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Case No. 2:11-cv-02936-JHN-Ex
72292-1004/LEGAL21133058.12
REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
Donald J. Kula, Bar No. 144342
DKula@perkinscoie.com
Monica M. Ortiz, Bar No. 259282
MOrtiz@perkinscoie.com
Sunita Bali, Bar No. 274108
SBali@perkinscoie.com
PERKINS COIE LLP
1888 Century Park E., Suite 1700
Los Angeles, CA 90067-1721
Telephone: 310.788.9900
Facsimile: 310.788.3399
Thomas L. Boeder (Admitted pro hac vice)
TBoeder@perkinscoie.com
Amanda J. Beane (Admitted pro hac vice)
Abeane@perkinscoie.com
PERKINS COIE LLP
1201 Third Avenue, Suite 4800
Seattle, WA 98101
Telephone: 206.359.8000
Facsimile: 206.359.9000
Attorneys for Defendant
Redbox Automated Retail, LLC
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
NICOLLE DISIMONE, individually,
and on behalf of all others similarly
situated,
Plaintiff,
v.
REDBOX AUTOMATED RETAIL,
LLC, a Delaware limited liability
company, and DOES 1 – 500,
Defendants.
JOHN SINIBALDI, individually, and
on behalf of all others similarly
situated,
Plaintiff,
v.
REDBOX AUTOMATED RETAIL,
LLC, a Delaware limited liability
company, and DOES 1 – 100,
inclusive,
Defendants.
Case No. 2:11-cv-02936-JHN-Ex
CONSOLIDATED CLASS ACTION
REDBOX AUTOMATED RETAIL
LLC'S MEMORANDUM OF
POINTS AND AUTHORITIES IN
OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS
CERTIFICATION
[Declarations of Amanda Beane, Eric
Hoersten, Amy Gibby, and Nick Lullo in
Support of Opposition to Motion for
Class Certification concurrently filed
herewith]
Date: October 24, 2011
Time: 2:00 p.m.
Judge : Jacqueline H. Nguyen
Courtroom: 790
Case 2:11-cv-02936-JHN-E Document 46 Filed 10/03/11 Page 1 of 32 Page ID #:459
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CONTENTS
Page
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
I. INTRODUCTION........................................................................................... 1
II. STATEMENT OF THE CASE....................................................................... 1
III. STATEMENT OF FACTS.............................................................................. 3
A. Redbox's Business ...................................................................... 3
B. Redbox Does Not Misuse PII ..................................................... 4
1. Redbox's marketing practices........................................... 5
2. Redbox uses ZIP codes to protect
consumers ......................................................................... 5
3. Redbox uses emails to communicate
with its customers in compliance
with federal law and at their request ................................ 7
C. Plaintiffs' Complaint and the Song-Beverly
Act............................................................................................... 8
IV. PLAINTIFFS HAVE NOT CARRIED THEIR
BURDEN TO SHOW THAT THE PROPOSED CLASS
COMPLIES WITH RULE 23 ......................................................................... 9
A. Legal Standard ............................................................................ 9
B. Plaintiffs Are Not Adequate
Representatives Because the Relief Sought
Is Detrimental to Other Class Members ...................................10
C. The Class Is Overly Broad and Not
Ascertainable ............................................................................13
1. The class is overly broad because it
includes scenarios not covered by the
Act ..................................................................................14
a. The Act does not apply to online
transactions...........................................................15
b. The Act applies to purchases, not rentals ............15
c. The Act does not apply to Redbox's
collection of email because Redbox is in
compliance with federal law ................................17
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CONTENTS
(continued)
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Case No. 2:11-cv-02936-JHN-Ex
72292-1004/LEGAL21133058.12 -ii-
DEFENDANT'S OPPOSITION TO MOTION
FOR CLASS CERTIFICATION
d. The Act does not apply to Redbox's
collection of email because it is not a
condition of the transaction..................................17
2. The class is not objectively
ascertainable because it requires an
inquiry into the customer's state of
mind................................................................................19
D. Plaintiffs' Claims Lack Commonality Under
Rule 23(a)(2).............................................................................20
E. A Rule 23(b)(3) Class Is Not Appropriate
Because Common Issues Do Not
Predominate ..............................................................................22
F. Plaintiffs Are Not Typical or Adequate
Representatives of the Proposed Class
Because There Is No Evidence They
Purchased from Redbox............................................................23
V. PLAINTIFFS HAVE NOT SHOWN THAT THE
PROPOSED CLASS NOTICE COMPLIES WITH
RULE 23........................................................................................................24
VI. CONCLUSION .............................................................................................25
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TABLE OF AUTHORITIES
Page
-iii- REDBOX'S OPPOSITION TO PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
Cases
Absher v. AutoZone, Inc.,
164 Cal. App. 4th 332, 78 Cal. Rptr. 3d 817 (2008) ................................2, 3, 4, 5
Adashunas v. Negley,
626 F.2d 600 (7th Cir. 1980) ........................................................................14, 15
Alston v. Va. High Sch. League, Inc.,
184 F.R.D. 574 (W.D. Va. 1999) .......................................................................12
Broussard v. Meineke Discount Muffler Shops, Inc.,
155 F.3d 331 (4th Cir. 1998) ..............................................................................13
Carnegie v. Household Int'l, Inc.,
371 F. Supp. 2d 954 (N.D. Ill. 2005)..................................................................24
Dukes v. Wal-mart,
509 F.3d 1168 (9th Cir. 2007) ......................................................................20, 23
E. Tex. Motor Freight Sys. Inc. v. Rodriguez,
431 U.S. 395, 97 S. Ct. 1891, 52 L. Ed. 2d 453 (1977) .....................................10
Eisen v. Carlisle & Jacquelin,
417 U.S. 156, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974) .....................................25
Endres v. Wells Fargo Bank,
2008 WL 344204 (N.D. Cal. Feb. 6, 2008)..................................................21, 24
Florez v. Linens' N Things, Inc.,
108 Cal. App. 4th 447, 133 Cal. Rptr. 2d 465 (2003) ........................................18
Hanlon v. Chrysler Corp.,
150 F.3d 1011 (9th Cir. 1998) ............................................................................22
Hanon v. Dataproducts Corp.,
976 F.2d 497 (9th Cir. 1992) ..............................................................................23
In re TJX Cos. Retail Sec. Breach Litig.,
246 F.R.D. 389 (D. Mass. 2007) ........................................................................20
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TABLE OF AUTHORITIES
(continued)
Page
-iv- REDBOX'S OPPOSITION TO PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
In re Wells Fargo Home Mortg. Overtime Pay Litig.,
268 F.R.D. 604 (N.D. Cal. 2010) .......................................................................23
Kingsepp v. Wesleyan Univ.,
142 F.R.D. 597 (S.D.N.Y. 1992)........................................................................23
Morris v. Wachovia Sec., Inc.,
223 F.R.D. 284 (E.D. Va. 2004).........................................................................13
Mueller v. CBS, Inc.,
200 F.R.D. 227 (W.D. Pa. 2001) ..................................................................13, 21
O'Connor v. Boeing N. Am., Inc.,
184 F.R.D. 311 (C.D. Cal. 1998) .......................................................................13
Oshana v. Coca-Cola Bottling Co.,
225 F.R.D. 575 (N.D. Ill. 2005), aff'd, 472 F.3d 506 (7th Cir. 2006)..........15, 20
Pineda v. Williams-Sonoma Stores, Inc.,
51 Cal. 4th 524, 120 Cal. Rptr. 3d 531 (2011)............................................passim
Rodriguez v. Gates,
2002 WL 1162675 (C.D. Cal. May 30, 2002)....................................................13
Saulic v. Symantec Corp.,
596 F. Supp. 2d 1323 (C.D. Cal. 2009).......................................................passim
Simer v. Rios,
661 F.2d 655 (7th Cir. 1981) ..............................................................................20
Sosna v. Iowa,
419 U.S. 393, 95 S. Ct. 553, 42 L. Ed. 2d 532 (1975) .................................10, 23
