Users v. Facebook new Privacy Litigation

Plaintiff Facebook users sued defendant Facebook for violation of California’s Unfair Competition Law (“UCL”), Cal. Bus. & Prof. Code17200, et seq., alleging that Facebook intentionally and knowingly transmitted personal information about plaintiffs to third-party advertisers without plaintiffs’ consent.  Facebook moved to dismiss the UCL claim.  The court granted the motion.

Defendant argued that plaintiffs failed to state a claim because they lacked standing under the UCL, since they did not allege they lost money or property.  Defendant asserted there was no such loss because plaintiffs’ “personal information” did not constitute property under the UCL.

Instead, the plaintiffs had alleged that defendant unlawfully shared their “personally identifiable information” with third-party advertisers.  However, the court distinguished the plaintiffs’ claim from Doe 1 v. AOL, LLC, 719 F.Supp.2d 1102 (N.D. Cal. 2010).  In that case, the plaintiffs’ personal and financial information had been distributed to the public after the plaintiffs therein signed up and paid fees for AOL’s service.  The court dismissed plaintiff’s claim in this case under the holding of Doe v. AOL — since plaintiffs alleged they received defendant’s services for free, they could not state a UCL claim.

Hubbard v. MySpace

Plaintiff, who sued on behalf himself and others similarly situated, claimed that MySpace improperly turned over account information and private messages to law enforcement, even though there was a search warrant. Plaintiff claimed this violated the Stored Communications Act, 18 USC 2701 et seq. MySpace moved to dismiss. The court granted the motion.

The version of the Stored Communications Act in effect at the time of the alleged wrongful disclosure in this case provided that a search warrant seeking the information must issue from a federal court “with jurisdiction over the offense under investigation,” or be “an equivalent State warrant.”

Plaintiff argued that the warrant sent to MySpace was not sufficient under the SCA (and should have been ignored) because (1) the state magistrate did not have jurisdiction to hear the felony that the cops were investigating plaintiff for, and (2) the magistrate did not have the power to issue search warrants across state lines.

The court rejected both of these arguments. In determining the warrant to be “an equivalent State warrant,” it looked to the way federal magistrates issue warrants in SCA cases. It held that the phrase “jurisdiction over the offense under investigation” refers to the power to issue warrants, not to the power to ultimately try the case. And the court looked to the legislative history around the Patriot Act amendments to conclude that SCA investigations give magistrate judges special powers to direct search warrants across state lines, because having to require cooperation with the courts in which an ISP actually exists might allow enough time for a terrorist to get away or strike again.

Frees, Inc. v. Phil McMillian

Former Employees Use Data Obtained From Plaintiff’s Computers To Aid Competitor

Defendants McMillian and Pierceall were former employees of plaintiff Frees Inc., a company that manufactures and markets ventilation and dust control systems.  Both defendants went to work for Southeast, a competitor of plaintiff.  The complaint alleged that defendants improperly obtained proprietary data from plaintiff’s computer systems, which they used to assist Southeast in competing with Frees.  Defendant McMillian was also alleged to have deleted data from Frees’ computers before he left its employ.  As a result, plaintiff expended over $16,000 to engage computer consultants to  conduct a forensic investigation of its computers, and the harm McMillian may have caused.  Frees did not suffer any interruption of service as a result of defendants’ alleged misconduct.

Plaintiff commenced this suit, asserting claims under the Computer Fraud and Abuse Act, 18 U.S.C. section 1030.  Plaintiff sought to recover both the funds expended in retaining the computer consultants, as well as the revenues it lost as a result of  defendants’ use of its proprietary data.