In a victory for consumer privacy rights, the California Supreme Court recently ruled that Jessica Pineda’s rights under the Song-Beverly Credit Card Act were violated when a clerk at specialty retailer Williams-Sonoma asked for and recorded her ZIP code in connection with an in-store purchase with her credit card. The unanimous opinion, written by Justice Moreno, concluded that an individual’s ZIP code is protected “personal identification information” that businesses in California cannot request for in-store purchases with a credit card, and then record that information for purposes unrelated to approving the credit transaction. In the longer term, it is likely that information collected by retailers for authentication purposes will need to be separate and distinct from personal information collected for marketing purposes.
The Court’s well-reasoned opinion slapped two California lower courts which had ruled squarely for Williams-Sonoma. Citing Webster’s New International Dictionary, among other sources, the Supreme Court held that a consumer’s ZIP code is certainly personal identification information (“PII”) protected by the Credit Card Act. The rationale of the lower courts, including an analysis based on the obscure doctrine of ejusdem generis, was roundly rejected. The Appeals Court had argued a ZIP code is not protected PII because it pertains to a group of individuals compared to a home address and phone number, both of which are protected. Justice Moreno wasn’t impressed, pointing out that a group of individuals may well live in the same household and a home phone number may be used by multiple persons.
The Court’s analysis was premised on a sounder grasp of how technological and search engine advances in recent years allow business enterprises to invade the privacy of consumers. The Court noted that the purpose of the Song-Beverly Act was to prevent retailers’ misuse of a consumer’s personal information for their own business purposes such as in-house marketing efforts, or to sell to direct mail or telemarketers. The Court’s ruling blocks retailers from “end-running” the law since readily accessible technology allows a cardholder’s ZIP code to be combined with the cardholder’s name to locate his or her full address. This accumulated information is then used by the retailer for its own purposes without the consumer’s consent, as alleged in the Williams-Sonoma case.
Retail and other businesses have a legitimate right to safeguard against fraud in connection with purchases by consumers. They still have the right to require positive identification as a condition to accepting a credit card such as a driver’s license or a state issued identification card. The store may match the name on the ID to the name on the credit card and visually compare the photo image on the ID to the presenting cardholder, provided that none of the information may be written or recorded, including the ZIP code.
The decision, entitled Pineda v. Williams-Sonoma Stores, Inc., is limited to card present transactions where the cardholder physically presents his or her card to the retailer. Some businesses may still legitimately request a ZIP code if the information is needed to complete the transaction. For instance, gas stations that require the customer to enter a zip code at the pump should still be able to do so assuming the oil company does not record the information and credit card processor requires the information to authorize the charge. ZIP code or other address information may still be collected if it is needed to complete the delivery of merchandise purchased at a store or via online transactions.
The decision was delivered on February 10, 2011. Since then, more than 100 class action suits have been filed against other major retailers including Big 5 Sporting Goods, Bed Bath & Beyond, JC Penney, Kohl’s, Office Depot and WalMart. The circumstances related to some of these businesses may be different than the Williams-Sonoma decision. Consequently, we expect that the outcomes in some of the new cases will vary. Many of the suits were filed in San Francisco County Superior Court in early March including cases against Pier 1 Imports, Sephora, T.J. Maxx, Marshalls, Urban Outfitters, Coach, Pottery Barn, Sur La Table and West Elm.
Questions regarding the business implications of Pineda v. Williams-Sonoma should be directed to Jonathan D. Joseph at Joseph & Cohen, Professional Corporation.
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Joseph & Cohen is a sponsor of the Western Independent Banker’s 2011 Bank Presidents, Senior Officers and Directors Conference in Maui, Hawaii. WIB’s annual conference, attended by leaders of the community banking industry, will focus on preparing for the opportunities and challenges of 2011 and beyond. Joseph & Cohen is one of the few boutique law firms in California with a core banking law expertise that helps bank CEO’s and bank directors successfully adjust to the opportunities and challenges they face. Jonathan M. Cohen, one of the firm’s founders, will be a featured speaker at WIB’s “hot topic” session entitled “D & O Insurance: What You Don’t Know Can Cost You,” addressing the highlights and pitfalls found in many, if not all policies and the steps banks should take to ensure that coverage is there, if and when it is needed. This annual event brings together leaders in the banking industry, federal banking regulators and community and independent bank executive officers and directors for four days of high level presentations, conversations and networking.
