. Sarris, 781 F.3d 1245, 1251 (11th Cir. 2015) (concrete
injury exists when the plaintiff’s fax line is tied up for “one minute.”).
Likewise, “concrete” does not mean economic or monetary. See, e.g., Id. and Common
Cause, 554 F.3d at 1351 (having to show a photo ID is a concrete injury); and see Students
Challenging Reg. Agency Procs.., 412 U.S. at 689, n.14. To the contrary, Spokeo reaffirms that a
concrete injury can be intangible, and amount to nothing more than a “risk of real harm.”
Spokeo, 136 S.Ct. at 1549. In fact, Spokeo goes even further, recognizing that the alleged
violation of a statute, by itself, can supply the requisite injury. Id. at 1544.2
These well-established principles demonstrate that Microsoft’s disclosure of ten digits of
Plaintiff’s credit card number caused him multiple concrete injuries.
A. Microsoft’s Violation of Plaintiff’s Substantive Rights under FACTA Is Itself
a Concrete Injury.
Microsoft principally bases its dismissal request on a misstatement of what Spokeo says.
According to Microsoft, “[i]n Spokeo, the Supreme Court made clear that the alleged violation of
a federal statute, on its own, is insufficient to show a ‘concrete’ injury.” (Memo. at p.9).
Actually, Spokeo says the opposite. It expressly states “the violation of a procedural right
granted by statute can be sufficient in some circumstances to constitute injury in fact. In other
2 The words “actual or imminent” are also used to describe the required injury, but Microsoft
makes no distinct argument on this point either. Likewise, Spokeo does not draw a distinction
between an injury that is “concrete,” i.e., real, and one that is “actual.”
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words, a plaintiff in such a case need not allege any additional harm beyond the one Congress
has identified.” Spokeo, 136 S.Ct. at 1544 (first italics added). Spokeo also describes the required
injury as “an invasion of a legally protected interest…” Id. at 1548, quoting Lujan v. Defs. of
Wildlife, 504 U.S. 555, 560 (1992). Finally, Spokeo reaffirms that “Congress has the power to
define injuries and articulate chains of causation that will give rise to a case or controversy where
none existed before.” Spokeo, 136 S.Ct. at 1549, quoting Lujan v. Defenders of Wildlife, 504
U.S. 555, 580 (1992). Accordingly, Microsoft’s claim that the Court should ignore the particular
statutory violation asserted, and just decide if Plaintiff meets the concrete injury requirement
“had the statute not existed” (Memo. at 8), is flat wrong. Spokeo instructs that the particular
statutory violation asserted materially affects whether the plaintiff has alleged a concrete injury.
Importantly, Spokeo’s remarks about when a statutory violation itself can constitute a
concrete injury specifically refer only to procedural rights, apparently because the FCRA
provisions at issue in that case were procedural. See Spokeo, 136 S.Ct. at 1545, citing, inter alia,
15 U.S.C. §1681e (“Compliance Procedures”).3 The majority did not discuss the concrete injury
requirement in the context of substantive rights.
Justice Thomas’s concurrence fills this gap, confirming that in the context of substantive
or “private” rights, the violation alone meets the concrete injury requirement:
Common-law courts imposed different limitations on a plaintiff’s right to bring
suit depending on the type of right the plaintiff sought to vindicate. Historically,
common-law courts possessed broad power to adjudicate suits involving the
alleged violation of private rights, even when plaintiffs alleged only the violation
of those rights and nothing more. “Private rights” are rights “belonging to
individuals, considered as individuals.” 3 W. Blackstone, Commentaries *2
(hereinafter Blackstone). …. In a suit for the violation of a private right, courts
historically presumed that the plaintiff suffered a de facto injury merely from
having his personal, legal rights invaded. Thus, when one man placed his foot on
another’s property, the property owner needed to show nothing more to establish
a traditional case or controversy.
* * *
A plaintiff seeking to vindicate a statutorily created private right need not allege
actual harm beyond the invasion of that private right. See Havens Realty Corp. v.
Coleman, 455 U.S. 363, 373–374, 102 S.Ct. 1114, 71 L. Ed. 2d 214 (1982)
(recognizing standing for a violation of the Fair Housing Act); Tennessee Elec.
Power Co. v. TVA, 306 U.S. 118, 137–138, 59 S.Ct. 366, 83 L. Ed. 543 (1939)
(recognizing that standing can exist where “the right invaded is a legal right,—
3 Spokeo’s hypothetical about the impact of an inaccurate zip code in a credit report, discussed
by Microsoft, also concerns an alleged procedural violation. See Spokeo, 136 S.Ct. at 1550.
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one of property, one arising out of contract, one protected against tortious
invasion, or one founded on a statute which confers a privilege”).
Spokeo, 136 S.Ct. at 1551 and 1553 (Thomas, J., concurring).
The Havens Realty case Justice Thomas cites is particularly instructive. A unanimous
Supreme Court ruled that the violation of the plaintiff’s statutory right not to be lied to about
available housing was an “injury in fact” even if the plaintiff had no intention of doing business
with the defendant, and interacted with the defendant fully expecting it to violate her rights:
As we have previously recognized, “[the] actual or threatened injury required by
Art. III may exist solely by virtue of ‘statutes creating legal rights, the invasion of
which creates standing . . . .’” Warth v. Seldin, supra, at 500, quoting Linda R. S.
v. Richard D., 410 U.S. 614, 617, n. 3 (1973). Accord, Sierra Club v. Morton, 405
U.S. 727, 732 (1972); Trafficante v. Metropolitan Life Ins. Co., 409 U.S. 205, 212
(1972) (WHITE, J., concurring). Section 804(d), which, in terms, establishes an
enforceable right to truthful information concerning the availability of housing, is
such an enactment. A tester who has been the object of a misrepresentation made
unlawful under § 804(d) has suffered injury in precisely the form the statute was
intended to guard against, and therefore has standing to maintain a claim for
damages under the Act’s provisions. That the tester may have approached the real
estate agent fully expecting that he would receive false information, and without
any intention of buying or renting a home, does not negate the simple fact of
injury within the meaning of § 804(d).
Havens Realty Corp., 455 U.S. at 373-74 (emphasis added). Needless to say, one who interacts
with a firm having no intention of doing business with it, and expecting the firm to lie, suffers no
harm beyond the statutory violation. Nevertheless, in the context of substantive rights, the Court
ruled nothing more is required to meet Article III. See Havens Realty Corp., 455 U.S. at 373-74.
