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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