In addition to generating caselaw bearing on whether large class action damages constitute “annihilating” penalties that render individual actions superior to class treatment, the Fair and Accurate Credit Transactions Act (FACTA) also defines the common term willfulness, a measure of conduct with considerable application beyond FACTA consumer class actions, or wage-and-hour class actions.
In California, for instance, the waiting-time penalties that are often the largest portion of damages where relatively small per-violation amounts are alleged (such as with the miscalculation of overtime pay rates) are triggered only if the underlying conduct is deemed willful. While not a wage-and-hour decision per se, Long v. Tommy Hilfiger, Inc., No. 09-1701 (W.D. Pa. Feb. 11, 2011) (available here) adds weight to the argument that analysis of willful conduct ought to be under a objective standard, as opposed to a subjective standard that will often provide incentives for employers and retailers to be deliberately uninformed as part of making out a defense to willfulness. See Cal. Lab. Code § 203(a) (“If an employer willfully fails to pay . . . any wages of an employee who is discharged or who quits, the wages of the employee shall continue as a penalty frwillfom the due date thereof at the same rate until paid or until an action therefor is commenced; but the wages shall not continue for more than 30 days.”) (emphasis added). Under an objective standard, any discovery of or analysis concerning a defendant’s subjective beliefs is obviated, in favor of an inquiry as to the objective reasonableness of the defendant’s conduct.
In Long, the district court took up whether the defendant had violated the FACTA requirement that credit card receipts not show a credit card’s expiration date by including the month, but not year, or expiration on credit card receipts. Under the premise that “expiration date” within FACTA’s meaning and intent requires both a month and year, the court held that the defendant did not violate FACTA. It was the court’s alternative reasoning from which the broader holding concerning willfulness arose. The court concluded the defendant’s understanding of the statute was objectively reasonable in the absence of any judicial guidance, so even if printing only the month of expiration had been a violation of the expiration date prohibition, it would not have been a willful violation. As such, FACTA statutory penalties, which require willful conduct, would not be triggered. The Long court relied on the willfulness analysis in Shlahtichman v. 1-800 Contacts, 615 F.3d 794 (7th Cir. 2010), and its holding applying an objective standard to willfulness analysis.
Accordingly, despite being a ruling helpful to companies, the objective standard for assessing willful conduct could, in the long run, yield considerably greater pro-plaintiff benefits, with any class seeking California’s Section 203 waiting-time penalties being one obvious beneficiary.