Payless ZIP Code Class Action Dismissed by Mass. Federal Judge

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A class action lawsuit filed against Payless Shoesource Inc. alleging that the company illegally stored ZIP codes it collected from its customers was dismissed by a Massachusetts federal judge Monday.

U.S. District Judge George O’Toole said that he tossed the Payless class action lawsuit because it failed to meet the statutory requirement because plaintiff Erin Alberts was not named in the demand letter initially sent to Payless.

“Rather, the demand letter, sent as usual by a lawyer, merely referred to ‘plaintiff’ or ‘my client,'” Judge O’Toole explained in his decision.

“In fact, Payless asserts without contradiction that the letter was originally sent on behalf of a different person, not Alberts, who later chose not to file suit,” he said. “Payless only became aware of Albert’s claims when served with the complaint.”

The Massachusetts federal judge said that according to Massachusetts law “the demand letter must ‘identif[y] the claimant.'”

O’Toole explained that while in a class action lawsuit, plaintiffs may be added to the class action without a demand letter, the lead plaintiff must first file a demand letter, “‘identifying him as the claimant and reasonably describing the act or practice relied on and the injury suffered” before filing the lawsuit.

He further explained that the reason for the demand letter is to encourage the parties to settle the matter without having to go to court by providing “the defendant with enough information regarding the alleged actions so as to encourage investigation, communication . . . .”

Such a demand letter is considered a prerequisite to the class action lawsuit.

The Payless Shoesource class action lawsuit filed by Alberts alleges that the company had a policy that required its store clerks “to request and record customer zip codes concurrent with credit card purchases for the purpose of mailing customers unsolicited marketing materials.”

Alberts claimed in her class action lawsuit filed in September 2013 that Payless had violated Massachusetts state law, “which prohibits a business from requesting personal identification information not required by the credit card issuer and recording such information on a credit card transaction form.”

Payless explained in its motion to dismiss the class action lawsuit that it did not violate the state law by collecting the ZIP codes because they were not kept on the credit card transaction forms, but in a customer database.

“This database is entirely separate from the transaction database in which the customer’s credit card information is recorded,” the company said, adding that this system is legal under the law, as explained in a 2013 decision handed down by the Supreme Judicial Court of Massachusetts.

Lawsuits filed against CVS Caremark Corp., Lowe’s Home Centers Inc. and Petsmart Inc. and Petsmart Inc. making similar allegations were all dismissed in October 2013.

Alberts is represented by Alexander Ilya Shapoval and Joseph J. Siprut of Siprut PC.

Payless is represented by Ana M. Francisco and Geoffrey M. Raux of Foley & Lardner LLP.

The Payless ZIP Code Class Action Lawsuit is Alberts v. Payless Shoesource Inc, Case No. 1:13-cv-12262, in the U.S. District Court for the District of Massachusetts.