Privacy Litigation and Class Action Lawsuit Against Facebook Dismissed

Published On May 13, 2011 | By Jake Sommer | General, Litigation, Privacy
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The Northern District of California issued its order on Facebook’s motion to dismiss in In re Facebook Privacy Litigation, No. C 10-02389 JW (N.D. Cal. May 12, 2011) yesterday.  The court dismissed all of Plaintiffs’ eight claims.  In doing so, it rejected Facebook’s global argument that Plaintiffs lacked standing to sue under Article III.  The Court did grant Plaintiffs leave to amend their complaint to allege claims under the Wiretap Act, the SCA, Cal. Penal Code § 502(c)(8), breach of contract, and Cal. Civ. Code §§ 1572 & 1573, but stating a claim within the bounds of the leave to amend granted, however, could prove impossible for Plaintiffs.

The Court first addressed standing.  It found that Plaintiffs had adequately alleged standing because “if Plaintiffs here are able to show,” as they have alleged, “that Defendant transmitted the contents of its users’ communications in the manner alleged, they will have effectively demonstrated that all of the users of Defendant’s website suffered the same injury, which will necessarily mean that each individual Plaintiff will have demonstrated that he was injured.”  Order at 7-8.  As a precursor to the Court’s decision on the substance of Plaintiffs’ claims, the Court, however, went on to state that a Plaintiff may demonstrate injury without being able to state a claim.

The Court then turned to Plaintiff’s Wiretap Act and Stored Communications Act (“SCA”) claims.  It set forth two possible interpretations of Plaintiff’s allegations.  The first was that “when a user of Defendant’s website clicks on an advertisement banner displayed on that website, that click constitutes an electronic communication from the user to Defendant” that asks the Defendant to send a further communication to an advertiser.  Order at 8.  The second was that “when a user of Defendant’s website click on an advertisement banner, that click constitutes an electronic communication from the user to the advertiser” and Defendant merely passes that communication along.  The Court found that under either interpretation Plaintiffs had not stated a claim, because in the first, the Defendant is a recipient, who may then disclose the contents of the communication.  In the second, the advertiser itself if the intended recipient, and thus the Defendant cannot be liable for divulging the communication’s content to the advertiser.  Order at 9.  The Court allowed Plaintiffs leave to amend to add a Wiretap claim alleging that “the information allegedly disclosed by Defendant was not part of a communication from Plaintiffs to an addressee or intended recipient of that communication.”  Id. The Court then applied the same logic to Plaintiffs’ SCA claims and dismissed those with the same leave to amend.

The Court next addressed Plaintiffs’ state law claims for violations of California’s Unfair Competition Law (“UCL”).  The Court dismissed those claims with prejudice because a plaintiff’s “‘personal information’ does not constitute property under the UCL” citing to the Southern District’s decision in Thompson v. Home Depot, Inc., No. 07-cv-1058 IEG, 2007 WL 2746603 (S.D. Cal. Sept. 18, 2007) and rejecting Plaintiff’s reliance on Doe 1 v. AOL, LLC, 719 F. Supp. 2d 1102 (N.D. Cal. 2010).  The Court distinguished AOL on the grounds that Plaintiffs here do not allege that they paid fees for Defendant’s services, and thus Plaintiffs are not a consumer of certain services capable of stating a claim for disclosure of personal information about a company’s customers in violation of its own policies.  The Court also applied the same logic to Plaintiffs’ CLRA claims, holding that the users of a free service are not “consumers” under the CLRA.

The Court next dismissed Plaintiffs’ claims under the California Comprehensive Computer Data Access and Fraud act Cal. Penal Code § 502, because Facebook did not act “without permission” as defined under the statue.  The Court applied a narrow reading of the statute, holding that it only applied to circumstances where a user “gains access to a computer … to which access was restricted through technological means.”  Order at 13.  The Court held that Plaintiffs’ had not alleged any such access here, since their claims were limited to “nonconsensual transmissions” of personal information.  Id. The Court, however, allowed leave to amend Plaintiffs’ claims under Cal. Penal Code § 502(c)(8) if they are able to allege that Facebook “introduced computer instructions designed to ‘usurp the normal operation’ of a computer…” 13 n. 11.

The Court then dismissed Plaintiffs’ breach of contract claim for failure to allege actual damages and Plaintiffs’ fraud claims under Cal. Civ. Code §§ 1572 and 1573 for failure to allege any actual reliance on fraudulent misrepresentations by the Defendant.  Finally, the Court dismissed Plaintiffs’ unjust enrichment claims because of the existence of an express contract, finding that a plaintiff cannot assert an unjust enrichment claim while also alleging an express contract.

About The Author

Jacob Sommer's practice focuses on legal issues related to Internet-based services and social networking, with a focus on protecting client's rights in litigation or government investigations involving the Copyright Act, Lanham Act, Digital Millennium Copyright Act ("DMCA"), Electronic Communications Privacy Act (“ECPA”), the Wiretap and Communication Acts, CAN-SPAM, FISA and federal and state laws governing Internet gambling. He also helps social networks, search engines, e-mail providers, ISPs and other clients fulfill their compliance obligations pertaining to the discovery and disclosure of customer and subscriber information.

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