Defense Motion for Summary Judgment in Song-Beverly Class Action should have been Granted because Zip Codes do not Constitute “Personal Identification Information” within the Meaning of Song-Beverly Act California State Appellate Court Holds
Plaintiff filed a class action against Party City alleging violations of California’s Song-Beverly Act, Cal. Civ. Code, § 1747 et seq.; specifically, the class action complaint asserted that the retailer requested zip codes from customers in connection with credit card purchases, and alleged that this violated Song-Beverly which, inter alia, prohibits retailers from seeking “personal identification information” in connection with credit card/debit card purchases. Party City v. Superior Court, 169 Cal.App.4th 497 (Cal.App. 2008) [Slip Opn., at 3]. According to the allegations underlying the class action, plaintiff made a purchase at defendant’s store and the cashier “asked for and recorded her five-digit zip code before completing her credit card transaction.” Id. The class action alleged that a zip code constituted “personal identification information” within the meaning of Song-Beverly, and that defendant used its customers’ zip codes “to further its own business purposes, including target marketing to increase product sales.” Id., at 4. Defense attorneys moved for summary judgment on the ground that zip codes are not “personal identification information” within the meaning of the statute, and that defendant’s cashier did not require plaintiff to provide her zip code as a condition to using her credit card to purchase merchandise, id., at 5. The trial court denied the motion. Id., at 2. Defense attorneys filed a petition for writ of mandate with the California Court of Appeal, id. The appellate court granted the petition and reversed the trial court, ordering that summary judgment be entered in favor of Party City in the putative class action.
Federal regulations define the Zone Improvement Plan (ZIP) Code system as “a numbered coding system that facilitates efficient mail processing.” Party City, at 6, n.4. The defense argument was two-fold. First, Party City submitted evidence that it “trains its cashiers to ask for the customer’s zip code before the type of payment is known, and to enter ‘99999’ into the register if the customer does not provide a zip code, and then to complete the transaction.” Id., at 5 (footnote omitted). The appellate court found it unnecessary to address this aspect of the defense motion because its interpretation of “the definitional issue” compelled judgment in favor of Party City. See id., n.3. Second, and the “key issue” identified by the appellate court, the defense argued that a zip code does not constitute “personal identification information” within the meaning of Song-Beverly. Id., at 5. Party City explained in its summary judgment motion that it “use[d] zip code information requested from customers for demographic purposes, to send promotional mailer to various zip codes throughout the country.” Id., at 5-6 (footnote omitted). To prove the point, defense attorneys submitted evidence that as of the year 2000, there were 25,000 individual addresses that shared plaintiff’s zip code and 27,500 individual addresses that shared the zip code of the trial court. Id., at 6. Moreover, Party City assures that “zip code information is made available only to the company’s marketing department, and zip code data is transmitted there alone, without customer names or credit card numbers.” Id. Further, “the company does not maintain a system or database that would allow it to locate a particular California customer’s address or phone number utilizing only zip code, name or credit card number.” Id., at 6-7.
The trial court found it “clear and unambiguous” that zip codes fall within Song-Beverly’s definition of “personal identification information.” Party City, at 7. The Court of Appeal disagreed. It began by noting that the issue it was addressing was a “narrow” one, see id., at 9, and followed with a detailed discussion of the general principals governing statutory interpretation and the legislative intent behind Song-Beverly, as well as case law interpreting Song-Beverly (none of which “answer the question of what definition should be given with regard to zip codes under the Act”), see id., at 11-22. On this point, the appellate court observed that “a zip code is not of itself specific or personal information about an individual, but rather it serves as a group identifier about location; in this case, the individual is one of some 24,000 addresses there.” Id., at 24. Moreover, the evidence showed that Party City “does not match zip codes with credit card numbers,” id.
Plaintiff argued that it was irrelevant whether Party City uses the zip codes to obtain specific information (an act known as “data mining”). Party City, at 24. The appellate court disagreed. Based on the “plain language” of the statute, and federal regulations concerning zip codes, zip codes are not “personal identification information”: “A zip code is not an address, but only a portion of it, and knowing a stand-alone zip code has not been shown to be potentially more helpful in locating a specific person than knowing his or her state or county of residence. A zip code is not an individualized set of identification criteria, such as telephone numbers would be, but rather zip codes provide identification of a relatively large group, on the present record.” Id., at 28. In sum, the Court held at page 28, “A five-digit zip does is not, as a matter of law, that kind of personalized or individual identification information within the statutory terms [of Song-Beverly].” Accordingly, it granted the petition for writ of mandate and ordered the trial court to enter summary judgment in favor of Party City, id., at 34.
NOTE: California Civil Code Section 1747.08(a)(2) provides that a retailer may not “request, or require as a condition to accepting the credit card as payment…, the cardholder to provide personal identification information” which the retailer “writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.”