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A recent Ninth Circuit decision will allow a class action brought under California’s Song-Beverly Credit Card Act (Song-Beverly Act) against Louis Vuitton to proceed in federal court.  In <em>Morey v. Louis Vuitton North America, Inc.</em>, No. 11-56916, 2011 WL 6256963 (9th Cir. Dec. 15, 2011), Plaintiff filed a putative class action against Louis Vuitton for violations of California’s Song-Beverly Credit Card Act by allegedly requesting and recording shoppers’ personal identification information during credit card transactions in retail stores.  The Song-Beverly Act prohibits retailers from collecting personal identification information—including address, phone number, or even zip code—in credit card transactions.  The Act allows a court to impose civil penalties of up to $250 for the first violation and up to $1,000 for subsequent violations.

Plaintiff originally filed her complaint in California state court and Defendant sought to remove it to the district court for the Southern District of California.  The district court found that Louis Vuitton’s notice of removal failed to demonstrate that the amount in controversy was in excess of $5 million.  Although the complaint alleged more than 5,000 offending transactions, the district court interpreted the Song-Beverly Act’s penalty provision to limit recovery to $250 for each violation to each individual victim.  The Ninth Circuit reversed, finding the statute to cap only the first violation of the act to $250 and each subsequent violation, no matter who the victim, to $1,000.  Thus because the complaint alleged “substantially in excess of 5,000” transactions and sought up to $1,000 for each violation, the amount in controversy exceeded $5 million and the case could be removed.  The case was remanded to the Southern District of California for further proceedings.

Data Breach Class Actions on The Rise