The Massachusetts Supreme Judicial Court has ruled that retailers that record consumers’ zip codes when they make credit card transactions can be sued under Massachusetts consumer privacy law because they’re retaining personal identification information.

The ruling, issued on March 11, means a putative class action, Tyler v. Michaels Stores Inc., against the craft retailer can move forward in federal court in Massachusetts.

The ruling is similar to a January 2012 ruling in the California 4th District Court of Appeal in Pineda v. Williams-Somona Stores Inc. In that case, the court reinstated a lawsuit filed by a woman who claimed that a Brookstone store asked for her ZIP code during a credit card transaction, in violation of state consumer protection law.

Those rulings followed two conflicting New Jersey rulings on whether New Jersey law bars retailers from recording customers’ zip codes at the point of sale. In September 2011, the Superior Court of New Jersey, in Imbert v. Harmon Stores Inc., denied the defendant’s motion to dismiss the state court case. The same month, Senior Judge William Walls of the District of New Jersey dismissed a federal case, Feder v. Williams-Sonoma Stores Inc.

Melissa Tyler sued Michaels Stores Inc. in May 2011, alleging that its practice of collecting customers’ zip codes violates the Massachusetts Unfair Trade Practices Act and constitutes unjust enrichment. Tyler also sought a declaratory judgment that Michaels’ zip code collection violates Massachusetts law.

Judge William Young of the District of Massachusetts granted Michaels’ dismissal motion in January 2012.

Young ruled that Tyler sufficiently claimed violation of the state’s privacy law because zip codes are personal information. But he also ruled that she failed to claim that the store’s actions caused an injury under the state’s consumer privacy law or unjust enrichment.

The following month, Young certified three questions about the Massachusetts consumer privacy law to the state’s high court. Young asked the court to determine whether a zip code could be personal identification information because a credit card company needs it to identify the cardholder and complete the transaction. He also asked the Supreme Judicial Court to rule on whether a plaintiff can bring an action under the state consumer privacy law for zip code retention when there’s no identity fraud. He further asked the court to clarify whether the words "credit card transaction form" in the law could refer to both electronic or a paper transaction forms.

The unanimous ruling authored by Justice Margot Botsford answered yes to all three questions. Chief Justice Roderick Ireland joined her, along with justices Robert Cordy, Fernande Duffly, Ralph Gants, Barbara Lenk and Francis Spina.

Botsford wrote that "based on the text, title and caption, and legislative history of [the law] we are persuaded that the principal purpose of [the section at issue] is to guard consumer privacy in credit card transactions, not to protect against credit card identity fraud."

On the first question, Botsford concluded that a zip code is personal identification information because "a consumer’s zip code, when combined with the consumer’s name, provides the merchant with enough information to identify through publicly available databases the consumer’s address or telephone number, the very information [the relevant section] expressly identifies as personal identification information."

On the second question Botsford wrote, "We see no reason to read into the statute a requirement that one be the victim of identity fraud in order to assert a claim under that statute."

Botsford relied on the Legislature’s words for the third question to "interpret ‘credit card transaction form’ to apply to transactions involving both electronic and paper forms."

Jeffrey Carton of Denlea & Carton in White Plains, N.Y., who argued for the plaintiffs, did not respond to requests for comment.

The plaintiffs’ other lawyer, Greg Blankinship of Meiselman, Denlea, Packman, Carton & Ebertz in White Plains, also did not respond.

Lawyers at Chicago-based Seyfarth Shaw who represented Michaels did not respond to requests for comment. Eric McDonough, a Los Angeles partner, argued for the company. Through an e-mail from a spokesperson, Michaels said the company does not comment on pending litigation.

Joseph Lazzarotti, a Morristown, N.J., partner at Jackson Lewis, who represented amicus Retail Litigation Center, said he wasn’t available to comment.

Christopher Wolf, a partner at Hogan Lovells and director of its privacy and information management practice group, said the Tyler ruling means the Massachusetts statute "is to be interpreted in a manner consistent with the California Supreme Court’s interpretation of the Song-Beverly Act in the Pineda v. Williams Sonoma case."

"As the second state to prohibit collection of zip code information in connection with a credit card transaction, Massachusetts may be paving the way for lawsuits in other states with similar statutes," said Wolf who isn’t involved in either case.

Sheri Qualters can be contacted at squalters@alm.com.