Another lawsuit lottery in California

In California, a state consumer privacy law forbids stores from requiring addresses as part of credit card transactions. Adopted in 1997, it exempts some businesses such as gas stations.

That seemed clear enough. But last week the always creative California Supreme Court chose to interpret that statute in a surprisingly broad manner, unanimously ruling it’s against the law not merely for stores to require a customer’s address, but even for a clerk to ask for your ZIP code.

The decision, against Williams-Sonoma Inc., set off a flurry of litigation. Consumers have already filed lawsuits against more than a dozen national retail chains operating in California, with most being filed in San Francisco or Los Angeles.

The lawsuits argue retailers including Wal-Mart, Target, Macy’s and Cost Plus requested ZIP code information from their customers during the past year.

Attorney Mike Burns, who represents Michaels Stores Inc. in one of the ZIP code cases, said it’s difficult to assess how much each lawsuit could extort. But state law calls for maximum fines of $250 for the first violation and $1,000 for each additional one, exposing each company to millions of dollars of potential liability.

Mr. Burns said he expects retailers to defend themselves by arguing consumers are free to refuse to divulge their zip codes and other personal information while paying by credit card. Mr. Burns said that legal argument hasn’t been taken up by the appellate courts, so it’s unclear whether that will absolve the retailers of liability.

Hasn’t been taken up? Why not? The fact that a customer is free to say “No” sure sounds like the obvious first defense against a claim that stores are requiring customers to provide addresses.

How can something be “required” if the transaction goes ahead just fine after the consumers simply says, “No, you don’t need that”?

True to form, the California courts thus create a new rats’ nest of pointless litigation to ensnare and further drive up the costs of any business still crazy enough to try and conduct honest commerce in California.

All to solve a supposed “problem” that goes away if consumers will simply learn to “just say no.”