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					           United States Court of Appeals,                  they enter into with them.
                    Third Circuit.
   SOVEREIGN BANK, Appellant No: 06-3392                    Fifth Third Bank is also a member of the Visa net-
                          v.                                work, and it also has a Membership Agreement with
BJ'S WHOLESALE CLUB, INC.; Fifth Third Ban-                 Visa. Within the network, Fifth Third is referred to as
                        corp.                               an “Acquirer,” which means that Fifth Third enters
Pennsylvania State Employees Credit Union, Appel-           into contractual relationships with businesses that
                  lant No: 06-3405                          agree to accept Visa cards as payment for their goods
                          v.                                and services (“Merchants”). Acquirers process those
     Fifth Third Bank; Bj's Wholesale Club, Inc.            transactions on behalf of the Merchants. BJ's Whole-
  Bj's Wholesale Club, Inc., Defendant/Third-Party          sale Club, Inc., is a Merchant. Accordingly, Fifth
                       Plaintiff                            Third and BJ's have entered into a Merchant Agree-
                          v.                                ment. Although Merchants participate in the Visa
 International Business Machines Corporation, Inc.,         network, they are not members. Only financial insti-
               Third-Party Defendant.                       tutions are eligible for membership. Therefore, Mer-
               Nos. 06-3392, 06-3405.                       chants have no contractual relationship directly with
                                                            Visa.
              Argued: June 19, 2007.
            Opinion Filed: July 16, 2008.                   Every time a cardholder uses a Visa card to pay a
                                                            Merchant for goods or services, the Issuer, Acquirer
                       OPINION                              and Merchant must interact to process and complete
                                                            the transaction. The Merchant's computer scanners
McKEE, Circuit Judge.                                       first “read” the “Cardholder Information” contained in
                                                            the magnetic stripe on the back of Visa cards as they
In these consolidated appeals, Sovereign Bank and the       are swiped through the familiar terminal at the
Pennsylvania State Employees Credit Union appeal            checkout. The Merchant then sends the pertinent ac-
orders dismissing claims that arose from the theft of       count information through the Visa network to the
certain credit card information from a retailer's com-      Issuer. The Issuer reviews the Cardholder Information
puter files. For the reasons that follow, we will reverse   and, assuming the card is valid with sufficient availa-
in part, and affirm those orders in part.                   ble credit, the Issuer authorizes the transaction, and so
                                                            notifies the Merchant. Upon receiving that notifica-
                                                            tion,*165 the Merchant completes the transaction with
                 I. BACKGROUND                              the cardholder, and then forwards the receipt to the
                                                            Acquirer who pays the Merchant pursuant to their
These consolidated appeals involve two law suits that       agreement. The Acquirer then notifies the Issuer that
arose from the theft of credit card information from        payment has been received, and the Issuer pays the
the computer files of a prominent retailer. Visa            Acquirer and charges the cardholder.
U.S.A., Inc., is a corporation, comprised of an asso-
ciation of financial institutions, which operates a cre-    Visa has created an extensive set of “Operating Reg-
dit card payment system known as “Visa.” Sovereign          ulations” to both govern and facilitate transactions
Bank and the Pennsylvania State Employees Credit            involving Visa cards. Those Regulations address vir-
Union (“PSECU”) are both members of the Visa                tually every aspect of the Visa payment system, and
network. Sovereign and PSECU have a Membership              impose both general and specific requirements on
Agreement with Visa that allows them to issue Visa          participants in the network.
cards to their respective customers and members.
Within the Visa network, Sovereign and PSECU are
referred to as “Issuers,” which means that they issue       The disputes in these appeals center on certain security
Visa cards to cardholders pursuant to the contracts         regulations including the Cardholder Information
                                                            Security Program (“CISP”). The CISP provisions
apply to Issuers and Acquirers and include broad           Pursuant to their Membership Agreements with Visa,
security requirements intended to protect Cardholder       all Members of the Visa network including Insurers
Information. Those requirements include a prohibition      and Acquirers, agree to be bound by the Operating
against retaining or storing the data encoded in the       Regulations. In addition, before an Acquirer can enter
familiar magnetic stripe on the back of credit cards,      into a Merchant Agreement with a Merchant, the
i.e., Cardholder Information, after a consumer trans-      Acquirer must first determine that the Merchant will
action is completed.                                       abide by the Operating Regulations. Given the im-
                                                           portance attached to uniform compliance, an Acquir-
One provision of the Operating Regulations, entitled       er's initial determination is deemed insufficient. Ra-
“Enforcement,” defines procedures by which Visa can        ther, an Acquirer must agree to ensure continued
enforce compliance with the Operating Regulations.         compliance with the Operating Regulations. Finally,
That provision expressly allows Visa to take specified     the Acquirer must have a Merchant Agreement with
remedial actions against Members who do not comply         each of its Merchants. The Merchant Agreements may
with the Operating Regulations, including levying          generally contain whatever extraneous provisions the
fines and penalties. Enforcement actions can be ap-        Acquirer and Merchant agree upon, but, the Agree-
pealed to Visa's Board of Directors, but the Board's       ment must, at a minimum, contain the provisions of
decision is final. The Operating Regulations give          Section 5.2 of the Operating Regulations. These dis-
Visa, and only Visa, the right to interpret and enforce    putes involve § 5.2.h.3.b. That subdivision prohibits a
the Operating Regulations, and only Visa can deter-        Merchant from retaining or storing Cardholder In-
mine whether a violation of the Operating Regulations      formation after an Issuer authorizes a transaction. Like
has occurred.                                              all Visa Members, Fifth Third's predecessor agreed to
                                                           be bound by the Visa Operating Regulations and
The Operating Regulations also impose extensive            By-Laws, which are incorporated by reference into the
security requirements on Issuers and Acquirers. Sec-       Membership Agreement.
