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In a ruling that offers a sign of relief to retailers nationwide, Judge John F. Walter of the U.S. District Court for the Central District of California recently refused to certify a class action lawsuit against Cost Plus, Inc., in a case alleging violation of the Fair and Accurate Credit Transactions Act (FACTA) by printing the last four digits of the Plaintiff’s credit card AND the expiration date on a credit card receipt.  The complaint is one of more than 100 similar complaints against retailers filed by plaintiff’s attorneys, primarily in Southern California and recently in Illinois and Pennsylvania.  Cost Plus was represented by Marcy J. Bergman, Robert A. Padway, Merrit Jones and Leila Knox of Cooper, White & Cooper LLP in San Francisco.

In denying class certification, the court found the plaintiff failed to meet the superiority requirement under Federal Rules of Civil Procedure 23 (b)(3) because the defendant’s liability for statutory penalties would be enormous and completely out of proportion to any harm suffered by the plaintiff.  In fact, the plaintiff suffered no actual damage as a result of receiving a credit card receipt bearing her card expiration date.  The court went on to state, “it appears unlikely, if not impossible, for the inclusion of the expiration date on a credit card or debit card receipt to result in identity theft or any other actual harm.”

The provision of FACTA relied on by plaintiff went into effect Dec. 4, 2006.  Cost Plus, like many other retailers, failed to meet that deadline for removing the expiration date from its credit and debit card receipts; although it had previously complied with the portion of FACTA requiring truncation of card numbers to five digits or less.  The court noted that Cost Plus promptly began the process of removing the expiration date from receipts after it became aware of the technical violation of FACTA, and the retailer completed the process within one month.  The court noted that this immediate effort to comply with FACTA’s requirement supported denial of class certification.

“The denial of class certification in this matter is a huge relief for Cost Plus and for the many other large retailers out there who also have been hit with the threat of class action litigation over this minor and victimless FACTA violation,” said Bergman, a commercial litigator representing retailers, restaurants, wineries and other businesses.  “With motions for class certification currently pending in several other FACTA cases, we expect this case will be cited and relied upon in putting an end to these opportunistic class actions.”

During the single month that its receipts continued to show an expiration date, Cost Plus processed 3.4 million transactions.  The plaintiff sought to recover statutory penalties of $100 to $1,000 per transaction for what was alleged to be “willful” violation of FACTA.  The Court found “even the minimum statutory damages would be ruinous to Defendant.”  “Given the disastrous consequences to Defendant’s business and the thousands of Defendant’s employees that would be left without a job if a class is certified in the case and the lack of any actual harm suffered by members of the potential class, the Court find[s] [sic] that certification of a class would be inappropriate in this case.”

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