The Eleventh Circuit has reaffirmed this rule twice, including post-Spokeo. Just days ago
it cited both Havens Realty and Spokeo to hold that a debt collector’s violation of a debtor’s
statutory right to receive a notice is sufficient, by itself, to meet the concrete injury requirement.
Church v. Accretive Health, Inc., No. 15-15708 (11th Cir. July 6, 2016) (unpub.), Slip. Op at p.9,
attached as Exh. 1. Noting that this right is substantive (Id., n.2), the Court ruled that “Congress
has created a new right—the right to receive the required disclosures in communications
governed by the FDCPA—and a new injury—not receiving such disclosures…” Id. Likewise,
with FACTA, Congress created a substantive right to receive transaction receipts that do not
reveal more than the last five digits of one’s credit card number, and a new injury – the
disclosure of more than the last five digits of one’s card number on the receipt. See Hammer v.
Sam’s East, Inc., 754 F.3d 492, 498 (8th Cir. 2014) (FACTA creates a “right to obtain a receipt
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at the point of sale showing no more than the last five digits of the consumer’s credit or debit
card number.”).4
The Eleventh Circuit also recently followed Havens Realty to conclude that a plaintiff has
standing to sue a business for having an architectural barrier that violates his rights under the
Americans with Disabilities Act, even if the plaintiff is merely a “tester” who visits the business
just to encounter the barrier so he can sue. See Houston v. Marod Supermarkets, Inc., 733 F.3d
1323, 1330 (11th Cir. 2013). As in Havens Realty and Church, the plaintiff in Marod did not
identify harm beyond the violation of his substantive rights, and yet the Court ruled that he still
met the injury requirement. See Id. at 1332. In short, Havens Realty, Church and Marod squarely
establish that a violation of one’s substantive rights, by itself, is enough to satisfy Article III.5
Microsoft cites no authoritative case to the contrary. Instead, it cites out-of-circuit district
court cases that do not address Havens Realty or Marod, and do not discuss whether a violation
of a federal substantive right is a concrete injury. See Khan v. Children’s Nat’l Health Sys., 2016
U.S. Dist. LEXIS 66404 (D. Md. May 19, 2016) and Smith v. Ohio State Univ. 2016 U.S. Dist.
LEXIS 74612 (S.D. Ohio June 8, 2016). Khan is distinguishable because it dealt with alleged
violations of state law. The court found that state law violations are not equivalent to violations
of federal rights because, unlike Congress, states do not have the power to define Article III
injuries. See Khan, 2016 U.S. Dist. LEXIS 66404 at *21 (“where Khan alleges violations of state
law, she advances no authority for the proposition that a state legislature or court, through a state
statute or cause of action, can manufacture Article III standing for a litigant…”)
Smith is distinguishable because it just acknowledges Spokeo’s statement that a violation
of procedural rights may not be enough to meet the injury requirement in some circumstances.
See Smith, 2016 U.S. Dist. LEXIS 74612 at *11. It does not discuss the implications of a
violation of substantive rights. Moreover, Smith found no injury in that case because “Plaintiffs
4 FACTA does not prescribe any procedures for complying with this requirement.
5 As Church shows, Havens Realty and Marod remain good law. They are consistent with
Spokeo, which describes the required injury as “‘an invasion of a legally protected interest’ that
is ‘concrete and particularized’ and ‘actual or imminent, not conjectural or hypothetical.’”
Spokeo, 136 S.Ct. at 1548 (emphasis added). Spokeo’s majority does not criticize or distinguish
Havens Realty, even though Justice Thomas favorably cites it. Finally, because Spokeo did not
decide the case before it, it cannot be read to overrule Havens Realty or Marod. See Stein v.
Buccaneers, LP, 772 F.3d 698 (11th Cir. 2014) (“A Supreme Court dictum in a different setting
rarely suffices to overturn a clear circuit holding on the precise question at issue.”) (citing cases).
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admitted they did not suffer consequential damage as a result of [Defendant’s] breach of the
FCRA.” Id. This conclusion is questionable, however, because Spokeo does not require proof of
“consequential damage” to establish an injury-in-fact. Again, Spokeo reaffirms that intangible
harms identified by Congress or recognized at common law are sufficient.
In contrast to the inapposite cases Microsoft cites, the only appellate case to address
Article III in the FACTA context confirms that the violation of Plaintiff’s FACTA rights, by
itself, is a concrete injury. See Hammer, 754 F.3d at 498 and n.3 (“the actual-injury requirement
may be satisfied solely by the invasion of a legal right that Congress created. This is not a novel
principle within the law of standing.”) (italics in original) (collecting cases). As required by
Spokeo, in Hammer the Eighth Circuit considered and determined that the defendant’s violation
of the plaintiff’s FACTA rights was both particularized and concrete, i.e., not abstract. See
Hammer, 754 F.3d at 499 (“Congress may not, for example, permit individuals to enforce ‘an
abstract, self-contained, noninstrumental ‘right’ …. this limitation poses no obstacle here.”); cf.
See Spokeo, 136 S.Ct. at 1548 (“When we have used the adjective ‘concrete,’ we have meant to
convey the usual meaning of the term — ‘real,’ and not ‘abstract.’”). Accordingly, the Court
concluded Article III was satisfied. Hammer, 754 F.3d at 499. (“Because appellants allege that
they have suffered an actual, individualized invasion of a statutory right, we conclude that they
have satisfied the injury-in-fact requirement of Article III standing.”). Thus, consistent with the
Eleventh Circuit’s recent decision in Church, Hammer further confirms that Microsoft’s
violation of Plaintiff’s substantive rights under FACTA, by itself, is a concrete injury.
B. Microsoft’s Disclosure of Plaintiff’s Private Credit Card Information, and Its
Exposure of Plaintiff to a Risk of Identity Theft, Are Also Concrete Injuries.
Microsoft also injured Plaintiff beyond violating his substantive rights. Spokeo reaffirms
that the universe of concrete injuries includes intangible harms. See Spokeo, 136 S.Ct. at 1549
(“we have confirmed in many of our previous cases that intangible injuries can nevertheless be
concrete.”); see also, e.g., Friends of the Earth, 528 U.S. at 183 (a lessened “aesthetic” and
“recreational” value of a river is an injury in fact). An asserted intangible harm is concrete when
it is analogous to a harm recognized at common law or one identified by Congress:
In determining whether an intangible harm constitutes injury in fact, both history
and the judgment of Congress play important roles. Because the doctrine of
standing derives from the case-or-controversy requirement, and because that
requirement in turn is grounded in historical practice, it is instructive to consider
whether an alleged intangible harm has a close relationship to a harm that has
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traditionally been regarded as providing a basis for a lawsuit in English or
American courts. [citation omitted]. In addition, because Congress is well
positioned to identify intangible harms that meet minimum Article III
requirements, its judgment is also instructive and important.