tion 2.3 of the Operating Regulations requires Issuers
and Acquirers to ensure that their agents, service         The seeds that sprouted this litigation were sewn in
providers and Merchants comply with the Operating          February 2004, when Visa identified a potential
Regulations.                                               compromise of electronically stored Cardholder In-
                                                           formation pertaining to certain Visa cards issued by
The Visa Operating Regulations also include com-           Sovereign, PSECU and other financial institutions.
prehensive provisions for resolving disputes between       Electronic data on some credit cards had been copied
Visa members. These provisions allow members to            and used to fraudulently obtain goods and services
challenge disputed charges through “chargeback” and        after cardholders had used the cards at various BJ's
representment procedures, in accordance with risk          stores. Visa responded by issuing a “CAMS alert” to
allocation judgments made by Visa. Disputes about          potentially affected Issuers. Such CAMS alerts notify
the use of these procedures are resolved by arbitration.   Visa members that Cardholder Information may have
                                                           been compromised. The CAMS alert here notified the
                                                           Issuers that Visa cards which had been properly pre-
Finally, the Operating Regulations also include            sented for payment at BJ's stores from July 2003
“Compliance” provisions that apply when a Member's         through February 2004 had been compromised and
violation of a Regulation causes a financial loss to       could be used to make fraudulent purchases.
another Member who cannot be made whole by re-
sorting to chargeback or representment. For example,
a loss resulting from fraudulent charges using stolen      Sovereign responded to the February 2004 alert by
data is allocated to the Issuer. However, the Issuer       cancelling some Visa cards and issuing new Visa
may use the Compliance proceedings to shift that loss      cards to the affected cardholders. Sovereign claims
to the Acquirer if it resulted from the Acquirer's vi-     that the fraud was only possible because BJ's impro-
olation of an Operating Regulation. The Compliance         perly retained and stored the Cardholder Information
provisions do not eliminate any rights a Member may        from its customers' cards instead of deleting the data
have to pursue any legal remedies that may otherwise       immediately after a sales transaction was completed,
be available.                                              as required by Visa Operating Regulation § 5.2.h.3.b.
                                                           In Sovereign's view, BJ's failure to comply with the
requirements of § 5.2.h.3.b. breached a duty owed to       United States District Court for the Middle District of
Sovereign. Sovereign further contends that Fifth Third     Pennsylvania to allow consolidation with Pennsylva-
failed to comply with the Operating Regulations by         nia State Employees Credit Union v. Fifth Third Bank
failing to ensure that BJ's complied with § 5.2.h.3.b.     and BJ's Wholesale Club, Inc. That action had been
                                                           brought by the PSECU to recover the costs it incurred
         FN3. The alert is purely informational and        in replacing its members' Visa cards that had been
         does not mean that the accounts listed had        compromised by the fraud.
         been compromised. Fifth Third claims that
         an Issuer has discretion in choosing how it       Following the transfer, BJ's and Fifth Third separately
         will respond to a CAMS alert. It can respond      moved to dismiss the claims against them pursuant to
         by monitoring the affected accounts for           Fed.R.Civ.P. 12(b)(6). The district court denied BJ's
         fraudulent activity, cancelling the accounts      motion on the negligence claim, but granted it on the
         and reissuing new Visa cards, or taking other     breach of contract and equitable indemnification
         measures based on the potential for fraud.        claims. The court granted Fifth Third's motion on the
                                                           negligence and equitable indemnification claims, but
According to Sovereign, BJ's failure to delete the         denied it on the breach of contract claim. Sovereign
Cardholder Information magnetically stored in Visa         Bank v. BJ's Wholesale Club, Inc., 395 F.Supp.2d 183
cards, and Fifth Third's failure to ensure that BJ's       (M.D.Pa.2005).
