A key question in many privacy class actions is whether the plaintiff has suffered an injury sufficient to confer Article III standing. Quite a number of these actions have been dismissed for lack of standing. The plaintiffs' bar therefore has been brainstorming new theories of injury in the hope that one of them will be deemed sufficient to allow the case to remain in court (and open the door to expensive discovery). A recent order by Judge White of the Northern District of California in Yunker v. Pandora Media, Inc. addresses—and rejects—some of these theories.
The lawsuit involves Pandora's mobile app, which provides music-streaming services to wireless devices. The plaintiff alleges that, although Pandora tells users that it will sell information to advertisers only after that information has been stripped of identifying details, in fact the company also sells personally identifiable information such as the user's age, gender, and location—which, the plaintiff says, violates federal and state law.
As is now routine in privacy class actions, the first question was whether the plaintiff has standing to sue in the first place. Judge White batted down each of the plaintiffs' arguments.
First, the plaintiff argued that because Pandora allegedly sold the plaintiff's personally identifiable information, that information is now less valuable. Judge White pointed out that this theory has been rejected five times by federal judges in California alone because of the highly speculative nature of this alleged harm. In addition, although the plaintiff had alleged that he "paid" for the Pandora app with his personal information (the app is available for free), he hasn't alleged that he otherwise had "attempted to sell" that information, that he "would do so in the future," or that he either was "foreclosed from entering into" any other transaction involving his information or even would have chosen not to use Pandora's app if he had "known how Pandora would use his" information.
Second, the plaintiff alleged that the manner in which the Pandora app allegedly collected his information by installing "third-party advertising libraries" on his phone decreased its usable memory. Judge White acknowledged that an alleged decrease in device "performance" could be an injury conferring standing. But Judge White explained that the plaintiff had failed to allege any such problems, that he paid money for the app, or even that he would not have downloaded it if he had known that it used slightly more memory because it used these libraries.
Third, the plaintiff argued that the sale of information about him could subject him to future harm (such as identity theft). The plaintiff pointed out that, in Krottner v. Starbucks Corp., the Ninth Circuit had indicated that a future harm like identity theft could confer standing. But Judge White explained that Krottner involved very different facts—a laptop containing individuals' financial information had been stolen, and a plaintiff alleged that she actually was the victim of identity theft. Judge White pointedly observed that the plaintiff here alleged nothing of the sort.
Having rejected these theories of standing, Judge White dismissed a number of the plaintiff's claims. (He also concluded that many of them failed on the merits.) Nonetheless, Judge White granted the plaintiff leave to amend (not a big surprise, as such leave is freely given by most federal courts).
In sum, Yunker confirms that challenges to Article III standing remain a major arrow in the quiver of companies facing privacy class actions.
Originally published May 3, 2013
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