Luckey v. Superior Court of State

• Decision Date: 22 July 2014
• Docket Number: B253892
• Citation: 228 Cal.App.4th 81,174 Cal.Rptr.3d 906
• Court: California Court of Appeals Court of Appeals
• Parties: Roman LUCKEY, Petitioner, v. SUPERIOR COURT of the State of California, County of Los Angeles, Respondent; Cotton On USA, Inc. et al., Real Parties in Interest.

228 Cal.App.4th 81

174 Cal.Rptr.3d 906

Roman LUCKEY, Petitioner,

v.SUPERIOR COURT of the State of California, County of Los Angeles, Respondent;

Cotton On USA, Inc. et al., Real Parties in Interest.

B253892

Court of Appeal,

Second District, Division 3, California.

Filed July 22, 2014

See 4 Witkin, Cal. Procedure (5th ed. 2008) Pleading, § 330.

ORIGINAL PROCEEDINGS in mandate. Daniel J. Buckley and Lee Smalley Edmon, Judges. Petition denied. (Super. Ct. No. BC508484)

Wucetich & Korovilas, El Segundo, Jason M. Wucetich and Dimitrios V. Korovilas for Petitioners.

Sedgwick and Douglas J. Collodel, Los Angeles, for Respondent.

Kelley Drye & Warren and Edward E. Weiman, Los Angeles, for Real Parties in Interest.

CROSKEY, Acting P.J.

Petitioner Roman Luckey brought a putative class action against real parties in interest Cotton On USA, Inc. and Cotton On Clothing Pty Ltd. (collectively Cotton On) for violations of the federal Fair and Accurate Credit Transactions Act (FACTA). Prior to class certification, Luckey and Cotton On mediated their dispute and reached a class settlement agreement. Pursuant to the settlement agreement, Luckey and Cotton On stipulated to the appointment of a temporary judge for the purpose of ruling on the motions for preliminary and final approval of the settlement. This stipulation was presented to respondent Superior Court of California, County of Los Angeles (Superior Court), which declined to appoint the temporary judge, on the basis that counsel for Luckey had no authority to sign the stipulation on behalf of the absent putative class members. Luckey filed a petition for writ of mandate, challenging this ruling. We conclude that the California Constitution, the California Rules of Court, and public policy concerns all preclude the appointment of a temporary judge for purposes of approving the settlement of a pre-certification class action. When the class has not yet been certified, the putative class representative has no authority to consent to a temporary judge on behalf of the absent putative class members.¹ We therefore deny the writ petition.

FACTUAL AND PROCEDURAL BACKGROUND

1. Allegations of the Complaint

On May 5, 2013, Luckey filed the instant action in Superior Court; the operative complaint is the first amended complaint, filed September 5, 2013. Under FACTA, it is prohibited for a person accepting credit or debit cards for the transaction of business to print “more than the last 5 digits of the card number or the expiration date” on an electronically printed receipt provided to the cardholder at the point of the transaction. (15 U.S.C. § 1681c(g).) Any person who willfully fails to comply with this requirement is liable to the consumer for actual damages of not less than $100 and not more than $1,000, as well as punitive damages and reasonable attorney's fees. (15 U.S.C. § 1681n(a)(1).) Luckey alleged that, on April 18, 2013, he made a credit card purchase at a Cotton On store, and received an electronically printed receipt that showed the first four and last four digits of his credit card number as well as the card's expiration date. Luckey alleged, on information and belief, that Cotton On's stores across the county similarly electronically print eight digits of purchasers' credit card numbers and expiration dates upon their receipts. Luckey alleged that Cotton On knew or should have known of the FACTA requirements. The operative complaint alleged causes of action for violation of FACTA, negligence, and declaratory relief.

Luckey sought to proceed in a class action, defining the putative class as “All individuals who purchased merchandise using a personal credit card or personal debit card at any retail store operated by Defendant within the United States during the Class Period[²] who: [¶] Subclass A: Were issued an electronically printed receipt that reflected more than the last five digits of the card; and/or [¶] Subclass B: Were issued an electronically printed receipt that reflected the card's expiration date....” Luckey sought, on behalf of the class, damages of between $100 and $1000 for each receipt which violated FACTA (with separate damages for each violation), punitive damages, and reasonable attorney fees. Luckey also sought an order declaring that Cotton On's credit and debit card receipt practices violate FACTA and an order enjoining Cotton On from continuing to do so.