complied with § 5.3.h.3.b, allowed the unauthorized
and fraudulent use of Cardholder Information. Sove-        Fifth Third moved for reconsideration on the sole
reign maintains that it was legally obligated to reim-     remaining claim for breach of contract. Sovereign's
burse its cardholders for the resulting fraudulent         breach of contract claim is based on a third-party or
charges, and that it incurred expenses, and lost income    intended beneficiary theory and depends, in part, upon
and fees from doing so. This purportedly included the      whether Fifth Third and Visa intended to give Sove-
costs of issuing replacement cards to Cardholders (in      reign enforceable rights under their separate contract
an effort to mitigate further losses), and loss of         even though Sovereign is not a party to it. Ultimately,
goodwill of its customer base.                             the district court converted Fifth Third's motion for
                                                           reconsideration into a motion for summary judgment
After it discovered the breach of security of Card-        and ordered the parties to conduct discovery on the
holder Information that had been retained in BJ's          third-party beneficiary issues, i.e., whether Fifth
system, PSECU also canceled approximately 20,000           Third's contractual obligation to Visa to comply with
Visa cards that it had issued to its members who had       the Visa Operating Regulations was intended to ben-
used the cards at BJ's. It then reissued Visa cards with   efit Issuers like Sovereign.
new account numbers and new Cardholder Informa-
tion at a cost of approximately $98,000.                   In the meantime, Sovereign filed an amended com-
                                                           plaint asserting claims against BJ's for negligence,
II. Sovereign Bank v. BJ's Wholesale Club and Fifth        breach of fiduciary duty and promissory estoppel. The
             Third Bank (No. 06-3392)                      amended complaint restated the breach of contract
                                                           claim against Fifth Third and added a claim for
On January 10, 2005, Sovereign sued Fifth Third and        promissory estoppel. Fifth Third and BJ's again
BJ's in state court asserting a claim for negligence,      moved to dismiss the claims under Rule 12(b)(6), and
breach of contract, and equitable indemnification          the district court dismissed all claims against BJ's and
against each defendant. The suit was brought to re-        dismissed all claims against Fifth Third except the
cover the losses that resulted from the fraudulent use     breach of contract claim. Sovereign Bank v. BJ's
of Cardholders' Information, lost fees and commis-         Wholesale Club, Inc., 427 F.Supp.2d 526
sions, the value of the unauthorized purchases and         (M.D.Pa.2006).
sales, and the cost of replacing Visa cards.
                                                           In accordance with the district court's order directing
BJ's and Fifth Third removed the action to the United      limited discovery on the third-party beneficiary issues,
States District Court for the Eastern District of Penn-    the parties exchanged paper discovery and took the
sylvania. Venue was subsequently transferred to the        deposition of Visa's designated representative, Alex
Miller. After discovery was completed, the district
court granted summary judgment in favor of Fifth             (1) Unless otherwise agreed between promisor and
Third on the third-party beneficiary claim, holding          promisee, a beneficiary of a promise is an intended
that Sovereign was not an intended beneficiary of the        beneficiary if recognition of a right to performance
Visa-Fifth Third Member Agreement. Sovereign Bank            in the beneficiary is appropriate to effectuate the
v. BJ's Wholesale Club, Inc., 2006 WL 1722398                intentions of the parties and either
(M.D.Pa. June 16, 2006).
                                                             (a) the performance of the promise will satisfy an
This appeal followed. With respect to Fifth Third,           obligation of the promisee to pay money to the be-
Sovereign appeals only the district court's Rule             neficiary; or
12(b)(6) dismissal of its equitable indemnification
claim and the district court's grant of summary judg-        (b) the circumstances indicate that the promisee
ment in favor of Fifth Third on its breach of contract       intends to give the beneficiary the benefit of the
claim. With respect to BJ's, Sovereign appeals only          promised performance.
the district court's Rule 12(b)(6)'s dismissal of its
negligence and equitable indemnification claims.
                                                             (2) An incidental beneficiary is a beneficiary who is
                                                             not an intended beneficiary.
We discuss each of Sovereign's arguments in turn.
                                                           Under § 302, Sovereign's contract claim depends on
A. Sovereign's Breach of Contract Claim Against            whether the “recognition of a right to performance” in
                  Fifth Third.                             Sovereign “is appropriate to effectuate the intentions
                                                           of” both Visa and Fifth Third in entering into their
As noted, Sovereign's contract claim is based on the       member agreement and whether “the circumstances
theory that it is a third-party beneficiary of Fifth       indicate that” Visa (the promisee) “intend[ed]” to give
Third's Member Agreement with Visa. As also noted,         Sovereign “the benefit of the promised performance.”
that agreement required Fifth Third to ensure that BJ's
complied with the Visa Operating Regulations, and §        As noted earlier, the district court converted Fifth
5.2.h.3.b. of that agreement prohibits Merchants from      Third's Rule 12(b)(6) motion to dismiss to a motion
retaining Cardholder Information. Sovereign contends       for summary judgment and ordered limited discovery.
