• by Wendy Davis  @wendyndavis, August 9, 2024

Numerous outside organizations, including the Interactive Advertising Bureau, are backing ecommerce platform Shopify's argument that it can't be sued in California over alleged privacy violations.

In a friend-of-the-court brief filed recently with the 9th Circuit Court of Appeals, the IAB and other business groups argue that Shopify -- which is headquartered in Canada and has divisions based in Delaware -- didn't “expressly take aim at consumers in California,” and therefore can't be hauled into court in that state.

The organizations are weighing in on a lawsuit filed against Shopify by Brandon Briskin, who alleged in a 2021 complaint that Shopify secretly collected his personal data when he made a purchase from the online retailer IABMFG (iambecoming.com).

Briskin alleged that the checkout page linked to Shopify code that enabled it to “intercept” his data. He also said Shopify drew on his data to create a profile of him that was then provided to other merchants.

The complaint included a claim that Shopify violated a California wiretap law that prohibits the interception of electronic communications without both parties' consent.

U.S. District Court Judge Phyllis Hamilton in the Northern District of California dismissed the case in May 2022, ruling that the allegations, even if proven true, wouldn't show that Shopify was subject to the jurisdiction of California courts. Instead, she said, the allegations could establish only that Shopify was a vendor for the retailer IABMFG.

A three-judge panel of the 9th Circuit initially upheld that ruling, writing in an opinion issued in November that Shopify didn't specifically direct its activity toward California residents.

In May, the 9th Circuit withdrew that opinion and said it would reconsider whether Shopify would have to face suit in a California court.

The IAB and others, including the Apple-backed group ACT--The App Association and BSA--The Software Alliance, say Shopify is only a “backend service provider” and shouldn't have to defend itself in every state where its client does business.

“Shopify made its online payment services available for use by vendors anywhere in the country,” the groups argue.

“A business located in California chose to make use of Shopify’s software by integrating it into its own online store, and the plaintiff then made a purchase from that online store while located in California,” the IAB and others add. “In these circumstances, it is not the backend service provider that has targeted end consumers in California.”

Other organizations including the U.S. Chamber of Commerce and tech industry-funded think tank Chamber of Progress have also weighed in on Shopify's side.

Attorneys general take the contrary view. Last month a coalition of attorneys general in 30 states and the District of Columbia argued in a friend-of-the-court brief that a ruling in favor of Shopify could hinder state attorneys general from prosecuting online companies that violate state laws.

The 9th Circuit is expected to hear arguments in the case the week of September 23, in San Francisco.