A California appellate panel affirmed the decertification of a class of consumers in a Song-Beverly Credit Card Act lawsuit challenging Williams-Sonoma’s collection of zip codes and email addresses during credit card sales.
The national retailer began requesting zip codes during point-of-sale transactions in California in 1991, adding email addresses to the request in 2004. Between 2007 and 2011, Williams-Sonoma’s general procedure was to ask for zip codes and emails regardless of the form of tender used for payment.
After a purchase was scanned and totaled, the point-of-sale system prompted the sales clerk to ask for the zip code. If the customer provided one, it was entered into the system. If the customer declined, the clerk bypassed the prompt by selecting a “receipt only” option.
The company also required each of its California stores to post signs at the cash registers stating that zip codes and email addresses were requested solely for marketing purposes and were not required.
A group of plaintiffs filed suit over the practices in 2013, alleging that Williams-Sonoma violated the Song-Beverly Act.
Arguing that the act prohibits all requests for personal identification information during credit card sales—whether or not the customer learns from signage or a sales assistant that the information is not required—the plaintiffs moved to certify a class of all persons from whom Williams-Sonoma requested and recorded zip codes and/or email addresses in conjunction with a credit card purchase.
The trial court granted the motion. However, the parties then briefed the issue of what it takes to prove a violation of the act.
Williams-Sonoma argued that the statute is violated only if the request for personal identification information is made under circumstances that reasonably suggest the information is required. The court agreed and decertified the class, holding that the defendant’s liability would depend on transaction-specific facts.
The plaintiffs appealed, but the appellate panel affirmed the trial court’s application of the standard of liability and decertification of the class.
Relying on Harrold v. Levi Strauss & Co., the court explained that neither the legislative history nor the cases that have interpreted the Song-Beverly Act have indicated that it prohibits merchants from requesting personal identification information if the request is not made under circumstances suggesting that a credit card will not be accepted as payment without such information.
“[T]he statute is violated when the request for information is made under circumstances in which the customer could reasonably believe it was required,” the panel wrote. “If the circumstances are not as such, there is no violation and, therefore, nothing to waive.”
Applying that standard, the court found “substantial evidence” to support decertification.
“Williams-Sonoma presented testimony and photographs establishing that it required its California stores to prominently post signs and stickers in plain view at the cash register area advising customers they were not required to provide their zip codes or email addresses,” the court said. “It also presented evidence that the appearance and placement of those notices are consistent with statutory and regulatory requirements for various consumer notices.”
In addition, the defendant presented evidence that its employees had discretion about whether to request a customer’s zip code, that they did not always do so and that they faced no discipline if they did not, the panel added. Employees were trained to tell inquiring customers that the information was for marketing purposes and was not required, and they sometimes spontaneously explained this to customers.
“Williams-Sonoma presented substantial evidence that the conditions relevant to a reasonable customer’s understanding of whether personal identification information was required for a credit card sale varied between individual transactions,” the panel wrote. “The objective circumstances of each transaction will have to be proven to determine whether the customer would have reasonably perceived he or she had to provide a zip code or email address in order to pay by credit card.”
The predominance of those individual issues rendered a class proceeding untenable, the court said.
To read the order in Williams-Sonoma Song-Beverly Act Cases, click here.
Why it matters: In an important ruling for Song-Beverly Act defendants, the appellate panel affirmed that the standard for liability under the statute requires a review of the circumstances of the actual request. This standard provides a powerful argument for defendants against class certification, as it requires an individualized inquiry into the transaction of each plaintiff.