Judge OKs $1.2M Microsoft Consumer Receipt Settlement

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Law360, New York (March 1, 2017, 7:48 PM EST) — A Florida federal judge gave preliminary approval on Tuesday to a proposed $1.2 million settlement between Microsoft Corp. and a proposed class of consumers who allege the company’s physical store receipts displayed too many digits of their credit card numbers, putting them at risk for identity theft.

U.S. District Court Judge Cecilia M. Altonaga granted preliminary approval of the settlement between Microsoft and lead plaintiff Carlos Guarisma, who claimed violations of the Fair and Accurate Credit Transactions Act.

“The court finds that settlement embodied in the agreement is sufficiently within the range of reasonableness so that notice of the settlement should be given as provided in this order,” Judge Altonaga said.

Judge Altonaga said the agreement was made “only after extensive arm’s-length negotiations” by counsel as well as mediation efforts presided over by Rodney Max, a principal of Florida mediation group Upchurch Watson White & Max.

Microsoft and the proposed class on Feb. 24 submitted to Judge Altonaga details of the deal to end the suit that alleged Microsoft’s noncompliance with the FACTA law put Guarisma and others at risk of identity theft.

The settlement would provide up to $100 to consumers who submit valid claims from a list of approximately 66,000 settlement class members in exchange for releasing Microsoft from any claims potentially arising from the alleged receipt violations, according to Guarisma’s motion for preliminary approval. Microsoft operates 97 physical stores in the United States and nine outside of the country, according to the company.

On Wednesday, a Microsoft spokesperson said the settlement puts an end to the case.

“This was a technical bug that we immediately fixed when it was brought to our attention. We’re pleased this matter is resolved and are committed to protecting our customers,” the spokesperson said in a statement.

Guarisma told the court that the deal, worked out through several months of negotiations after Microsoft’s motion to dismiss was denied in July, provides fair monetary return for class members that exceeds many other FACTA class settlements. He said the case also produced a substantial nonmonetary benefit by prompting Microsoft to correct the issue in its point-of-sale software.

Guarisma alleged that after buying a Microsoft Surface Pen Tip Kit from a Microsoft store in Florida in November 2015, he noticed that his receipt bore the first six digits of his credit card account number, plus the last four digits, his name and the name of the salesperson who processed the sale. His putative class action alleged that Microsoft’s failure to comply with FACTA put him and others at the increased risk of identity theft.

While the monetary award represents only a portion of the maximum amount of statutory damages available under FACTA, Guarisma told the court on Feb. 24 that entering into a settlement is a prudent move given the law’s requirement that the class prove that Microsoft “willfully” committed the violations. Discovery from Microsoft showed the violations took place over only a few weeks, the company had no track record of violations, and it promptly corrected the issue, Guarisma said.

Guarisma indicated that the sides had raised the idea of a settlement after Judge Altonaga denied Microsoft’s bid to dismiss the suit on July 26.

In that ruling, the judge found that Guarisma sufficiently established his alleged injury was concrete and particularized, as required by the U.S. Supreme Court‘s May 16 decision in the case Spokeo v. Robins. Guarisma pled a “clearly particularized” injury in the form of a physical receipt for the Microsoft Surface Pen Tip Kit purchase that didn’t limit the credit card numbers displayed, as required by FACTA to stem the threat of identity theft.

Microsoft, in seeking to toss the suit, had claimed that the court lacked subject matter jurisdiction over the case since Guarisma couldn’t show he suffered an injury-in-fact because he didn’t actually experience any identity theft from the printed receipt, and that in any case, he must arbitrate his claims due to a warranty printed on the receipt and product he bought.

Legal counsel for Guarisma and Microsoft did not respond immediately to requests for comment on Wednesday.

Guarisma is represented by Michael Hilicki of Keogh Law Ltd., Scott Owens, Patrick C. Crotty and Sean M. Holas of Scott D. Owens PA and Bret L. Lusskin Jr. of Bret Lusskin PA.

Microsoft is represented by Brian M. Ercole of Morgan Lewis & Bockius LLP.

The case is Carlos Guarisma v. Microsoft Corp., case number 1:15-cv-24326, in the U.S. District Court for the Southern District of Florida.