We take judicial notice of the Superior Court docket sheet. No responsive pleading was filed. The only other documents filed in this case consisted of stipulations for continuance of the initial status conference, and the stipulation for appointment of a temporary judge which is at issue in this writ proceeding. Luckey represents that, from the time the complaint was filed, the parties engaged in “informal discovery and exchanged information” in preparation for a mediation held on October 28, 2013.

2. The Settlement

The mediation was held before a retired superior court judge. A settlement was reached at the mediation, and memorialized in a written settlement agreement.³ It is a class settlement, defining the settlement class as “all individuals who purchased merchandise using a personal credit card or personal debit card at any retail store operated by Cotton On within the United States since May 9, 2008, who were issued an electronically printed receipt that reflected more than the last five digits of the card and/or were issued an electronically printed receipt that reflected the card's expiration date.” It excludes persons who validly opt out of the class.

Under the terms of the settlement, the class is to receive compensation in the form of “Merchandise Credits,” although the term is something of a misnomer. The compensation consists of a $5 credit on a transaction at or exceeding $25 at one of Cotton On's retail stores, during one pre-selected week.⁴ The credits will apply to “every transaction in excess of $25.00, exclusive of tax, during this seven day period.” Only one credit will be provided per transaction or per customer. In other words, each person buying something in excess of $25 at Cotton On, during the designated week, will receive a $5 discount—regardless of whether that person is a member of the class. Moreover, each such shopper will receive a single $5 discount, regardless of how many FACTA violations Cotton On may have committed against that person. (We refer to this compensation as the “$5 off $25 sale.”) Notice is to be provided to the class by means of e-mail notice to be provided “to all [Cotton On]'s customers in the United States for whom [Cotton On] possesses a valid e-mail address.” ⁵ Notice would also be given on Cotton On's website and near each of its retail stores' cash registers. Class members would be given an opportunity to opt out of the class by means of a written request for exclusion. If class members sought to object to the settlement, they could do so by means of filing “signed, written objection[s].” The notice to be sent to the class, attached as an exhibit to the settlement agreement, provided that objecting class members could attend the final fairness hearing and request to be heard, but explained, “If you submit a written objection, you do not have to come to Court to talk about it. As long as you submitted your written objection on time, the Court will consider it.”

Cotton On agreed to fund the settlement in the amount of $1,000,000. Of that amount, the parties agreed that Luckey's counsel could seek an award of attorney's fees and costs in an amount of $302,000. The parties also agreed that Luckey himself could receive a payment of $5,000 as class representative, and that $135,000 would be allocated to the administrative costs of the settlement.

In short, Luckey and Cotton On agreed to settle Cotton On's liability to the nationwide class in exchange for: (1) $5,000 paid to Luckey (whereas each class member would receive, at most, a merchandise credit for one one-thousandth of that amount); ⁶ (2) $302,000 paid to Luckey's counsel (for work which, to that point, consisted of filing a complaint and amended complaint, and preparing for and attending a one-day mediation); and (3) a one-week $5 off $25 sale,⁷ of which Cotton On would send notice to its e-mail customer list. The parties also agreed to a stipulated injunction enjoining Cotton On from including on its electronically-printed receipts either the cards' expiration dates or more than the last five digits of the cards' numbers, although the settlement agreement provides no time frame for when Cotton On would comply with this requirement. Pursuant to the settlement agreement, Cotton On would be released from any liability to the class for the FACTA violations alleged in Luckey's complaint.

In the settlement agreement, the parties agreed to stipulate, for the purposes of settlement only, to provisional certification of the class. The parties also agreed to stipulate to the appointment of a temporary judge for purposes of ruling on the motions for preliminary approval and final approval “to facilitate the expeditious resolution of these motions....”

3. The Stipulation for Appointment of a Temporary Judge

Pursuant to the settlement agreement, the parties stipulated for appointment of a temporary judge to hear the matter “until final determination thereof.” Specifically, the parties intended to submit to the temporary judge the issues related to preliminary and final approval of the class action settlement. The same retired judge who had served as the mediator in this matter was identified by the parties as the proposed temporary judge.⁸ The temporary judge would be privately compensated by the parties.⁹

The stipulation was presented to the Supervising Judge of the Civil Division, as required by the Superior Court of Los Angeles County, Local Rules, rule 2.24(a)(1). On June 2, 2014, the court issued a minute order declining to approve the stipulation. The court's analysis explained...