making sense of the california song-beverly · pdf filediscussion of potential legislative...
TRANSCRIPT
Wednesday March 2 2011
Making Sense of the California Song-Beverly Act:
What Retailers Need to Know About Collecting Personal Information in
Credit Card Transactions
©2011 Fulbright & Jaworski L.L.P.
Wednesday, March 2, 2011Web Seminar
Speakers
Bill DombrowskiPresident and CEO
California Retailers [email protected]
+1 916 443 1975
James R. EvansPartner, Los AngelesFulbright & Jaworski [email protected]+1 213 892 9322
©2008 Fulbright & Jaworski L.L.P.
Margaret GladsteinLobbyist
Capitol [email protected]
+1 916 444 0400
Jeffrey B. MarguliesPartner, Los AngelesFulbright & Jaworski [email protected]+1 213 892 9286
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Continuing Legal Education Information
We have applied for one hour of California, Minnesota, Texas, and Virginia CLE and New York non-transitional CLE credit. Newly admitted New York attorneys may not receive non-transitional CLE credit. For attendees in other states, we will supply a certificate of attendance that may be used to apply for CLE credit with the applicable bar or other pp y ppaccrediting agency.
Fulbright will supply a certificate of attendance to all participants who:
1. Participate in the web seminar by phone and via the web.2. Complete our online evaluation, which we will send to you after
the web seminar (required by some states).
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Administrative Information
Today’s program will be conducted in a listen-only mode. To ask an online question at any time throughout the program, simply click on the question mark icon located on the tool bar in the bottom right side of your screen. We will try to answer your question during the session.
Everything we say today is opinion. We are not dispensing legal advice, and listening does not establish an attorney-client relationship. This discussion is off the record. You may not quote the speakers without our express written permission. If the press is listening, you may contact us, and we may be able to speak on the record.
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OVERVIEW AND INTRODUCTION
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Goals of This Presentation
Understanding What Retailers Can Do Under Current Law
Understanding the Pineda decision and its implications
Understanding Potential Issues Relating to Point of Sale Practices
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Goals of This Presentation
Understanding Potential Implications for Internet Retailing
Developing Practices/Strategies to Best Defend Against Lawsuits
Discussion of Potential Legislative Action
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An Overview Of Section 1747.08
No one that accepts credit cards for the transaction of business shall:● Request or require the cardholder to write any personal
identification information upon transaction form or otherwise
● Request or require the cardholder to provide personal identification information which the merchant writes or records upon transaction form or otherwise
● Utilize a credit card form which contains preprinted spaces designated for personal identification information of cardholder
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What is Personal Identification Information?
Anything specific to the cardholder that is not set forth on the credit card● Name
● Address [or any portion of it]● Address [or any portion of it]
● Phone Number
● E-mail address
● Driver’s license number
● Date of birth
● Anything else unique to the cardholder
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The Exceptions
“Special Purpose Incidental To Credit Card Transaction”● Shipping information● Delivery● Servicingg● Installation● Special Orders
Cash Advance/Lay-Away Transactions“Contractually Obligated” or “Legally Required” To ProvideReturns
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Enforcement
Civil Penalties● Up to $250 for first violation
● Up to $1,000 for each subsequent violation
Injunction by Public Prosecutor
Potential Enforcement under Unfair Competition Law
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The Policy Issues
Legislative History
Concerns with invasion of privacy
Concerns with aggressive marketing
The technological changes since 1747.08 was adopted
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Pineda And Its Fall Out
Zip Codes Are Personal Information Subject to Civil Code section 1747.08
Ruling Applies Retroactively notwithstanding published Party City opinion
In two weeks since Pineda was published, more than 100 class action lawsuits have been filed across the state
Lawsuits challenging not only point-of-sale practices, but also online sales and gas station sales
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THE CASE LAW
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The Case Law
Powers v. Pottery Barn, Inc., 177 Cal. App. 4th 1039 (4th Dist. 2009) ● Federal CAN-SPAM Act does not preempt an action
alleging that collecting email violates Song-Beverly Act
The TJX Companies Inc v Superior Court 163 CalThe TJX Companies, Inc. v. Superior Court, 163 Cal. App. 4th 80 (4th Dist. 2008) (reh’g denied)● One year statute of limitations applies to 1747.08
transactions because penalties are mandatory
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The Case Law
Saulic v. Symantec Corp., 596 F. Supp. 2d 1323 (S.D. CA 2009)● Interpreting California law, District Court ruled that online
transactions not subject to Civil Code section 1747.08Watkins v. Autozone Parts, Inc., 2009 U.S. Dist. LEXIS 89745 (S.D. Cal. Sept. 29, 2009) ( p , )● 1747.08 does not prohibit collection of personal identifying
information in connection with warranty registrationLinder v. Thrifty Oil Co., 23 Cal. 4th 429 (2000) ● The civil penalty provision of the Song-Beverly Credit Card Act
of 1971 does not mandate fixed penalties; rather, it sets maximum penalties of $250 for the first violation and $1,000 for each subsequent violation, thus providing an entire range of available penalties
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The Case Law
Shabaz v. Polo Ralph Lauren Corp., 586 F. Supp. 2d 1205 (2008, CD Cal.)● District Court rules that consumer has no right to jury trial because
1747.08 is not compensatory—pure penalty
Florez v. Linens 'N Things, Inc., 108 Cal. App. 4th 447 (2003, Cal. App. 4th Dist.), review deniedApp. 4th Dist.), review denied ● retailer cannot avoid application of 1747.08 by asking for phone
number before ringing up purchases on a credit card● Section 1747.8 “is remedial in nature and in the public interest [and]
is to be liberally construed to the end of fostering its objectives.”
