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Sinibaldi v. Redbox Automated Retail, LLC

United States Court of Appeals, Ninth Circuit

June 6, 2014

JOHN SINIBALDI and NICOLLE DISIMONE, individually and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
REDBOX AUTOMATED RETAIL, LLC, a Delaware limited liability company, Defendant-Appellee

Argued and Submitted, Pasadena, California: January 8, 2014.

Appeal fro the United States District Court for the Central District of California. D.C. No. 2:11-cv-02936-JHN-E. Jacqueline H. Nguyen, District Judge, Presiding.

Christopher P. Ridout, Devon M. Lyon, and Caleb LH Marker, Ridout Lyon Ottoson, LLP, Long Beach, California, for Plaintiff-Appellant Nicolle Disimone, and Daniel H. Qualls, Robin G. Workman (argued), and Aviva N. Roller, Qualls & Workman, LLP, San Francisco, California, for Plaintiff-Appellant John Sinibaldi.

Donald J. Kula, Perkins Coie, LLP, Los Angeles, California, and Thomas L. Boeder, Amanda J. Beane, Eric D. Miller (argued), and Ryan T. Mrazik, Perkins Coie, LLP, Seattle, Washington, for Defendant-Appellee.

Before: Alex Kozinski, Chief Judge, and Stephen Reinhardt and Richard R. Clifton, Circuit Judges. Opinion by Judge Clifton; Dissent by Judge Reinhardt.

OPINION

Page 704

CLIFTON, Circuit Judge:

Plaintiffs John Sinibaldi and Nicolle Disimone appeal the dismissal of a putative class action alleging violations of California's Song-Beverly Credit Card Act of 1971, which prohibits retailers from collecting personal identification information in connection with credit card transactions. See Cal. Civ. Code § 1747.08. Defendant Redbox Automated Retail, LLC operates self-service kiosks throughout California and elsewhere in the United States. Customers use the kiosks to rent movies and video games, using credit and debit cards to pay the charges. As part of the process, Redbox requires customers who obtain discs from the kiosks to provide their ZIP codes. Plaintiffs allege that, by imposing that requirement on customers using credit cards in California, Redbox has violated the Act.

We conclude that Redbox's alleged conduct does not violate the Act. The statute exempts certain transactions, including those where " the credit card is being used as a deposit to secure payment in the event of default, loss, damage, or similar occurrence." Cal. Civ. Code § 1747.08(c)(1). The Redbox transaction fits within that exception. We affirm the dismissal of the action.

I. Background

Redbox owns and operates more than 30,000 kiosks nationwide. The kiosks are usually located outside retail locations, including grocery stores, drug stores, and fast-food restaurants. Living up to the name, each Redbox kiosk is bright red. It can hold approximately 630 discs representing 200 unique movie titles or video games. No employee is present to tend to the kiosk on an ongoing basis. The transaction with the customer is fully automated.

To rent a movie or game at a Redbox kiosk, the customer uses a touch screen to select from the titles displayed. After selecting one or more titles and proceeding to the check-out screen, the customer is prompted to swipe a credit or debit card through a built-in card reader. The kiosk screen then displays the following statement: " For security reasons, please enter the ZIP code associated with your card's billing address, and press 'ENTER.'" After the customer enters a 5-digit number and the transaction representing one day's worth of charges clears, the kiosk vends the selected titles.[1]

Page 705

Most DVD rentals cost $1 per day. At the time of the rental, the customer's card is charged the fee for one day. A customer may keep a rented disc longer at the same daily rate. When the customer returns the disc, the customer's credit card is charged for any additional days beyond the initial one-day rental period, up to a maximum of $25 for DVDs, $34.50 for Blu-ray discs, and $60 for video games. If the disc is not returned before the maximum fee is reached, the customer's credit card is charged that maximum fee. These additional charges are processed automatically from the credit card information on file. The customer is not required to swipe a credit card or enter a ZIP code upon returning rentals.

Based on these facts, Plaintiffs allege that Redbox violated § 1747.08 of the Act by requesting personal identification information in connection with a credit card transaction. Section 1747.08(a) provides that " no . . . corporation that accepts credit cards for the transaction of business shall . . . [r]equest, or require as a condition to accepting the credit card as payment in full or in part for goods or services, the cardholder to provide personal identification information." [2] The California Supreme Court has held that a ZIP code is personal identification information within the meaning of § 1747.08. Pineda v. Williams-Sonoma Stores, Inc., 51 Cal.4th 524, 120 Cal.Rptr.3d 531, 246 P.3d 612 (Cal. 2011). Redbox's request for a ZIP code prior to the completion of the rental transaction is thus a request for personal identification information within the meaning of the Act.

The district court held that the Act does not apply to Redbox's unmanned kiosk transactions because, in light of the potential for fraud in such transactions, the legislature could not have meant for them to fall within the statutory privacy protection scheme. Mehrens v. Redbox Automated Retail LLC, 2012 WL 77220 at *3-4 (C.D. Cal. Jan. 6, 2012) (citing Saulic v. Symantec Corp., 596 F.Supp.2d 1323, 1333-34 (C.D. Cal. ...


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