Companies that offer chat features on their websites should take note of five recent federal decisions out of California dismissing California Invasion of Privacy Act (CIPA) claims relating to the use of chat features. These decisions, from the Northern, Eastern and Central District Courts, represent the latest entries to the jurisprudence and clarify the growing majority view that:
- The "party exception" remains a viable defense even when companies use a third party to provide the chat services at issue; and
- Plaintiffs must provide more than boilerplate, conclusory statements to plausibly allege "eavesdropping" and data use by a vendor to survive a motion to dismiss.
Almost all of the operative complaints alleged causes of actions for a violation of both CIPA Section 631(a) (prohibiting tapping of telegraph or telephone wires, lines or cables) and CIPA Section 632.7 (prohibiting intercept and recording of calls between cellphones, a cellphone and a landline, two cordless telephones, a cordless telephone and a landline, or a cordless phone and a cellphone).
The Northern District
"The facts are bare" is how Judge William Alsup of the Northern District began his March 16, 2023, summary of plaintiff's claims in Esparza v. Lenox. From there, Judge Alsup proceeded to issue two rulings adopting Lenox's arguments. First, Judge Alsup invoked the "party exception" rule to CIPA and held that Lenox could not be liable for eavesdropping upon a conversation held in a chat feature that Lenox hosts on its own website because a party to a conversation cannot eavesdrop upon its own conversations. Second, Judge Alsup held that plaintiff failed to adequately plead that Lenox aided and abetted eavesdropping because it "assert[ed] no facts beyond the statement that some unknown third party not involved in this action 'eavesdrops' somehow 'in real time.'" The order notes that "Plaintiff makes a passing reference to a 'third-party vendor' 8X8 in his complaint, but does not allege what service the vendor provides let alone how or why this alleged vendor interacts with defendant 'to enable eavesdropping.'" (Emphasis added.) Thus, the court found these conclusory allegations were insufficient to state a plausible aiding and abetting claim under CIPA.1
The Central District
Courts in the Central District have also granted motions to dismiss three nearly identical chat feature complaints filed by plaintiffs represented by Pacific Trial Attorneys. See Byars v. Hot Topic, Licea v. Cinmar and Licea v. American Eagle.
Writing for the court on February 14, 2023, in Hot Topic. v. Byars, Judge Jesus G. Bernal held that plaintiff's complaint did not adequately plead a Section 631(a) claim for aiding or abetting third-party eavesdropping because it set forth no facts establishing that a third-party vendor intercepted and used the data itself as opposed to simply sorting it and engaging in routine data recordation. The Section 631(a) claim was dismissed with leave to amend.2 The court also held that CIPA Section 632.7 is facially inapplicable to website chat features because the plain language of the statute limits its applications to communications between two telephones. As such, the court dismissed the Section 632.7 claim with prejudice.
Significantly, the court admonished the plaintiff's attorney's "copy and paste" complaint-filing operation, stating that "if a litigant pleads at such a high level of generality that it is possible to copy and paste a complaint word-for-word against a new defendant (at least after the unnumbered 'introduction' section, where Plaintiff's Counsel has written the URL of the defendant of the day and referred to it as 'the Website' so that he need not make a single other alteration to the rest of the complaint), then almost by definition he is pleading without the factual specificity necessary to state a claim for relief." (Emphasis added.) Expressing further disapproval of the pleading method, the court characterized the case as one iteration of the "cookie cutter" lawsuits that have erupted since the "Ninth Circuit's unpublished decision in Javier v. Assurance IQ, 2022 WL 1744107 (9th Cir. May 31, 2022) ... opened the floodgates."
On the heels of Hot Topic, Judge Michael W. Fitzgerald, writing for the court in Licea v. Cinmar and Licea v. American Eagle Outfitters, issued two more orders, both on March 7, 2023, dismissing almost identical complaints filed by Pacific Trial Attorneys. The Cinmar order employed the same statutory analysis as in Hot Topic and dismissed the Section 632.7 with prejudice while granting leave to amend the Section 631(a) claims. The American Eagle order also granted leave to amend the Section 631(a) claim. In each case, the court's reasoning closely tracked that in Hot Topic, finding that the "bare allegations" only suggest that any alleged third party accessing the chat feature used the data collected on behalf of the company hosting the website or in tangent with the company, not for the third-party vendor's own purposes.
The Eastern District
On March 30, 2023, in Martin v. Sephora, Magistrate Judge Stanley A. Boone joined the Northern and Central Districts by recommending the dismissal of another formulaic chat feature complaint filed by Pacific Trial Attorneys. The complaint in Sephora also alleged claims under Section 631(a) and Section 632.7, and Judge Boone, like the judges in the Central District, recommended dismissing the Section 632.7. Revealing a growing consensus among the district courts in California, Judge Boone employed nearly identical reasoning as set forth by the Northern and Central Districts in recommending dismissal of the complaint.
The Decisions' Impact on the Trajectory of the Wiretapping Litigation Trend
While these five rulings are certainly helpful to defendants hit with chat feature wiretapping class action lawsuits, they do not represent a panacea. First, it's apparent that the plaintiffs and law firms behind these cases are not slowing down. As Judge Bernal noted, Pacific Trial Attorneys has filed at least 58 virtually identical chat feature complaints (and more since his ruling). In some of the new complaints, plaintiffs have attempted to address the flaws highlighted by the courts with new allegations of a profiteering scheme employed by chat vendors. Second, not all judges of the federal courts in California have reached the same conclusion as Judges Alsup and Bernal, giving the plaintiffs and their lawyers in these cases incentive to continue filing new, virtually identical complaints as this jurisprudence continues to develop.
For More Information
If you have any questions about this Alert, please contact J. Colin Knisely, Michael S. Zullo, Katherine Lynch, any of the attorneys in our Trial Practice Group or the attorney in the firm with whom you are regularly in contact.
Footnotes
1. The dismissal was without prejudice, but rather than provide leave to amend, the court explicitly required plaintiff to attach any proposed amended complaint to a formal motion noting specifically how the amendment cured the deficiencies of the first complaint.
2. The plaintiff chose not to amend and voluntarily dismissed the action.
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