Los Angeles and Pittsburgh teams secure win for GNC

November 22, 2011

In a case profiled in National Law Journal, McGuireWoods defeated a motion for class certification in an action brought against General Nutrition Corporation (GNC) in the U.S. District Court for the Central District of California alleging violations of California Civil Code section 1747.08 (the Song-Beverly Credit Card Act).

The Song-Beverly Credit Card Act (the "Act") was intended to stop businesses from gathering and storing unnecessary personal information from their consumers. The California Legislature passed the Act to address two important privacy concerns. First, corporations were needlessly storing consumer information and using it for their own marketing purposes or selling the information to other marketers. Second, store clerks who obtained customers' personal information engaged in acts of harassment and violence.

In 2008, a California appellate court held that for the purposes of the Act, "personal identification information" did not include ZIP codes. However, in 2011, the California Supreme Court rejected that holding and determined that ZIP codes are "personal identification information" under the Act. This decision was handed down on February 10, 2011, and subsequently more than 100 class actions were filed against retailers, including the claim against GNC.

The plaintiff alleged that she purchased items from the defendant's store, using her credit card as payment and that GNC "requested and.or required plaintiff to provide her ZIP code" in connection with the credit card transaction. On September 29, 2011, the plaintiff moved to certify a class of customers, seeking more than $5,000,000 in statutory damages.

In its ruling, the court held that the class definition improperly included individuals who had not suffered a violation of the Act, and that alone was sufficient to deny certification. In addition, while the court found numerosity existed, it held that the plaintiff presented little, if any, evidence and had not established either commonality or typicality. The court further adopted GNC’s position that plaintiff’s claim under the Act is not subject to common proof, rendering class certification improper. Finally, the court determined that plaintiff had not established that proposed class counsel was adequate, based upon counsel's repeated citation to the Ninth Circuit's decision in Dukes v. Wal-Mart, which, as noted by the court, had been famously overruled by the Supreme Court.

The court’s ruling is the first decision of the more than 150 Song-Beverly ZIP code cases that have been filed since February that addresses class certification, and the decision is likely to be relied upon by retailers throughout California.

Coverage was also provided by Law360.

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