Spokeo, 136 S.Ct. at 1549. Indeed, “Congress has the power to define injuries and articulate
chains of causation that will give rise to a case or controversy where none existed before.” Id.,
quoting Lujan, 504 U.S. at 580 (emphasis added). These well-established principles show that
Microsoft injured Plaintiff in several additional ways.
1. Microsoft Violated Plaintiff’s Privacy Interests.
Microsoft’s exposure of Plaintiff’s credit card information to its retail employees and
anyone else who might handle the receipt violates Plaintiff’s privacy interests. This injury is
concrete because Congress identified it as one of the very harms FACTA was created to avoid:
Congress, at the very least, recognized a card holder’s right of privacy in the card
holder’s complete card account number and account information, and a
corresponding right of privacy not to have that information exposed on an
electronically printed payment card receipt.
Creative Hospitality Ventures v. U.S. Liab. Ins. Co., 655 F.Supp.2d 1316, 1333-34 (S.D. Fla.
2009), rev'd in part on other grounds, 444 F.App’x 370 (11th Cir. 2011). Indeed, when signing
FACTA into law, President Bush noted the government was “act[ing] to protect individual
privacy.” Id. at 1333, quoting 39 Weekly Comp. Pres. Doc. 1746, 1757 (Dec. 4, 2003).
This injury is also concrete because it “has a close relationship to a harm that has
traditionally been regarded as providing a basis for a lawsuit in English or American courts.”
Spokeo, 136 S.Ct. at 1549. Invasion of privacy is a well-established basis for a lawsuit. See Parks
v. IRS, 618 F.2d 677, 683 (10th Cir. 1980) (the “common law tort of invasion of privacy” created
a remedy for “personal wrongs which result[ed] in injury to plaintiffs’ feelings and [were]
actionable even though the plaintiff suffered no pecuniary loss nor physical harm. It is the
invasion of the right that is the essence of the action.”), citing 62 Am. Jur. 2d Privacy §45
(emphasis added); accord Pichler v. UNITE, 542 F.3d 380, 398–99 (3d Cir. 2008).
Moreover, courts “have recognized as a ‘species of privacy violation …. violations of a
right to secrecy of personal information . . . .’” Creative Hospitality Ventures, 655 F.Supp.2d at
1333-34, quoting Hooters of Augusta v. Am Global Ins. Co., 157 Fed. Appx. 201, 208 (11th Cir.
2005). This includes allowing lawsuits based on a disclosure of private information, even
without consequential damage. Warren & Brandeis, THE RIGHT TO PRIVACY, 4 Harv. L. Rev. at
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199, n.6 (“[The right] does not turn upon the form or amount of mischief or advantage, loss or
gain.”)
Indeed, the Third Circuit just confirmed that “the unlawful disclosure of legally protected
information” is a concrete injury under Spokeo. In re Nickelodeon Privacy Litig., 2016 U.S. App.
LEXIS 11700 at *22 (3rd. Cir. June 27, 2016). That is precisely what Plaintiff alleges here
because again, FACTA makes it unlawful for Microsoft to disclose more than the last five digits
of his credit card number on its transaction receipt, yet Microsoft willfully did so (along with
disclosing Plaintiff’s first and last name). Microsoft does not show otherwise. Accordingly,
Microsoft’s breach of Plaintiff’s privacy interests is an additional concrete injury.
2. Microsoft Exposed Plaintiff to a Congressionally Recognized Risk of
Identity Theft.
Microsoft also injured Plaintiff by exposing him to a risk of identity theft. This injury is
concrete because again, Congress has the power to identify injuries and chains of causation that
satisfy Article III (Spokeo, 136 S.Ct. at 1549), and Congress determined that the inclusion of
more than the last five digits of consumers’ credit card numbers on transaction receipts creates a
real risk of identity theft that would not exist but for the disclosure of this information on the
receipt. See Harris v. Mexican Specialty Foods, Inc., 564 F.3d 1301, 1306 (11th Cir. 2009)
(FACTA “is aimed at protecting consumers from identity theft”).
Specifically, Congress determined the account number is the “single most crucial piece
of information a criminal would need to perpetrate account fraud.” Vol. 154, No. 78 Cong. Rec.
H3730 (May 13, 2008) (Rep. Mahoney). The inclusion of excess account information on a
receipt enables anyone who sees the receipt to use the data in it to discover further information
about the consumer. See Redman v. Radioshack Corp., 768 F.3d 622, 626 and 639 (7th Cir.
2014) (“the less information the receipt contains the less likely is an identity thief who happens
to come upon the receipt to be able to figure out the cardholder’s full account information”). In
signing FACTA into law, President Bush noted that “[s]lips of paper that most people throw
away should not hold the key to their savings and financial secrets.” Creative Hospitality
Ventures, 655 F.Supp.2d at 1333, citing Weekly Comp. Pres. Doc. 1746, 1757 (Dec. 4, 2003).
At that time, identity theft had “reached almost epidemic proportions.” H.R. Rep. No.
108-263 at 25 (2003). Over 27 million Americans had been victims of identity theft in the past
five years, and the estimated cost to consumers and the economy was over fifty billion dollars
annually. See Federal Trade Commission, Identity Theft Survey Report (2003). Every year,
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identity theft results in billions of dollars of loss, which has a significant effect on consumers and
the economy.6 Further the direct costs of financial fraud, identity theft, or even the fear of
identity theft, have a powerful psychological effect on consumers, as “36% of identity theft
victims reported moderate or severe emotional distress as a result of the incident.” Bureau of
Justice Statistics, U.S. Dep’t of Justice, Victims of Identity Theft, 2014, at 1 (Sept. 2015).7
The complex dimensions of identity theft make the risk to any particular consumer near
impossible to quantify. Congress is best equipped to evaluate and address that risk, and thus the
exposure to identity theft is exactly the type of intangible harm Congress is best positioned to
define as actionable under Article III. See Spokeo, 136 S. Ct. at 1549. In doing so with FACTA,
Congress decided to “require the truncation of credit and debit card account numbers on
electronically printed receipts to prevent criminals from obtaining easy access to such key
information,” and to “limit the number of opportunities for identity thieves to ‘pick off’ key card
account information.” S. Rep. No. 108-166, at pp. 3 and 13 (2003).
