Vizio Can't Immediately Appeal Ruling In Privacy Battle

In a blow to smart TV manufacturer Vizio, a federal judge has refused to authorize an immediate appeal of a decision that allowed  consumers to proceed with a video privacy lawsuit. 

U.S. District Court Judge Josephine Staton in Santa Ana, California also rejected the Data and Marketing Association's request to weigh in on the matter. Staton's ruling, issued Friday, means that consumers can continue to gather evidence in the case, but does not indicate that they will ultimately prevail.

The battle between the consumers and Vizio centers on allegations that the company tracks TV viewers by default, and then shares data about their viewing histories with companies that send targeted ads to people's phones, tablets and other devices. The litigation began in late 2015, less than one week after ProPublica published a report about the company.

The consumers allege in a class-action complaint that Vizio violated the Video Privacy Protection Act, a 1988 law that prohibits video providers from disclosing "personally identifiable information" about people's video-viewing history without their consent.

Earlier this year, Staton rejected Vizio's argument that the video privacy law doesn't cover electronics manufacturers. The company said it's comparable to "a building that leases space to several video rental stores," but is not itself a video rental store.

Staton ruled Congress intended for the video privacy law to apply to companies that are "in the business of delivering video content."

Staton also rejected Vizio's argument that the case should be dismissed at an early stage because the information it allegedly disclosed -- including IP addresses, media access control (MAC) addresses, ZIP codes, computer names, and product serial numbers -- was't personally identifiable.

Her ruling specifically referenced Vizio's marketing materials, which allegedly boasted about its ability to offer specific viewing behavior data. "Plaintiffs have thus plausibly alleged that Vizio’s provision of -- to quote its own prospectus -- 'highly specific viewing behavior data on a massive scale with great accuracy' amounts to the disclosure of personally identifiable information," she wrote.

Vizio sought to immediately appeal Staton's refusal to dismiss the case to the 9th Circuit Court of Appeals. The Data and Marketing Association attempted to file a friend-of-the-court brief siding with Vizio. That organization argued that the lawsuit's result "will have a direct impact on DMA and its members." Staton rejected the trade group's request for several reasons, including that it reiterates Vizio's views.

Staton also ruled that Vizio had not shown grounds for an immediate appeal. "The court appreciates that this motion is motived at least in part by an attempt to resolve questions reaching beyond the facts at issue in this multidistrict litigation for the benefit of the Smart TV industry," she wrote. But, she added, the law does not allow for immediate appeals of trial judge's orders "merely because they pose interesting questions."

She also noted that her earlier ruling merely paves the way for the consumers to gather more information. "In the March 2 Order, this Court did not hold that Vizio’s collection and disclosure practices violate the Video Privacy Protection Act or even that a reasonable jury could find as much; all the Court did was open the door to discovery on these highly fact-dependent issues involving intricate technologies," she wrote.

In recent years, numerous online video distributors -- including Gannett and ESPN -- have been sued for allegedly violating the video privacy law by sending data like device identifiers, to third parties.

Questions about whether these transmissions violate the video privacy law have not been definitively resolved. The 1st Circuit Court of Appeals ruled last year that Gannett potentially violated the law by allegedly transmitting users' device identifiers, GPS data and video viewing history to Adobe.

But other judges have dismissed lawsuits against video distributors that allegedly transmitted similar information to outside companies. Among others, a judge in Seattle dismissed a lawsuit by Roku user Chad Eichenberger, who accused ESPN of transmitting his Roku's serial number, combined with data about videos watched, to Adobe. Eichenberger appealed that matter to the 9th Circuit Court of Appeals, which recently heard arguments in the case.

Earlier this year, the Federal Trade Commission brought a separate enforcement action against Vizio for allegedly engaging in an unfair practice by tracking consumers, and for deceiving consumers by failing to adequately explain its data practices. The company agreed to settle the charges by paying $2.2 million to the FTC and the state of New Jersey, which also filed a complaint against the company.

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