Supreme Court Urged To Tighten Rules For Privacy Class-Actions

Google, Facebook and others in Silicon Valley are urging the Supreme Court to effectively block consumers from bring federal class-action lawsuits over a large swath of privacy violations.

In a friend-of-the-court brief filed Monday, Google, Facebook, eBay, and the trade groups Internet Association, Technology Network and Computer & Communications Industry Association argue that consumers must experience an “actual” and “concrete” injury before bringing a privacy lawsuit.

The tech companies and trade groups (referred to in the papers as "amici") write that they are "frequently subjected to opportunistic lawsuits” based on alleged violations of privacy laws -- including the Wiretap Act (which restricts the interception of electronic communications), the Video Privacy Protection Act (which prohibits companies from disclosing people's video-viewing history without consent) and the Telephone Consumer Protection Act (which regulates robotexting and robocalling).

“Permitting these abusive no-injury class action lawsuits has a particularly negative impact on amici due to the broad scale of their operations,” the companies write.

Google, Facebook and the others point to several examples of settlements in privacy lawsuits that, according to the companies, should not have proceeded in federal court. Among others, they mention Facebook's $650 million settlement of a lawsuit alleging that the company violated an Illinois biometrics privacy law by compiling a faceprint database, and Vizio's $17 million settlement of claims that its SmartTVs violated various privacy laws by transmitting data to ad partners.

Google, Facebook and the others are weighing in on a class-action lawsuit brought by Sergio Ramirez against credit reporting firm TransUnion.

Ramirez alleged that TransUnion incorrectly labeled him and others as “terrorists,” based on faulty information. He said he learned of the issue after being denied a car loan.

Ramirez specifically claimed that TransUnion violated the Fair Credit Reporting Act by failing to take steps to ensure that the information was accurate, and adequately notifying consumers about their rights to remove incorrect data.

A jury sided against TransUnion and ordered the company to pay $60 million to more than 8,000 class members who were wrongly labeled as terrorists. (That figure was later slashed to $40 million.)

TransUnion argued that Ramirez shouldn't have been able to sue on behalf of the other 8,000-plus people, because those individuals may not have been harmed by the incorrect information on their reports.

The 9th Circuit disagreed with TransUnion, ruling that all of the class members “suffered a material risk of harm to their concrete interests” due to TransUnion's “failure to follow reasonable procedures to assure maximum possible accuracy” of the information it reported.

The credit reporting company is now asking the Supreme Court to reverse that finding, arguing that Ramirez didn't show that anyone other than himself was harmed by the false information.

The tech companies siding with TransUnion argue that judges in the 9th Circuit -- which often decides disputes involving Silicon Valley -- have wrongly allowed numerous “no-injury” lawsuits to proceed. Those decisions reflect a misinterpretation of the Supreme Court's 2016 decision in a dispute between the data aggregator Spokeo and Virginia resident Thomas Robins, Google and the others contend.

In the Spokeo matter, the court said Robins could only proceed with claims that Spokeo violated the Fair Credit Reporting Act if he could show a “concrete” injury. But the court added that Robins could do so by showing that Spokeo's data placed him at risk of future harm.

The tech companies are now telling the Supreme Court that the 9th Circuit judges have interpreted that ruling too loosely.

“Under the Ninth Circuit’s rule, class plaintiffs are permitted to maintain ... broad class suits against amici and other technology companies despite their inability to allege any actual harm,” the companies write. “Commonly, many if not most members of the putative class are unaware of the defendant’s technical violation and entirely unharmed.”

The Supreme Court is scheduled to hear arguments in the matter on March 30.

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