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District Court allows majority of privacy invasion class action claims to proceed against social media company
On September 9, the U.S. District Court for the Northern District of California granted in part and denied in part a social media company’s motion to dismiss a multidistrict class action alleging the company failed to prevent third parties from accessing and misusing private data of its users, in violation of the Stored Communications Act (SCA), the Video Privacy Protection Act (VPPA), and various state laws. In the consolidated action, the plaintiffs allege that the company (i) made sensitive user information—including basic facts such as gender, age, and address; and substantive content such as photos, videos, and religious and political views—available to third parties without user consent; and (ii) failed to prevent those same third parties from selling or otherwise misusing the information. The company moved to dismiss the action, arguing, among other things, that “people have no legitimate privacy interest in any information they make available to their friends on social media.”
The district court disagreed, concluding that most of the plaintiffs’ claims should survive, and that the company “could not be more wrong” in its argument that its users lose all privacy interest in the information they share with their friends on social media. The court asserted that when a user shares information with a limited audience, they “retain privacy rights and can sue someone for violating them.” The court also rejected the company’s argument that the plaintiffs did not have standing to sue in federal court because they could not show “tangible negative consequences from the dissemination of [the] information.” The court noted that privacy invasion is a redressable injury in itself and does not need a secondary economic injury to confer standing. Additionally, while the court recognized that the company’s argument that the users consented to this practice has “some legal force,” it cannot “defeat the lawsuit entirely, at least at the pleading stage.” Therefore, the court denied the motion as to the VPPA and narrowed certain claims under the SCA and California state laws, mostly with regard to claims on behalf of users who signed up for the service after 2009, who purportedly authorized the company to share information through their friends with app developers.
District Court says TCPA dismissal bid cannot rely upon Supreme Court ruling
On September 3, the U.S. District Court for the District of New Jersey denied a medical laboratory’s motion to dismiss, ruling that the company cannot use a Supreme Court ruling to avoid a proposed TCPA class action suit concerning allegations that it made unsolicited calls using an “autodialer.” As previously covered by InfoBytes, the court denied the defendant’s motion to dismiss last December after it concluded that the plaintiff sufficiently alleged the equipment used to make unsolicited calls qualified as an “autodialer.” The defendant argued, however, that the court should reconsider its decision in light of a 2019 Supreme Court ruling in which separate concurring opinions written by Justices Kavanaugh and Thomas concluded that district courts are not bound by the FCC’s interpretation of the term “autodialer” under the TCPA. According to the defendant, because of these concurring opinions, the court “was not bound by the FCC’s 2003 and 2008 guidance on the definition of an ‘autodialer,’” and should therefore revisit its prior opinion. However, the court stated that the Supreme Court’s case does not change any of the “controlling law” dealing with the TCPA issue in the current lawsuit. “Because defendant’s arguments are not based on any actual change in controlling law,” its motion for reconsideration is denied, the court stated, noting that concurring opinions “do not change ‘controlling law.’”
District Court allows TCPA class action to proceed against auto company
On August 27, the U.S. District Court for the Central District of California denied a car manufacturer’s motion to dismiss a class action alleging that it violated the TCPA by sending unwanted automated text messages. According to the opinion, after a consumer visited a car dealership, she allegedly received unsolicited text messages to her cell phone from the dealership. The consumer filed a proposed class action alleging the corporate car manufacturer “directed, encouraged, and authorized its dealerships [] to send text messages promoting the sale of [the] automobiles to [the consumer] and other members of the proposed Class, pursuant to a common marketing scheme” and that the text messages were transmitted using an automated telephone dialing system (autodialer) in violation of the TCPA. The manufacturer moved to dismiss the action, arguing that the plaintiff failed to allege (i) that the manufacturer sent the text messages or that the dealership sent the text messages as the manufacturer’s agent; and (ii) that the text messages were sent using an autodialer.
The court first determined that the plaintiff plausibly alleged that the manufacturer directly sent the text messages, or, in the alternative, that the dealership was acting as the manufacturer’s agent when the texts were sent. Furthermore, the plaintiff alleged that the manufacturer used hardware and software programs with the requisite capabilities to qualify as an autodialer pursuant to the 9th Circuit’s decision in Marks v. Crunch San Diego, LLC (covered by InfoBytes here).