Korn v. Polo Ralph Lauren Corp. (2008, ED Cal.) 2008 U.S. Dist. LEXIS 47034 (injunctive relief not available in consumer’s action)● Contra: B&P 17200
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The Case Law—Florez
Florez dictum is helpful to retailers who “unlink” (make clear that there is no nexus between) the request for information and the credit card transaction:
“As evidenced by the 1991 amendment, section 1747.8 is designed to prevent a ‘request’ for personal information, because a customer might perceive that request as a condition of credit card payment.” Id at 453.
Under no circumstances should the information be requested before the transaction is complete:p“…the 1991 amendment simply clarified that a "request" for personal identification information was prohibited if it immediately preceded the credit card transaction, even if the consumer's response was voluntary and made only for marketing purposes.”
“Based on our review, we conclude the addition of the word ‘request’ to section 1747.8 bars a preliminary request for personal identification information.”
Requesting the information after the transaction is completed, and then linking it to the transaction, will run afoul of Flores:“The obvious purpose of the 1991 amendment was to prevent retailers from ‘requesting’ personal identification information and then matching it with the consumer's credit card number.”
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NOW WHAT?
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Potential Legislative Solutions
The importance of collective effort
Bill DombrowskiPresident and CEO
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California Retailers [email protected]+1 916 443 1975
How Do You Solve A Problem Like Pineda?
The separation of the sales transaction
No pre-transaction requests for PII for any reason other than for authorized purpose? Florez
Post transaction requests● Customer Loyalty Programs
● Warranty
● Mailing Lists
● No reverse appending of purchase transaction data
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Developing Defenses For Online Retailing
Symantec
Developing the “contractually obligated” argument● examining Credit Card/Retailer Agreement terms
● other contractual obligations● other contractual obligations
Developing the “special purpose” argument● fraud prevention (no card present)
● extended warranty offer
Requirements of State or Federal Law22
POST-PINEDA CLASS ACTION LITIGATION
The Lawsuits Filed Against Brick and Mortar Retailers
The Attack on Internet Retailing
The Attack on PayPal
The Attack on Gas Station Sales
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Preparing For The Class Action
CAFA Removal?Coordination?Complex RulesVetting Your Judge
d l h● Judge In A Flash
Preparing for the Class Certification Motion● The plaintiff’s transaction data● The plaintiff’s deposition● The plaintiff and his/her attorney
Background investigationApple issues
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Preparing For The Class Action
• Developing Individualized IssuesGathering Company Policy Documents concerning the collection of data
Understanding the point of sale transaction sequence
Point of sale disclosures (oral and written)
C i li iCompany privacy policies
Understanding the use of the data collected from consumers
Identifying the key employees
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Questions?
Bill DombrowskiPresident and CEO
California Retailers [email protected]
+1 916 443 1975
James R. EvansPartner, Los AngelesFulbright & Jaworski [email protected]+1 213 892 9322
©2008 Fulbright & Jaworski L.L.P.
Margaret GladsteinLobbyist
Capitol [email protected]
+1 916 444 0400
Jeffrey B. MarguliesPartner, Los AngelesFulbright & Jaworski [email protected]+1 213 892 9286
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Continuing Legal Education Information
If you are requesting CLE credit for this presentation, please record the number given during the program and respond to the survey that Fulbright will email within the next day.
Completion of the above-mentioned survey is required in i b i C dicertain states to obtain CLE credit.
If you are viewing a recording of this web seminar, most state bar organizations will only allow you to claim self-study CLE credit. Please refer to your state's CLE rules. If you have any questions regarding CLE approval of this course in your applicable bar, please contact your bar administrator.
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