Microsoft disclosed ten digits of Plaintiff’s credit card number (along with his first and
last name), giving its retail employees and anyone else who might find the receipt access to the
information that Congress determined creates a sufficiently real risk of identity theft to pass
FACTA. See Redman, 768 F.3d at 639 (“identity theft is a serious problem, and FACTA is a
serious congressional effort to combat it.”). A “risk of real harm” is enough to meet the injury
requirement. Spokeo, 136 S.Ct. at 1549. Accordingly, this risk is a concrete injury.
Microsoft questions the significance of this risk, but its alleged skepticism cannot trump
Congress’s power to “define injuries and articulate chains of causation that will give rise to a
case or controversy where none existed before.” Spokeo, 136 S.Ct. at 1549. Indeed, Congress’s
6 See Javelin Strategy & Research, 2015 Identity Fraud: Protecting Vulnerable Populations 6, at
pp. 7, 14, available at https://www.javelinstrategy.com/file/11696/download?token=yB71qLr7.
In 2014 and 2013, respectively, approximately 12.7 million and 13.1 million consumers
experienced identity theft. (Id.) In 2010, about 7% of households had at least one member who
experienced one or more types of identity theft. Bureau of Justice Statistics, U.S. Dep’t of
Justice, Identity Theft Reported by Households, 2005-2010, at 1 (Nov. 2011).
7 In addition, according to a 2012 FTC report, Florida ranks No. 1 for identity theft among the 50
states, with 361.3 complaints per 100,000 people. That's 86 percent more than Georgia, which
ranks a distant second. Also, nine of the top 10 metro areas for identity theft are in Florida,
according to the report. First is the Miami area with 645.4 complaints per 100,000
people.http://www.wptv.com/money/consumer/identity-theft-florida-ranks-no-1-in-nation-for-id-
theft (Last accessed: August 28, 2014).
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judgment is entitled to deference.8
Microsoft also cites “data breach” cases that decided that plaintiffs asserting potential
identity theft failed to allege an injury in fact against defendants whose computer systems were
hacked by third parties.9 Those cases are inapposite because they do not allege the defendant
engaged in conduct that Congress already determined creates an actionable risk of real harm.
Indeed, the defendants in those cases were themselves victims of the data breaches, whereas here
Microsoft willfully disclosed Plaintiff’s information in violation of a Congressional decree.
Microsoft also claims that Plaintiff eliminated the risk of harm by keeping the receipt, but
Plaintiff’s subsequent reduction of the risk of harm does not change the fact that Microsoft
created the risk in the first place. Until Microsoft printed a receipt disclosing ten digits of his
card number, there was no risk of harm. Indeed, the fact that Plaintiff had to take the trouble to
keep and protect the receipt instead of discarding it, to avoid further disclosure, is an additional
concrete injury. See, e.g., Common Cause/Georgia, 554 F.3d at 1351 (the inconvenience of
having to show a photo ID meets the “injury in fact” test).
Finally, Microsoft cites Clapper v. Amnesty Int'l USA, 133 S. Ct. 1138 (2013), a case that
bears no resemblance to this case. The plaintiff in Clapper did not allege a violation of federal
substantive rights, or any other rights. The issue in Clapper was whether the plaintiff had
standing to sue to seek to have a foreign surveillance statute declared unconstitutional based on
the plaintiff’s speculation that the government might use the statute to justify intercepting the
plaintiff organization’s communications with persons it was trying to help. Clapper, 133 S.Ct. at
8 This is because Congress “is far better equipped than the judiciary to amass and evaluate the
vast amount of data bearing upon” legislative questions. See Turner Broad. Sys., Inc. v. F.C.C.,
512 U.S. 622, 665 (1994) (internal quotation omitted); see also Walters v. Nat’l Ass’n of
Radiation Survivors, 473 U.S. 305, 331 n.12 (1985) (“When Congress makes findings on
essentially factual issues such as these, those findings are of course entitled to a great deal of
deference.”).
9 See Kahn, 2016 U.S. Dist. LEXIS 66404 at *2; Case v. Miami Beach Healthcare Grp., Ltd.,
2016 U.S. Dist. LEXIS 56108 at *3 (S.D. Fla. Feb. 25, 2016); In re Zappos.com, Inc., 108 F.
Supp. 3d 949, 951 (D. Nev. 2015); In re SuperValu, Inc., 2016 U.S. Dist. LEXIS 2592 at *3 (D.
Minn. Jan. 7, 2016); Whalen v. Michael Stores Inc., 2015 U.S. Dist. LEXIS 172152 at *2
(E.D.N.Y. Dec. 28, 2015); Green v. eBay, Inc., 2015 U.S. Dist. LEXIS at *2 (E.D. La. May 4,
2015); Storm v. Paytime, Inc., 90 F. Supp. 3d 359, 361 (M.D. Pa. 2015); Peters v. St. Joseph
Serv. Corp., 74 F. Supp. 3d 847, 849 (S.D. Tex. 2015); In re Sci. Appls. Intl. Corp. Backup Tape
Lit., 45 F. Supp. 3d 14, 19 (D.D.C. 2014).
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1142. Plainly these are not our facts, as Microsoft actually disclosed Plaintiff’s information in
violation FACTA, and Congress determined this conduct creates a real risk of identity theft.
Under Spokeo, that is a concrete injury.
C. Plaintiff Meets the Injury Requirement Because Microsoft’s Willful FACTA
Violation Confers a Right of Action for Statutory Damages.
Plaintiff’s standing is also confirmed by the fact that he has a right of action for statutory
damages. “Standing” is not an arbitrary limitation. Instead, it exists only to ensure the court’s
resources are brought to bear on a real controversy asserted by a genuinely interested party with
something to gain:
‘[T]he gist of the question of standing’ is whether the petitioners have ‘such a
personal stake in the outcome of the controversy as to assure that concrete
adverseness which sharpens the presentation of issues upon which the court so
largely depends for illumination.’