3rd Circuit affirms dismissal of NFL season ticket class action
On August 29, the U.S. Court of Appeals for the 3rd Circuit affirmed the dismissal of a putative class action alleging that an NFL team’s season ticket sales practices had violated the implied covenant of good faith and fair dealing and the New Jersey Consumer Fraud Act (CFA). As previously covered by InfoBytes, the case was centered on the plaintiff’s purchase of a personal seat license (PSL) that “both allows and obligates” him to buy season tickets for particular seats at the team’s home games. The team later began selling seats in the same seating section without requiring PSLs, which the plaintiff alleged made his PSL “valueless” and “‘unsellable’ because defendants are currently giving away for free what cost him $8,000.” The district court dismissed the plaintiff’s claims with prejudice because the plaintiff had received the “reasonably expected fruits under the contract.”
On appeal, the 3rd Circuit agreed with the district court that the plaintiff had “received the fruits of his contract” because “[n]othing in the complaint suggests [the plaintiff] has lost the exclusive right to purchase season tickets for these seats” and the fact that the team “might now sell adjacent seats to members of the general public does not implicate [the plaintiff’s] rights and certainly does not strip him of the benefit for which he bargained.” Regarding the value of his PSA, the appellate court noted that when purchasing the PSL, the plaintiff represented that he was not acquiring it as an investment and had no expectation of profit. Finally, with regard to the CFA claim, the appellate court held that “simply changing the terms on which defendants sell other seats in the stadium is not misleading.”
11th Circuit: Unsolicited text message doesn't establish standing under TCPA
On August 28, the U.S. Court of Appeals for the 11th Circuit held that receiving one unsolicited text message is not enough of a concrete injury to establish standing under the TCPA. According to the opinion, a former client of an attorney received an unsolicited “multimedia text message” from the attorney offering a ten percent discount on services. The client filed a putative class action, alleging the attorney violated the TCPA arguing the text message caused him “‘to waste his time answering or otherwise addressing the message’” leaving his cell phone “‘unavailable for otherwise legitimate pursuits’” and resulted in “‘an invasion of [] privacy and right to enjoy the full utility’” of his cell phone. The attorney moved to dismiss the complaint for lack of standing and the district court denied the motion. However, the court allowed the attorney to pursue an interlocutory appeal.
On appeal, the 11th Circuit looked to the Supreme Court decision in Spokeo, Inc. v. Robins— which held that a plaintiff must allege a concrete injury, not just a statutory violation, to establish standing—as well as the legislative history of the TCPA and determined there was “little support” for treating the client’s allegations as a concrete injury. Specifically, the panel noted that the allegations of “a brief, inconsequential annoyance are categorically distinct from those kinds of real but intangible harms” Congress set out to protect. Moreover, the “chirp, buzz, or blink of a cell phone” is annoying, but not a basis for invoking federal court jurisdiction. The panel also acknowledged that Congress, not a federal court, is “well positioned” to assess the new harms of technology. Because the client failed to allege a concrete harm by receiving the unsolicited text message, the panel reversed the district court decision.
District Court: No negligent misrepresentation claims in smart-TV privacy suit
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.
District Court approves final call-taping settlement
On August 21, the U.S. District Court for the Central District of California issued an order granting final approval of a settlement reached between a class of California consumers and a mortgage company. The approval of the settlement resolves allegations that the company contacted delinquent borrowers and had conversations involving personal and confidential financial information without first informing the consumers that the conversations would be recorded. The plaintiffs filed a complaint in 2015 alleging that the company violated sections of the California Penal Code that prohibit the intentional recording of conversations without obtaining the knowledge or consent of the other party. According to the plaintiffs, the company used scripts that instructed its agents to carry on discussions with consumers prior to providing the call recording advisory. Among other provisions, the settlement terms award $1.6 million in attorneys’ fees, approximately $25,046 in reimbursement of litigation expenses, service awards of $10,000 to each class representative, and up to $200,000 to the settlement claims administrator for its work in distributing settlement money to class members (the company is required to establish a settlement fund in the amount of $6.5 million).
