Wage Law

It would break the company, it would give the class a windfall, and the judge doesn't like the law.

Perhaps we oversimplify, but the heart of the order denying class certification in Spikings v. Cost Plus, Inc. (C.D. Cal. May 25, 2007) 2007 U.S. Dist. LEXIS 44214, a case we saw in a year-end class action roundup, seems to come down to those three factors. In Spikings, the plaintiff filed a motion for certification under Rule 23, and the court found the superiority element required under Rule 23(b)(3) lacking.

The case was filed under the FACTA (Fair and Accurate Credit Transactions Act), alleging a violation of the rule that requires that no more than the last 5 digits of a credit card number be shown on customer receipts, and that the expiration date of the credit card not be disclosed on the receipt. 15 U.S.C. § 1681c(g). Spikings bought an item at Cost Plus on December 19, 2006, and filed her putative class action just a few hours later. Apparently, the judge thought those facts didn't pass the smell test. "[T]he superiority requirement allows the Court to exercise its considerable discretion in deciding whether or not to certify a class for a category of cases for which a class action may not be the best method.”

[C]ourts may refuse to certify class action treatment where the defendant’s liability ‘would be enormous and completely out of proportion to any harm suffered by the plaintiff.’

In these cases, certification is not denied solely because of the possible financial impact that it would have on a defendant, but based on the disproportionality of a damage award that has little relation to the harm actually suffered by the class, and on the due process concerns attendant upon such an impact. (Citations omitted.) Put simply, class action treatment may be denied where the damages would be ‘ad absurdum.’
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Plaintiff’s class action sought to represent an estimated 3.4 million people nationwide, at $100-$1000 per violation; thus, “statutory damages alone would range from a minimum of $340 million to a maximum of $3.4 billion,” Defendant’s net worth, however, is only $316 million, Id. “Thus, an award of even the minimum statutory damages of $340 million would put Defendant out of business,” Id. Such an outcome is particularly absurd in light of plaintiff’s admission that “she did not suffer any actual damage, such as identity theft, as a result of her expiration date appearing on her credit card receipt from Defendant’s store, and there is no evidence that any customer making a purchase from Defendant’s store...suffered any actual harm due to the inclusion of the expiration date on credit card and debit card receipts.”

Since then, several other cases involving identical violations of FACTA's truncation requirement have been denied class treatment on the same ground. Serna v. Big A Drug Stores, Inc., 2007 U.S. Dist. LEXIS 82023, (C.D. California, October 9, 2007); Lopez v. KB Toys Retail, Inc. 2007 U.S. Dist. LEXIS 82025 (C.D. Cal. July 17, 2007); Najarian v. Avis Rent A Car Sys. LLC, 2007 U.S. Dist. LEXIS 59932 (C.D. Cal. June 13, 2007); Torossian v. Vitamin Shoppe Indus. 2007 U.S. Dist. LEXIS 81961 (C.D. Cal. Aug. 9, 2007); Soualian v. Int'l Coffee & Tea LLC, 2007 U.S. Dist. LEXIS 44208 (C.D. Cal. June 11, 2007).

This ground would not likely be a basis for denial of class certification in a wage and hour case, but we can envision some jurists applying it to PAGA claims.