For additional information, please visit WIB’s website.
Joseph & Cohen, Professional Corporation, is an AV® rated firm based in California that emphasizes complex banking, corporate, regulatory, securities, executive employment and litigation matters for financial institutions, entrepreneurs, businesses, investors and venture capital firms. Joseph Law is known for sophisticated expertise, extraordinary commitment to clients, relationship-based services, and a range of specialized capabilities typically found only in the largest American law firms.
Joseph Law Announces Monthly Fixed Fee Model for Employment and Corporate Law Matters as Alternative to Traditional Hourly Billing
SAN FRANCISCO, CA – Joseph Law Corporation announced today that it has begun offering a subscription fee model for employment, transactional, corporate and securities law services as an alternative to the traditional hourly billing format utilized by most business oriented law firms. “Business clients, particularly those with recurring legal costs and matters, are requiring alternative billing models as an option to the hourly rate structure. The fixed fee subscription provides predictability and drives down legal costs while encouraging clients to seek legal input earlier. It is a perfect solution for businesses that routinely require employment and HR advice or have recurring transactional, contract, bank regulatory or securities law counseling needs and are tired of ever increasing legal costs,” said Jonathan Joseph, the firm’s chief executive officer.
The fixed fee subscription eliminates hourly billing and provides unlimited legal counseling within all agreed upon core areas. With a subscription model, the client is empowered to invite its lawyers to participate sooner since the meter doesn’t’ start running every time the client calls. While alternative billing has become more popular in recent years, Joseph Law is one of the first California based law firms to craft a monthly subscription fee model for banks, venture capital firms and public corporations with legal service needs related to transactional work such as venture capital financing, employment and labor law matters including executive compensation, bank regulatory and corporate issues, contract negotiations and securities disclosure matters.
Our fixed fee subscription service is easy to implement. Each client’s fee is based on that particular client’s needs within defined core areas. The first month is an initiation month with a flat fee that covers all of our services within the agreed upon core areas. During the month, our lawyers meet with the client’s executives and other key personnel, attend board or planning meetings and otherwise learn the client’s business. At the end of the month, we meet with the client and agree upon a fixed monthly rate going forward. In practice, the Joseph Law monthly fixed fee model tends to reduce business annual legal costs within defined core areas by as much as 40%. That fixed rate continues until either party requests an adjustment and is usually reset annually.
The fixed fee or flat fee billing structure is informed by Joseph Law’s senior lawyers’ years as billing partners at large national law firms that emphasized the billable hour model. Jonathan Joseph worked as a partner for many years at Pillsbury Winthrop and Kirkpatrick & Lockhart (now known as K & L Gates) while Jonathan Cohen was a litigation partner at Winston & Strawn and Kirkpatrick & Lockhart.
Joseph Law Corporation is an AV® rated firm based in California that emphasizes complex banking, corporate, regulatory, transactional and litigation matters for financial institutions, private businesses, public companies and venture capital firms. Joseph Law is known for sophisticated expertise, extraordinary commitment to clients, relationship-based services, and a range of specialized capabilities typically found only in the largest American law firms. For additional information, please visit the firm’s website.
For more information:
Jonathan M. Cohen can be reached at email@example.com or at 415.817.9200, ext 8.
Jonathan D. Joseph can be reached at firstname.lastname@example.org or at 415.817.9200, ext 9.
This communication is provided as a general informational service to clients and friends of Joseph Law Corporation. It should not be construed as, and does not constitute, legal advice on any specific matter, nor does this message create an attorney-client relationship. These materials may be considered Attorney Advertising in some states. Please note that prior results discussed in the material do not guarantee similar outcomes.