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The latest craze in class actions: privacy suits v. CarrierIQ

12/13/2011 COMMENTS (1)

Last spring, when every day seemed to bring a new spate of class actions against Sony for allegedly failing to protect the private data of PlayStation users, Reuters' Terry Baynes conducted a fascinating analysis of privacy-breach litigation. Her conclusion? No one's getting rich from it. Fee awards to plaintiffs lawyers in the six settled cases she looked at ranged between $500,000 and $6.5 million, and were typically shared among a lot of firms (25 plaintiffs firms were in on the $6.5 million settlement with TJX in 2007). A couple of name plaintiffs received as much as several thousand dollars. Ordinary class members got bupkis: a coupon, credit monitoring, identity-theft insurance and the like.

But those paltry returns haven't stopped lawyers from jumping aboard every privacy-breach suit to roll through the station. On November 28, an app developer and spyware expert named Trevor Eckhart posted a YouTube video that supposedly demonstrated how Carrier IQ software in many smartphones secretly tracks users' keystrokes. Within days the class actions against Carrier and various smartphone makers began to hit dockets. By December 2, when Pearson, Simon, Warshaw & Penny asked the Judicial Panel on Multidistrict Litigation to consolidate the Carrier IQ cases in the Northern District of California, the firm cited five filed suits.

By December 8, when Strange & Carpentersuggested the Southern District of California as a preferable venue, the count was up to at least eight. A day later, in a brief opposing quick consolidation of the Northern District class actions, Skikos, Crawford, Skikos & Joseph said seven cases had been filed there, with at least a dozen more filed in other districts. (Carrier IQ, which didn't respond to my request for comment, has said in a statement that its software "does not record, store or transmit the contents of SMS messages, email, photographs, audio or video.")

So are the Carrier IQ class actions going to change the tide of privacy litigation? Not likely, according to Jeffrey Jacobson of Debevoise & Plimpton. Jacobson isn't involved in the Carrier IQ case, but has defended several other software companies in privacy cases. Many of those cases, like the Carrier IQ class actions, asserted claims under the Electronic Communications Privacy Act (or, as it's better known, the Wiretap Act), which carries statutory damages of up to $10,000 per violation. There are 140 million smartphone users in the United States, which suggests the possibility of mind-boggling value in the Carrier IQ litigation. But according to Jacobson, the Wiretap Act hasn't brought much success to plaintiffs in privacy suits. "Yes, there's a statute, and yes, there are statutory damages," he said. "Plaintiffs are still a long way from proving it's applicable and that the data was misused." More often than not, he added, the allegedly improper spyware has been disclosed in user terms and conditions.

In fact, according to the Debevoise lawyer, only a few Wiretap Act privacy class actions have survived a defense motion to dismiss. "They've pretty much universally failed so far," he said.

I left messages requesting comment with four of the plaintiffs lawyers who've filed Carrier cases but didn't hear back.

(Reporting by Alison Frankel)

Follow Alison on Twitter: @AlisonFrankel 

Follow us on Twitter: @ReutersLegal


Comments (1)

12/14/2011 5:11:12 PM by techman2010

I think you hit the nail on the head Alison. Unless these law firms can show beyond a reasonable doubt that the data collected is not exactly what the company says it is and then in turn misused that information I would think that most if not all the cases would be thrown out. I do feel the situation at hand raises a number of legal questions though. Not about the right or wrong regarding the software itself but much broader questions regarding cellular carriers and also the person who reported the issue. 1. What rights do the carriers have in regard to monitoring devices on their network? I am not talking about reading someones text messages, but I am talking about data bandwidth usage, possible rogue behavior. If a phone, tablet or something else were to start acting erratically what rights does a carrier have to monitor the devices and act accordingly to ensure good services to their clients, i.e. you and me. From the corporate perspective we own it all or the company does, but how does it work with ISP's and cellular network providers? 2. If and or when Carrier IQ and the carriers is absolved of any wrong doing, what is the person who started all this responsible for? IT could be said Trevor, who has less certifications or work experience then me by a lot, created an inaccurate technical video and released it to millions of non technical people causing wide spread panic and outcry. If he presented his findings to the developer community who in turn backed up his theories through retesting and understanding the issue, then I think it is fine but that was not the case. In fact within a week Dan Rosenberg, and also others performed detailed analysis of the program and concluded that Trevor's "findings" were in fact false. So what happens to him for crying fire in a crowded theater?


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