California courts continue to be confronted with claims alleging that websites are violating the California Invasion of Privacy Act (“CIPA”). While courts debate CIPA’s applicability to the use of third-party internet tracking software, a California federal judge recently denied a CIPA-based motion for class certification. Below, we discuss: (1) the CIPA allegations asserted in the lawsuit; (2) the judge’s reasoning for denying class certification; and (3) some recent developments with implications for those facing CIPA tracking claims.
CIPA Tracking Classes Cannot Be Certified
Plaintiffs, on behalf of themselves and several putative classes of consumers, alleged that Defendant, a financial institution, violated CIPA by employing internet tracking software on its website without first obtaining their consent. As set forth in the Complaint, Plaintiffs claimed that Defendant violated CIPA by installing third-party tracking technology to “instantaneously and surreptitiously duplicate communications with that webpage and send them to the Third Party.” Through the use of such internet tracking technology, Plaintiffs alleged that Defendant captured: (1) employment information; (2) bank account information; (3) citizenship status; (4) credit card approval and eligibility data; (5) browsing activities, including pages viewed and content; and (6) credit card application status. According to the Complaint, the tracked information was shared with third parties in violation of CIPA for marketing purposes, to find new customers, to increase sales, and to better understand advertising efficacy. As a result, Plaintiffs asserted numerous federal and California State privacy claims, and moved to certify four classes of consumers who had visited Defendant’s website.
Although the Court found that the information shared by the tracking technology raised a common question, the Court denied class certification on the basis that individual inquiries predominated over common questions. Specifically, the Court found, among other things, that individualized inquiries were required of each prospective plaintiff’s interactions with the tracking technologies and into whether putative class members agreed to Defendant’s privacy policy. In addition, the Court found that the lack of any method capable of proving harm on a class-wide basis required individual investigations into putative class members’ standing. Because the judge found that “[p]laintiff has not met the predominance requirement of Rule 23(b)(3) to certify a nationwide or statewide class,” she denied the motion for class certification.
Clarity on CIPA’s Scope Coming Soon?
Our readers may recall a piece in which we mentioned that a California Senate Bill aimed at curtailing CIPA tracking lawsuits had stalled out in committee. Since that piece, the California Assembly has reconsidered the bill which would, among other things, exempt communications captured for a “commercial business purpose.” In addition, two California appellate courts are reviewing the threshold issue of whether CIPA’s pen register provision should even apply to internet tracking technologies at all.
While these developments may provide clarity in the future, for now, e-commerce companies that utilize third-party tracking software on their consumer-facing websites will remain vulnerable to CIPA tracking claims. Because CIPA is such a lucrative statute for the plaintiffs’ bar (the statute allows for, among other things, $5,000 per violation), CIPA tracking claims should persist unabated until a statutory carve-out is created.
Hiring the experienced attorneys at Klein Moynihan Turco (“KMT”) can mitigate against CIPA tracking claims and other consumer data privacy claims. KMT has a wealth of experience assisting companies with federal and state marketing and privacy law compliance. Importantly, the KMT litigation team has successfully defended numerous businesses in CIPA tracking lawsuits, federal and state regulatory proceedings, and alternative dispute forums. If your company employs third-party tracking software or has been served with a CIPA tracking demand, please email us at info@kleinmoynihan.com or call us at (212) 246-0900.
The material contained herein is provided for informational purposes only and is not legal advice nor is it a substitute for seeking legal advice from an attorney. Each situation is unique, and you should not act or rely on any information contained herein without seeking the advice of an experienced attorney.
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