The U.S. District Court for the Southern District of California recently granted class certification in a Song-Beverly Credit Card Act case, refusing to exclude from the class individuals who joined the retailer’s rewards program months after the alleged Song-Beverly violation.              See               Yeoman       v. IKEA U.S. West, Inc.,  No . 11CV701 , 2012 WL 1598051 (S.D. Cal. May 4, 2012).  The Court’s discussion suggests that a retailer may also face Song-Beverly liability even if it requests personal information at the register that it already holds by virtue of the customer’s membership in its rewards program.

The allegations in Yeoman are simple – plaintiff alleges that IKEA “systematically” requested a ZIP code at the register during credit card transactions and that the plaintiff provided his ZIP code upon such request.  Such conduct, if proven, would violate the Song-Beverly Credit Card Act of 1971, Cal. Civ. Code § 1747.08, which prohibits a retailer from requesting a customer’s personal information when payment is made by credit card.  In February 2011, the California Supreme Court concluded that a retailer’s request for a ZIP code is prohibited by the statute.  See Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524, 530 (2011), which we addressed previously.

By March 2011, IKEA had stopped requesting ZIP codes at the register in order to comply with Pineda.  Later that year, around December 2011, IKEA launched a rewards program, which individuals joined by voluntarily providing a mailing address and other personal information.  IKEA sought in the Yeoman case to limit the class to exclude individuals who had joined the new rewards program, based on the argument that those class members voluntarily provided IKEA with their personal information.  The Court rejected IKEA’s argument, stating:

The Song-Beverly Credit Card Act does not provide an exception allowing a retailer to request or require the cardholder to provide personal identification information as a condition of accepting a credit card payment when the individual has previously or subsequently provided any personal information to the retailer. Such an exception would contravene one of the purposes of the Song-Beverly Credit Card Act which is to prevent store clerks from obtaining customers’ personal identification information. The Court concludes that Class definition is not overbroad on the grounds that it may include individuals who voluntarily provided their personal identification information to Ikea at some time other than in conjunction with the credit card transaction during which Ikea requested and recorded the individuals’ ZIP code information.

Yeoman, 2012 WL 1598051, at *4.

Limited to the facts of the case, Yeoman stands for the proposition that a retailer’s liability for a Song-Beverly violation should be assessed based on the facts in existence at the time of the alleged incident, and that a plaintiff’s later conduct does not excuse the retailer’s statutory violation.  However, the court’s discussion may reach further than the facts of the case.  Under Yeoman, it appears that a retailer could face Song-Beverly liability for requesting personal information at the register even if the customer “previously . . . provided” that personal information to join the retailer’s pre-existing rewards program. Yeoman therefore signals that California retailers may lose a potential defense to Song-Beverly liability, i.e., that a claim cannot be maintained where the customer previously voluntarily provided information to the retailer.  The Yeoman holding seems inconsistent with Rothman v. General Nutrition Corporation, No. CV 11-03617, 2011WL 6940490 (C.D. Cal. Nov. 17, 2011), which refused to certify a class to include individuals who had previously provided a mailing address to join that retailer’s rewards program.  See Rothman, 2011 WL 6940490, at *4 (“Plaintiff's proposed class includes individuals who voluntarily gave Defendant their personal information to join the Gold Card program . . . These individuals have not suffered a violation of the Act, and are not proper members of a class seeking redress for violations of the Act.”).  Given the seemingly-broad pronouncement of Yeoman and this potential conflict with Rothman, California retailers should remain cautious regarding their point-of-sale procedures.  Moreover, retailers outside of California should also take note of this opinion, as several states have similar laws, but which have not yet been litigated nearly as frequently or extensively as in California.