that Fifth Third breached that contract by not ensuring    The ensuing discovery included production of nu-
BJ's compliance.                                           merous documents as well as the deposition of Visa's
                                                           designated representative, Alex Miller. Fifth Third
Historically, under Pennsylvania law, “in order for a      relies in part on Miller's testimony that he was not
third party beneficiary to have standing to recover on a   aware that Visa intended to create a direct right of
contract, both contracting parties must have expressed     enforcement under the Operating Regulations among
an intention that the third-party be a beneficiary, and    Members and he has never seen a document that
that intention must have affirmatively appeared in the     would allow a Member “to step into Visa's shoes
contract itself.” Scarpitti v. Weborg, 530 Pa. 366, 609    under its contract with other members” and enforce
A.2d 147, 149 (1992) (citation omitted). Sovereign         the Operating Regulations. Miller testified in part as
appropriately concedes that it is not an express           follows:
third-party beneficiary of the Visa-Fifth Third Mem-
ber Agreement. However, in Scarpitti, the Pennsyl-           [T]he core purpose of the Operating Regulations is
vania Supreme Court adopted § 302 of the Restate-            to set up the conditions for participation in the sys-
ment (Second) of Contracts. Id. That provision allows        tem, to set up the rules and standards that apply to
an “intended beneficiary” to recover for breach of           that ultimately for the benefit of the Visa payment
contract even though the actual parties to the contract      system, the members that participate in it and other
did not express an intent to benefit the third party.        stakeholders such as cardholders, merchants, and
Section 302 provides as follows:                             others who may participate in the system as well.

Intended and Incidental Beneficiaries                      Fifth Third further contends that Miller also made it
clear that the Operating Regulations' prohibition           benefit the Visa system as a whole and not Sovereign
against retaining Cardholder Information, which Fifth       or any particular Issuer in particular. Accordingly,
Third claims was enacted long after it entered into its     Fifth Third argues that it is entitled to summary
agreement with Visa, was not to benefit any individual      judgment on Sovereign's breach of contract claim.
member or class of members. Rather, according to
Miller:                                                     Sovereign responds that there is a genuine issue of
  [t]he purpose of the CISP program ... is to maximize      material fact as to Visa's intent which precludes
  the value to the Visa system as a whole. That can         summary judgment. Sovereign notes that in August
  include the protection of any entity that may be          1993, Visa wrote a memorandum entitled “Retention
  involved in the use or-or handling of cardholder          of Magnetic-Stripe Data Prohibited.” The memoran-
  data, so it's to protect a cardholder, the privacy of     dum described a new section of the Operating Regu-
  their information, to protect their confidence in us-     lations prohibiting the storage of magnetic-stripe data,
  ing the Visa system, to protect issuers, to protect       i.e., Cardholder Information. It read in part as follows:
  acquirers, to protect merchants; and by creating a
  system that protects cardholder data, generally it's to     To protect the Visa system and Issuers from poten-
  maximize the usage and value of the Visa payment            tial fraud exposure created by databases of mag-
  system for all of those participants.                       netic-stripe information, Section 6.21 has been re-
                                                              vised. Effective September 1, 1993, the retention or
Miller was asked whether, even though there may               storage of magnetic stripe data subsequent to the
have been multiple purposes for requiring the Ac-             authorization of a transaction is prohibited. Ac-
quirer to ensure Merchant compliance with the regu-           quirers are obligated to ensure that their merchants
lations, at least one such reason was to protect Issuers.     do not store the magnetic-stripe information from
Miller responded as follows:                                  Visa Cards for any subsequent use.
   The part of your question I'm struggling with is to        Sovereign contends that this August 1993 memo-
   say whether that was the purpose or not. I think I         randum shows that Visa understood and clearly in-
   summarized what the purpose was.                           tended that Issuers such as Sovereign (and PSECU)
                                                              would obtain direct benefits from the requiring
  One of the entities that is impacted by the Card-           members to ensure that magnetic-stripe data was not
  holder Information Program is issuers, as well as           retained.
  acquirers, merchants and cardholders. So my un-
  derstanding was the purpose was not directed at any       Sovereign further contends that other evidence ob-
  one of those entities but to maximize the value of        tained from Visa shows that Visa expressly unders-
  the system in protecting cardholder information for       tood and intended that the prohibition would provide
  all of the participants.                                  direct benefits to Issuers and that the type of harm
                                                            suffered by Sovereign was specifically intended to be
Finally, Fifth Third notes that in responding to a          avoided by compliance with the prohibition. Visa
question about whether Visa intended to give Issuers        published an on-line article entitled “Issuers and Ac-
the benefit of the Acquirer's compliance with the           quirers Are At Risk When Magnetic-Stripe Data Is
CISP, Miller testified:                                     Stored,” in May 2003. The article stated that the CISP
  Visa designed the CISP program to benefit the Visa        “was established to preclude a compromise that could
  system as a whole, to drive confidence in the inte-       lead to the duplication of valid magnetic-stripe data on
  grity of the Visa system, to drive greater, greater       counterfeit or altered cards,” because such a data
  efficiency, to drive cardholder security, and to do       compromise “impacts Issuers, Acquirers, cardholder
  that from requirements that apply to all Visa mem-        goodwill and the integrity of the payment system.”
  bers that designed ultimately to yield a more effi-       Sovereign submits that this article is additional evi-
  cient system on behalf of all those participants.         dence that the prohibition against retaining Cardholder
                                                            Information contained in the magnetic strip was in-
In sum, Fifth Third contends that Miller's deposition       tended to directly benefit Issuers.
testimony clearly shows that the intent of the Operat-
ing Regulations, and more particularly the prohibition      Finally, Sovereign relies on the following exchange
on Merchant retention of Cardholder Information, is to      during Miller's deposition:
                                                               that the single August 1993 reference to benefiting
  Q: [by Fifth Third's counsel] Is it fair to say that the     issuers nor the ambiguous “core purpose” statement
  operating regulations are not intended to benefit a          is sufficient evidence to lead a reasonable jury to
  single group of participants, but the Visa payment           find for [Sovereign] on the contract claim.
  system as a whole?