Starbucks Corp. v. Superior Court,
168 Cal. App. 4th 1436, 86 Cal. Rptr. 3d 482 (2008) ..................................14, 18
Stearns v. Ticketmaster Corp.,
__ F.3d. __, 2011 WL 3659354 (9th Cir. Aug. 22, 2011)..................................20
Sweet v. Pfizer,
232 F.R.D. 360 (C.D. Cal. 2005) .......................................................................23
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TABLE OF AUTHORITIES
(continued)
Page
-v- REDBOX'S OPPOSITION TO PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
Thomas v. NCO Fin. Sys., Inc.,
2003 WL 22416169 (E.D. Pa. Oct. 21, 2003) ....................................................24
Ungar v. Dunkin' Donuts of America, Inc.,
531 F.2d 1211 (3d Cir. 1976) .............................................................................22
Wal-Mart Stores, Inc. v. Dukes,
131 S. Ct. 2541, 180 L. Ed. 2d 374 (2011) ........................................9, 20, 21, 23
Rules and Regulations
12 C.F.R. 202............................................................................................................. 7
12 C.F.R. § 205.9(a) ......................................................................................7, 12, 17
12. C.F.R. § 205.9(e) ................................................................................................. 7
66 Fed. Reg. 15,187, 15,188 (Mar. 15, 2001) ........................................................... 7
Fed. R. Civ. P. 23.................................................................................................9, 20
Fed. R. Civ. P. 23(a) ......................................................................................9, 10, 13
Fed. R. Civ. P. 23(a)(2)............................................................................................20
Fed. R. Civ. P. 23(b) .................................................................................................. 9
Fed. R. Civ. P. 23(b)(3) .......................................................................................9, 22
Fed. R. Civ. P. 23(c)(2)(B) ......................................................................................24
Notice of Study, 69 Fed. Reg. 29,308, 29,309 (May 22, 2004) ................................ 7
Statutes
Cal. Civ. Code § 1747.08.........................................................................................14
Cal Civ. Code § 1747.08(a)(2) ................................................................................17
Cal. Civ. Code §1747.08(c)(1) ................................................................................16
Cal Civ. Code § 1747.08(c)(3) ................................................................................17
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-vi- REDBOX'S OPPOSITION TO PLAINTIFFS' MOTION FOR CLASS CERTIFICATION
Video Privacy Protection Act, 18 U.S.C. § 2710(b)(2)...........................................11
Video Protection Privacy Act of 1988, 18 U.S.C. § 2710......................................... 6
Other Authorities
5 James Wm. Moore et al., Moore's Federal Practice § 23.21[1] (3d ed. 2011).....13
Assem. Bill No. 1219 (2011-2012 Reg. Sess.).......................................................... 5
7AA Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, Federal
Practice and Procedure § 1790, at 595-96 (3d ed. 2005)..................................22
Federal Trade Commission, Facts for Consumers,
http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre07.shtm. ........................11
Merriam-Webster Dictionary, available at http://www.merriam-
webster.com/dictionary/condition. .....................................................................17
Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem.
Bill No. 1219 (2011-2012 Reg. Sess.) as amended Sept. 1, 2011 ....................... 5
Target Sued for Collecting Customer Zip Codes, 17 No. 1 Westlaw J. Bank &
Lender Liability 4 (2011)...................................................................................... 8
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Case No. 2:11-cv-02936-JHN-Ex
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
I. INTRODUCTION
The Court should deny class certification in this case on several grounds.
First, class certification is not appropriate because the relief that plaintiffs seek is
directly contrary to the interest of the class they wish to certify. In particular, class
relief would prevent the only means that Redbox Automated Retail, LLC
("Redbox") has available to deter credit card fraud and communicate with its
customers, including providing them receipts, to the detriment of Redbox users.
Moreover, the putative class is extremely overbroad as it would include
many individuals who suffered no violation of the Song-Beverly Credit Card Act
(the "Act"), even assuming arguendo that the Act applies to Redbox. In addition,
the putative class is far from objectively ascertainable as demonstrated by the need
to determine for each member whether he or she perceived the request for an email
as a condition to the credit card transaction. For this same reason, the class that
plaintiffs seek to certify lacks commonality; and individual issues in need of
adjudication predominate over common issues.
Finally, plaintiffs are not adequate or typical representatives of the putative
class because the Act explicitly applies to purchases only, but not to rental
transactions. Mr. Sinibaldi, however, only rented from Redbox, and never
purchased, and Ms. DiSimone made no purchase with her own credit card.
For these and other reasons addressed below, Defendant Redbox respectfully
requests that the Court deny Plaintiffs' Motion for Class Certification ("Motion").
II. STATEMENT OF THE CASE
Redbox is a popular and fast-growing business with innovative and
customer-friendly service that has generated millions of consumer transactions in
California in 2010 alone. Redbox operates automated, unmanned, electronic video
rental kiosks ("kiosks")—not brick-and-mortar stores—throughout California.
Redbox customers enjoy this automated service in which, similar to Internet
transactions, customers do not interface with any other person.
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
Redbox protects consumer privacy at its kiosks by requesting ZIP codes in
an effort to deter fraud and assist in identifying customers, if they later call Redbox
customer service. Redbox also offers customers the option to provide email
addresses to Redbox, if they want the convenience of an electronic receipt and to
receive other communications from Redbox. Redbox never uses customer ZIP
codes or email addresses for any other reason and never shares or sells customer
ZIP codes or email addresses. In this way, Redbox complies with the essential
purposes of the Act—to protect consumer privacy and deter fraud. Saulic v.
Symantec Corp., 596 F. Supp. 2d 1323, 1334 (C.D. Cal. 2009); Absher v.
AutoZone, Inc., 164 Cal. App. 4th 332, 345, 78 Cal. Rptr. 3d 817 (2008).
Through this action, plaintiffs seek to alter, and possibly destroy, the very
features of Redbox's business that make it a viable, consumer-friendly business.
The relief plaintiffs seek would prevent Redbox from protecting its customers'
privacy, providing receipts, and communicating with its customers. Plaintiffs
therefore are inadequate representatives of the class they seek to represent, and, in
fact, seek relief that conflicts with the best interests of the putative class.
Plaintiffs' class definition also is impermissibly overbroad. Plaintiffs define
the class as any California credit card holder from whom Redbox has requested
and recorded personal identification information ("PII"), no matter the
circumstance surrounding the request, contrary to case law and statutory
exceptions. Plaintiffs' class definition therefore includes many who could not have
experienced a violation of the Act, e.g., those who rented online at
www.redbox.com, those who provided their credit card as a deposit for the rental
rather than for a purchase, and those who chose to provide an email in order to
receive receipts and marketing materials.
Moreover, the class is not objectively ascertainable because determining
class membership requires an inquiry into whether individuals perceived the
request for email as a condition to the credit card transaction. For similar reasons,
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
the plaintiffs' claims are neither common nor typical, and individualized issues
predominate. Plaintiffs are neither typical nor adequate because there is no
evidence that they purchased from Redbox or purchased using their own credit
card, and the Act applies to purchases only.
