• by Wendy Davis  @wendyndavis, August 22, 2022

Siding against ad tech company NaviStone, a federal appellate court has revived a class-action complaint over the company's tracking technology, which allegedly collected data from a consumer who visited Harriet Carter Gifts' website.

In a ruling issued last week, the 3rd Circuit Court of Appeals directed a trial judge to reconsider whether NaviStone's tracking code violates Pennsylvania's wiretap law.

The dispute dates to 2019, when Pennsylvania resident Ashley Popa sued NaviStone and Harriet Carter over tracking technology that allegedly enables online retailers to arrange to send postal mail to “anonymous” web users after they visit a website.

Popa alleged that she browsed the Harriet Carter site, which included code from NaviStone that allegedly “acted as a secret wiretap that sends visitors' IP address and other [personally identifiable information] to NaviStone in real time.”

Among other claims, Popa contended that the companies violate Pennsylvania's wiretap law, which generally prohibits the interception of electronic communications without the consent of both parties.

NaviStone's tracking technology came to public attention in 2017, when Gizmodo reported that the code can capture email or home addresses that users type into retailers' sites, even if the users never hit the “enter” button. (After Gizmodo published the report, NaviStone revised its technology, according to statements in court documents.)

The company denies that it identifies individuals or enables retailers to do so.

Last year, U.S. District Court Judge William Stickman IV in the Western District of Pennsylvania, dismissed Popa's complaint, ruling that NaviStone didn't “intercept” any transmissions, given that the information was sent to the company “directly.”

“The information regarding certain activities of Popa on Harriet Carter's website was sent directly to NaviStone,” he wrote. “As a result NaviStone was a direct party to that information.”

He alternatively ruled that even if there was an interception, it occurred in Virginia, where NaviStone's servers are, and therefore wouldn't have violated Pennsylvania's relatively stringent law.

Popa then appealed to the 3rd Circuit, which reinstated her claims.

A three-judge panel of that court ruled that the key factor in determining whether an “interception” occur is whether the party transmitting information intends to communicate with the recipient -- not whether the information is transmitted directly.

“NaviStone and Harriet Carter cannot avoid liability merely by showing that Popa directly communicated with NaviStone’s servers,” Circuit Judge Thomas Ambro wrote in a 21-page opinion joined by Circuit Judges Michael Chagares and Julio Fuentes. 

The judges left open the possibility that Popa consented to the interception by agreeing to Harriet Carter's privacy policy, and sent the case back to the trial judge to decide that question.

“The defendants assert the privacy policy adequately alerted a reasonable person to the interception; hence Popa’s conduct using the Harriet Carter website demonstrated she consented,” Ambro wrote. “Popa disagrees that the policy went far enough and, alternatively, contends there is a genuine issue of material fact about whether this policy even existed at the time she visited the Harriet Carter website.”

The appellate judges also said the interception happened when NaviStone routed Popa's communications to its servers, but added that it's not clear where that occurred.

“The parties seem to assume this occurred in Pennsylvania, but they point us to no source in the record confirming this point,” Ambro wrote.

The ruling directs the trial judge to determine whether there is a factual dispute about where the interception occurred.

NaviStone has faced several other privacy lawsuits since 2018, and has so far defeated all of the other cases brought in federal court.

Navistone's lawyer, David Bertoni, says in an email to MediaPost that the company “has always required a plain English explanation of its services on the websites of all its clients,” including Harriet Carter.

“While the company disagrees with the court of appeals’ reasoning and its conclusion, and is weighing its options for further judicial review, NaviStone looks forward to establishing before Judge Stickman that its longstanding practice of transparency and full disclosure place it squarely on the right side of the law and consumer privacy,” Bertoni adds.