A recent decision by the US Court of Appeals for Ninth Circuit will allow a putative class action against defendant Louis Vuitton to remain in federal court. The lawsuit, Morey v. Louis Vuitton North America, Inc., Case No. 3:11CV01517 (SD Cal. July 8, 2011), alleges that Louis Vuitton violated California Civil Code § 1747.08, commonly known as the Song-Beverly Credit Card Act of 1971 (the Song-Beverly Act), by requesting credit card customers to provide personal identification information without informing the customers of the consequences if they did not provide the store with such information. 

The Song-Beverly Act prohibits businesses from requesting or requiring consumers to provide personal identification information (PII) during a credit card transaction. The Act defines PII as including the cardholder’s address and telephone number, and in a recent case, the California Supreme Court held that even ZIP codes constitute PII and cannot be requested during a credit card transaction. Class actions against Californian retailers based on alleged violations of the Act have become commonplace: Nordstrom, Williams Sonoma, Bed Bath & Beyond, Pottery Barn, and many others have been involved in suits alleging violations of the Act.

Plaintiff originally filed the case in California state court, and Louis Vuitton thereafter sought to remove the case to federal court. The federal district court denied removal, however, and remanded the case sua sponte to state court on the grounds that Louis Vuitton had not established that the matter in controversy exceeded $5 million, as required by the Class Action Fairness Act (CAFA). Under the CAFA, federal courts have jurisdiction over class actions when the amount in controversy exceeds $5 million. Louis Vuitton, the district court reasoned, had not shown the requisite amount in controversy; although Louis Vuitton had established that it processed substantially in excess of 5,000 credit card transactions during the period at issue, the district court reasoned it had jurisdiction under the CAFA only if every transaction was a violation and every violation resulted in the maximum penalty of $1,000 available under the Song-Beverly Act. Louis Vuitton sought reconsideration in the district court’s remand and submitted evidence that it had indeed processed well over 200,000 credit card transactions in California during the relevant time period, but reconsideration was denied. 

Louis Vuitton appealed to the Ninth Circuit, arguing that plaintiff’s complaint put over $5 million in controversy and that the federal court therefore has jurisdiction over the case. Louis Vuitton contended that, under the Song-Beverly Act, it was subject to penalties of $250 for the first violation, and $1000 for each subsequent violation. Given that it has processed in excess of 200,000 credit card transactions in California, it was subject to penalties well over $5 million. The Ninth Circuit agreed and reversed the remand, holding that district court’s remand was in direct conflict with numerous other cases finding removal proper under the same circumstances. The case has since been referred to Magistrate Judge Barbara Lynn Major of the US District Court for the Southern District of California. 

For more information about this case or the Song-Beverly Act, please contact Tony Lupo, Sarah Bruno, or Leah Montesano.