California Ruling Sets Off More Credit Card Suits

February 16, 2011 – In The News
CNBC

The California Supreme Court's recent decision to bar merchants from requesting customer zip codes has set off a frenzy of class action lawsuits against big-name retailers. According to David F. Faustman, the decision is wreaking havoc for retailers doing business in California. "It's a very unfortunate opinion that's going to plague retailers who collect zip codes for very innocent purposes that have nothing to do with tracking somebody down," Faustman said. "And the potential damages are just massive, amounting to a violation of due process."

In 2008, Faustman successfully represented Party City in a similar class action suit. As the plaintiffs were unable to prove Party City was using customers' zip codes to track down their home addresses, the California appeals court ruled merchants could collect zip codes under the statute. With the most recent ruling, however, Faustman now has to defend Party City again in the same conduct in a class action suit filed in Los Angeles Superior Court. Faustman said the court's recent decision forces defense lawyers to shift their focus and come up with creative new arguments about the scope of damages and the propriety of certifying a class.

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