Big 5 Sporting Goods Corp. v. Zurich Am. Ins. Co.

• Court: U.S. District Court — Central District of California
• Writing for the Court: DOLLY M. GEE
• Citation: Big 5 Sporting Goods Corp. v. Zurich Am. Ins. Co., 957 F.Supp.2d 1135 (C.D. Cal. 2013)
• Decision Date: 10 July 2013
• Docket Number: Case No. CV 012–03699 DMG (MANx).
• Parties: BIG 5 SPORTING GOODS CORPORATION, a Delaware corporation, Plaintiff, v. ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; and Hartford Fire Insurance Company, a Connecticut corporation, Defendants.

957 F.Supp.2d 1135

BIG 5 SPORTING GOODS CORPORATION, a Delaware corporation, Plaintiff,

v.ZURICH AMERICAN INSURANCE COMPANY, a New York corporation; and Hartford Fire Insurance Company, a Connecticut corporation, Defendants.

Case No. CV 012–03699 DMG (MANx).

United States District Court, C.D. California.

July 10, 2013.

David Allan Gauntlett, James A. Lowe, Gauntlett & Associates, Irvine, CA, for Plaintiff.

Eldon S. Edson, Jan L. Pocaterra, Selman Breitman LLP, David Simantob, Elizabeth L. Musser, Tressler LLP, Los Angeles, CA, for Defendants.

ORDER RE PARTIES' CROSS–MOTIONS FOR SUMMARY JUDGMENT

DOLLY M. GEE, District Judge.

This matter is before the Court on the parties' cross-motions for summary judgment. For the reasons set forth below, Defendants' Motions for Summary Judgment are GRANTED and Plaintiff's Motion for Partial Summary Judgment is DENIED.

I.PROCEDURAL HISTORY

On April 27, 2012, Plaintiff Big 5 Sporting Goods Corporation (“Big 5”) filed a Complaint against Zurich American Insurance Company (“Zurich”) and Hartford Fire Insurance Company (“Hartford”), collectively (“Defendants”), asserting claims under state law arising from Defendants' refusal to defend Plaintiff from third party lawsuits. Plaintiff alleges the following claims: (1) declaratory judgment on Defendants' duty to reimburse defense expenses; (2) breach of contract; and (3) breach of the duty of good faith and fair dealing. Defendants filed their respective Answers as well as Counterclaims on June 12, 2012. Plaintiff and Counter–Defendant filed an Answer to Zurich's Counterclaim on July 3, 2012. Plaintiff and Counter–Defendant filed an Answer to Hartford's Counterclaim on July 9, 2012.

On June 18, 2012, Plaintiff filed a Motion for Partial Summary Judgment (“Big 5 Mot.”) as to Defendants' Duty to Reimburse Plaintiff's Defense Expenses. Zurich and Hartford each filed Oppositions to Plaintiff's Motion on July 6, 2012. Plaintiff filed a Reply on July 20, 2012.

On June 18, 2012, Hartford filed a Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment (“Hartford Mot.”) as to Plaintiff's claims for declaratory judgment, breach of contract, and breach of the duty of good faith and fair dealing. Plaintiff filed an Opposition on July 6, 2012. Hartford filed a Reply on July 20, 2012.

On July 5, 2012, Zurich filed a Corrected Motion for Summary Judgment or, in the Alternative, Partial Summary Judgment (“Zurich Mot.”) as to Plaintiff's claims for declaratory judgment, breach of contract, and breach of the duty of good faith and fair dealing. Plaintiff filed an Opposition on July 6, 2012. Zurich filed a Reply on July 20, 2012.

The Court held a hearing on the motions on August 10, 2012 and, thereafter, took the matters under submission.

II.FACTUAL BACKGROUND

Introduction

Eleven underlying class action lawsuits allege that Big 5 infringed privacy rights by requesting, recording, and publishing customer zip codes during credit card transactions in violation of the Song–Beverly Act of 1991, Cal. Civ.Code§ 1747.08(a)-(b). (Big 5's Mot. at 7; Big 5's Statement of Uncontroverted Facts (“BSUF”), passim.) The Song–Beverly Act prohibits a corporation that accepts credit cards for business transactions from requesting that the cardholder provide “personal identification information,” which includes address and telephone number. Cal. Civ.Code § 1747.08(a)-(b).

A. The Song–Beverly Act

Section 1747.08 of the Song–Beverly Act prohibits the requesting of “personal identification information” in connection with credit card transactions. Cal. Civ.Code § 1747.08(a)-(b). The Song–Beverly Act states:

(a) ... no person, firm, partnership, association, or corporation that accepts credit cards for the transaction of business shall do any of the following: * * *

(2) Request 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, which the person, firm, partnership, association, or corporation accepting the credit card writes, causes to be written, or otherwise records upon the credit card transaction form or otherwise.

(b) For purposes of this section “personal identification information,” means information concerning the cardholder, other than information set forth on the credit card, and including, but not limited to, the cardholder's address and telephone number....

Cal. Civ.Code § 1747.08(a)-(b).

Section 1747.08(e) states that, “[a]ny person who violates this section shall be subject to a civil penalty not to exceed two hundred fifty dollars ($250) for the first violation and one thousand dollars ($1,000) for each subsequent violation....” Section (e) further states, “[h]owever, no civil penalty shall be assessed for a violation of this section if the defendant shows by a preponderance of the evidence that the violation was not intentional and resulted from a bona fide error made notwithstanding the defendant's maintenance of procedures reasonably adopted to avoid that error.” Cal. Civ.Code § 1747.08(e). Injunctive relief is available only in actions brought by the Attorney General, a district attorney, or a city attorney. Cal. Civ.Code § 1747.08(f).

