• by Wendy Davis  @wendyndavis, January 17, 2024

Siding against Madison Square Garden Entertainment, a federal judge said New York residents should be allowed to proceed with a lawsuit claiming the company violated a New York City biometric privacy law.

In a report and recommendation issued last week, U.S. Magistrate Judge James Cott in the Southern District of New York essentially found that the complaint, if proven true, could support a claim that Madson Square Garden Entertainment ran afoul of a city ordinance that regulates companies' use of biometric identifiers. Cott's report hasn't yet been accepted by U.S. District Court Judge Lewis Kaplan, who presides over the lawsuit.

The report comes in a class-action complaint filed last year by Aaron Gross and Jacob Blumenkrantz, who alleged that Madison Square Garden Entertainment -- which owns venues including the Garden, Radio City Music Hall and the Beacon Theater -- harnessed consumers' biometric data in order to reduce costs associated with litigation.

The suit came several months after it became widely known that owner James Dolan was using facial recognition technology to ban lawyers who who work at firms that are suing any of the company's venues.

Gross and Blumenkrantz alleged in their complaint that the company aimed “to profit from the use of its facial recognition technology system by deterring litigation and, in turn, reducing ... significant litigation expenses.”

The complaint included a claim that the company was violating a New York City biometric privacy law that took effect in 2021, and includes a provision prohibiting businesses from sharing biometric identifier information in exchange for “anything of value,” or from otherwise profiting from a "transaction" of biometric data.

Gross and Blumenkrantz specifically alleged the company collects biometric data from everyone that enters an entertainment venue and then shares that data with “at least one third-party vendor.”

Madison Square Garden Entertainment sought to have the lawsuit dismissed at an early stage for numerous reasons. Among other arguments, the company said the complaint didn't include any allegations that it received “money or other recompense” from any third parties in exchange for the biometric data.

Cott rejected that argument on the grounds that the complaint alleged Madison Square Garden Entertainment shared the data in order to profit by reducing litigation expenses.

He added that a legislative report issued by a New York City Council suggests that lawmakers aimed “to both empower individual consumers and to move away from facial recognition legislation that focuses only on commercial purposes.”

Madison Square Garden isn't the only company facing a lawsuit over New York City's biometric privacy law. Amazon and Starbucks are currently being sued in federal court in Washington State for allegedly running afoul of the city law by collecting biometric data from customers.

That lawsuit -- brought by New York residents Alfredo Rodriguez Perez, Suzanne Mallouk and Arjun Dhawan -- focuses on Amazon's “Just Walk Out” technology, which facilitates cashless check-out at Amazon Go and at two New York City Starbucks that share space with Amazon Go stores.

Amazon and Starbucks have argued that matter should be dismissed at an early stage on the grounds that consumers consent to the use of biometric identification. The companies' request is pending in front of U.S. District Court Judge Ricardo Martinez in Seattle.