A host of recent federal court decisions about wiretapping allegations signals more headwinds for class-action claims filed under California’s Invasion of Privacy Act (CIPA).
“These cases are the latest entries into the jurisprudence interpreting the reach of CIPA with respect to website chat features,” Michael S. Zullo, a partner with Duane Morris and member of the firm’s Website Accessibility and Privacy Compliance Litigation Team, told the Northern California Record by email.
“The decisions further clarify the distinction between a service provider acting as an extension of the company hosting the website and a true third party seeking to use customer data for its own purposes,” Zullo said. “One thing is clear, it is not enough for plaintiffs to allege, in a conclusory fashion, that the third party ‘used the data’ or ‘monetized the data.’ Future plaintiffs will have to provide a more robust factual foundation for such claims.”
The five cases, which came from California’s Northern, Eastern, and Central federal district courts, involve plaintiffs represented by Scott Ferrell of Pacific Trial Attorneys, a firm also known for ADA litigation.Two of the cases involve the same plaintiff, Miguel Licea.
There are three key messages in the federal court rulings, Zullo said.
“First, that the courts still recognize the party exception to CIPA can apply when a third-party vendor acts as an extension of the company.
"Second, that plaintiffs will need to plead specific factual examples of how third parties are using customer data gleaned from chats to overcome this defense.
"And, third, that the plain language of state penal code 632.7 only applies to communications between two telephone lines and does not apply to a website simply because a plaintiff used a smartphone to access the website chat feature.”
A recent Law.com analysis looked at how much recent litigation has been filed under the 50-year-old CIPA law.
But precisely what these recent federal court decisions will mean for the present and future of these kinds of lawsuits is not yet clear.
“These cases are solidifying the defenses parties will continue to rely on in CIPA chat wiretap cases. But they do not represent a panacea,” Zullo said. “To survive motions to dismiss, plaintiffs are likely to adapt their pleadings and provide more detailed allegations concerning use of the data by third-party service providers and will continue to push for alternative statutory interpretations. Indeed, these recent decisions do not seem to have slowed down the pace of new CIPA lawsuits.”
But Zullo noted that this is still a developing area of law.
“Defendants’ successes so far should not be misinterpreted as a sign that these cases will go away, and in some cases plaintiffs have gotten past motions to dismiss,” Zullo said. “Instead, plaintiffs are likely to respond with more robust factual pleadings with the goal of surviving a motion to dismiss. So companies using website chat features should still give serious consideration to the strength of their disclosures and the means by which they obtain customer consent when participating in a chat.”