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  • District Court dismisses privacy class action claims citing absence of jurisdiction

    Privacy, Cyber Risk & Data Security

    On May 5, the U.S. District Court for the Northern District of California granted defendants’ motions to dismiss a putative class action concerning invasion of privacy claims related to the collection of consumer data over an online shopping platform. The Canada-based e-commerce company and two of its wholly-owned subsidiaries operate an e-commerce platform that hosts merchants’ websites and facilitates and verifies customers’ payment information. According to the plaintiff, the defendants’ platform intercepts payment information and collects shoppers’ sensitive personal information through the use of cookies, including names, addresses, and credit card information. The plaintiff alleged that the defendants compile the data into individualized profiles, which is shared with merchants, and also share shoppers' data with other non-merchant third parties. Shoppers are not required to consent to any of these activities and are supposedly unaware that their sensitive information is being tracked and shared, the plaintiff stated, claiming violations of California’s Invasion of Privacy Act, Computer Data Access and Fraud Act, and Unfair Competition Law, among other things. In dismissing the action, the court concluded that the plaintiff’s privacy claims against the defendants are too general and fail to identify which defendant is responsible for the plaintiff’s alleged injuries. The court noted that it would normally permit the plaintiff to amend his complaint to address the issue, but said that in this case the court lacks both general and specific jurisdiction over any of the defendants. The court explained that the plaintiff failed to argue that any of the three entities (based either in Canada or Delaware) are subject to general jurisdiction in California. Simply stating that the platform “enables merchants to sell products online . . . does not represent an intentional act directed at California residents,” the court stated.

    Privacy/Cyber Risk & Data Security Courts Class Action State Issues California Jurisdiction

  • Pennsylvania judge partially dismisses action against investors of an online lending scheme

    Courts

    On January 26, the U.S. District Court for the Eastern District of Pennsylvania partially dismissed an action brought by the Pennsylvania Attorney General against out-of-state investors of an online payday lender and the lender for violating Pennsylvania’s Corrupt Organizations Act (COA). The Attorney General alleged that an online payday lender and the investors “designed, implemented, and profited from a consumer lending scheme to circumvent the usury laws of states.” The alleged conduct, which the court referred to generally as “rent-a-bank” and “rent-a-tribe” schemes, involved the online lender partnering with an out-of-state bank and later with tribal nation to act as the nominal lenders of the loans. The investors moved to dismiss the claims against them, arguing that the court lacked personal jurisdiction over them and that the Attorney General failed to plead sufficient allegations with respect to the investors’ involvement in the “rent-a-bank” scheme. The court rejected the jurisdictional arguments, holding that even though the investors were a Delaware LLC with no physical connection to the state, their participation in a scheme targeting Pennsylvania consumers constituted sufficient minimum contacts. However, the court dismissed the “rent-a-bank” aspects of the complaint as to the investors because it found that the Attorney General failed to allege that they were anything more than passive investors in the scheme.

    Courts Payday Lending State Attorney General Jurisdiction Lending

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