California Court of Appeals, Second District, First Division
APPEAL from judgment of the Superior Court of Los Angeles County No. BC455706, John S. Wiley, Jr., Judge.
Schwartz Law, P.C. and Jeffrey M. Schwartz for Plaintiffs and Appellants.
Jones Day, Paul F. Rafferty, Eric M. Kennedy, and Rhianna S. Hughes for Defendant and Respondent.
John Flores III and other named plaintiffs appeal from the summary judgment entered against them in their class action for violation of the Song-Beverly Credit Card Act of 1971 (Credit Card Act or Act). Plaintiffs allege that defendant Chevron U.S.A. Inc. (Chevron) violates the Act by sometimes requiring customers to provide their ZIP codes when buying gasoline with credit cards.
The undisputed facts show that Chevron requires ZIP codes only in pay at the pump transactions at locations where there is a high risk of fraud, uses the information only to prevent fraud, and purges the information shortly after the credit card transactions are reconciled. We agree with the trial court that Chevron’s conduct does not violate the Act, because the personal identification information “is required for a special purpose incidental but related to the individual credit card transaction, ” namely, the purpose of ensuring that the individual credit card transaction is not fraudulent. (Civ. Code, § 1747.08, subd. (c)(4).) We therefore affirm the judgment.
Under the Credit Card Act, “no person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall... [r]equest, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to write any personal identification information upon the credit card transaction form or otherwise, ” subject to certain exceptions. (§ 1747.08, subd. (a)(1).) On February 10, 2011, the Supreme Court held that ZIP codes constitute “personal identification information” within the meaning of the Act. (Pineda v. Williams-Sonoma Stores, Inc. (2011) 51 Cal.4th 524, 527 (Pineda).) In so doing, the Court disapproved a prior Court of Appeal decision that had reached the opposite conclusion. (Pineda, supra, 51 Cal.4th at p. 534.)
Less than two weeks after the Supreme Court decided Pineda, Flores and other named plaintiffs filed the instant class action against Chevron and other oil companies. The operative second amended complaint alleges a single claim under the Credit Card Act. Plaintiffs allege that when they and the members of the putative class used credit cards to buy gasoline at defendants’ gas stations, defendants violated the Act “by requiring class members to write down their zip codes as a condition to accepting their credit card as payment.”
Also in the wake of Pineda, the Legislature passed a series of amendments to the Credit Card Act. In particular, the Legislature added subdivision (c)(3)(B) to section 1747.08, stating that the prohibition on requesting or requiring personal identification information does not apply if “[t]he person, firm, partnership, association, or corporation accepting the credit card in a sales transaction at a retail motor fuel dispenser or retail motor fuel payment island automated cashier uses the Zip code information solely for prevention of fraud, theft, or identity theft.” The Governor signed the amendment into law on October 9, 2011.
The following month, plaintiffs filed their second amended complaint. It proposes definitions of several subclasses (one for each oil company defendant). Each proposed subclass is limited to persons whose “personal identification information was used for a purpose other than solely for prevention of fraud, theft, or identity theft.” As already noted, however, the second amended complaint also alleges that defendants violated the Credit Card Act by requiring putative class members (including the named plaintiffs) to provide ZIP codes as a condition of completing their credit card transactions, regardless of the purpose for which the ZIP codes were used.
Chevron moved for summary judgment on multiple grounds. In particular, Chevron argued that its conduct did not violate the Credit Card Act because it fell within a statutory exception that preceded Pineda. Under section 1747.08, subdivision (c)(4), requesting or requiring personal identification information does not violate the Act “if personal identification information is required for a special purpose incidental but related to the individual credit card transaction, including, but not limited to, information relating to shipping, delivery, servicing, or installation of the purchased merchandise, or for special orders.” Chevron argued that its use of personal identification information was required for the special purpose of preventing fraud.
Chevron contended in support of its motion—and plaintiffs expressly conceded—that all of the following facts are undisputed: When buying gas at a Chevron station in California, customers can either pay at the pump or pay inside the service station. Customers paying at the pump with a credit card may be asked to “enter their ZIP code into an electronic keypad for fraud prevention purposes, ” but “[o]nly Chevron stations located in high fraud areas or that have experienced high levels of fraud prompt customers to enter their ZIP codes at the pump.” When Chevron began requesting ZIP codes for pay-at-the-pump credit card transactions in high fraud areas, it thereby reduced the number of fraudulent transactions by over 80 percent. “Since it began asking for ZIP codes at the gas pump, Chevron has never used that information for any purpose other than fraud prevention.” “Chevron does not use customer ZIP codes for any other reason except to prevent/reduce fraud. Specifically, Chevron does not use ZIP codes for any marketing purpose; does not sell, transfer, assign, or provide access to customers’ personal information to any third party; and does not use this information to solicit customers in any manner nor to promote its products.” Chevron’s “Settlement Team” purges the ZIP code information from its records “after 90 days once Chevron reconciles all credit card transactions.” Again, plaintiffs expressly conceded that all of the foregoing facts are undisputed.
The trial court granted Chevron’s motion on the ground that the “special purpose” exception under subdivision (c)(4) of section 1747.08 applies to Chevron’s conduct. The court entered judgment in favor ...