                                                              2006 WL 1722398 at *12 (emphasis added). It further
  Objection. Leading.                                        commented:
                                                               It cannot be disputed that Sovereign benefits from
  A: [by Miller] It's fair to say that the core purpose of     the prohibition on the retention of magnetic-stripe
  the operating regulations is to set up the conditions        data. It is probably also true that as an issuer it has
  for participation in the system, to set up rules and         the greatest need for such a prohibition, and benefits
  standards that apply to that ultimately for the benefit      the most from it, since its cardholders' information
  of the Visa payment system, the members that par-            is at risk if a merchant or other entity retains such
  ticipate in it and other stakeholders such as card-          data so that it is subject to theft. But one essential
  holders, merchants and others who may participate            part of the test for third-party-beneficiary status is
  in the system as well. (emphasis added).                     that the promisee, here Visa, must have intended to
                                                               benefit the third party. There is sufficient evidence
                                                               on summary judgment to state that Visa had no such
  Q: They may have some incidental benefit; is that            intent. In sum, as Fifth Third argues, Sovereign is at
  correct?                                                     most an incidental beneficiary of the member
                                                               agreement between Visa and Fifth Third, and an
  Objection                                                    incidental beneficiary has no right to enforce a
                                                               contract, no matter how great a stake it might have
  Leading, and calls for a legal conclusion.                   in doing so.

  A: The bylaws and operating regulations, by their          Id. (emphasis added).
  terms, apply only to members. So to the extent you
  mean they might have benefits beyond the rules that        ***
  apply to other stakeholders, that's correct. They're
  not directly parties to these rules. (emphasis added)      In order to be an intended beneficiary of the Visa-Fifth
                                                             Third Member Agreement, Sovereign has the burden
Sovereign argues that, despite the best efforts of Fifth     of producing, inter alia, sufficient evidence that Visa
Third's counsel, the italicized portions of Miller's         intended to give it the benefit of the Fifth Third's
testimony demonstrate that Visa understood that Is-          promise to Visa to ensure that BJ's complied with the
suers are more than incidental beneficiaries of the          provision of the Member Agreement prohibiting
Member Agreements. Rather, it shows that Visa ex-            Merchants from retaining Cardholder Information.
pressly understood that other classes of participants,       We believe that Sovereign met that burden.
such as Issuers, were intended and foreseeable bene-
ficiaries of a Member Agreement, even though they            We do not, however, regard the May 2003 on-line
are not parties to a particular agreement.                   article entitled “Issuers and Acquirers Are At Risk
                                                             When Magnetic-Stripe Is Stored” as indicative of an
Sovereign also argues that in granting summary               intent to benefit a particular Issuer such as Sovereign
judgment to Fifth Third, the district court did not          or PSECU. That article simply states the reason for the
apply well-settled summary judgment standards. Ra-           prohibition against retention of Cardholder Informa-
ther, according to Sovereign, the district court acted       tion, viz., a data compromise that could result from
like a fact-finder by weighing conflicting or ambi-          storage of magnetic-stripe data “impacts Issuers,
guous evidence and making credibility determina-             Acquirers, cardholder goodwill, and the integrity of
tions. The district court explained:                         the system.” However, we do believe that Visa's Au-
                                                             gust 1993 memorandum, entitled “Retention of
  In the face of this evidence of Visa's intent [i.e.,       Magnetic-Stripe Date Prohibited,” and Miller's “core
  Miller's deposition testimony], we do not believe          purpose” deposition testimony raise a genuine issue of
material fact regarding the intent of the Visa and Fifth    F.Supp.2d at 533.