Contrary to plaintiffs' suggestion, Redbox is not continuing to violate—and
has never violated—the Act. Altering its business practices before adjudicating
these issues and obtaining a ruling on the Motion to Dismiss, which largely
presents questions of first impression, would cause hardship for Redbox and be
detrimental to its customers. As a result, Redbox has continued its business
operations in good faith compliance with the law and in the best interests of its
customers.
III. STATEMENT OF FACTS
A. Redbox's Business
Redbox rents and sells DVDs, Blu-ray discs, and video games through
automated, self-service kiosks:
Redbox's model for renting movies and video games is simple: discs are
rented for a low daily fee (most DVDs cost $1 a day) up to a maximum amount.
Declaration of Amy Gibby ("Gibby Decl.") ¶ 4. Redbox also sells a limited
number of used movies at some kiosk locations. Id. ¶ 5. Redbox locates its kiosks
in convenient, accessible locations, including in and outside grocery stores, drug
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
stores, and fast-food restaurants. Id. ¶ 4. Membership is not required to rent or
purchase a movie or video game—i.e., it is not necessary to sign up for an account
and provide Redbox with personal information in order to rent or purchase.
Rather, anyone with a credit or debit card (collectively, "payment card") may do
so. Id. Because neither an account nor advance reservations are required,
consumers can rent and physically obtain movies or video games at their
convenience without interfacing with another person. This flexible, accessible,
private, and low-cost self-service has contributed greatly to Redbox's success.
Redbox kiosks are fully automated and unattended by Redbox employees
during the rental or purchase transaction. Id. ¶ 7. To rent or purchase a movie or
video game, a customer uses the kiosk's touchscreen and pays by swiping a
payment card. Id. ¶ 5. At the time of rental, the customer is charged only for the
first night's fee. A customer is charged for any remaining fees when he or she
returns the discs, or, if the customer does not return the discs, when the maximum
rental period is reached. These latter fees are assessed to the same payment card
that was swiped at the time of rental, without requiring the customer to swipe the
payment card again. Declaration of Eric Hoersten ("Hoersten Decl.") ¶ 4.
While Redbox kiosks are located inside and outside various retail locations,
employees of those businesses are not responsible for Redbox machines. Gibby
Decl. ¶ 7. The kiosks, however, are not isolated machines. All kiosks are
connected to the Internet and communicate with Redbox servers. Hoersten Decl.
¶ 3.
Redbox's innovative, accessible and affordable rental service has made it a
popular and fast-growing company. It currently has over 27,000 kiosks
nationwide, with over 3,000 located in California. Gibby Decl. ¶ 3.
B. Redbox Does Not Misuse PII
Plaintiffs correctly assert that "the primary legislative purpose of the Act
was to 'address the misuse of personal information for, inter alia, marketing
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
purposes.'" Motion at 1 (citing Absher, 164 Cal. App. 4th at 345). In addition, the
Act seeks to deter fraud. Absher, 164 Cal. App. 4th at 345. What plaintiffs do not
say is that they seek relief for a practice that not only causes no harm but also
protects consumers, because, as detailed below, Redbox does not use any PII for
unwanted marketing communications, but instead to promote privacy and deter
fraud.1
1. Redbox's marketing practices.
Consistent with the purposes of the Act—and contrary to the facts presented
in Pineda v. Williams-Sonoma Stores, Inc., 51 Cal. 4th 524, 120 Cal. Rptr. 3d 531
(2011)—Redbox does not engage in unwanted marketing communications with its
customers. Redbox's direct marketing communications are limited to those
customers who choose to receive them. Redbox neither mails nor telemarkets its
customers. Redbox does not know the addresses or phone numbers of its kiosk
customers, and it makes no attempt to discover them. Redbox never shares or sells
its customers' ZIP codes or email addresses with anyone else.2 Gibby Decl. ¶ 9-11.
2. Redbox uses ZIP codes to protect consumers.
Redbox requests customer ZIP codes at the kiosk to protect consumer
privacy, deter fraud, and satisfy credit card processing requirements.
1 In this regard, the California legislature recently approved Assembly Bill 1219, which exempts
from the Act the collection of ZIP codes for the prevention of fraud in retail motor fuel transactions. This
bill awaits the governor's signature. Assem. Bill No. 1219 (2011-2012 Reg. Sess.), see Exhibit G to
Beane Decl. The amendment is a result of the effort of the strong oil/gas lobby and a direct response to
Pineda. Sen. Rules Com., Off. of Sen. Floor Analyses, 3d reading analysis of Assem. Bill No. 1219
(2011-2012 Reg. Sess.) as amended Sept. 1, 2011, pp. 1, 3-4, see Exhibit H to Declaration of Amanda J.
Beane ("Beane Decl."). The amendment does not represent a change in the law but rather confirmation in
light of Pineda that collection of PPI to protect privacy and prevent fraud is not a violation of the Act.
Sen. Judiciary Com., Bill Analysis of Assem. Bill No. 1219 (2011-2012 Reg. Sess.) as amended Aug. 24,
2011, pp. 3-7, see Exhibit I to Beane Decl. This is entirely consistent with the collection of PII at
automated kiosks to protect privacy and prevent fraud, which is allowed, and is, and has been, the law.
2 While Redbox uses an email service provider, Redbox's agreement with its email service
provider prohibits the sale or dissemination of customer information, including emails to third parties.
Gibby Decl. ¶ 11. Redbox shares limited information with its email service provider, and, for example,
does not tell its email service provider what specific movies its customers have rented. Id. Redbox has
on a few occasions emailed its customers with studio promotions to buy a movie they have recently seen.
In so doing, Redbox does not share its customer information with the studio and sends the email as a
benefit to its customers. Id. ¶ 9.
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REDBOX'S OPPOSITION TO PLAINTIFFS'
MOTION FOR CLASS CERTIFICATION
When a customer calls Redbox with questions about a transaction, Redbox
customer service agents look up his account by asking for his name, the last four
digits of his credit card, his ZIP code, and confirmation that the person speaking is
the cardholder. Declaration of Nicholas Lullo ("Lullo Decl."), ¶ 2. Redbox takes
these steps to verify a customer's identity before discussing his account in order to
protect a customer's private rental history. Id. Indeed, federal law requires that
Redbox not disclose video rental history to anyone other than the customer (except
in limited situations). Video Protection Privacy Act of 1988, 18 U.S.C. § 2710.
Thus, Redbox's instruction to its customer service agents to request customers' ZIP
codes is consistent with federal law. Lullo Decl., ¶ 2.
Moreover, Redbox asks for a customer's ZIP code at the kiosk because doing
so is a simple and non-intrusive way to help prevent credit card fraud.3 In fact,
Visa requires that Redbox obtain a customer's ZIP code for certain transactions in
order for Redbox to receive the lowest processing rate possible. Hoersten Decl.,
¶ 5. That is, Visa charges a lower rate for automated transactions that it deems to
be less risky, including where a customer provides his or her ZIP code when using
a credit card. Id. Redbox's request for ZIP codes, therefore, is considered by Visa
to be a less risky practice than if Redbox were to accept credit cards without
requesting customer ZIP codes.
Redbox does not use a customer's ZIP code for any other purposes.
Plaintiffs may assert that Redbox uses ZIP codes to target emails for special
promotions but Redbox does not do so. Rather, all location-targeted promotions
rely on the location of the kiosk from which the customer rented, not customer ZIP
codes. Gibby Decl., ¶ 12.
