Flores v. Chevron U.S.A. Inc. , 158 Cal. Rptr. 3d 242 ( 2013 )

Filed 6/20/13
CERTIFIED FOR PUBLICATION
IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
DIVISION ONE
JOHN FLORES III, et al., B240477
Plaintiffs and Appellants, (Los Angeles County
Super. Ct. No. BC455706)
v.
CHEVRON U.S.A. INC.,
Defendant and Respondent.
APPEAL from judgment of the Superior Court of Los Angeles County. John S.
Wiley, Jr., Judge. Affirmed.
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).)1 We therefore affirm the judgment.
BACKGROUND
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.
1
All subsequent statutory references are to the Civil Code.
2
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, 2011.2
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
2
The parties dispute whether the amendment applies retroactively and, perhaps
equivalently, whether the amendment merely clarified rather than modified existing law.
Because we resolve the appeal on other grounds, it is not necessary for us to address
those issues, and we express no opinion on them.
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“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 of Chevron on March 19, 2012, and plaintiffs timely
appealed.
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STANDARD OF REVIEW
We review the trial court‟s ruling on a motion for summary judgment de novo.
(Buss v. Superior Court (1997) 16 Cal. 4th 35, 60.)
DISCUSSION
Plaintiffs argue that the trial court erred by concluding that Chevron‟s
conduct is covered by the “special purpose” exception under subdivision (c)(4) of
section 1747.08. We disagree.
Plaintiffs argue that the exception applies only if personal identification
information “is required for the completion of the transaction.” Because Chevron admits
that in the past it has accepted and at some locations it still accepts credit card payments
without requesting or requiring personal identification information, Chevron admits that
credit card transactions can be completed without such information. Thus, according to
plaintiffs, the exception does not apply, because the undisputed facts show that personal
identification information is not required to complete the credit card transaction.
The argument lacks merit because the exception is not limited to circumstances in
which personal identification information is required to complete the credit card
transaction. Rather, the exception applies if personal identification information “is
required for a special purpose incidental but related to the individual credit card
transaction.” (§ 1747.08, subd. (c)(4).)
Plaintiffs also argue that preventing fraud is insufficiently similar to the
special purposes that the statute expressly lists, namely, “shipping, delivery, servicing,
or installation of the purchased merchandise, or for special orders.” (§ 1747.08,
subd. (c)(4).) On that basis, plaintiffs conclude that preventing fraud is not a “special
purpose incidental but related to the individual credit card transaction” within the
meaning of the statute. (Ibid.)
We are not persuaded. The statute says that the relevant special purposes
include but are not limited to those listed. (§ 1747.08, subd. (c)(4).) Preventing fraud is
incidental but related to the individual credit card transaction. It is incidental in that,
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as plaintiffs point out, it is possible for the seller to complete the transaction without
attempting to ensure that the transaction is not fraudulent. But it is related to the
individual credit card transaction in that the seller is trying to ensure that that particular
transaction is not fraudulent. Preventing fraud is therefore sufficiently similar to
shipping, delivery, and the other enumerated purposes—it is a special purpose incidental
but related to the individual credit card transaction. (See City of Santa Ana v. City of
Garden Grove (1979) 100 Cal. App. 3d 521, 528 [“expressio unius est exclusio alterius”
does not apply, because the statute says “but not limited to”].)
Plaintiffs have failed to show that the trial court erred in its application of the
“special purpose” exception under subdivision (c)(4) of section 1747.08. We therefore
affirm the judgment in favor of Chevron, and we express no opinion on the other issues
raised by the parties.3
3
The Supreme Court‟s most recent case concerning section 1747.08 is Apple Inc. v.
Superior Court (2013) 56 Cal. 4th 128 (Apple), which held that “section 1747.08 does not
apply to online purchases in which the product is downloaded electronically.” (Apple,
supra, 56 Cal.4th at p. 133.) Apple expressly limited its holding to such online purchases,
so it does not govern the instant case. (See, e.g., id. at pp. 133, 143, 150.) In addition,
because of the procedural posture of the case, the Court in Apple assumed the truth of
the plaintiff‟s allegation that the defendant did not collect personal identification
information for any special purpose incidental but related to the individual credit card
transaction. (Id. at p. 134.) The “special purpose” exception under subdivision (c)(4)
of section 1747.08 was consequently not at issue, and the Court did not analyze its
applicability; in particular, the Court did not consider the question of whether preventing
fraud is a “special purpose” within the meaning of the exception. Finally, we note that in
discussing the legislative history of the 2011 amendments to the Credit Card Act, the
Court quoted “an Assembly analysis of proposed Senate amendments,” which noted that
“„this bill simply creates an express exemption in current law from the prohibition on
collecting zip code information in a retail credit card transaction at a motor fuel dispenser
so long as the zip code information is used to prevent fraud, theft or identity theft,‟ an
exemption that „the courts may determine in current litigation . . . always existed.‟
[Citation.]” (Apple, supra, 56 Cal.4th at p. 146, italics added in Apple.) Apple and the
Assembly analysis it quoted thus foreshadowed the determination we make in this case.
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DISPOSITION
The judgment is affirmed. Respondent shall recover its costs of appeal.
CERTIFIED FOR PUBLICATION.
ROTHSCHILD, J.
We concur:
MALLANO, P. J.
JOHNSON, J.
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