Class Action

FACTA Class Action Defense Cases–TJX v. Superior Court: California Court Holds One-Year Limitations Period Applies To Class Action Complaint Under Song-Beverly Act And Class Action Complaint Cannot Include Merchandise Return Transactions

By Michael J. Hassen

Class Action Alleging Violations of California’s Song-Beverly Act Limited by One-Year Statute of Limitations Period and cannot Encompass Customers from Whom Information was Sought as Part of Merchandise Return Transactions because Song-Beverly does not Apply to Returns, only Point of Sale, California State Court Holds

Plaintiffs filed a putative class action against TJX, TJ Maxx, Marshalls and other defendants alleging violations of California’ Song-Beverly Act, Civil Code § 1747 et seq., which prohibits businesses from requiring customers to provide certain personal information in connection with credit card purchases, and which “bans the use of forms that facilitate the obtaining of such information”; the class action complaint purported to represent individuals who had made credit card purchases over the prior three-year period, and the class action purported to seek damages on behalf of customers from whom information was requested as part of merchandise return transactions. TJX Cos., Inc. v. Superior Court, ___ Cal.App.4th ___, 2008 WL 213132573, *1 (Cal.App. May 22, 2008). Defense attorneys demurred to the class action complaint on the grounds that “customers who returned merchandise were not covered under section 1747.08,” and sought to strike those portions of the class action complaint that sought to define the class as extending back three years. Id. The trial court overruled the demurrer and motion to strike. Defense attorneys sought petitions for mandate from the appellate court, and the appellate court reversed.

With respect to the limitations period, Song-Beverly provides for statutory penalties “not to exceed two hundred fifty dollars ($250) for the first violation and one thousand dollars ($1,000) for each subsequent violation.” Cal. Civ. Code, § 1747.08(e). Plaintiffs’ lawyer argued that this provision constitutes a “liability created by statute, other than a penalty or forfeiture,” so as to fall within the three-year statute of limitations set forth in California Code of Civil Procedure section 338. TJX, at *3. Defense attorneys, however, argued that the class action’s Song-Beverly Act claims constitute “[a]n action upon a statute for a penalty,” and thus fall within the one-year statute of limitations set forth in California Code of Civil Procedure section 340. Id. The appellate court sided with the defense. It explained that while the amount of penalty to be set in the event of a violation is within the sound discretion of the trial court, “[p]resumably…span[ning] between a penny (or even the proverbial peppercorn we all encountered in law school) to the maximum amounts authorized by the statute,” it does not have discretion to deny awarding damages entirely. Id., at *2-*3. Because the trial court must impose a penalty in the event of a violation, the class action complaint falls within the scope of section 340 and is subject to a one-year limitations period. Id., at *3-*4. Accordingly, the Court of Appeal granted the petition for writ of mandate as to the motion to strike those portions of the class action complaint seeking to impose liability on defendants for more than one year. Id., at *6.

Full post as published by Class Action Defense Blog on May 27, 2008 (boomark / email).