District Court Affirms No Cause of Action under VPPA for Data Retention or Disclosure Resulting From Transfer of Business Ownership

Published On May 3, 2012 | By ZwillGen | Litigation, Privacy
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On April 20, 2012, the Northern District of California dismissed two of three Video Privacy Protection Act (“VPPA”) claims brought against Sony Computer Entertainment America, LLC (“SCEA”) as non-actionable under the statute. In Rodriguez v. SCEA, et al., Plaintiff Rodriguez sought damages related to SCEA’s alleged disclosure and retention of his personally identifiable information (“PII”) to Sony Network Entertainment International LLC (“SNEA”), as a result of the transfer of SCEA’s assets to its successor company SNEA.

The Court dismissed Rodriguez’s first claim that SCEA failed to destroy Plaintiff’s PII as soon as practicable, but no later than one year from the date the information was no longer necessary in violation of the VPPA’s document destruction requirements.  In doing so, the Court found that Rodriguez did not have a cause of action, citing Sterk v. Redbox Automated Retail, LLC, 672 F.3d 535 (7th Cir. 2012), where the Seventh Circuit firmly established that a “plaintiff may only sue for damages under VPAA for unlawful ‘disclosure’ of PII, not for the purportedly unlawful ‘retention’ of PII.”

The Court also dismissed both of Rodriguez’s disclosure claims.  Rodriguez alleged that SCEA’s disclosure of Plaintiff’s PII to SNEI during the transfer of certain assets violated the VPPA’s prohibition against disclosure of consumer information.  However, the Court determined that the VPPA expressly permits disclosure of PII “’if the disclosure is incident to the ordinary course of business of’ the provider, with ‘ordinary course of business’ further being defined as a ‘transfer of ownership.’”  18 U.S.C. § 2710(a)(2); 18 U.S.C. §  2710(b)(2)(E).  Accordingly, Plaintiff’s claim based on disclosure made during such a transfer could not state a claim under the VPPA.

Additionally, Rodriguez alleged that subsequent to the transfer to SNEI, SCEA disclosed his PII to John Doe defendants “in connection with SNEI’s use and/or disclosure of plaintiff’s PII for marketing and advertising purposes.”   The Court dismissed this claim, but without prejudice, finding that Plaintiff had “fail[ed] to state that a disclosure has affirmatively taken place, identify with particularity the person(s) or entity to whom such disclosure was made, or state that any such disclosure falls outside the scope of disclosures permitted under the VPPA.”

In sum, the Court rightfully affirmed the Seventh Circuit’s finding in Redbox that a civil litigant does not have a cause of action under the VPPA for retention of PII and held that disclosures made as a result of the transfer of ownership do not violate the provisions of the Act.