In the wake of Pineda v. Williams-Sonoma Stores, Inc.
(2011) 51 Cal. 4th 524 ("Pineda"), Divisions One
and Five of California's Second Appellate District have
published two opinions that put some constraints on Song-Beverly
class action litigation.
The first case is Archer v. United Rentals, Inc. (May
19, 2011, B219089) __ Cal.App.4th ___, [2011 BL 134609, 2011 DJDAR
7158]. In Archer, the trial court (Anthony J. Mohr,
J.) awarded summary adjudication to the defendants on
plaintiffs' claim under the UCL, finding that plaintiffs'
lacked standing to proceed "because they did not lose money or
property." After a thorough discussion of the California
Supreme Court's recent decision in Kwikset Corp. v.
Superior Court (2011) 51 Cal. 4th 310
("Kwikset"), Division One ruled that plaintiffs
"have failed to demonstrate" how the alleged invasion of
privacy "translates into a loss of money or
property." The trial court's summary adjudication was
affirmed. Archer v. United Rentals, Inc. (May
19, 2011, B219089) __ Cal.App.4th ___, [2011 BL 134609, 2011 DJDAR
7158] slip op. at p. 8.
Judge Mohr also denied class certification of Mr. Archer's
claims brought under the Song-Beverly Credit Card Act
("SBCCA") and the Consumer Legal Remedies Act
("CLRA"). He reasoned that the SBCCA does not apply
to business credit cards or personal credit cards used primarily
for business purposes. On this basis, he found that
determining class membership would be an "intensely
fact-driven" and costly process that was not
justified. His denial of class certification was based on the
ascertainability requirement. See Sevidal v.
Target Corp. (2010) 189 Cal App. 4th 905, 919; Sav-On Drug
Stores, Inc. v. Superior Court (2004) 34 Cal. 4th 319,
326.
Division One agreed, in part, with Judge Mohr. The Appellate
Court held that "section 1747.08 does not apply to credit
cards issued for business purposes," but it does apply to a
natural person to whom a credit card is issued for
consumer credit purposes "without regard to the actual purpose
for which the card is used, namely, business or otherwise."
Archer, slip op. at p. 18. Relying upon the
definition of "cardholder" in section 1747.02(d) and
certain legislative history, the Court held that "credit cards
issued for business purposes are excluded from the privacy
protection afforded under section 1747.08." Id.
at p. 17. However, because 1747.02(d) focuses on the purpose
for which the card was "issued," as opposed to
"used," the Appellate Court found that section 1747.08
applies to consumers who are issued credit cards for consumer
credit purposes without regard to the purpose for which the card is
actually used.
Division One reversed the order denying class certification and
remanded the matter to the trial court to conduct further
proceedings on the question of whether a class of personal credit
card holders could be ascertained, and thus certified. (The
Court noted that the parties' treated the CLRA and SBCCA claims
as the same in the context of the appeal and did not address any
additional issues related to the CLRA claim.)
In sum, the Archer opinion impacts the size of putative
classes under Song-Beverly. It stands for the proposition that
putative classes under Song-Beverly cannot include consumers who
used credit cards that were issued for business
purposes. Further, it confirms that UCL claims in the context
of Song-Beverly violations are subject to summary adjudication,
under Proposition 64's standing requirement that a plaintiff
show "injury in fact" through the loss of money or
property.
The second case, Folgelstrom v. Lamps Plus, Inc., involved
an appeal based on a judgment that was entered after demurrers to
the plaintiff's SBCCA, invasion of privacy, and UCL claims were
sustained by the trial court (Anthony J. Mohr, J.), without leave
to amend. Division Five reversed Judge Mohr as to the
Song-Beverly claim, in light of Pineda (the complaint
alleged requests for zip codes). However, the Appellate Court
affirmed the judgment as to the invasion of privacy and UCL
claims. Folgelstrom v. Lamps Plus, Inc. (May 20,
2011, B221376) ___ Cal. App.4th ___, [2011 WL 1902202, 2011 DJDAR
7276].
With reference to the constitutional invasion of privacy claim,
Division Five was not convinced that plaintiff had alleged facts
demonstrating a protected privacy interest in his home
address. But in any event, plaintiff had not alleged facts
showing a "serious" invasion of privacy. Allegations
that the retailer had obtained plaintiff's address without his
knowledge or permission, and mailed him coupons or other
advertisements, is not "an egregious breach of social norms,
but routine commercial behavior." Folgelstrom,
slip op. at pp. 5-6.
In addressing the common law tort of invasion of privacy, Division
Five looked to § 652B of the Restatement Second of Torts,
which has been adopted in California. The Court determine that
the intrusion as well as the use of the information obtained from
the plaintiff must be "highly offensive." No facts
were alleged showing any offensive or improper use. The Court
dismissed the plaintiff's argument that he was subject to an
increased risk of identity theft.
As in Archer, the Folgelstrom Court found that
the UCL claim failed under Kwikset and Proposition
64's requirement that the plaintiff suffer economic injury in
fact and loss of money or property. The Court rejected the
plaintiff's novel arguments that he had lost intellectual
property rights in his home address and that he failed to
demonstrate that he suffered any economic injury, lost money, or
lost property.
Thus, within the span of a few days, the Second District Court of
Appeal has published two important Song-Beverly decisions that put
the brakes on attempts to over-plead cases involving requests for
personal information from credit card customers.
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