Song-Beverly Does Not Prohibit Collection of Personal Information for Online Alcohol Purchase

In Ambers v. Beverages & More, Inc., the Second District California Court of Appeal held that the Song-Beverly Credit Card Act’s prohibition on collecting personal identifying information (PII) during credit card transactions does not apply to online purchases that are later picked up from retail stores if requesting a customer’s PII is necessary to prevent fraud.

In Ambers, plaintiff filed an unverified class action complaint against defendant Beverages & More (BevMo) alleging violations of section 1747.08 of Song-Beverly. BevMo required plaintiff to provide PII as a condition of completing his online purchase of alcohol, which would later be picked up at a BevMo store. Plaintiff alleged that BevMo’s online request for his PII was unnecessary to prevent fraud because he was required to show identification at the retail store before receiving his merchandise. BevMo demurred, arguing that pursuant to its website’s terms and conditions, plaintiff’s transaction was completed at the moment of purchase. Thus, the PII was necessary to prevent fraud and the transaction fell under the exception set forth in subdivision (c)(4) of the Song-Beverly Act. The trial court sustained the demurrer without leave to amend. Plaintiff appealed.

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9th Circuit Analyzes Securities Exception to CAFA Removal

In Eminence Investors, LLLP v. Bank of New York Mellon, the 9th Circuit applied the securities exception to defendant's removal under the Class Action Fairness Act ("CAFA") and dismissed plaintiff's appeal of the remand order.

In Eminence, plaintiff sued defendant in 2011, later amending its complaint to assert class allegations for breach of fiduciary duty and gross negligence, among other things, as holders of bonds on which defendant was the fiduciary, seeking damages in excess of $10 million for each of four causes of action.  Defendant timely removed the amended complaint under CAFA.  The district court granted plaintiff's motion to remand, holding that the removal was untimely, but not reaching the question of whether the securities exception to CAFA applies.  Defendant sought to appeal under 28 U.S.C. 1453(c)(1).

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9th Circuit Holds CAFA Can Provide a Second Removal Period

In Jordan v. Nationstar Mortgage LLC, the 9th Circuit held that the Class Action Fairness Act ("CAFA") provides a 30-day removal period from the date the grounds for removal under CAFA are ascertainable, even if an earlier pleading revealed a basis for federal removal jurisdiction.

In Jordan, plaintiff sued defendant in a putative class action in state court, alleging, among other things, violation of the Fair Debt Collection Practices Act.  The state court certified a class on May 9, 2014.  On June 3, 2014, plaintiff served responses to defendant's discovery that asserted total damages in excess of $25,000,000.  Two days later, defendant removed the case to federal court based on CAFA.  Plaintiff moved to remand, arguing that defendant's removal was untimely because it could have, but did not, remove the original complaint based on federal question jurisdiction when it was filed two years prior.  Defendant asserted that the June 2014 discovery responses were the first paper that revealed grounds for removal under CAFA, and that the prior grounds for removal were not a bar to a later removal once CAFA's requirements had been met.  The district court remanded the case back to state court, and awarded plaintiff attorney's fees for the remand motion.  Defendant applied to appeal under 28 U.S.C. 1453(c), which permits review of remand orders under CAFA.

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9th Circuit: Class Certification Triggered New CAFA Removal Period

In Reyes v. Dollar Tree Stores, Inc., the 9th Circuit held that a state court's order certifying a class that met the requirements of removal under the Class Action Fairness Act ("CAFA") created a new occasion for removal.

In Reyes, defendant removed the wage-and-hour case to federal court in 2012 based on CAFA.  Plaintiff moved to remand, asserting that the narrow definition of the proposed class did not satisfy CAFA's $5 million amount-in-controversy requirement.  The district court granted the motion and remanded the case to state court.  The state court later entered an order certifying a class based on a broader class definition, for which the amount in controversy exceeded $5 million.  Defendant removed again under CAFA.  The district court held that this second removal was untimely because it was based on the same complaint as the first removal.  Defendant applied to appeal under 28 U.S.C. 1453(c), which permits review of remand orders under CAFA.

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CFPB Arbitration Study Revives Consumer Arbitration Policy Debate

The Arbitration Study issued last month by the Consumer Financial Protection Bureau revives a long-standing policy debate over consumer arbitration.

The CFPB Arbitration Study, mandated by Dodd-Frank, analyzes the prevalence of consumer arbitration, consumer knowledge and understanding of arbitration provisions, procedural rules in arbitration, and empirical data on arbitration experiences as compared to federal and state court.  The Study also compares alternatives, including small claims court, class actions, public enforcement actions, and analyzes credit pricing in the context of pre-dispute arbitration clauses.  The stated purpose of the Study is to provide empirical, not evaluative, analysis of consumer arbitration issues.