Third Member Agreement. That was sufficient to
preclude the grant of summary judgment on Sove-              “The Economic Loss Doctrine provides that no cause
reign's breach of contract claim.                           of action exists for negligence that results solely in
                                                            economic damages unaccompanied by physical or
In his deposition, Miller testified that the core purpose   property damage.” Adams v. Copper Beach Town-
of the Operating Regulations was to benefit the Visa        home Communities, L.P., 816 A.2d 301, 305
system and “the members that participate in it.” Ad-        (Pa.Super.2003). “[T]he Economic Loss Doctrine is
mittedly, any indication of an intent by Visa to spe-       concerned with two main factors: foreseeability and
cifically benefit Issuers is arguably undermined by         limitation of liability.” Id. at 307
Miller's references to “other shareholders such as
cardholders, merchants and others who may partici-          Pennsylvania appellate courts first discussed this
pate in the system as well.” Nonetheless, his testimony     doctrine in Aikens v. Baltimore & Ohio R.R. Co., 348
clearly suggests an intent by Visa to benefit Issuers.      Pa.Super. 17, 501 A.2d 277 (1985). There, employees
An argument to the contrary is tantamount to claiming       of a manufacturing company sued a railroad company
that since Visa intended to benefit 35 everyone who         to recover wages lost when their plant had to close
was part of the Visa system, it did not specifically        because of damage inflicted by a derailment allegedly
intend to benefit anyone. However, the fact that it         caused by the railroad company's negligence. The
intended to benefit several Members or classes of           employees did not suffer any personal injuries or loss
Members does not negate the possibility that it in-         of property. In appealing the trial court's judgment on
tended to benefit individual Issuers such as Sovereign.     the pleadings in favor of the railroad, the employees
                                                            argued that the Pennsylvania Superior Court should
Moreover, as recited earlier, the August 1993 memo-         recognize “a cause of action to compensate a party
randum provides, in relevant part: “To protect the Visa     suffering purely economic loss, absent any direct
system and Issuers from potential fraud exposure            physical injury or property damage, as a result of the
created by databases of magnetic-stripe information         negligence of another party.” 501 A.2d at 278. The
.... Acquirers are obligated to ensure that their mer-      Superior Court declined the invitation; instead, the
chants do not store the magnetic-stripe information         court adopted the general rule set forth in the Res-
from Visa Cards for any subsequent use.” (emphasis          tatement (Second) of Torts § 766C. That rule provides
added). Thus, the memorandum clearly states that            as follows:
Acquirers must act to protect Issuers by ensuring that
their Merchants do not retain Cardholder Information.         Negligent Interference with Contract or Prospective
Accordingly, the August 1993 memorandum is suffi-             Contractual Relation.
cient evidence by itself to create a genuine issue about
whether Visa intended to give Sovereign the benefit of        One is not liable to another for pecuniary harm not
Fifth Third's promise to Visa to ensure BJ's com-             deriving from physical harm to the other, if that
pliance with the provisions of the Visa-Fifth Third           harm results from the actor's negligently
Member Agreement. Therefore, we will reverse the
district court's grant of summary judgment to Fifth
Third on the breach of contract claim and remand for          (a) causing a third person not to perform a contract
further proceedings on that claim.                            with the other, or

                                                              (b) interfering with the other's performance of his
                                                              contract or making the performance more expensive
***                                                           or burdensome, or

  C. Sovereign's Negligence Claim Against BJ's.               (c) interfering with the others acquiring a contrac-
                                                              tual relation with a third person.
The district court dismissed Sovereign's negligence
claim pursuant to Fed.R.Civ.P. 12(b)(6) because the         The Superior Court noted that under § 766C, “recov-
claim was barred by the economic loss doctrine. 427         ery for purely economic loss occasioned by tortuous
interference with contract or economic advantage is         A.2d 270 (2005). Sovereign claims that Bilt-Rite se-
not available under a negligence theory.” 501 A.2d at       verely weakened the economic loss doctrine as first
278 (citation omitted).                                     announced in Aikens v. Baltimore & Ohio R.R. Co.,
                                                            supra.
As the Superior Court explained, the “roots of this
well-established rule” reach back to the U.S. Supreme       Sovereign first claims that the district court erred in
Court's decision in Robins Dry Dock and Repair Co. v.       assessing its losses in purely economic terms, because
Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed. 290             it also incurred a loss of property, i.e. money, because
(1927). The Superior Court quoted from the Supreme          of BJ's alleged negligence. The argument is meritless.
Court's decision in Flint, in concluding that:              Not surprisingly, Sovereign cites no authority to
                                                            support its contention that its financial loss negates the
  negligent harm to economic advantage alone is too         economic loss doctrine. Indeed, the argument would
  remote for recovery under a negligence theory. The        totally eviscerate the economic loss doctrine because
  reason that a plaintiff cannot recover stems from the     any economic loss would morph into the required loss
  fact that the negligent actor has no knowledge of the     of property and thereby furnish the damages required
  contract or prospective relation and thus has no          for a negligence claim.
  reason to foresee any harm to the plaintiff's interest.
                                                            Sovereign also attempts to pirouette around the eco-
501 A.2d at 279.                                            nomic loss doctrine by arguing that it only applies
                                                            when the plaintiff has suffered an unforeseeable loss,
                                                            and then claiming that its loss was clearly a foreseea-
Moreover, as the Superior Court stressed, there are         ble result of BJ's negligence. We do not doubt that
sound public policy reasons to condition tort recovery      Sovereign's loss was a foreseeable result of not taking
on injury to person or property.                            appropriate precautions to protect its cardholders'
                                                            information. However, that does not advance Sove-
  [A]llowance of a cause of action for negligent in-        reign's claim to the extent that Sovereign believes. We
  terference with economic advantage would create           agree that the court in Aikens did explain that the
  an undue burden upon industrial freedom of action,        economic loss doctrine was partly the result of a pol-
  and would create a disproportion between the large        icy consideration to not impose loss for an unfore-
  amount of damages that might be recovered and the         seeable result. However, that is of no consequence
  extent of defendant's fault. See Restatement              here because Sovereign did not incur any loss of
  (Second) of Torts Sec. 766c, comment a (1979). To         property. Moreover, Sovereign's argument ignores the
  allow a cause of action for negligent cause of purely     thrust of the public policy rational explained in Aikens.
  economic loss would be to open the door to every
  person or business to bring a cause of action. Such
  an outstanding burden is clearly inappropriate and a
                                                            ***
  danger to our economic system.