Massachusetts v. EPA, 549 U.S. 497, 517 (2007), quoting, Baker v. Carr, 369 U.S. 186, 204
(1962); see also Spokeo, 136 S.Ct. at 1556 (Ginsburg, J., dissenting) (“The basic inquiry is
whether the ‘conflicting contentions of the parties ... present a real, substantial controversy….’”),
quoting Babbitt v. UFW Nat’l Union, 442 U.S. 289, 298 (1979) (citations omitted).
Plaintiff squarely meets these concerns. He alleges a real (not hypothetical) FACTA
violation that is particular to him (because it concerns his credit card information). Moreover, he
alleges the violation is willful which, if proven, entitles him to recover $100 to $1,000 in
statutory damages. Harris, 564 F.3d at 1312. Plainly, the actual violation of his private rights and
his resulting ability to recover statutory damages presents a real, substantial controversy by a
plaintiff with a concrete stake. See Cuellar-Aguilar v. Deggeller Attractions, Inc., 812 F.3d 614,
620-21 (8th Cir. 2015 (“plaintiffs who fail to allege actual damages nonetheless satisfy both the
injury in fact and redressability requirements of Article III standing by suing for statutory
damages.”).10 For this additional reason, Plaintiff satisfies Article III. See Horne v. Flores, 557
U.S. 433, 445 (2009) (“Here, as in all standing inquiries, the critical question is whether at least
10 Chief Justice Roberts, who joined the majority in Spokeo, reached this same conclusion in
Campbell-Ewald Co. v. Gomez, 136 S. Ct. 663 (2016), going out of his way to note that the
plaintiff’s claim for statutory damages gave rise to an “injury in fact.” See Id. at 679 (Roberts,
C.J., dissenting) (“All agree that at the time Gomez filed suit, he had a personal stake in the
litigation. In his complaint, Gomez alleged that he suffered an injury in fact when he received
unauthorized text messages from Campbell. To remedy that injury, he requested $1500 in
statutory damages for each unauthorized text message.”).
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one petitioner has ‘alleged such a personal stake in the outcome of the controversy as to warrant
his invocation of federal-court jurisdiction.’”) (italics added, citations omitted).11
For all of the above reasons, Plaintiff has asserted an injury-in-fact in multiple ways, and
thus Microsoft’s request for dismissal for lack of standing should be denied.
II. The Motion to Compel Arbitration Should Be Denied Because There Is No
Agreement to Arbitrate Plaintiff’s FACTA Claim.
“[A]rbitration is ‘a matter of consent, not coercion.’” World Rentals & Sales, LLC v.
Volvo Constr. Equip. Rents, Inc., 517 F.3d 1240, 1244 (11th Cir. 2008), quoting Volt Info. Scis.
v. Bd. of Trustees, 489 U.S. 468, 479 (1989). A party cannot be “compelled to arbitrate unless
that party has entered into an agreement to do so.” Emps. Ins. of Wausau v. Bright Metal
Specialties, 251 F.3d 1316, 1322 (11th Cir. 2001); see also Seifert v. United States Home Corp.,
750 So. 2d 633, 636 (1999) (“no party may be forced to submit a dispute to arbitration that the
party did not intend and agree to arbitrate.”).
Yet that is exactly what Microsoft is trying to do. It seeks to force Plaintiff to arbitrate his
FACTA claim even though he never agreed to arbitrate any claim with Microsoft, and even
though Microsoft itself never intended to arbitrate any FACTA claim against it.
“[W]hether parties have agreed to ‘submi[t] a particular dispute to arbitration’ is typically
an ‘issue for judicial determination.’” Granite Rock Co. v. Int’l Bhd. of Teamsters, 561 U.S. 287,
296 (2010) (citations omitted). Likewise, “[w]here the dispute at issue concerns contract
formation, the dispute is generally for courts to decide.” Id., citing, inter alia, First Options of
Chicago, Inc. v. Kaplan, 514 U.S. 938, 944 (1995). It is Microsoft’s burden to prove the parties
agreed to arbitrate. Schoendorf v. Toyota of Orlando, 2009 U.S. Dist. LEXIS 33528 at *15-*16
(M.D. Fla. Apr. 21, 2009). But contrary to what Microsoft claims, there is no “presumption in
favor of arbitration” because Plaintiff disputes any such agreement exists. Bazemore v. Jefferson
Cap. Sys., LLC, 2016 U.S. App. LEXIS 12403 at *5 (11th Cir. July 5, 2016) (“the presumption
does not apply to disputes concerning whether an agreement to arbitrate has been made.”).
State law rules of contract formation determine whether the parties have an agreement to
arbitrate. Caley v. Gulfstream Aero Corp., 428 F.3d 1359, 1368 (11th Cir. 2005) (“[S]tate law
11 Microsoft claims the standing inquiry precludes class certification because it must be
individually made for each class member. That argument is both premature and incorrect. There
is no individual inquiry because all class members suffered the same violation of their FACTA
rights and privacy interests, and the same risk of identity theft that Plaintiff suffered.
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generally governs whether an enforceable contract or agreement to arbitrate exists.”), citing
Perry v. Thomas, 482 U.S. 483, 492, n.9 (1987). Florida law governs a purchase made in Florida.
David v. Am. Suzuki Motor Corp., 629 F.Supp.2d 1309, 1316 (S.D. Fla. 2009). Indeed, Microsoft
relies on Florida law to argue about what the parties agreed to here. (Memo. at p.13).
Under Florida law, there is no agreement to arbitrate for three reasons: (1) the arbitration
clause’s plain terms exclude persons like Plaintiff who never used the product, (2) Plaintiff never
assented to the arbitration clause, and (3) the clause’s scope does not reach FACTA claims.
Accordingly, Microsoft’s request to force Plaintiff to arbitrate his claim should be denied.
A. Microsoft Excluded Plaintiff from the Arbitration Clause Because Plaintiff
Never Used the Product.
Contracts must be construed according to their plain terms. See Gendzier v. Bielecki, 97
So. 2d 604, 608 (Fla. 1957) (“The test of the meaning and intention of the parties is the content
of the written document.”).12 Microsoft claims the arbitration clause at issue is part of a warranty
for the Pen Tip Kit that Plaintiff bought. However, by its plain terms, the warranty (and thus the
arbitration clause) do not apply to a person unless and until the person actually uses the product:
LIMITED WARRANTY
BY USING YOUR …. MICROSOFT BRANDED ACCESSORY PURCHASED
FROM AN AUTHORIZED RETAILER (“MICROSOFT HARDWARE”),
YOU AGREE TO THIS WARRANTY. BEFORE USING IT, PLEASE READ
THIS WARRANTY CAREFULLY. IF YOU DO NOT ACCEPT THIS
WARRANTY, DO NOT USE YOUR MICROSOFT HARDWARE OR
ACCESSORY. RETURN IT UNUSED TO YOUR MICROSOFT RETAILER
FOR A REFUND. See www.microsoft.com/surface/warranty for more information.
