On September 26, 2018, New Jersey federal district judge Madeline Cox Arleo dismissed an eight-count class action complaint in its entirety against three smart TV makers: Samsung, LG, and Sony. The plaintiffs alleged that defendants’ smart TVs continuously monitored and tracked their viewing habits, recorded their voices, and then transmitted that information to defendants’ servers, after which the information was shared with third-party advertisers and content providers. The judge dismissed all counts:
Federal Law Claims: Plaintiffs made two federal law claims: one under the Video Privacy Protection Act (“VPPA”) and one under the Wiretap Act (which is part of the Electronic Communications Privacy Act, or “ECPA”).
- VPPA: Under the VPPA, plaintiffs must allege that a Video Tape Service Provider (“VTSP”) “knowingly disclosed” “personally identifiable information” (“PII”) concerning a consumer of such provider. The statute defines “PII” as “information which identifies a person as having requested or obtained specific video materials or services from a video tape service provider,” and the Third Circuit construes the VPPA as prohibiting “disclosures of information that would, with little or no extra effort, permit an ordinary recipient to identify a particular person’s video-watching habits.” See In re Nickelodeon Consumer Privacy Litigation (3d Cir. 2016). Plaintiffs alleged that Defendants disclosed “extensive information about plaintiffs’ and consumers’ digital identities, namely, consumers’ video-viewing history, consumers’ computer addresses, and information about other devices connected to the same Wi-Fi network.” The Court held that under In re Nickelodeon, the appropriate standard, plaintiffs failed to allege how an “ordinary recipient” of the data at issue could use it to “identify a particular person” “with little or no extra effort.”
- Wiretap Act: The Wiretap Act prohibits “interceptions” of electronic communications, but also provides that it is not unlawful for a person to intercept an electronic communication where such a person is a party to that communication. As such, when plaintiffs alleged that defendants violated the Wiretap Act by intercepting electronic communications (specifically, electronic communications that the defendants’ smart TVs transmitted to plaintiffs, and communications that plaintiffs sent to defendants’ servers), defendants argued that they had not violated the Wiretap Act, among other reasons, because they were parties to the alleged communications. The court agreed with the defendants, finding that plaintiffs’ focus on whether defendants took plaintiffs’ and consumers “identifying information in real-time” could not overcome the fact that any communications to the smart TV manufacturers would not violate the Wiretap Act.
Other Claims
Plaintiffs also alleged four contract-based claims and two fraud-based claims:
- Contract-based claims: Plaintiffs’ contract-based claims were for (1) breach of contract, (2) breach of duty of good faith and fair dealing, (3) breach of express warranty, and (4) unjust enrichment. Defendants argued that the first three claims failed because plaintiffs did not identify any actual contract or specific affirmation, promise, or guarantee made to them by the smart TV manufacturers. In addition, defendants argued that plaintiffs failed to identify a loss sustained by the plaintiffs or a benefit received by defendants, and therefore failed to state a claim for unjust enrichment. The court agreed and dismissed all four claims.
- Fraud-based claims: Plaintiffs’ two fraud-based claims (unfair and deceptive tracking and transmission, and deceptive omissions) were brought under New Jersey’s Consumer Fraud Act. However, with the plaintiffs being from New York and Florida respectively, the only connection that they alleged between their claims and New Jersey was the defendant smart TV manufacturers’ allegedly “super-massive” presence in New Jersey. However, the Third Circuit has consistently maintained that a non-resident plaintiff cannot bring a Consumer Fraud Act claim where the sole connection to New Jersey is the defendants’ location, and the court therefore dismissed both fraud claims.
Covington represented Samsung in this case (White, et al. v. Samsung Electronics America, Inc., et al.).
The California legislature recently passed three bills meant to address rapidly-developing technologies including the Internet of Things, artificial intelligence (AI), and chatbots.