Yahoo Says California Privacy Law Is Unconstitutional

Yahoo is asking a federal judge to rule that California's privacy law, which gives state residents broader privacy rights than the federal wiretap law, is unconstitutional.

The company makes that request in a motion asking U.S. District Court Judge Lucy Koh for summary judgment in a class-action challenging the company's practice of scanning emails in order to surround them with ads.

The consumers who brought the case -- all non-Yahoo email users who say they exchanged emails with Yahoo account holders -- allege that Yahoo's scans violate the federal wiretap law and the California Invasion of Privacy Act. The latter generally prohibits companies from intercepting communications without the consent of all parties.

Koh previously ruled that the plaintiffs could proceed as a nationwide class for their federal claim, and a California-only class for their claim under the state law.

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Yahoo now says it is entitled to prevail in the lawsuit for several reasons, including that it shouldn't be limited by a California law when providing a nationwide email service.

"The practical effect of applying CIPA to Yahoo’s email service is to regulate email transmissions occurring wholly outside California between residents of other states," Yahoo argues. "Thus, if CIPA were interpreted to apply to Yahoo’s conduct ... Yahoo would have to comply with CIPA in all 50 states with respect to all email."

The company says it lacks a good method for determining whether non-account holders are California residents. Therefore, Yahoo says, the only way it can follow California's relatively broad privacy protections is by extending those principles nationwide.

Yahoo says that result would mean that California was effectively regulating interstate commerce, even though only the federal government is empowered to do so.

The consumers are asking Koh to reject Yahoo's position, asserting in papers filed on Monday that the company "would obviously prefer to continue to disregard California’s two-party consent requirement."

The legal fight dates to 2013, when a group of consumers sued Yahoo for scanning their emails in order to serve targeted ads. Yahoo's terms of service provide that the company analyzes email in order to display ads, but the people who are suing didn't have Yahoo email accounts and say they never explicitly agreed to the company's terms of service.

Koh is expected to hold a hearing in the case on Dec. 10 in San Jose.

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