Forum Selection Clause and FACTA Electronically Printed Receipt Issues Determined by Ninth Circuit

The Ninth Circuit resolved two issues when it released its opinion in Simonoff v. Expedia, Inc.,(pdf) on May 24, 2011:

  • Whether the forum selection clause limited jurisdiction to Washington state courts; and
  • Whether an email receipt displayed on a computer screen is an electronically printed receipt under the Fair and Accurate Credit Transactions Act (FACTA).

This case does not involve copyright issues per se, but does present two interesting issues.  The first issue provides information to licensing attorneys on how to draft a forum selection clause.  The second provides information on the definitions of the words “print” and “electronically printed.”  Although the court’s ruling is specific to FACTA, neither FACTA nor the Copyright Act defines the word “print.”

Facts.  Expedia is an online travel arrangement service that accepts credit or debit cards.  As such, it must comply with FACTA.  The portion of FACTA that is relevant to this case states:

no person that accepts credit cards or debit cards for the transaction of business shall print more than the last 5 digits of the card number or the expiration date upon any receipt provided to the cardholder at the point of the sale or transaction.

15 USC §1681c(g)(1).

Dimitriy Simonoff used Expedia’s website to purchase travel arrangements.  Expedia emailed him a receipt that included the expiration date of his credit card.  Simonoff claims that the email receipt he received from Expedia violates FACTA.

Forum Selection Clause.  Simonoff originally filed this case in Illinois state court.  Expedia removed it to federal court.  Under 28 USC §1441, a defendant can remove to federal court any civil action brought in state court which the federal district court has the power to hear and decide.  In Illinois federal court, Expedia filed a motion to dismiss pursuant to the user agreement’s forum selection clause.  A “forum selection clause” allows contract parties to choose in advance the location in which disputes will be resolved.  Simonoff voluntarily dismissed his case and refiled it in state court in King County, Washington.  Expedia then removed the King County case to federal court.  The federal district court judge denied Simonoff’s motion to remand the case (send it back) to state court.

Simonoff argued that the wording of Expedia’s user agreement limited jurisdiction to state court.  Expedia’s agreement stated that “You hereby consent to the exclusive jurisdiction and venue of courts in King County, Washington.”  (Opinion, pdf page 4).

In Doe 1 v. AOL LLC, the Ninth Circuit ruled that only state courts had jurisdiction under that user agreement.  That user agreement provided for “exclusive jurisdiction for any claim or dispute…in the courts of Virginia.”  (Opinion, pdf page 4).  The Doe 1 court thought the phrase “the courts of” a state meant “courts that derive their power from the state—i.e., only state courts.”  (Opinion, pdf page 4).  In contrast, the phrase “courts in” a state imposes a geographical limitation, but not a limitation on sovereignty.

In short, the rule we adopted in Doe 1 is that a forum selection clause that specifies “courts of” a state limits jurisdiction to state courts, but specification of “courts in” a state includes both state and federal courts.

The court applied its rule from Doe 1 in Simonoff.  This rule is consistent with Fifth, Fourth, Tenth, Eleventh, Sixth and First Circuit opinions, but inconsistent with one other Tenth Circuit opinion.

Emailed Receipts Not Covered by FACTA.  The court begins its analysis with the text of the statute.  It determined that FACTA “prohibits merchants from printing credit card expiration dates and non-truncated credit card numbers on ‘electronically printed’ receipts” and that the meanings of “print” and “electronically printed” determine the outcome of the case.  (Opinion, pdf page 8).

Neither “print” nor “electronically printed” is defined in the statute.  The court looked at the ordinary meaning of “print”: 

The ordinary meaning of “print” is clear:  printing involves a physical imprint onto paper or another tangible medium….A printed receipt is thus a receipt that exists in physical form, not one electronically displayed on a screen.

(Opinion, pdf page 9).

The court indicated that the use of “electronically printed” in FACTA versus just “print” does not change its analysis.  Under FACTA, full credit card numbers are allowed to be printed on handwritten or manually imprinted receipts, while they are not allowed to be printed on electronically printed receipts.  The use of the word “electronic” makes that distinction clear.

Congress used the phrase “electronically printed,” not “electronically printable” in drafting the statute, another indication that the act was not meant to apply to emailed receipts.  In addition, by its own terms, FACTA “excludes machines that do no more than electronically display information.”  (Opinion pdf page 11).  Another point made by the court is that FACTA’s staggered implementation schedule is based on when the merchant got the machine that prints the receipts.  That provision would become nonsensical if a display on the customer’s computer screen were deemed to “print” a receipt.  The court’s final point is that the statute uses the phrase “at the point of the sale or transaction,” which contemplates a face-to-face transaction at a physical location at which the consumer is handed a receipt.

I think the best part of this opinion is in the third paragraph:

“Print” refers to many different technologies—from Mesopotamian cuneiform writing on clay cylinders to the Gutenberg press in the fifteenth century, Xerography in the early twentieth century, and modern digital printing—but all of those technologies involve the making of a tangible impression on paper or other tangible medium….Although computer technology has significantly advanced in recent years, we commonly still speak of printing to paper and not to, say, iPad screens.  Nobody says, “Turn on your Droid (or iPhone or iPad or Blackberry) and print a map of downtown San Francisco on your screen.”

The court’s comment highlights the difference between printing a document and displaying it on a computer screen.