3 A rental transaction may be approved even if a customer enters an incorrect ZIP code.
However, the credit card provider retains discretion as to whether to decline a transaction if the ZIP code
does not match. Hoersten Decl., ¶ 6.
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3. Redbox uses emails to communicate with its customers in
compliance with federal law and at their request.
Redbox does not require a customer to enter an email address as a condition
of a transaction—providing an email is always optional. After swiping a credit
card, the customer is presented with a screen where he can either provide an email
address or touch "No Thanks" and proceed with the transaction. Gibby Decl. Exs.
A, B.
Providing an email address allows the customer to receive receipts for the
transaction, and, indeed, it is the only way to receive receipts because the kiosks
are not equipped to provide paper receipts. Gibby Decl. ¶ 10. Regulations
promulgated under the Electronic Funds Transfer Act ("EFTA") obligate Redbox
to make receipts available every time a consumer initiates an electronic fund
transfer at the kiosk. 12 C.F.R. § 205.9(a).4 Both Visa and MasterCard require
that Redbox offer customers the option of a receipt. Hoersten Decl. ¶ 8. While
Visa and MasterCard require the availability of a receipt when a transaction
reaches a certain minimum (currently, $50), any Redbox transaction could
potentially meet those minimums. See Gibby Decl., ¶ 4 (discussing maximum
rental fees for DVDs, Blu-ray, and video games). Without an option for an
electronic receipt, Redbox risks violating federal law and disrupting its essential
relationships with Visa and MasterCard.
4 An "electronic terminal" under 12 C.F.R. § 205.9(a) includes a point-of-sale ("POS") terminal
that "captures data electronically, for debiting or crediting to a consumer's asset account . . . even if no
access device is used to initiate the transaction." 12 C.F.R. 202, supp. I, cmt. 2(h)-2. Redbox is precisely
that kind of POS terminal. Moreover, while, on its face, 12 C.F.R. § 205.9(a) applies to financial
institutions, Federal Reserve commentary makes clear that merchants at POS terminals are also obligated
to provide receipts. See id., cmt. 9(a)-2 ("An account-holding institution may make terminal receipts
available through third parties such as merchants or other financial institutions."); see also Electronic
Fund Transfers, 66 Fed. Reg. 15,187, 15,188 (Mar. 15, 2001) ("merchant[s] must comply with the receipt
requirements of § 205.9 of the regulation for debit card transactions"); Notice of Study, 69 Fed. Reg.
29,308, 29,309 (May 22, 2004) ("Consequently, when a debit card is used at point-of-sale, the merchant
provides a terminal receipt that contains the information that the account-holding institution is required to
provide to the consumer."). In addition, while there is an exception for amounts under $15, 12. C.F.R.
§ 205.9(e), Redbox has no way of knowing at the time of the initial transaction whether or not any given
transaction will be under $15, see Gibby Decl. ¶ 4 (discussing rental charges).
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To those customers who choose to provide email addresses and receive
receipts, Redbox also sends promotional emails. Id. ¶ 9. A customer can opt out
of these emails at any time. Id.
C. Plaintiffs' Complaint and the Song-Beverly Act
Plaintiffs have rented from Redbox and continue to use Redbox.
Mr. Sinibaldi has never purchased from Redbox; it is unclear whether
Ms. DiSimone has; at the least, she never used her own credit card.5 Both
complain that Redbox's requests for a ZIP code and an email address (which is
optional) during a kiosk transaction violate the Act.
The California legislature enacted the relevant portions of the Act in 1990.
The Act regulates the collection and recordation of PII when made as a condition
of a credit card transaction. As noted, its primary purposes are to protect consumer
privacy and prevent fraud. While the Act defines PII to include an address, not
until Pineda did the California Supreme Court hold (in light of egregious facts)
that a ZIP code, without more, constitutes PII. 51 Cal. 4th at 528. After Pineda, at
least one source reported that, as of May 2011 more than 150 lawsuits had been
filed against retailers in California, including this one. See Target Sued for
Collecting Customer Zip Codes, 17 No. 1 Westlaw J. Bank & Lender Liability 4
(2011).
The Central District of California has held that the Act applies to
transactions in brick-and-mortar stores only, not to non-traditional retailers such as
online retailers, given that, unlike brick-and-mortar retailers, online retailers can
deter credit card fraud only by collecting PII. Saulic, 596 F. Supp. 2d at 1335-36.
5 Mr. Sinibaldi's most recent rental appears to have occurred on September 11, 2011. Beane
Decl., Ex. B. While plaintiffs' motion asserts that Ms. DiSimone has rented from Redbox numerous
times, her interrogatory responses state that she has rented only once during the relevant time period.
Beane Decl., Ex. A (Rog. No. 1). Redbox's records indicate two rentals, one occurring recently. Lullo
Decl., ¶ 3. Ms. DiSimone states that she "believe[s]" she purchased a DVD from Redbox. Beane Decl.,
Ex. A (Rog. No. 1). Her deposition testimony indicated she may have used her wife's payment card.
DiSimone Dep. at 17:1-20:21; see Ex. D to Beane Decl. Redbox did find a record for a DVD purchase
under Ms. DiSimone's wife's name, Amy DiSimone.
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MOTION FOR CLASS CERTIFICATION
Because Redbox is a non-traditional retailer that operates like an online store, it
has moved to dismissed plaintiffs' Complaint under Saulic, and because of other
deficiencies in the Complaint. That motion remains pending. Even assuming that
the Act applies, class certification should be denied, as discussed below.
IV. PLAINTIFFS HAVE NOT CARRIED THEIR BURDEN TO SHOW
THAT THE PROPOSED CLASS COMPLIES WITH RULE 23
A. Legal Standard
A class action is "an exception to the usual rule that litigation is conducted
by and on behalf of the individual named parties only." Wal-Mart Stores, Inc. v.
Dukes, 131 S. Ct. 2541, 2550, 180 L. Ed. 2d 374 (2011) (internal quotations and
citation omitted). To justify departing from this rule, plaintiffs must affirmatively
demonstrate compliance with Rule 23. Id. at 2548. The Court must apply a strict
burden of proof and conduct a "rigorous" analysis to determine whether
certification is proper. Id. at 2551. This analysis will frequently overlap with the
merits of plaintiff's claim—"class determination generally involves considerations
that are enmeshed in the factual and legal issues comprising the plaintiff's cause of
action." Id. at 2551-52 (internal quotations and citation omitted).
A party seeking class certification must establish first that the mandatory
requirements of Rule 23(a) are met: (1) that the class is so numerous that joinder
of all members is impracticable; (2) that there are questions of law or fact common
to the class; (3) that the claims of the named plaintiffs are typical of the claims of
the class (i.e., the typicality requirement), and (4) that the named plaintiffs will
fairly and adequately represent the class (i.e., the adequacy requirement).
In addition, the plaintiff must establish that at least one subsection of Rule
23(b) is met. Plaintiffs seek certification under Rule 23(b)(3), which requires "that
the questions of law or fact common to class members predominate over any
questions affecting only individual members, and that a class action is superior to
other available methods for fairly and efficiently adjudicating the controversy."
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MOTION FOR CLASS CERTIFICATION
Plaintiffs gloss over these requirements and incorrectly assert that they have
satisfied their burden. Having proposed relief that is in conflict with the desires of
other class members, defined a class that includes those who have suffered no
violation and that cannot be ascertained, and failed to meet the standards of
typicality, adequacy, or commonality, plaintiffs' Motion must be denied.