                                                            Thus, the district court correctly held that Sovereign's
 Id. Accordingly, the Superior Court held “that no          negligence claim against BJ's was barred by the eco-
cause of action exists for negligence that causes only      nomic loss doctrine.
economic loss.” Id.
                                                                              D. CONCLUSION
In its negligence claim against BJ's, Sovereign is
seeking to recover the costs associated with replace-       For the above reasons, we will reverse the district
ment of some of its customers' Visa cards and the           court's grant of summary judgment to Fifth Third on
amounts it paid to reimburse customers whose mag-           Sovereign's breach of contract claim and remand for
netic-stripe data was used for fraudulent purchases.        further proceedings. However, we will affirm the
Sovereign tries to get around the fatal limitation of the   district court's dismissal of Sovereign's equitable in-
economic loss doctrine by relying on the Pennsylvania       demnification claims against Fifth Third and BJ's and
Supreme Court's decision in Bilt-Rite Contractors,          its dismissal of Sovereign's negligence claim against
Inc. v. The Architectural Studio, 581 Pa. 454, 866          BJ's.
                                                          members to resume using their cards for retail pur-
III. Pennsylvania State Employees Credit Union v.         chases. PSECU's actions also limited the liability that
 Fifth Third Bank and BJ's Wholesale Club, Inc.           BJ's and Fifth Third would otherwise have incurred to
                  (No. 06-3405)                           PSECU and its members. Thus, argues PSECU, BJ's
                                                          and Fifth Third's acceptance and retention of the
The Pennsylvania State Employees Credit Union is          benefits conferred without compensation to PSECU,
the Issuer of Visa cards to it members, Fifth Third is    would be inequitable. Accordingly, BJ's and Fifth
the Acquirer and BJ's is the Merchant. After disco-       Third were unjustly enriched by PSECU's cancelling
vering the breach of Cardholder Information retained      and replacing its members' Visa cards. We cannot
in BJ's system, PSECU canceled approximately              agree.
20,000 of its Visa cards that had been used at BJ's. It
then reissued Visa cards with new account numbers         The district court held that BJ's and Fifth Third re-
and new Cardholder Information at a cost of ap-           ceived no benefit from PSECU's cancelling and reis-
proximately $98,000. PSECU brought this action to         suing of its members' Visa cards because PSECU
recover related costs.                                    replaced the cards pursuant to its contractual obliga-
                                                          tion with its cardholders. The district court relied on
                                                          Allegheny Gen. Hosp. v. Philip Morris, Inc., 228 F.3d
***                                                       429 (3d Cir.2000), in holding that any benefit that BJ's
                                                          or Fifth Third may have derived was purely incidental,
   C. PSECU's Claims For Unjust Enrichment                and could not form the basis of an unjust enrichment
         Against Fifth Third and BJ's.                    claim. 398 F.Supp.2d at 331.

The elements of unjust enrichment under Pennsylva-        In Allegheny Gen. Hospital, a group of hospitals sued
nia law have been defined as follows:                     various tobacco companies asserting an unjust
                                                          enrichment claim for unreimbursed medical care the
  (1) benefits conferred on defendant by plaintiff; (2)   hospitals had provided to nonpaying, diseased
  appreciation of such benefits by defendant; and (3)     smokers. The hospitals claimed that “by paying for the
  acceptance and retention of such benefits under         medical services required by nonpaying patients, the
  such circumstances that it would be inequitable for     Hospitals discharged the Tobacco Companies' legal
  defendant to retain the benefit without payment of      duties and saved them from bearing costs caused by
  value.                                                  their fraudulent and wrongful conduct.” 228 F.3d at
                                                          447. We held that a claim for unjust enrichment may
 Limbach Co. LLC v. City of Philadelphia, 905 A.2d        not be based on the performance of an obligation that
567, 575 (Pa.Cmwlth.2006) (citation omitted). The         is independently owed to third parties:
cause of action is similar to a claim for equitable in-
demnification that we discussed in No. 06-3392. “To         In addition, since the Hospitals had an independent
sustain a claim of unjust enrichment, a claimant must       obligation to provide health care to the nonpaying
show that the party against whom recovery is sought         patients [through Medicaid], incidental benefit to
either wrongfully secured or passively received a           the Tobacco Companies is not enough to maintain
benefit that it would be unconscionable for her to          an action; the nonpaying patients get the main ben-
retain.” Torchia v. Torchia, 346 Pa.Super. 229, 499         efit, not the Tobacco companies. See Restatement of
A.2d 581, 582 (1985) However, a claim for unjust            Restitution § 106 (1937) (“A person who, inciden-
enrichment requires more than a showing that the            tally to the performance of his own duty ... has
defendant may have benefited in some way from the           conferred a benefit upon another, is not thereby en-
disputed conduct. Walter v. Magee-Womens Hosp.,             titled to contribution.”).
