Destination Maternity Reaches Class Action Settlement Over Credit Card Violation

Plaintiffs who filed a class action lawsuit against Destination Maternity Corp. for illegally requesting telephone numbers from customers when paying with a credit card has reached a class action settlement, and they are asking a California federal judge to approve the deal, after he rejected the last agreement.

If approved, each Class Member will receive a $25 gift card, which plaintiff Alana Schwartz says is fair even though Class Members could potentially receive a maximum of $250 under the Song-Beverly Credit Card Act for each violation, adding that it is still unclear exactly what qualifies as a violation.

“In a case such as this, which is based on a ‘request’ for personal identification information, the cases are all over the map as to when a violation occurs during a transaction such that the customer would objectively believe that the provision of personal identification information was necessary in order to complete the transaction,” Schwartz wrote in her motion for preliminary approval of the Destiny Maternity class action settlement.

Schwartz added that the “Ninth Circuit recently recently recognized the problem and certified a question to the California Supreme Court in order to obtain further clarification on when information can be lawfully requested.”

Due to this uncertainty, Schwartz has concluded that giving each Class Member a gift card is adequate and fair.

In May, U.S. District Judge George King rejected the Destination Maternity class action settlement that she and the retailer had reached.

Judge King said that he wanted “to explain why some Class Members were either included or excluded from the class action settlement, and why this settlement is fair, given the fact that under California law, Class Members could get $250 for the first violation and $1,000 for each following violation.”

The California federal judge said that he also questioned the terms that come with gift certificates, specifically that they are set to expire in 10 months, can only be used in one transaction, while giving up whatever is remaining, and can only be used in stores and not for online purchases.

Schwartz said that subscribers of Parents or Parenting magazine were included because they had voluntarily given their personal identification information to Destination Maternity when they had first subscribed to the magazines. The same is the case with those who were members of Destination’s perks program.

She argues that the Class is limited to those who made more than one credit card purchase because when Destination Maternity requested the personal identifiable information after a customer had already signed up for either the magazine subscription or the perks program, that’s when the Song-Beverly Act is violated.

She also said in the motion for approval of the Destination Maternity class action settlement that 10 months is “a significant amount of time within which to make a purchase.”

If a Class Member has no need for the gift certificate because she isn’t pregnant or planning to have any more children, she can give it “to someone else who is expecting” or sell it to someone on Craigslist or eBay at a monetary value, she argues.

Schwartz explained in the motion to approve the class action settlement that the Class size was decided through an analysis of Destination Maternity records, and that the data had been analyzed by the claims administrator to figure out how many Class Members exist.

In addition to the $25 gift card, Class Members will also have the option of being removed from Destination Maternity mailing lists.

While it is illegal under California law for retailers to ask for any personal identifiable information from customers when making credit card purchases, such as a phone number, Schwartz reportedly admitted that she gave Destination Maternity her phone number to the cashier for the purpose of looking up her “perks program” profile.

Destination Maternity owns Motherhood Maternity, A Pea In The Pod, and Destination Maternity retails stores.

Alana Schwartz is represented by Kenneth Alan Goldman of the Law Office of Kenneth Goldman PC and James Timothy Ryan of James T. Ryan PC.

Destination Maternity Corp. is represented by Molly Moriarty Lane, Brendan Eugene Radke, Phillip J. Wiese and Diane Leslie Webb of Morgan Lewis & Bockius LLP.

Representatives for Destination Maternity Corp. did not respond to request for comment Tuesday.

The Destination Maternity Class Action Lawsuit is Alana Schwartz v. Destination Maternity Corporation et al., Case No. 2:14-cv-01477, in the U.S. District Court for the Central District of California.