If you live in the United States, Section 8 contains a binding arbitration clause
and class action waiver.
(ECF 29-2 at ¶9) (underscored-italics added).
This language demonstrates that the arbitration clause does not apply to Plaintiff, because
the undisputed facts demonstrate that Plaintiff never used the product or even opened the
packaging. (Decl. of Plaintiff at ¶5, attached as Exh. 2). Instead, he bought the product for
someone else. (Id.) Accordingly, by Microsoft’s own choice of language, Plaintiff never agreed
to the warranty or its arbitration clause, and thus he is not bound by it.
12 Florida Supreme Court decisions about Florida state law are binding on federal courts. Reaves
v. Sec’y, Fla. Dept. of Corr., 717 F.3d 886, 903 (11th Cir. 2013).
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Microsoft admits that arbitration agreements must be enforced according to their terms.
(Memo. at p.12). But then it tries to get around the fact that its warranty excludes Plaintiff by
misstating what its terms say. First, Microsoft claims “Guarisma’s purchase of the Pen Tip Kit
… constitutes assent to the arbitration provision.” (Memo. at p.16). That is incorrect because, as
shown by the actual text itself, it is one’s “use” of the product that constitutes assent, not the
mere “purchase” of it.
Second, Microsoft claims that Plaintiff must “return” the product to avoid the warranty
and its arbitration clause, but once again that is not what the text says. Its only says a purchaser
must return the product within 30 days “FOR A REFUND.” The previous three sentences
describe how to avoid accepting the warranty and, again, they only require that Plaintiff not use
the product.13 It is undisputed that Plaintiff did not use the product. Accordingly, the warranty
and arbitration clause do not apply to him.
In short, by its own text and the undisputed facts, the warranty and its arbitration clause
do not apply to Plaintiff. For this reason alone, Microsoft cannot force him to arbitrate.14
B. Plaintiff Did Not Assent to the Arbitration Clause.
The only contract between Plaintiff and Microsoft is one to purchase the product at issue.
In exchange for the product, Plaintiff agreed to pay the price Microsoft demanded, and Microsoft
accepted by processing his payment. Those were the terms, and by their performance, the parties
fully executed that agreement on November 18, 2015.
If Microsoft wanted to add additional terms, it had to propose them before the parties
executed the contract, and Plaintiff had to assent to them. See Gibson v. Courtois, 539 So.2d 459,
460 (Fla. 1989). Microsoft claims Plaintiff assented to the arbitration clause because allegedly he
“clearly had notice of the terms of the Warranty, including the arbitration provision” (Memo. at
p.14). That is incorrect. Plaintiff was not aware of the warranty or its arbitration clause when he
13 Even if the paragraph were ambiguous on the matter, the ambiguity must be construed against
Microsoft because it drafted it. Golden Door Jewelry Creations v. Lloyds Underwriters Non-
Marine Ass’n, 117 F.3d 1328, 1337 (11th Cir. 1997) (applying Florida law). The presumption in
favor of arbitration does not alter this because it only applies to “ambiguities in the scope of
arbitration clause itself,” not the rest of the contract. See Volt Info. Sci., 489 U.S. at 476.
14 Microsoft claims that if Plaintiff disputes that the parties agreed to arbitrate, then there should
be discovery and a trial on the issue. That is a delay tactic. There is no basis to dispute that
Plaintiff did not use the product, which is dispositive, and thus no fact issue for trial. See
Bazemore, 2016 U.S. App. LEXIS 12403 at *17.
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made his purchase. (Decl. of Plaintiff at ¶6-¶7, attached as Exh. 2). Indeed, until Microsoft raised
the issue in this litigation, Plaintiff had no reason to know the arbitration clause existed. No one
would think that the mere act of buying something for someone would bind them to arbitration.
Nevertheless, Microsoft claims the arbitration clause in the warranty should be deemed a
part of the purchase contract by virtue of the reference to the warranty on the product packaging
and the back of the transaction receipt. As explained below, Microsoft is wrong on both counts.
1. There Is No Assent to or Consideration for Terms on the Receipt.
The reference to the warranty among the litany of single-spaced, small print on the back
of the receipt does not make the arbitration clause part of the purchase contract. Microsoft did
not give Plaintiff the receipt until after the transaction ended. By the time Microsoft printed the
receipt, it had already accepted Plaintiff’s payment, and the parties’ obligations were fulfilled.
At that point, the deal could only be modified to include terms from the receipt if the
parties agreed to the change, and if Microsoft provided additional consideration. See Solnis v.
Wallis & Wallis, P.A., 15 F.Supp.3d 1258, 1268 (S.D. Fla. 2014), citing Schneir v. State, 43 So.
3d 135, 137 (Fla. App. 2010) (“like an initial contract, a modification or novation requires lawful
consideration for its validity”). However, Microsoft does not claim it sought to modify the
contract to include the terms on the back of the receipt or offered additional consideration, nor
does it prove that Plaintiff accepted (or was even aware of) the terms on the back of the receipt.
Accordingly, the mere reference to the warranty among the litany of small print on the back of
the receipt that Microsoft gave Plaintiff after their purchase transaction was complete does not
prove the existence of an agreement to be bound by the arbitration clause in the warranty.
2. The Product Packaging Does Not Incorporate Arbitration Clause into
the Purchase Agreement.
The reference to the warranty on the product packaging does not make the warranty or
the arbitration clause in it part of the purchase contract either. Microsoft claims the mere
reference to the “limited warranty” and “surface.com/warranty” on the Pen Tip Kit packaging is
itself enough to incorporate the arbitration clause into the purchase contract by reference, but
Microsoft’s position is contrary to Florida law.
Again, Florida requires mutual assent to contract terms. Gibson, 539 So.2d at 460. There
is no mutual assent to terms that purport to be incorporated from a separate document or website
unless the party seeking to incorporate the terms: (1) expressly tells the other party that the
contract is subject to the other terms, and (2) sufficiently describes the incorporated terms:
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to incorporate by reference a collateral document, the incorporating document
must (1) specifically provide ‘that it is subject to the incorporated [collateral]
document’ and (2) the collateral document to be incorporated must be
‘sufficiently described or referred to in the incorporating agreement’ so that the
intent of the parties may be ascertained.
