Thursday, July 05, 2012

Smartphone battery drain and disclosure of location sufficient harm to state claim

Goodman v. HTC America, Inc., 2012 WL 2412070 (W.D. Wash.)
Goodman and others brought a putative class action against HTC America, a phone manufacturer, and three entities of the weather forecaster AccuWeather.  They alleged that the weather apps on certain HTC phones turned the phones into surreptitious tracking devices.  Rather than transmitting “coarse” location data sufficient to provide accurage local weather information, the apps transmit “fine” location data, enough to locate a customer within a few feet.  This allegedly allowed defendants to “track their movements, including where they live, work, dine, and shop,” information then used to profile them and sold to third parties.
Plaintiffs alleged three types of economic harm: First, they alleged they overpaid for their phones, because if they had known they were buying surveillance devices, they would have paid less or not bought the phones at all. Second, they alleged that collecting fine location data puts an extra load on the battery, draining it and hurting the overall battery life.  Third, they alleged that defendants’ misappropriation prevented them from using their location information for their own commercial advantage and exposed them to security risks.
The named plaintiffs resided in California, Minnesota, and Washington.  They sought certification of a national class with Minnesota and California subclasses.
First, the court declined to take judicial notice of documents allegedly accompanying or accessible on the smartphones, including HTC’s terms of use and AccuWeather’s terms of use, as well as user guides for the phones.  The accuracy and nature of the documents were not beyond reasonable controversy.  Plaintiffs identified a number of inconsistencies in the documents and screenshots; even if their authenticity were assumed, it wasn’t clear that plaintiffs ever accessed or read them, or that the contracts were operative when plaintiffs bought and used their phones.
HTC argued that the documents were incorporated by reference in the complaint because plaintiffs alleged that defendants inadequately disclosed privacy and security information.  That was “overstatement.”  The complaint didn’t allege a misrepresentation in any specific document; rather they more broadly argued that defendants engaged in material omissions.
Mostly, defendants challenged standing.  The court found that plaintiffs’ first two alleged injuries—overpayment and battery drain/diminution in value of the phones—were pled sufficiently to show injury in fact.  The third injury, misappropriation of personally identifiable information, didn’t allege injury in fact in the absence of a specific statutory or constitutional right, because the plaintiffs didn’t allege that any one of their data was actually compromised or that they suffered actual harm.  As to the battery life allegations, plaintiffs specifically alleged that the AccuWeather app sends fine location data every three hours or whenever the device’s screen is refreshed, draining the battery faster than otherwise would have occurred.  Defendants argued that other apps use fine location data, but that didn’t undermine plaintiff’s allegation that the AccuWeather app played a role in battery drain. 
By constrast, plaintiffs’ misappropriation injury was too vague and future-oriented.  The abstract concept of opportunity costs was insufficient to show how plaintiffs lost economic value when their information was collected by a third party.  (Gee, courts never think this is true when there’s free riding on a trademark.  I wonder why.)  And any injury was too far in the future: though plaintiffs allege that their personal information was insecurely transmitted, no plaintiff alleged that he was a victim of identity theft or that theft was imminent.  Nor did plaintiffs allege standing by reason of invasion of a statutorily created right.
HTC allegedly misrepresented the privacy and security of their smartphones, and AccuWeather allegedly worked with HTC to integrate the app into the operating system, created an HTC specific location on AccuWeather’s servers to receive the fine location information, and programmed the app.  Defendants blamed the designers of other apps and the users themselves, but the court was not persuaded.  Users may install other apps that use the GPS function, but plaintiffs’ alleged injuries are still fairly traceable to defendants’ conduct.  And the injunctive and monetary relief sought would redress their harms.
The court then found that plaintiffs’ claims weren’t all grounded in fraud, though some were.  The Minnesota and Washington statutory claims, for example, depended on fraud allegations, and weren’t pled with sufficient particularity.  The complaint didn’t “identify or discuss a single statement, even to show a material omission.”  It also missed the who/when/how communicated elements.
However, Rule 9(b) didn’t necessarily apply to the CLRA and California UCL claims.  The CLRA claims were just against HTC, not AccuWeather, since software apps are neither goods nor services and the CLRA only covers goods and services; a smartphone, by contrast, is a good.  Rule 9(b) did apply to these CLRA claims because plaintiffs specifically alleged fraudulent conduct.  But again, plaintiffs failed to specify the ads and other sales material on which they relied, when and who made them.
Plaintiffs did state a UCL claim under the unlawful and unfair prongs, though not under the fraud prong.  Unfairness requires weighing the impact on the alleged victim against the reasons, justifications and motives of the alleged wrongdoer.  Plaintiffs’ claims couldn’t be kicked out as a matter of law.  Sharing fine location data with third parties over a long period time, without plaintiffs’ knowledge or consent, needlessly shortening the life of each battery charge and overall battery life, could be unfair or the benefit to society at large from using the data to improve services could outweigh the harm.  In addition, the allegations under the California constitutional right to privacy sufficiently alleged a harm tethered to specific constitutional, statutory, or regulatory provisions, as some versions of the unfairness test require.  The California Constitution protects not just against invasions of privacy by state actors, but also against invasions by private parties.  A right to privacy claim requires a legally protected interest, a reasonable expectation of privacy, and a serious invasion by the defendant.  If those three elements are present, the court must weigh and balance defendant’s justification for its conduct against the privacy intrusion entailed.  Plaintiffs adequately alleged a legally protected privacy interest in their fine location data, since legally protected interests include “conducting personal activities without observation, intrusion, or interference” as determined by “established social norms.”  Tracking and compiling the data to analyze plaintiffs’ behavior, plaintiffs alleged, allowed defendants to obtain “sensitive personal information ... including, inter alia, a continually updated log of precisely where they live, work, park, dine, pick up children from school, worship, vote, and assemble, and what time they are ordinarily at these locations.”  
Likewise, they adequately alleged a reasonable expectation of privacy under broadly based and widely accepted community norms.  Defendants argued that plaintiffs admitted that they expected their smartphones to transmit GPS location data.  That wasn’t sufficiently contextualized: plaintiffs alleged that they didn’t expect defendants to collect or disseminate their fine location data for purposes unrelated to weather information.
And plaintiffs adequately alleged a serious invasion.  This wasn’t like collection of home addresses, which is routine commercial behavior.  Continuous tracking of location or movements, and sale of individualized profiles based thereon, is more sensitive than collecting home addresses or phone numbers.  People often carry their phones wherever they go.  As Justice Sotomayor recently noted, “GPS monitoring generates a precise, comprehensive record of a person's public movements that reflects a wealth of detail about her familial, political, professional, religious, and sexual associations.” United States v. Jones, 132 S.Ct. 945, 955 (2012).  This includes “indisputably private” events such as “trips to the psychiatrist, the plastic surgeon, the abortion clinic, the AIDS treatment center, the strip club, the criminal defense attorney, the by-the-hour motel, union meeting, mosque, synagogue or church, the gay bar and on and on.”
In addition, plaintiffs adequately stated an unjust enrichment claim under Washington law.  The cause of action requires (1) a benefit conferred on defendant by the plaintiff; (2) appreciation or knowledge of the benefit; and (3) that retention of the benefit would be unjust under the circumstances. Given that plaintiffs’ pleaded injuries were not wholly speculative, which was defendants’ main argument against this claim, the cause of action survived.
The court declined to strike the class action allegations because defendants’ arguments that plaintiffs couldn’t maintain claims under the laws of all fifty states and couldn’t satisfy commonality/typicality were premature.

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