Court of Appeal Upholds Dismissal of Song-Beverly Class Action

In Lewis v. Safeway, Inc., the First District California Court of Appeal held that collecting and recording a customer's date of birth in connection with the sale of alcohol is not a violation of the Song-Beverly Act's prohibition on collecting personally identifiable information in a credit card transaction.

In Lewis, plaintiff filed a putative class action alleging that defendant collected and recorded his birthdate when he purchased alcohol at the store, in violation of section 1747.08(a)(2) of the Song-Beverly Act.  Defendant demurred, arguing, among other things, that collection of personally identifiable information in connection with the purchase of alcohol fell within an exception to the statute for an obligation imposed by law.  The trial court granted the demurrer, and denied leave to amend.  Plaintiff appealed.

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California Appellate Court Examines Ascertainability Standard and Reverses Denial of Class Certification

California's Third Appellate District recently reversed an order denying class certification because it found that the lower court used an inappropriate standard in concluding the class was not ascertainable. In Aguirre v. Amscan Holdings, Inc., the lower court's order stated that, in order to show that the class was ascertainable, the putative class representative was required to establish a means to identify, locate and notify members of the class through reasonable expenditure of time and money. The appellate court rejected this standard for ascertainability, and reversed and remanded because this standard had been used to reach the lower court's conclusion.

Plaintiff Dione Aguirre sued Amscan Holdings, doing business as Party America, for violations of §1747.08 of the Song Beverly Credit Card Act of 1971. Aguirre alleged that Party America routinely requested and recorded zip codes from customers using credit cards to pay for their transactions at Party America's retail stores. Aguirre sough to represent a class of similarly-situated Californians.

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California Court of Appeal Holds Unconscionable Arbitration Provisions are Severable

In Trabert v. Consumer Portfolio Services, Inc., the Fourth District California Court of Appeal reversed a trial court order and held that certain unconscionable provisions of an arbitration agreement should be severed, and the remainder of the arbitration agreement should be enforced.

In Trabert, plaintiff purchased a car with an industry standard form installment sales contract.  The dealer assigned the contract to defendant Portfolio.  Defendant repossessed plaintiff's car, and plaintiff filed a putative class action alleging that defendant's default notices violated California's Unfair Competition Law (Bus. & Prof. Code § 17200) as well as California's Consumer Legal Remedies Act ("CLRA") (Civ. Code §1750 et seq.).  Defendant moved to compel arbitration pursuant to the sales contract.  The trial court denied the motion, finding two provisions of the arbitration agreement unconscionable.  Defendant appealed, and the Court of Appeal held that certain provisions were unconscionable, and others were not, and remanded for the trial court to determine whether the unconscionable provisions could be severed.  On remand, the trial court denied defendant's motion to sever.  Defendant appealed again.

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U.S. Supreme Court Holds TILA Rescission Does Not Require Suit

In Jesinoski v. Countrywide Home Loans, Inc., the U.S. Supreme Court held that only written notice is required, and a borrower need not file suit, to rescind a loan under the Truth in Lending Act (TILA).

In Jesinoski, borrowers refinanced their mortgage with Countrywide in February 2007.  Within three years, they mailed Countrywide a letter to rescind the loan.  The lender denied the validity of the rescission, and in February 2011, four years and one day after the date of the loan, borrowers filed suit in federal court for a declaration of rescission.  The district court granted the lender's Motion for Judgment on the Pleadings, holding TILA requires a borrower to file suit within three years of a loan in order to rescind: since borrowers had provided notice of rescission within three years, but did not file suit until more than four years after the date of the loan, their claim was time-barred.  Borrowers appealed; the Eighth Circuit affirmed

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U.S. Supreme Court Holds CAFA Removal Notice Need Not Include Evidence of Amount in Controversy

Overturning Tenth Circuit precedent, the U.S. Supreme Court recently held that the Class Action Fairness Act of 2005, or "CAFA," does not require that a party seeking removal to federal court submit with its notice of removal evidentiary support of the amount in controversy. Rather, the high court held in Dart Cherokee Basin Operating Co., LLC v. Owens, CAFA requires the removal notice include only a plausible allegation of the amount in controversy. The Court also clarified that, contrary to Tenth Circuit precedent, there is no presumption against CAFA removal: Congress intended CAFA to facilitate the adjudication in federal court of certain types of class actions. 

Owens filed a putative class action in a Kansas state court. The defendant, Dart, removed the action to a federal district court under CAFA. CAFA permits the removal to federal court of certain state law class actions filed in state court, even if there is not the "complete diversity" that is otherwise required for federal diversity jurisdiction. In order for an action to qualify for CAFA removal, three requirements must be met. First, there must be at least 100 class members. Second, there must be so-called minimal diversity, as defined by CAFA itself. And finally, there must be at least $5 million in controversy.

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