B. Plaintiffs Are Not Adequate Representatives Because the Relief
Sought Is Detrimental to Other Class Members
Plaintiffs do not satisfy the adequacy requirement of Rule 23(a) because the
relief they seek—to prevent Redbox from the very practices that protect privacy
and deter fraud—conflicts with the interests of other class members. It is
fundamental to the adequacy requirement that class representatives have common
interests with the unnamed members of the class. Sosna v. Iowa, 419 U.S. 393,
403, 95 S. Ct. 553, 42 L. Ed. 2d 532 (1975) (Rule 23(a) is met "where it is unlikely
that segments of the class appellant represents would have interests conflicting
with those she has sought to advance."); see also E. Tex. Motor Freight Sys. Inc. v.
Rodriguez, 431 U.S. 395, 405, 97 S. Ct. 1891, 52 L. Ed. 2d 453 (1977) (holding
plaintiffs are not appropriate class representatives when they seek relief in conflict
with the desires of the other members of the class).
Here, the named plaintiffs seek to impose liability on Redbox for the
collection of ZIP codes and emails on behalf of an entire class. As a necessary
result of this relief, Redbox would be forced to stop requesting ZIP codes and
email addresses in California. Because, plaintiffs' interests are distinctly at odds
with the interests of the class, the class should not be certified.
First, Redbox's request for a ZIP code at the kiosks benefits the class
because this request acts as a deterrent to credit card fraud. Redbox kiosks are
unmanned, and there is no method other than requesting and recording PII to help
verify the identity of the cardholder. An in-person transaction is obviously
different. The Central District of California recognized this when holding that the
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Act applies to brick-and-mortar transactions only: "[A]n in-person transaction
provides the merchant with the opportunity to check the customer's signature on
her credit card against the signature on the credit card slip. Additionally, the
merchant can ask for picture identification to compare the person in front of them
to the name on the credit card." Saulic, 596 F. Supp. 2d at 1335 (citation omitted).
Redbox has none of these means available to it and "without a request for
PII, [it] must ultimately accept payment with nothing more than a name and a
credit card number—there is no 'verification.'" Id. There can be little doubt that
the average Redbox customer would prefer that Redbox take non-intrusive steps to
deter and protect them against credit card fraud, as opposed to eliminating a
practice that causes no harm.6 Moreover, if Redbox were prohibited from
requesting ZIP codes, its payment processing fees would be higher because these
transactions are less safe, potentially resulting in higher Redbox fees for its
customers. Hoersten Decl. ¶ 7.
In addition, Redbox uses ZIP codes to protect customer privacy. When a
customer calls customer service seeking information regarding a transaction,
Redbox requests four pieces of information to verify the customer's identity: the
person's name, the last four digits of the credit card used, the ZIP code entered at
the kiosk, and verification that the person speaking is the card holder. Lullo Decl.,
¶ 2. In this way, Redbox does its best to ensure that it does not share rental
transaction history with anyone but the renter. This not only is consistent with the
Act, which was passed to "protect consumer privacy," Saulic, 596 F. Supp. 2d at
1333, but also is consistent with federal privacy law, and, specifically, the Video
Privacy Protection Act, 18 U.S.C. § 2710(b)(2) (limiting disclosure of a person's
video rental history). Plaintiffs' relief would undermine the very steps that Redbox
has taken to comply with federal law and protect consumer privacy.
6 See Fed. Trade Comm'n, Facts for Consumers (credit card fraud costs hundreds of millions of
dollars each year), http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre07.shtm.
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The elimination of Redbox's ability to request email addresses likewise
would negatively impact Redbox customers. Because Redbox kiosks do not
provide paper receipts, the only way Redbox can provide receipts is by collecting
email addresses. See Gibby Decl. ¶ 10. The receipts confirm the amount Redbox
charged and the successful return of a disc. Customers consistently provide
feedback to Redbox that they like and desire email receipts and promotional emails
from Redbox. Id.¶ 13, Ex. C. Mr. Sinibaldi conceded that he liked receiving email
receipts from Redbox. Sinibaldi Dep. at 35:9-20, Ex. C to Beane Decl.
Moreover, Redbox must make a receipt available under federal law. 12
C.F.R. § 205.9(a); see also fn 4. As Redbox kiosks are not equipped to provide
paper receipts, the only way to do so is to provide the option of an email receipt.
Moreover, Visa and MasterCard require that Redbox make receipts available.
Hoersten Decl. ¶ 8. Without this option, Redbox could violate federal law or
negatively impact its essential relationships with credit card companies, and
possibly end Redbox's ability to do business in California. This cannot be the
result desired by Redbox's California customers, and it seems unlikely that the
California legislature intended to stifle innovation in the retail industry by applying
the Act to eliminate the use of email receipts in an online transaction.
In sum, plaintiffs seek class relief that would eliminate valuable and
desirable features for many customers, including protecting them from fraud and
promoting personal privacy, in contravention of the very purpose of the Act. This
is particularly troublesome given that Redbox's innovative and consumer-friendly
service is used by millions of customers. Indeed, both plaintiffs have continued to
use Redbox since filing the Complaint, which suggests that they wish to continue
to use Redbox's services as they are. Beane Decl., Ex. B; Lullo Decl., ¶ 3.
Courts have denied class certification where the class representative sought
relief that was in conflict with other class members, in particular where relief
would impact those who remained in relationship with the defendant. Alston v. Va.
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High Sch. League, Inc., 184 F.R.D. 574 (W.D. Va. 1999) (conflict between relief
sought by named plaintiffs and class members who preferred status quo precluded
plaintiffs from satisfying adequacy and typicality requirements); see also Morris v.
Wachovia Sec., Inc., 223 F.R.D. 284, 299 (E.D. Va. 2004) (former client seeking to
rescind investment services on behalf of all current and former clients not adequate
representative because "it is reasonable to conclude that a number of those who
remain invested in the Masters Program would not want to nullify their investment
relationships").7 This is also analogous to a former franchisee owner improperly
seeking to represent current franchisee owners. See Broussard v. Meineke
Discount Muffler Shops, Inc., 155 F.3d 331, 338 (4th Cir. 1998) (current
franchisees not adequate representatives for former franchisees as they have
interest in franchisor defendant's financial strength and thus sought different relief).
The Court should likewise deny class certification in this case.
C. The Class Is Overly Broad and Not Ascertainable
Plaintiffs also fail to carry their burden for class certification because they
define an overly broad class that is incapable of being defined through objective
means. "The proposed class may not be amorphous, vague, or indeterminate and it
must be administratively feasible to determine whether a given individual is a
member of the class." Mueller v. CBS, Inc., 200 F.R.D. 227, 233 (W.D. Pa. 2001)
(internal quotations and citations omitted). See also Rodriguez v. Gates, 2002 WL
1162675, at *8 (C.D. Cal. May 30, 2002) ("A class definition should be 'precise,
objective and presently ascertainable.'") (quoting O'Connor v. Boeing N. Am., Inc.,
184 F.R.D. 311, 319 (C.D. Cal. 1998)); 5 James Wm. Moore et al., Moore's
Federal Practice § 23.21[1] (3d ed. 2011) ("Although the text of Rule 23(a) is silent
7 Unlike some class actions, withdrawal from this class by those members who do not seek the
same result as the named plaintiffs would not solve the conflict. Relief on a class basis, no matter who
opts out, must, at best, result in Redbox eliminating features that are desirable and beneficial to its
customers in general, and, at worst, eliminate Redbox's ability to effectively do business in California.
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on the matter, a class must not only exist, the class must be susceptible of precise
definition.") (footnotes omitted) (internal quotations and citations omitted).