BGT Group, Inc. v. Tradewinds Engine Servs., LLC, 62 So.3d 1192, 1194 (Fla. App. 2011).
Microsoft flunks this test for several reasons. For starters, Microsoft never told Plaintiff
his purchase might be subject to an arbitration clause. Instead, at best, the product packaging
only suggests that the product is subject to a “limited warranty.”
Moreover, the arbitration clause is not “sufficiently described or referred to” on the
packaging. It is not mentioned at all! The bare reference to the limited warranty is not sufficient
to inform the reader that it contains an arbitration clause because an arbitration clause is not a
required (or normal) part of a warranty. See, e.g., 15 U.S.C. §2301(6) (a “written warranty” is
simply a promise that the product is free of defects or will meet a specified level of performance,
and/or that the seller will repair or replace it if the product fails to meet those promises).
Finally, the mere reference to a website on the packaging also is not sufficient to apprise
Plaintiff that the mere act of buying the product could subject him to an arbitration clause. The
website does not mention the arbitration clause and, contrary to what Microsoft claims, neither it
nor the warranty is “easily available upon visiting the website.” (Memo. at p.4). Instead, the
website listed on the packaging is just the beginning of a visitor’s search.
Specifically, the website contains a list of five “Frequently Asked Questions.” (ECF 29-2,
¶5). None mention arbitration, the warranty, the “Pen Tip Kit” or “Surface Accessories.” (Id.).
Instead, below the list is a heading, “Related Topics,” followed by two links in smaller print, one
of which reads “Surface warranty and extended service plans.” (Id.). If a visitor finds and clicks
this link, she is taken to a second webpage, called “Surface Documents.” (Id. at ¶7). But this
page also does not mention arbitration, the Pen Tip Kit, or accessories. Instead, it presents a list
of seven links, one of which is “Surface standard warranty.” (Id.). If the visitor chooses this link,
and selects the language they wish to use, only then is the visitor brought to the warranty, and
only then can the visitor find the arbitration clause. (Id. at ¶8-¶9).
Given this labyrinth, plus the fact that there is no mention of the arbitration clause until
the visitor actually gets to and reads the warranty itself, the bare reference to the warranty and
the website on the packaging does not “sufficiently describe” the existence of the arbitration
clause, and thus it does not give adequate notice of it:
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In Affinity, a computer service contract stated that the contract was “subject to all
of [the service provider’s] terms, conditions, user and acceptable use policies
located” at its website. Id. at 1287. We held that the reference to the website as
the repository of the collateral documents insufficiently described them so that
they could be interpreted as a part of the service contract.
BGT Group, 62 So.3d at 1194, citing Affinity Internet, Inc. v. Consol. Credit Counseling Servs.,
920 So.2d 1286, 1287 (Fla. App. 2006) (“While the contract in this case does state that it is
subject to the collateral document, that simple statement, with nothing more, is insufficient to
bind Consolidated to arbitrate.”); see also, e.g., Sgouros v. TransUnion, Corp., 817 F.3d 1029,
1036 (7th Cir. 2016) (“buried terms and conditions of purchase” on a website are insufficient
notice. “[Defendant] cannot manufacture notice where there was none.”).
Indeed, compared to the general reference to additional terms deemed insufficient in BGT
Group and Affinity, what Microsoft did was worse. Its packaging is very specific – it says
“limited warranty,” not “arbitration.” This misleads the reader to think the website only contains
information about a warranty, not an arbitration clause, and certainly not one that could force the
reader to forgo the courts to assert a claim that has nothing to do with the product or warranty.15
Microsoft cites a series of cases to argue that its non-disclosure is nevertheless sufficient
to incorporate the arbitration into Plaintiff’s purchase agreement, but the cases are inapposite
because, unlike here, the plaintiffs in them actually used the products and services that were
subject to the arbitration clause.16 By contrast, Microsoft’s warranty (and arbitration clause)
expressly excludes non-users, and it is undisputed Plaintiff did not use the Pen Tip Kit.
15 Even if the packaging had mentioned arbitration, that still would not be enough because
Microsoft never gave Plaintiff a copy of clause. “[T]he existence of conspicuous terms providing
for other terms elsewhere is not all that is required to make such other terms binding. The terms
must actually be provided.” Gustavsson v. Wash. Mut. Bank, F.A., 850 So.2d 570, 573 (Fla. App.
2003) (citation omitted).
16 See Williams v. Metropcs Wireless, Inc., 2010 U.S. Dist. LEXIS 39225 at *15 (S.D. Fla. Apr.
21, 2010) (service used); Rivera v. AT&T Corp., 420 F.Supp.2d 1312, 1320 (S.D. Fla. 2006)
(service used); Rampersad v. Primeco Pers. Comms., L.P., 2001 U.S. Dist. LEXIS 26037 at *5
(S.D. Fla. Oct. 16, 2001) (service activated); Briceno v. Sprint Spectrum L.P., 911 So. 2d 176,
178 (Fla. App. 2005) (service used); Hill v. Gateway 2000, 105 F.3d 1147, 1148 (7th Cir. 1997)
(product used); Schwartz v. Comcast Corp., 256 Fed. Appx. 515, 520 (3d. Cir. 2007) (service
used); Schafer v. AT&T Wireless Servs., Inc., 2005 U.S. Dist. LEXIS 43930 at *1 (S.D. Ill. Apr.
1, 2005) (product used); Vernon v. Qwest Comm. Int’l, Inc., 857 F.Supp.2d 1135, 1147 (D. Colo.
2012) (service used); and Pentecostal Temple Church v. Streaming Faith, LLC, 2008 U.S. Dist.
71878 at 3 (W.D. Pa. Sept. 16, 2008) (service used for almost two years).
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The cases Microsoft cites are also distinguishable insofar as they involved actual
disclosures of the subject terms. For example, in Williams, the defendant handed a copy of the
subject terms and conditions to the plaintiff, and yet she continued to use the defendant’s
services. Williams, 2010 U.S. Dist. LEXIS 39225 at *15; see also Rivera, 420 F.Supp.2d at 1315
(terms mailed to plaintiff three times, plus reminders about the terms included in each monthly
bill); Schwartz, 256 Fed. Appx. at 518 (subscription agreement actually provided); Briceno, 911
So. 2d at 178-79 (terms provided in the box with each of several products the plaintiff opened
and used over a period of years); Hill, 105 F.3d at 1148 (terms in the box with the product);
Rampersad, 2001 U.S. Dist. LEXIS 26037 at *5 (plaintiff sued to enforce the contract containing
the terms and conditions); Schafer, 2005 U.S. Dist. LEXIS 43930 at *9-*10 (evidence showed
plaintiff received the terms and conditions with the product, even though plaintiff disputed this).