District Court upholds $925 million TCPA jury verdict against direct sales company
On August 21, the U.S. District Court for the District of Oregon upheld a $925 million jury verdict against a direct sales company in a TCPA class action lawsuit, denying the company’s motion to decertify the class. According to the opinion, the named plaintiff brought the 2015 class action lawsuit alleging the company violated the TCPA by calling consumers using an artificial or prerecorded voice without their consent. In April 2019, a jury concluded that a total of 1,850,436 calls were made using an artificial or prerecorded voice to either cell phones or landlines. However, in June 2019, the FCC granted a request made by the company in September 2017 for a retroactive waiver of the agency’s 2012 new written consent requirements for telemarketing robocalls, but only as it applied to “calls for which the petitioner had obtained some form of written consent.” Based on the newly-obtained waiver from the FCC, the company moved to decertify the class arguing that, among other things, (i) the named plaintiff lacked standing, and (ii) consent is now an individualized issue that “predominates” over the class issues. The court rejected these arguments, concluding that the company waived the affirmative defense of consent by not raising the defense earlier in the litigation when it knew its FCC waiver was pending. Specifically, the court reasoned that the failure to raise the issue “given the likelihood that the FCC would grant its waiver petition was unreasonable.” The court also rejected the company’s predominance arguments, concluding that whether the calls were made to a landline or cellphone is irrelevant as TCPA liability “attaches to any call made [to] either” type. The court concluded that class certification was proper, upholding the jury’s verdict.
District Court rejects stop-payment fee class action against bank
On August 13, the U.S. District Court for the Northern District of California dismissed the majority of an EFTA class action against a national bank, allowing only one claim by the lead plaintiff to proceed. In this case, two customers filed a class action against the bank alleging that it violated the EFTA and California’s Unfair Competition Law (UCL) by charging a $30 stop-payment fee. The bank moved to dismiss the plaintiffs’ third amended complaint arguing, among other things, that the plaintiffs lacked standing, the EFTA does not prohibit stop payment fees, and the California UCL claims are preempted by the National Banking Act. While the district court found that the lead plaintiff had standing to assert the claims against the bank, the court also held that the EFTA, its legislative history, and the U.S. Court of Appeals for the 9th Circuit precedent “unambiguously does not prohibit stop payment fees.” Moreover, the court noted that the EFTA and its legislative history say nothing about “how the reasonableness of any such fees should be determined.” The court dismissed the plaintiffs’ class action claims with prejudice.
3rd Circuit: QR code on debt collection letter violates FDCPA
On August 12, the U.S. Court of Appeals for the 3rd Circuit affirmed a district court ruling that an envelope containing an unencrypted “quick response” (QR) code that revealed a consumer’s account number when scanned violated the FDCPA. The plaintiff in this case received an envelope containing a collection letter with a printed QR code that, when scanned, revealed the internal reference number associated with the plaintiff’s account. The plaintiff filed a class action lawsuit, and the district court granted summary judgment for the plaintiff, finding that printing the QR code was no different than printing the account number on the envelope, which is a violation of the FDCPA. The defendant appealed, arguing, among other things, that (i) the plaintiff had not suffered a concrete injury; (ii) the QR code would have to be unlawfully scanned in order to obtain the account information; and (iii) the defendant’s conduct was covered under the FDCPA’s bona fide error defense, because it “erred by using industry standards for processing return mail.”
On appeal, the 3rd Circuit affirmed the district court’s ruling. Specifically, the appellate court found that, with respect to injury, the plaintiff was not required to demonstrate that anyone actually intercepted the letter or scanned the QR code to determine that the contents related to debt collection—disclosure of the account number is itself the harm. The appellate court also rejected the defendant’s argument that someone needed to unlawfully scan the barcode, finding that there is no material difference between printing a QR code or printing an account number directly on an envelope because protected information was made available to the public. The appellate court also rejected the defendant’s bona fide effort defense, stating that the defendant misunderstood its FDCPA obligations and the printing of the QR code had not been the result of a clerical mistake or accident.