Cases & Deals

Chevron dismisses California class action seeking substantial penalties for gas pump transactions and has it affirmed on appeal

Clients Chevron Corporation

Jones Day put an end to a large California class action filed against Chevron and other major oil companies seeking huge statutory penalties for alleged misuse of ZIP code information in association with credit card transactions following the California Supreme Court’s holding in Pineda v. Williams-Sonoma (2011) 51 Cal.4th 524.

During pendency of the litigation, Jones Day also worked through Chevron's lobbyist to create an amendment for the California Legislature to amend the Act and specifically exclude the oil companies that engage in such practices. And, on October 9, 2011, California's Governor Brown signed that amendment into law, assuring that Chevron, and dozens of other oil companies, can continue to protect their customers from identify theft at the pump. See Cal. Civ. Code §§ 1747.08(a)(2), (c)(3)(B). However, the Legislature left open the question of retroactivity, thereby requiring Chevron to make new law as well in the Courts.

On March 14, 2012, Chevron did so. In granting summary judgment, the court held that to interpret the Act as prohibiting Chevron's conduct in protecting consumers would be "absurd," and that "courts disfavor absurd interpretations." The court further noted that Chevron's conduct in preventing fraud is a special purpose that has always been exempt from the Act and that Pineda simply does not apply. Plaintiffs appealed, and on May 21, 2013, Paul Rafferty argued before the Second Appellate District, Division One, in Chevron's defense. On June 20, 2013, the court of appeal affirmed, finding that Chevron's prevention of fraud is incidental, but related to, individual credit card transactions and therefore fits within an exception defined by the Act.

The appellate court's opinion, delivered by Justice Rothschild with concurrences from Justices Mallano and Johnson, has been certified for publication and will impact California businesses beneficially where collection of ZIP codes is intended to prevent fraud.

Flores, et al. v. Chevron U.S.A. Inc., Case No. B240477 (Cal. App., Second Dist., Div. One)