876 A.2d 400, 407 (Pa.Super.2005).
                                                          Id.
PSECU argues that BJ's and Fifth Third benefited
from PSECU's cancellation and replacement of its          PSECU's unjust enrichment claims against BJ's and
Visa cards because the cancellation stopped the           Fifth Third are analogous to the hospital's failed unjust
fraudulent use of those cards and permitted PSECU's       enrichment claim against the tobacco companies.
PSECU attempts to distinguish Allegheny by arguing          PSECU argues that it entered into the series of con-
that, unlike the hospitals, it did not replace its mem-     tracts that make up the Visa system with BJ's and Fifth
bers' Visa cards pursuant to an independent obligation.     Third, but it does not have any “prior duty of perfor-
However, PSECU's amended complaint fatally un-              mance” within the Visa system. PSECU concedes that
dermines that contention. There, PSECU alleged that         it did allege that it replaced its members' cards pur-
it replaced its members' Visa cards “to fulfill a con-      suant to its contractual obligations within the Visa
tractual obligation to its customers.” Am. Compl. ¶ 65.     system. However, it submits that Visa's designated
Although PSECU's attempt to salvage its unjust              representative's deposition testimony establishes that
enrichment claim now requires that it take a contrary       cancellation and reissuance of its members cards is
position, the allegation in the amended complaint is a      only one of a number of options an Issuer may take in
binding judicial admission. See Parilla v. IAP              response to a breach of Cardholder Information by a
Worldwide Serv., VI, Inc., 368 F.3d 269, 275 (3d            Merchant or Acquirer.
Cir.2004) (“Judicial admissions are formal conces-
sions in the pleadings, or stipulations by the party or     According to PSECU, this establishes that it had no
its counsel, that are binding upon the party making         obligation to cancel and reissue the cards; rather,
them.”). Accordingly, the district court properly dis-      doing so was just one of PSECU's options under the
missed the unjust enrichment claim.                         Visa system. PSECU claims that by promptly cancel-
                                                            ling and replacing cards, it protected BJ's and Fifth
Finally, PSECU tries to distinguish this case from          Third from greater fraud losses, which would have
Allegheny. According to PSECU, this case should be          been shifted to Fifth Third's compliance process (and
governed by the Restatement of Restitution § 81,            then shifted to BJ's for indemnification to Fifth Third).
which provides:
                                                            PSECU concludes that it, BJ's and Fifth Third are all
  Unless otherwise agreed, a person who has dis-            “interested in an enterprise [the Visa system, and its
  charged more than his proportionate share of a duty       associated network of contracts] out of which [obli-
  owed by himself and another as to which, between          gations] arise,” as to which none of the three have a
  the two, neither had a prior duty of performance, is      prior duty of performance. PSECU's Br. at 55 (quoting
  entitled to contribution from the other, except where     Restatement of Restitution § 81, comment (b)). It
  the payor is barred by the wrongful nature of his         further says that by cancelling and reissuing its
  conduct.                                                  members' Visa cards, it “discharged more than [its]
                                                            proportionate share of a duty owed by [PSECU, BJ's
Comment (b) offers the following guidance:                  and Fifth Third]” “as to which, between the [three],
 The rule stated in this Section applies where two or       neither had a prior duty of performance.” Id. (quoting
 more persons are interested in an enterprise out of        Restatement of Restitution § 81). Therefore, PSECU
 which the obligation arises, whether as primary or         contends that it is entitled to contribution from BJ's
 secondary obligors, and where neither of them with         and Fifth Third on its unjust enrichment theory, re-
 respect to the other has a prior duty of performance,      gardless of whether PSECU, BJ's or Fifth Third “ap-
 irrespective of the question whether, as between           pears to be primarily responsible” for reissuance of
 them and the creditor, one of them appears to be           Visa cards. Id. (quoting Restatement of Restitution §
 primarily responsible.                                     81, comment (b)).

Comment (c) explains the limited scope of § 81:             This argument has some facial appeal. However,
 The rule stated in this Section is limited to those        PSECU did not make this argument in the district
 who are parties to a single transaction or series of       court, and we therefore need not determine its merit
 transactions. If there is but one debt or duty, the fact   now. “Generally, barring exceptional circumstances,
 that there are a number of separate agreements             like an intervening change in the law or the lack of
 which guarantee its performance does not prevent           representation by an attorney, this Court does not
 contribution between all the secondary obligors.           review issues raised for the first time at the appellate
                                                            level.” Gleason v. Norwest Mortgage, Inc., 243 F.3d
Id. at comment (c).                                         130, 142 (3d Cir.2001). PSECU does not contend that
                                                            there are exceptional circumstances present here, and
we do not find any. Accordingly, this argument has
been waived, and we will reject it without discussion.

We conclude that the district court did not err in dis-
missing PSECU's unjust enrichment claim against
either BJ's or Fifth Third.



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