Paul Hastings-led Business Coalition Secures Legislative Victory

May 22, 2008

New York, NY (May 22, 2008) Paul, Hastings, Janofsky & Walker LLP, a leading international law firm, announced today that it successfully led a coalition of U.S. retailers and associations in support of legislation that will protect businesses from abusive and costly lawsuits. This afternoon, the U.S. Senate passed without objection, H.R. 4008, the Credit and Debit Card Receipt Clarification Act, a bill that would amend the Fair and Accurate Transactions Act (FACTA). The House of Representatives unanimously passed the bill last week by a vote of 407 - 0.

The legislation makes a technical correction to FACTA to make clear that the inclusion of an expiration date on an otherwise FACTA compliant credit or debit card receipt between December 4, 2004 and the date of enactment cannot be deemed a willful violation of FACTA. Under applicable law, a willful violation triggers statutory damages between $100 and $1000 per transaction. This technical correction would preserve a consumers existing right to sue for negligence in the event someone experiences actual harm or account fraud.

FACTA, which was originally enacted by Congress in 2003, required, among other things, that no person that accepts credit or debit cards for payment of a transaction shall print more than 5 digits of the card number or the expiration date on the receipt. Almost immediately after the date of nationwide compliance, hundreds of lawsuits were filed alleging that the inclusion of the expiration date on a receipt with a properly truncated account number constituted a willful violation of FACTA.

"The effect of these class actions was to turn FACTA, a well meaning consumer protection statute, on its head," said Larry Sidman, the chairman of the firm's government affairs practice, "The last thing consumers or our nations economy need right now is hundreds of class actions exposing businesses ranging from mom and pop restaurants to leading retailers to potentially bankrupting damages without one scintilla of evidence of harm to consumers. Enactment of H.R. 4008 will help prevent price increases and prevent job losses."

Members of the coalition included Overstock.com, Wal-Mart, Jones Apparel Group, Longs Drugs, Vitamin Shoppe, Ross Stores, Boscovs, Food Marketing Institute and Supervalu. The coalitions efforts were aided by the U.S. Chamber of Commerce, Retail Industry Leaders Association, National Retail Federation, National Council of Chain Restaurants, National Theater Owners Association, National Restaurant Association and the International Franchise Association.

"This was clearly an unintended consequence," said Jason Rosenstock, a Paul Hastings attorney who managed the coalition. "The original FACTA provision was modeled on state law, however, because FACTA amended an existing federal statute, it also incorporated the underlying statutory damages provisions. This was not the same as with the state laws on which FACTA was modeled, and it was this statutory damages provision which provided an incentive for individuals to file class actions."

The success of this legislation, which was enacted less than seven months after bill introduction, was based on the Coalition's ability to reach across both sides of the aisle to explain how this technical correction was necessary to protect both business and consumer interests. "This is a shining example of post-partisan politics Democrats and Republicans working together to pass pragmatic, common sense legislation that protects both businesses and consumers," stated Larry Sidman.

The President is expected to sign the legislation into law.

"The legislation should send a message that these FACTA class actions should now be voluntarily dismissed," said Joshua Hamilton, an attorney at Paul Hastings who represents companies in FACTA class actions. "Court decisions have differed on whether FACTA cases are appropriate for class action treatment, and companies that benefit from this statute will no longer need to face this great uncertainty."

Paul, Hastings, Janofsky & Walker LLP, founded in 1951, is a leading international law firm with over 1,200 attorneys in 18 offices. The firm serves a diverse client base including many of the leading global financial institutions and Fortune 500 companies and offers deep capabilities in capital markets, finance and restructuring, intellectual property, international arbitration and dispute resolution, investment management, labor and employment, mergers and acquisitions, private equity, product liability, project finance, real estate, securities litigation and tax advisory services. For additional information, please visit our website at www.paulhastings.com.