• by Wendy Davis  @wendyndavis, October 19, 2022

In a defeat for ad-tech company NaviStone, a federal appellate court this week reiterated its earlier decision reviving a claim that the company's tracking technology violates Pennsylvania's wiretap law.  

The ruling, initially issued by the 3rd Circuit Court of Appeals in August and confirmed on Tuesday, allows Pennsylvania resident Ashley Popa to proceed with a lawsuit against NaviStone and Harriet Carter Gifts over technology that allegedly enables online retailers to arrange to send postal mail to “anonymous” web users after they visit a website.

After the appellate judges ruled against NaviStone this summer, the company asked the court to either reconsider or order a hearing in front of the entire circuit. Among other arguments, NaviStone said the ruling marked “an unprecedented change in Pennsylvania law” that could affect website operators throughout the country.

NaviStone added in court papers filed last month that the decision was already having an impact, noting that at least 10 new lawsuits over tracking had been filed in Pennsylvania after the original version of the ruling came out.

The 3rd Circuit on Tuesday withdrew its original opinion and replaced it with a slightly revamped version, but the revisions didn't affect the outcome of the case. 

The dispute dates to 2019, when Popa alleged in a class-action complaint against both companies that NaviStone and Harriet Carter violated a Pennsylvania law that prohibits companies from intercepting communications without both parties' consent.

She said in her complaint that she browsed Harriet Carter's site, which included code from NaviStone that allegedly “acted as a secret wiretap” that sends people's IP addresses and other personal information to the company.

NaviStone 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.”

A panel of the 3rd Circuit Court of Appeals reversed Stickman's ruling and reinstated the complaint.

The appellate judges said in their ruling that 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 unknowingly directly communicated with NaviStone’s servers,” Circuit Judge Thomas Ambro wrote in the opinion that came out this week. (The original opinion, issued in August, included that sentence without the word “unknowingly”). Circuit Judges Michael Chagares and Julio Fuentes joined in the ruling.

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 3rd Circuit also said the interception happened when NaviStone routed Popa's communications to its servers, but added that it's not clear where that occurred and directed the trial judge to resolve that question.

NaviStone's attorney, David Bertoni, says the company is now weighing its options.