Finally, to the extent any of the non-Florida state cases Microsoft’s cites can be read to
bind the plaintiff who simply buys (but never uses) a product to an arbitration clause under facts
similar to those at issue, they cannot be reconciled with BGT Group and Affinity Internet, and
thus are contrary to Florida law. In short, the bare reference to the limited warranty and website
on the product packaging did not incorporate the arbitration clause into Plaintiff’s purchase.
C. The Arbitration Clause Does Not Cover FACTA Claims.
Even if Plaintiff had used the product and even if Microsoft had effectively incorporated
the arbitration clause into his purchase, the clause would not cover Plaintiff’s FACTA claim.
The clause expressly limits its reach to “disputes,” which the clause defines to mean “any
dispute, action, or other controversy between You and Microsoft concerning the Microsoft
Hardware or Accessory (including its price) or this warranty ….” (Warranty ¶8(a)). This narrow
definition does not reach Plaintiff’s FACTA claim because his claim does not “concern” the
product, its price or the warranty. Plaintiff’s claim only concerns Microsoft’s decision to print
more than the last five digits of his credit card number on the transaction receipt.
Despite what the clause says, Microsoft claims the Court should “construe” the clause to
reach Plaintiff’s FACTA claim because “doubts” about the clause’s reach should be resolved in
favor of arbitration. But that principle does not apply when, as here, the claim is plainly beyond
the clause’s scope. “Presumption notwithstanding, ‘the courts are not to twist the language of the
contract to achieve a result which is favored by federal policy but contrary to the intent of the
parties.’” Paladino v. Avnet Computer Techs. Inc., 134 F.3d 1054, 1057 (11th Cir. 1998).
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Alternatively, Microsoft claims an arbitrator should decide the clause’s scope because the
clause incorporates American Arbitration Association rules, and because allegedly those rules
allow the arbitrator to decide questions about the clause’s scope. This argument is incorrect,
however, because Plaintiff never signed an arbitration agreement, he disputes he agreed to
Microsoft’s proposed arbitration clause, and thus he disputes that he is bound by the clause’s
selection of AAA rules. Accordingly, the alleged AAA rules’ presumption does not apply here:
The calculus changes when it is undisputed that the party seeking to avoid
arbitration has not signed any contract requiring arbitration. In such a case, that
party is challenging the very existence of any agreement, including the existence
of an agreement to arbitrate. Under these circumstances, there is no
presumptively valid general contract which would trigger the district court’s duty
to compel arbitration pursuant to the Act. If a party has not signed an agreement
containing arbitration language, such a party may not have agreed to submit
grievances to arbitration at all. Therefore, before sending any such grievances to
arbitration, the district court itself must first decide whether or not the non-
signing party can nonetheless be bound by the contractual language. See
Cancanon v. Smith Barney, Harris, Upham & Co., 805 F.2d 998, 1000 (11th Cir.
1986) (per curiam) (“[W]here the allegation is one of . . . ineffective assent to the
contract, the issue [of arbitrability] is not subject to resolution pursuant to an
arbitration clause contained in the contract documents.”).
Chastain v. Robinson-Humphrey, 957 F.2d 851, 854 (11th Cir. 1992) (italics in original). The
cases Microsoft cites to argue the arbitrator should decide if the clause reaches Plaintiff’s claim
are inapposite for the same reason. In each, and unlike here, it was undisputed that the plaintiff
had entered into an arbitration agreement with the defendant.17 In short, the reach of the
arbitration clause is an issue for this Court, not an arbitrator. See Chastain, 957 F.2d at 854. As
shown, that issue should be resolved against Microsoft. The request to compel arbitration should
be denied.
CONCLUSION
Plaintiff has standing and he cannot be forced to arbitrate his claims. Defendant’s motion
should be denied, and the stay of the case should be lifted.
17 See Terminix Int’l. Co., LP v. Palmer Ranch L.P., 432 F.3d 1327, 1329 (11th Cir. 2005)
(undisputed that “all of its contracts with Terminix included broadly worded arbitration
clauses.”); Norfolk S. Ry. Co. v. Florida E. Coast Ry., LLC, 2014 U.S. Dist. LEXIS 24737 at *33
(M.D. Fla. Feb. 26, 2014) (“Norfolk does not dispute that the 1995 Haulage Agreement is a valid
contract, containing a valid arbitration provision.”); Shea v. BBVA Compass Bancshares, Inc.,
2013 U.S. Dist. LEXIS 31906 at *11 (S.D. Fla. March 7, 2013); Crook v. Wyndham Vacation
Ownership, Inc., 2013 U.S. Dist. LEXIS 160705 at *6 (N.D. Cal. Nov. 8, 2013).
Case 1:15-cv-24326-CMA Document 32 Entered on FLSD Docket 07/11/2016 Page 21 of 23
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Respectfully submitted,
/s/Scott D. Owens
One of Plaintiff’s Attorneys
Scott David Owens
SCOTT D. OWENS, P.A.
3800 S. Ocean Drive
Suite 235
Hollywood, FL 33019
954−589−0588
Fax: 954−337−0666
Email: scott@scottdowens.com
Bret Leon Lusskin , Jr.
Bret Lusskin, P.A.
20803 Biscayne Blvd.
Ste. 302
Aventura, FL 33180
954−454−5841
Fax: 954−454−5844
Email: blusskin@lusskinlaw.com
Michael S. Hilicki (pro hac vice)
Keogh Law, Ltd.
55 West Monroe Street
Suite 3390
Chicago, Illinois 60603
312-726-1092
mhilicki@keoghlaw.com
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on July 11, 2016, I electronically field the foregoing
document with the Clerk of the Court using CM/ECF. I also certify that the foregoing document
is being served this date via U.S. mail and/or some other authorized manner for those counsel or
parties below, if any, who are not authorized to receive electronically Notices of Electronic
Filing.
By: /s/ Scott D. Owens .
One of Plaintiff’s Attorneys
Case 1:15-cv-24326-CMA Document 32 Entered on FLSD Docket 07/11/2016 Page 23 of 23
