FTC says COPPA does not preempt state privacy claims

Courts State Issues Privacy, Cyber Risk & Data Security FTC Appellate Ninth Circuit COPPA Class Action Preemption

The FTC recently filed an amicus brief in a case on appeal before the U.S. Court of Appeals for the Ninth Circuit, arguing that the Children’s Online Privacy Protection Act (COPPA) does not preempt state laws that are consistent with the federal statute’s treatment of regulated activities. The full 9th Circuit is currently reviewing a case brought against a multinational technology company accused of using persistent identifiers to collect children’s data and track their online behavior surreptitiously and without their consent in violation of COPPA and various state laws.

As previously covered by InfoBytes, last December the 9th Circuit reversed and remanded a district court’s decision to dismiss the suit after reviewing whether COPPA preempts state law claims based on underlying conduct that also violates COPPA’s regulation. At the time, the 9th Circuit examined the language of COPPA’s preemption clause, which states that state and local governments cannot impose liability for interstate commercial activities that is “inconsistent with the treatment of those activities or actions” under COPPA. The opinion noted that the 9th Circuit has long held “that a state law damages remedy for conduct already proscribed by federal regulations is not preempted,” and that the statutory term “inconsistent” in the preemption context refers to contradictory state law requirements, or to requirements that stand as obstacles to federal objectives. The opinion further stated that because “the bar on ‘inconsistent’ state laws implicitly preserves ‘consistent’ state substantive laws, it would be nonsensical to assume Congress intended to simultaneously preclude all state remedies for violations of those laws.” As such, the appellate court held that “COPPA’s preemption clause does not bar state-law causes of action that are parallel to, or proscribe the same conduct forbidden by, COPPA. Express preemption therefore does not apply to the children’s claims.” The defendant asked the full 9th Circuit to review the ruling. The appellate court in turn asked the FTC for its views on the COPPA preemption issue, specifically with respect to “whether the [COPPA] preemption clause preempts fully stand-alone state-law causes of action by private citizens that concern data-collection activities that also violate COPPA but are not predicated on a claim under COPPA.”

In agreeing with the 9th Circuit that plaintiffs’ claims are not preempted in this case, the FTC argued that nothing in COPPA’s text, purpose, or legislative history supports the sweeping preemption that the defendant claimed. According to the defendant, plaintiffs’ state law claims are inconsistent with COPPA and are therefore preempted “because the claims were brought by plaintiffs who were not authorized to directly enforce COPPA, and would result in monetary remedies under state law that COPPA did not make available through direct enforcement.” Moreover, all state law claims relating to children’s online privacy are inconsistent with COPPA’s framework, including those brought by state enforcers, the defendant maintained. The FTC disagreed, writing that the 9th Circuit properly rejected defendant’s interpretation, which would preempt a wide swath of traditional state laws. Moreover, COPPA’s preemption clause only applies to state laws that are “inconsistent” with COPPA so as not to create “field preemption,” the FTC said, adding that plaintiffs’ claims in this case are consistent with the statute.