9th Cir. Asks California Supreme Court To Clarify State's Credit Card Data Law

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By Katie W. Johnson

May 6 — The U.S. Court of Appeals for the Ninth Circuit May 5 certified to the California Supreme Court a question on the scope of the Song-Beverly Credit Card Act's application to the collection of personal identification information at the time of credit card transactions.

The Ninth Circuit, in a per curiam order, attempted to answer whether the state statute “prohibits a retailer from requesting a customer's personal identification information (PII) at the point of sale after the customer has paid with a credit card, even if it would not be objectively reasonable for the customer to construe the request to mean that providing PII is required to pay by credit card.”

The appeals court, however, found no controlling precedent and said the Song-Beverly Act's language and legislative history were ambiguous.

“The answer to this question could have a significant impact on the practices of thousands of California retailers, as a broad construction of Song-Beverly could prohibit many retailers' practice of requesting PII from customers immediately after they have completed a credit card transaction,” the Ninth Circuit said.

For this reason, the Ninth Circuit said intervention by the state's highest court was necessary.

ZIP Code Requested 

Plaintiff Tammie Davis visited one of defendant Devanlay Retail Group Inc.'s retail clothing stores in California. As she was placing her credit card back in her purse after paying for an item, the cashier asked her for her ZIP code, according to the Ninth Circuit.

Davis filed a putative class action against Devanlay, alleging that the company violated the Song-Beverly Act by requesting and recording the PII of customers who pay with credit cards.

Under the Song-Beverly Act, Cal. Civ. Code § 1747.08(a)(2), an entity that accepts credits cards for business transactions can't “request, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information.”

In December 2012, a federal district court granted summary judgment in favor of Devanlay. Looking at the statute objectively, the district court said that “Devanlay's policy of waiting until the customer has her receipt in hand conveys that the transaction has concluded and that providing a zip code is not necessary to complete the transaction.”

Objective Test?

But the Ninth Circuit said the Song-Beverly Act and the state case law interpreting it aren't quite so clear. It said it was “uncertain whether district courts are correctly applying California law in construing Song-Beverly to require an objective test of consumer perceptions.”

Davis, in appealing, argued that the statute forbids retailers from requesting PII at the point of sale when a customer pays with a credit card irrespective of the customer's reasonable perception of whether the request was a condition of the credit card transaction. The appeals court said there is support for the appellant's argument and the district court's application of an objective test.

Notably, the Ninth Circuit said it was unclear whether the statute's clause “as a condition to accepting the credit card” modifies the preceding word “request.”

The panel therefore certified the following question to the California Supreme Court:

Does section 1747.08 of the California Civil Code prohibit a retailer from requesting a customer's personal identification information at the point of sale, after a customer has paid with a credit card and after the cashier has returned the credit card to the customer, if it would not be objectively reasonable for the customer to interpret the request to mean that providing such information is a condition to payment by credit card?


Judges Consuelo M. Callahan, Milan D. Smith Jr. and Paul J. Watford served on the panel.

Stonebarger Law and Patterson Law Group represented Davis. Call & Jensen PC represented Devanlay.

To contact the reporter on this story: Katie W. Johnson in Washington at kjohnson@bna.com

To contact the editor responsible for this story: Donald G. Aplin at daplin@bna.com

Full text of the court's opinion is available at http://www.bloomberglaw.com/public/document/Davis_v_Devanlay_Retail_Group_Inc_No_1315063_2015_BL_130189_9th_C.


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