Plaintiffs define the class as all "California credit card holders, from whom,
within one year of the filing date of this action to the present, Defendant requested
and recorded personal identification information in the course of a credit card
transaction."8 Proposed Order Granting Class Certification at 2. The class is
overly broad because it wrongly assumes that any request and recordation of PII
that is "in the course of a credit card transaction" violates the Act. It fails to
account for relevant exceptions to the statute and the fact that a request for PII
violates the Act only if it is a condition of the credit card transaction—an element
of the statute that requires an individualized inquiry into each class member's state
of mind and thus cannot be objectively ascertained.
1. The class is overly broad because it includes scenarios not
covered by the Act.
A class is overly broad and imprecise where, as here, it contains those who
have not suffered a violation of the Act. It is a fundamental tenet of class
certification that the proposed class members must "have all suffered a
constitutional or statutory violation warranting some relief." Adashunas v. Negley,
626 F.2d 600, 604 (7th Cir. 1980) (denying class certification where class included
all learning disabled children who were not receiving special education; not clear
that all proposed class members had suffered a violation). "Where civil liability is
predicated upon a legislative provision . . . plaintiffs must establish that they fall
within the class of persons for whose protection the legislative provision was
enacted." Starbucks Corp. v. Superior Court, 168 Cal. App. 4th 1436, 1448, 86
Cal. Rptr. 3d 482 (2008).
8 Redbox assumes that by "California credit card holders," plaintiffs mean California residents
who used a credit card (as opposed to a debit card) at a Redbox kiosk, given that the Act applies to credit
card transactions only. See Cal. Civ. Code § 1747.08 (act applies to "credit cards"); Saulic, 596 F. Supp.
2d at 1328-29. If a class is certified, this should be made clear in the class definition and class notices.
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Courts have accordingly denied class certification where it "cannot be
reasonably clear" that the proposed class contained those who have suffered a
violation. Adashunas, 626 F.2d at 604; see also Oshana v. Coca-Cola Bottling
Co., 225 F.R.D. 575, 580 (N.D. Ill. 2005) (class definition was "overly inclusive
and encompasse[d] millions of potential members without any identifiable basis
for standing"), aff'd, 472 F.3d 506 (7th Cir. 2006).
a. The Act does not apply to online transactions.
First, plaintiffs' class definition is overly broad because it fails to distinguish
between online reservations and kiosk transactions. As discussed above, in Saulic,
the court held that the Act applies only to brick-and-mortar transactions, not online
transactions. 596 F. Supp. 2d at 1335.9 Id.
Redbox offers customers the choice to either reserve movies or video games
online at www.redbox.com or to rent from a kiosk without a reservation. When
customers reserve movies online, they provide their payment card information and
pay their first night's rental fee through the website, rather than at the kiosk. Gibby
Decl., 6. Once at the kiosk, they swipe their card only for the purpose of retrieving
the reservation they made online. Accordingly, because customers reserving
movies or video games at www.redbox.com pay online, their transactions are not
within the purview of the Act and they have no standing to assert a claim. The
failure to distinguish between online reservations and kiosk transactions renders
the class definition impermissibly overbroad.
b. The Act applies to purchases, not rentals.
Second, plaintiffs' class definition is overly broad because it encompasses
both rentals of movies and video games and purchases of movies and video
games. The Act, however, expressly applies to purchases only.
The Act's prohibition on requesting and recording PII in connection with a
credit card transaction does not apply "[i]f the credit card is being used as a deposit
9 For this same reason, the Act should not apply to Redbox. See Motion to Dismiss, Dkt. 15-1.
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to secure payment in the event of a default, loss, damage, or other similar
occurrence." Cal. Civ. Code §1747.08(c)(1). Redbox retains a customer's credit
card information in order to charge a consumer for any rental charges that are
incurred in excess of the first night's charge.10 Thus, the credit card is "used as a
deposit to secure payment in the event of a default, loss, damage, or other similar
occurrence." That is, here, the credit card is used to secure payment in the event of
additional rental charges or the failure to return the movie or video game.
While the Court need look no further than the plain language of the Act to
determine that it does not apply to rentals from Redbox, the legislative history of
the Act also supports this conclusion. See Pineda, 51 Cal. 4th at 531 (court should
look to legislative history when statute is unclear). The legislative history states
that "[t]he . . . language [of Cal. Civ. Code § 1747.08(c)(1)] also clarifies that
personal information such as addresses and phone numbers can be recorded when a
credit card is used as a deposit when renting equipment, for example. That is to
protect the merchant in case rented goods are not returned." Assemblyman Rusty
Areias, Bill Background for Assem. Bill No. 1477 (1991-1992 Reg. Sess.), at 2,
see Ex. E to Beane Decl. "This bill would in addition exempt transactions where
the credit card is used as a deposit to secure payment in the event of default, loss,
damage or other similar occurrence. The card holder's address and phone number
are necessary when using a credit card to guarantee hotel reservations, renting a
car, and similar transactions." Dep't of Consumer Affairs, Enrolled Bill Rep. on
Assem. Bill No. 1477 (1991-1992 Reg. Sess.), at 3 (Sept. 9, 1991), see Ex. F to
Beane Decl.
By failing to limit their class to those who have purchased movies or video
games from Redbox kiosks, plaintiffs have defined the class in such a way that it
encompasses millions of people who have no claim.
10 The Act does not require that the PII be used to secure payment, only that the credit card is
being used as such. Regardless, there could be scenarios where the use of a ZIP code or email would be
helpful to collect unpaid amounts.
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c. The Act does not apply to Redbox's collection of email
because Redbox is in compliance with federal law.
Third, plaintiffs' proposed class is overly broad to the extent that it applies to
Redbox's collection of emails for the purpose of providing receipts. Regulations
promulgated under EFTA obligate Redbox to make receipts available every time a
consumer initiates an electronic fund transfer at the kiosk. 12 C.F.R. § 205.9(a);
see also fn 4. As Redbox kiosks are not equipped to provide paper receipts, email
is the only way that Redbox can comply with EFTA. Moreover, Redbox must
record the customer's email at the time of the initial transaction so that it can
provide the receipt when the transaction completes, i.e., when the consumer returns
the discs or meets the maximum rental period.
The Act specifically does not apply where the request and recordation of PII
is obligated by federal law or regulation. Cal Civ. Code § 1747.08(c)(3). Because
the class definition fails to account for this statutory exception, it is overbroad.
d. The Act does not apply to Redbox's collection of email
because it is not a condition of the transaction.
Fourth, plaintiffs' proposed class is overly broad because it captures anyone
from whom Redbox requested and recorded PII "in the course of" a credit card
transaction, contrary to the plain language of the Act. Proposed Order Granting
Motion for Class Certification at 2 (emphasis added).
The Act prohibits the request and recordation of PII only when it is a
"condition" of the credit card transaction. Cal Civ. Code § 1747.08(a)(2)
(emphasis added). The plain meaning of "condition" is that it acts as a pre-
requisite to the transaction. See Merriam-Webster Dictionary, available at
http://www.merriam-webster.com/dictionary/condition. The Court must follow the
plain words of the statute, giving them their usual and ordinary meaning, "because
they generally provide the most reliable indicator of legislative intent." Pineda, 51
Cal. 4th at 535 (internal quotations and citation omitted).