In 2011, the California Supreme Court examined whether the Song–Beverly Act is violated when a business requests and records a customer's zip code during a credit card transaction. Pineda v. Williams–Sonoma Stores, Inc., 51 Cal.4th 524, 527, 120 Cal.Rptr.3d 531, 246 P.3d 612 (2011). The court held that, “[i]n light of the statute's plain language, protective purpose, and legislative history, we conclude that a ZIP code constitutes ‘personal identification information’ as that phrase is used in section 1747.08.” Id. The court further held that, “[t]hus, requesting and recording a cardholder's ZIP code, without more, violates the Credit Card Act.” Id. at 527–528, 120 Cal.Rptr.3d 531, 246 P.3d 612.

B. The 2008 Underlying Actions

In 2008, two class action lawsuits were filed against Big 5: Zimmerman v. Big 5 Sporting Goods Corporation, Case No. BC383834, Los Angeles County Superior Court (“ Zimmerman ”), and Gonzalez v. Big 5 Sporting Goods Corporation, Case No. 27–2008–00083307–CU–BT–CTL, San Diego County Superior Court (“ Gonzalez ”) (the “2008 Underlying Actions”). (Big 5's Statement of Uncontroverted Facts (“BSUF”) ¶¶ 22–24, 26–27.) Both alleged that Big 5 infringed customers' privacy rights by requesting, recording, and publishing customer zip codes in connection with credit card transactions, and in violation of the Song–Beverly Act of 1991, Cal. Civ.Code§ 1747.08(a)-(b). (BSUF ¶¶ 22, 24, 27.)

The Zimmerman complaint alleged a violation of the Song–Beverly Act and an additional California statutory violation. (Zurich's Statement of Uncontroverted Facts (“ZSUF”) ¶ 27.) Specifically, the Zimmerman complaint alleged the following causes of action: (1) violation of the Song–Beverly Act; and (2) violations of California Civil Code Section 1750 et seq. (the “Consumers' Legal Remedy Act”). (ZSUF ¶ 27.) The Zimmerman action sought the following: (1) certification of a class; (2) civil penalties provided under the Song–Beverly Act; (3) injunctive relief; and (4) attorney's fees, costs and interests. (ZSUF ¶ 28.)

The Gonzalez complaint alleged two claims in addition to a violation of the SongBeverly Act. The Gonzalez complaint alleged: (1) violations of the Song–Beverly Act; (2) violation of California Business and Professions Code § 17200 et seq.; and (3) invasion of privacy. (ZSUF ¶¶ 30–31.) The Gonzalez action sought the following: (1) certification of a class; (2) civil penalties provided under the Song–Beverly Act; (3) injunctive relief; (4) general damages; (5) disgorgement of profits (and cy pres recovery); and (6) attorney's fees, costs and interests. (Joint Appendix, Exhibit 6 [ Gonzalez complaint].)

C. The 2011 Underlying Actions¹

In 2011, nine more class action lawsuits were filed against Big 5 (the “2011 Underlying Actions”).² (BSUF ¶¶ 29, 40.) The additional nine pending lawsuits allege that Big 5 violated class members' privacy rights by following its corporate policy requiring employees to request and record customers' zip codes in order to complete a credit card transaction. (BSUF ¶¶ 29, 40.)

Six of the 2011 Underlying Actions (the “Statute–Only Actions”) allege that Big 5 violated the Song–Beverly Act. The Statute–Only Actions include the following lawsuits: Matatova, Mossler, Holmes, Wiener, Smith, and Gabriel. (Hartford's Statement of Uncontroverted Facts (“HSUF”) ¶¶ 2–3, 7–8, 12–13, 17–18, 22–23, 27–28.) All of the Statute–Only Actions seek civil penalties for violation of the Song–Beverly Act pursuant to California Civil Code section 1747.08(e). (HSUF ¶¶ 4, 9, 14, 19, 24, 29.)

Two of the Underlying Actions, the Nelson and Motta actions, allege common law claims as well as violations of the Song–Beverly Act. (HSUF ¶¶ 37–38, 42–43.) The Nelson and Motta actions allege the following causes of action: (1) violation of the Song–Beverly Act; (2) common law negligence; (3) invasion of privacy; and (4) unlawful intrusion. (HSUF ¶¶ 37, 42.) The Nelson and Motta actions seek civil penalties pursuant to California Civil Code section 1747.08(e), general damages, disgorgementof profits (and cy pres recovery), and injunctive relief. (HSUF ¶¶ 39–40, 44–45.)

One of the Underlying Actions, the Valiente action, alleges two claims in addition to the claim for violation of the Song–Beverly Act. (HSUF ¶ 31.) The Valiente action alleges the following causes of action: (1) violation of the Song–Beverly Act; (2) injunctive relief for violation of the Song–Beverly Act; and (3) violation of California Business and Professions Code § 17200 et seq. (HSUF ¶ 31.) The Valiente action seeks civil penalties pursuant to California Civil Code section 1747.08(e), injunctive relief, and restitution. (HSUF ¶¶ 33–34.)

All nine of the 2011 Underlying Actions were consolidated in October 2011 into the ...