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Stone v. Advance America

December 4, 2009

KERRIE STONE, PLAINTIFF,
v.
ADVANCE AMERICA, CASH ADVANCE CENTERS INC., ADVANCE AMERICA, CASH ADVANCE CENTERS OF CALIFORNIA, LLC AND DOES 1 THROUGH 50, INCLUSIVE, DEFENDANTS.



The opinion of the court was delivered by: Hon. William McCurine, Jr. U.S. Magistrate Judge

ORDER RE: DISCOVERY

I. INTRODUCTION

On September 16, 2009, the Court held a telephonic discovery conference. [Doc. No. 50.] During this conference, the Court granted Defendants' request for full briefing as to the procedure to use to provide notice of the lawsuit to putative class members. Parties were required to file opening briefs no later than September 28, 2009 and reply briefs no later than October 2, 2009. [Doc. Nos. 56, 60, 61, 64, 65 and 66.]

The issue before the Court is whether an opt-out or opt-in procedure regulating precertification discovery of putative class members' contact information adequately balances Plaintiffs' need for identification information with the putative class members' right of privacy in contact information which may reveal their status as a customer of a payday lender.

II. ARGUMENTS

A. Plaintiffs' Argument

Plaintiffs argue notice to putative class members informing them of the instant lawsuit and the potential for disclosure of their contact information to Plaintiffs' counsel should include an "opt-out" provision. Plaintiffs assert an opt-out provision, rather than a more restrictive opt-in provision, adequately protects the privacy rights of putative plaintiffs with respect to the disclosure of their contact information. Specifically, Plaintiffs argue the California Financial Information Privacy Act, cited by Defendants as requiring an opt-in provision in the notice to putative class members, is inapplicable in the context of this litigation where: (1) the release of the information requested is a result of judicial process, and (2) the release of information is to one acting in a representative capacity such as Plaintiff's counsel, who is by law deemed a fiduciary to putative class members even before a class is certified. Plaintiffs' October 2, 2009 Letter Brief at 1; Cal. Fin. Code s 4056(b)(7); Cal. Fin. Code s 4056(b)(3)(E); In re GMC Pick-up Truck Fuel Tank Prod. Liability Litigation, 55 F.3d 768, 801 (3rd Cir. 1995).

Plaintiffs advocate use of the procedure discussed in the California Supreme Court's decision in Pioneer Electronics (USA), Inc. v. Superior Court, 40 Cal.4th 360, (Cal. 2007) and compliance with the optout procedure approved therein. Plaintiffs propose, under a procedure similar to the one implemented in Pioneer, that the parties jointly draft and mail a letter to the putative class members notifying them plaintiffs are seeking their names and contact information; the putative class members would have 21 days from the date of the mailing to object to disclosure; and those putative class members who did not object would have their information produced to Plaintiffs' counsel. Id. at 361, see also Plaintiff's September 14, 2009 Letter Brief at 1; September 28, 2009 Letter Brief at 2. To supplement the mailing procedure and ensure more potential class members receive notice, Plaintiffs also offer to engage a third-party administrator to cross-check undeliverable notices through the United States Postal Services NCOA database. Plaintiffs' September 28, 2009 Letter Brief at 8.

B. Defendants' Argument

Defendants argue the notice to putative class members must include an opt-in clause as ordered by a recent state court decision, Winters v. QC Fin. Servs. of California Inc., No. 37-2008-00091188-CU-BTCTL (Cal. Super. Ct., San Diego June 23, 2009) and similar to an affirmative consent option discussed in Colonial Life & Accident Ins. Co. v. Super Ct., 31 Cal. 3d 785 (1982).*fn1 Specifically, Defendants contend putative class members must be sent a notice which requires them to affirmatively consent ("opt-in") to disclosure of their personal information to Plaintiffs' counsel because the use of a payday loan service is highly sensitive, personal financial information warranting heightened protection under the California Financial Information Privacy Act. See Cal. Fin Code section 4052.5 (prohibiting financial institutions from "disclos[ing] nonpublic personal information to or with any nonaffiliated third parties without the explicit prior consent of the consumer to whom the nonpublic personal information relates.")(emphasis added.); see Cal. Fin. Code s 4052(B)(3)-(b)(4) (defining nonpublic personal information as "[a]ny information about a financial institution's consumer if it is disclosed in a manner that indicates that the individual is or has been the financial institution's consumer.")

Defendants propose notice be sent to putative class members informing them Plaintiffs' counsel is seeking their names and contact information along with a return they may fill out if they consent to the disclosure of their contact information to counsel. Defendant's September 14, 2009 Letter Brief at 1; September 28, 2009 Letter Brief at 1.Defendants contend affirmative consent to the release of customer contact information is required to protect the collective privacy interest of thousands of putative class members who may not receive notice due to an address change or failure to open the notice itself. Defendants' September 28, 2009 Letter brief at 8.

III. STANDARD OF REVIEW

Courts balance the following factors when assessing the potential intrusion of precertification discovery on the putative class members' right of privacy in their contact information: (1) if the party has a legally protected privacy interest; (2) whether the party has a reasonable expectation of privacy; and (3) whether production of the information constitutes a serious invasion of privacy. ...


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