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Financial Services Law Insights and Observations

District Court: No negligent misrepresentation claims in smart-TV privacy suit

Courts Class Action Privacy/Cyber Risk & Data Security

Courts

On August 20, the U.S. District Court for the District of New Jersey dismissed without prejudice a proposed class action alleging consumer fraud claims. Specifically, in 2017, the plaintiffs filed a complaint alleging that smart televisions manufactured by the defendants surreptitiously collected consumer data such as programs viewed and when they were viewed, along with certain identifying information including IP addresses and zip codes. This information, the plaintiffs contended, was sold to third parties who used the data to advertise to the same consumers, in violation of the (i) New Jersey Consumer Fraud Act (NJCFA); (ii) Florida's Deceptive and Unfair Trade Practices Act (FDUTPA); (iii) the Video Privacy Protection Act; (iv) the Wiretap Act; and (v) common law negligent misrepresentation. In response to the defendants’ motion to dismiss, the court held that the claims were pled with sufficient particularity under the Federal Rules of Civil Procedure to withstand a motion to dismiss, but dismissed the state consumer fraud claims, reasoning that the plaintiffs failed to adequately allege their damages. The court ruled that the FDUTPA and NJCFA claims failed because the plaintiffs had not alleged actual damages, rejecting plaintiffs’ assertions that the invasion of their privacy counted as damages because there was no out-of-pocket loss. Additionally, the court dismissed the plaintiffs’ federal Video Privacy Protection Act, reasoning that the information allegedly collected did not constitute personally identifiable information under 3rd Circuit precedent. By contrast, the court allowed the Wiretap Act allegations to proceed after determining the plaintiffs “adequately alleged that their ‘content’ was intercepted.” Finally, with respect to the common law negligent misrepresentation claim, the court agreed with the defendants that the plaintiffs failed to allege that a special relationship existed between the plaintiffs and the defendants that could support a negligent misrepresentation claim.

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