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MOTION FOR CLASS CERTIFICATION
Case law confirms that only requests for PII that are made as a condition to
the credit card transaction violate the Act, not all requests for PII made in the
course of, or during, a credit card transaction. For example, in Florez v. Linens' N
Things, Inc., 108 Cal. App. 4th 447, 451, 133 Cal. Rptr. 2d 465 (2003), the
California Court of Appeals held that "nothing prevents a retailer from soliciting a
consumer's address and telephone number for a store's mailing list, if that
information is provided voluntarily. Retailers are not without options in this
regard. A merchant can easily delay the request until the customer tenders
payment or makes his or her preferred method of payment known." To determine,
therefore, whether there was a violation, it mattered "whether a consumer would
perceive the store's 'request' for information as a 'condition' of the use of a credit
card." Florez, 108 Cal. App. 4th at 451. In finding a violation of the Act, the court
noted that the retailer requested the plaintiff's telephone number before accepting
payment and that the plaintiff provided her telephone number "believing it was
required to complete the transaction." Id. See also Pineda, 51 Cal. 4th at 527
("Believing it necessary to complete the transaction, plaintiff provided the
requested information and the cashier recorded it.").
To interpret the Act otherwise would lead to the absurd result of penalizing
businesses who collect PII in a manner that is separate from the credit card
transaction. For example, a brick-and-mortar retailer might leave a guest book on
its counter or information cards that invite guests to provide an address or email in
order to receive notifications about sales and events. Redbox's request for email is
no different than an electronic guest book. The legislature could not possibly have
intended to prohibit businesses from collecting consumer information in this way,
especially where customers want such communications. See Starbucks Corp., 168
Cal. App. 4th at 1449 (California law requires resolving ambiguity in statutes
"according to the usual, ordinary import of the language, and to avoid absurd
consequences, including an unconstitutionally excessive penalty.").
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Here, the facts establish that providing email was not a condition of the
credit card transaction. The user interface at Redbox kiosks has always provided
(and still provides) the customer with the option of entering an email address after
the customer swipes his or her credit card. This option appears after prompting the
customer to swipe his or her credit card, and gives the consumer the option of
selecting "No Thanks" and continuing with the transaction. Gibby Decl. ¶ 8, Exs.
A, B. Indeed, Ms. DiSimone never provided her email address to Redbox.11
Motion at 5; Beane Decl. Ex. A (Rog. No. 8). Redbox therefore did not collect and
record email addresses as a condition of the credit card transaction and did not
violate the Act. Accordingly, including in the class those who provided email
addresses renders the class definition overbroad.
2. The class is not objectively ascertainable because it requires
an inquiry into the customer's state of mind.
As explained above, only PII that is requested and recorded as a condition of
the credit card payment violates the Act, and whether the request was a conditional
of the credit card payment depends on the perception of each Redbox customer. If
a class should include all of those customers who provided emails (and, as
explained above, it should not), then it should only include those who believed that
providing an email address was required to complete the transaction. Because
class membership can therefore be determined only by evaluating the state of mind
of each individual class member, class certification should be denied.
Courts regularly deny class certification where the determination of class
membership is dependent on the potential class member's state of mind. For
example, the Ninth Circuit recently affirmed the denial of class certification where
at issue was whether or not each class member had consented to join a rewards
11 Mr. Sinibaldi did; and he testified that, despite the clear indication that he could decline to
provide his email, he believed it was required to complete the transaction. Sinibaldi Dep. at 34:25-37:1,
Ex. C to Beane Decl. While Redbox believes that this is an unreasonable interpretation of its user
interface, Mr. Sinibaldi's belief and experience highlight the extent to which the proposed class is fraught
with individualized issues.
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program. Stearns v. Ticketmaster Corp., __ F.3d. __, 2011 WL 3659354, at *8
(9th Cir. Aug. 22, 2011). The option to join was presented to all putative class
members through a webpage that the Ninth Circuit deemed "materially deficient."
Id. Despite the fact that each potential class member viewed the same "deficient"
webpage, the Court could not objectively ascertain class membership because the
claim depended on the extent to which each individual class member knowingly
joined the program or had actually been misled. Id.
Other cases affirm that the necessity of making an inquiry into a potential
class member's state of mind to determine class membership defeats class
certification. E.g., Simer v. Rios, 661 F.2d 655, 673-74 (7th Cir. 1981) (class
certification improper where proof depended on state of mind; no procedural
device could alleviate burden of separate mini-trials); In re TJX Cos. Retail Sec.
Breach Litig., 246 F.R.D. 389, 393 (D. Mass. 2007) ("Where individualized fact-
finding is required to identify class members, the class fails to satisfy one of the
basic requirements for a class action under Rule 23.") (internal quotations and
citation omitted); Oshana, 225 F.R.D. at 580 (holding class not ascertainable
because membership depended on whether each person had knowledge that
product contained saccharin).
D. Plaintiffs' Claims Lack Commonality Under Rule 23(a)(2)
Ignoring a recent and controlling United States Supreme Court case,
plaintiffs urge that the Court should "liberally and permissively construe the
commonality requirement." Motion at 9. But plaintiffs rely on a Ninth Circuit
decision, Dukes v. Wal-Mart Stores, Inc., 509 F.3d 1168 (9th Cir. 2007), that was
overturned in June by the Supreme Court. Wal-Mart Stores, 131 S. Ct. at 2541.
Plaintiffs' assertion that they have met the standard of commonality is wrong.
In Wal-Mart Stores, the Supreme Court eschewed the liberal and permissive
approach toward commonality that was adopted by the Ninth Circuit in Dukes. See
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131 S. Ct. at 2551 (holding that "any competently crafted class complaint literally
raises common 'questions'") (internal quotations and citation omitted). Instead, the
Supreme Court held that commonality "requires the plaintiff to demonstrate that
the class members have suffered the same injury." Id. (internal quotations and
citation omitted). That is, the claims "must depend on a common contention" and
the common contention "must be of such a nature that it is capable of class wide
resolution—which means that determination of its truth or falsity will resolve an
issue that is central to the validity of each one of the claims in one stroke." Id.
This rigorous analysis may, and frequently will, overlap with the merits of the
underlying claim. Id. at 2551-52.
As explained above, plaintiffs' claims depend on proving whether each class
member perceived that providing PII was a prerequisite to completing the credit
card transaction. And, as evidenced by the named representatives themselves,
class members could have had different perceptions. Plaintiffs, therefore, have not
shown, and cannot show, that the claims depend on a common contention that is of
such a nature that the "determination of its truth or falsity will resolve an issue that
is central to the validity of each one of the claims in one stroke." Id. at 2545.12
Accordingly, where the determination of class membership involves an
individualized inquiry into the merits, courts deny class certification. E.g., id.;
Mueller, 200 F.R.D. at 233, 239 (class lacked commonality where court would
have to consider merits of individual claims to determine membership); Endres v.
Wells Fargo Bank, 2008 WL 344204, at *11-12 (N.D. Cal. Feb. 6, 2008) (denying
class certification in part where damages would require individual inquiry into
knowledge, state of mind, and actual harm).
12 For the same reasons, plaintiffs' claims are not typical, nor are they adequate representatives.
See Wal-Mart Stores, 131 S. Ct. at 2551 n.5.
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E. A Rule 23(b)(3) Class Is Not Appropriate Because Common Issues
Do Not Predominate
For the same reason, plaintiffs cannot show that common issues predominate
under Rule 23(b)(3). The Rule 23(b)(3) predominance inquiry focuses on the
relationship between the common and individual issues. Hanlon v. Chrysler Corp.,
150 F.3d 1011, 1022 (9th Cir. 1998). Under the standards of Rule 23(b)(3), which
are stricter than commonality, the court should deny certification when
"noncommon issues are inextricably entangled with the common issues, or . . . the
noncommon issues are too unwieldy or predominant to permit the efficient
management of the litigation." 7AA Charles Alan Wright, Arthur R. Miller &
Mary Kay Kane, Federal Practice and Procedure § 1790, at 595-96 (3d ed. 2005).
As explained above, the Court cannot determine class membership without
determining whether each customer perceived that the request for PII was a
condition of the credit card transaction—a determination that can only be made on
an individual basis and that defeats certification under Rule 23(b)(3). For example,
in Ungar v. Dunkin' Donuts of America, Inc., 531 F.2d 1211, 1226 (3d Cir. 1976),
the Third Circuit denied class certification where a claim of tying under the
antitrust laws required proof of coercion. In recognizing that individual issues
predominated where issues of coercion and voluntary action are at play, the Court
stated: "What is sufficient to coerce one buyer's choice may not be sufficient to
coerce another buyer's choice; an item that one buyer might accept voluntarily,
another might accept only if forced to do so." Id. at 1219.
No reasonable alternative exists to compensate for the necessity of this
individualized inquiry. See id. at 1225. Accordingly, if a class were certified, the
issue of perception would require mini-trials that could number in the tens of
millions. "[I]f the adjudication of a defense for which the defendant has the burden
of proof would necessitate individual inquiries, and those inquiries would
predominate over inquiries into common questions, certification should be denied."
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MOTION FOR CLASS CERTIFICATION
In re Wells Fargo Home Mortg. Overtime Pay Litig., 268 F.R.D. 604, 612 (N.D.
Cal. 2010) (denying certification).
F. Plaintiffs Are Not Typical or Adequate Representatives of the
Proposed Class Because There Is No Evidence They Purchased
from Redbox
Plaintiffs cannot show that they are typical or adequate representatives
because they either did not purchase from Redbox or did not purchase using their
own credit card.13 "The test of typicality is whether other members have the same
or similar injury, whether the action is based on conduct which is not unique to the
named plaintiffs, and whether other class members have been injured by the same
course of conduct." Hanon v. Dataproducts Corp., 976 F.2d 497, 508 (9th Cir.
1992) (internal quotations and citation omitted). The typicality and adequacy
analysis often merge together because they are both concerned with whether the
named plaintiffs suffered the same injury as the class. Wal-Mart Stores, 131 S. Ct.
at 2551 n.5.
As explained above, the class, if any, can encompass only those who
purchased from Redbox kiosks, not those who rented. "A litigant must be a
member of the class which he or she seeks to represent at the time the class action
is certified by the district court." Sosna, 419 U.S. at 403. Mr. Sinibaldi concedes
that he has never purchased from Redbox. Motion at 5. Ms. DiSimone
"believe[s]" she purchased a movie from Redbox, but there is no record that she
did so using her own credit card. See fn 5. There is no evidence, therefore, that
either named plaintiff suffered the only injury of which the class can complain (if
any) (purchases of movies or video games from kiosks by a credit card holder
conditioned on a request for ZIP code), thereby defeating typicality and adequacy.
13 Given their reliance on the Ninth Circuit's overruled decision in Dukes v. Wal-Mart and their
proposal of a deficient notice plan backed by no data, Redbox also questions the adequacy of plaintiffs'
counsel. Sweet v. Pfizer, 232 F.R.D. 360, 370 (C.D. Cal. 2005) (holding plaintiffs' counsel inadequate
because of failure to apply correct federal law, failure to adhere to local rules, and other errors); Kingsepp
v. Wesleyan Univ., 142 F.R.D. 597, 602-03 (S.D.N.Y. 1992) (holding counsel inadequate because of the
poor quality of his memoranda).
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Endres, 2008 WL 344204, at *11-12 (denying certification in misrepresentation
claim in part because representatives did not review relevant marketing materials
and therefore lacked standing).14
V. PLAINTIFFS HAVE NOT SHOWN THAT THE PROPOSED CLASS
NOTICE COMPLIES WITH RULE 23
Plaintiffs propose a notice plan in the event of class certification that would
(1) email those class members for whom Redbox has emails; and (2) display the
notice at all of Redbox's California kiosks for 60 days. Plaintiffs' proposal does
not comply with Rule 23(c)(2)(B), which requires "the best notice that is
practicable under the circumstances, including individual notice to all members
who can be identified through reasonable efforts."
Plaintiffs do not explain the extent to which their plan will reach California
consumers who used a credit card at a Redbox kiosk since February 2010, or the
cost of such a plan. That alone should result in the Court's rejection of the plan.
Carnegie v. Household Int'l, Inc., 371 F. Supp. 2d 954, 957-58 (N.D. Ill. 2005)
(rejecting notice plan; court found it "troubling" plaintiffs offered no information
regarding the reach of the proposed publication plan); Thomas v. NCO Fin. Sys.,
Inc., 2003 WL 22416169, at *7 (E.D. Pa. Oct. 21, 2003) (court could not evaluate
reasonableness of notice plan absent information regarding cost and coverage).
The information that is available, however, indicates that the notice plan is
not the best practicable method. While email is the only method by which Redbox
can reach any of its customers, it is doubtful that email notice would reach even
50% of any potential class, give that many users provide an invalid email
address.15 Other emails become invalid or are abandoned. Gibby Decl. ¶ 16. A
14 This is assuming the class can complain of any violation at all, given that Redbox is not a
brick-and-mortar store and the Act does not apply to it. Saulic, 596 F. Supp. 2d at 1335-36; see also
Motion to Dismiss, Dkt. 15-1; Reply in Support of Motion to Dismiss, Dkt. 25.
15 Moreover, any class of credit card users is not as easily identifiable as plaintiffs assert.
Identifying credit card users (as opposed to debit card or gift card users) is likely to involve considerable
work by Redbox, a certain amount of guesswork and assumptions, and possibly assistance from Redbox's
payment processor. See Hoersten Decl. ¶ 9.
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kiosk screen is unlikely to bolster notice and reach a substantial number of past
Redbox users, because it is unclear to what extent and how often Redbox users
repeatedly visit the kiosks. See id. ¶ 14. For example, while Mr. Sinibaldi appears
to be a frequent renter, Ms. DiSimone has rented only twice.
Rather than propose the best notice practicable, plaintiffs have proposed a
method of notice that will avoid their own responsibility to bear the initial cost of
notice and instead burden Redbox. See Eisen v. Carlisle & Jacquelin, 417 U.S.
156, 177, 94 S. Ct. 2140, 40 L. Ed. 2d 732 (1974). Adding a screen to the user
interface would take Redbox weeks, consuming valuable resources that are
otherwise committed to high-priority projects for the company. Hoersten Decl.
¶ 10. Moreover, including a legal notice in the user interface—which would need
to be carefully read and perhaps recorded—would likely cause delays at kiosks.
Delays are already a cause of frustration for some Redbox users; further delay
could result in a significant loss of goodwill for the company.16 Gibby Decl. ¶ 15.
If the Court certifies a class, the parties should confer regarding notice and
present either a joint plan or competing plans to the Court for approval.
VI. CONCLUSION
For the reasons set forth above, plaintiffs' motion for class certification
should be denied.
DATED: October 3, 2011
PERKINS COIE LLP
By: /s/ Donald J. Kula
Donald J. Kula
Attorneys for Defendant Redbox
Automated Retail, LLC
16 Redbox also has concerns about the language of the proposed notice. It fails to define
"California card holder," leaving consumers to guess whether they need to be California residents. It also
fails to define "personal identification information." To resolve inquiries, it requires potential class
members to write to plaintiffs' counsel, which may be inefficient and burdensome.
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