First Line Of Defense In Privacy Class Actions - Damages

Law360, New York (September 22, 2011, 12:57 PM ET) -- Named plaintiffs in privacy class actions ordinarily do not or cannot allege injury or loss resulting from the misuse or theft of their private information. As demonstrated by recent court decisions in California and New York, the inability to allege damages continues to pose significant obstacles for would-be class plaintiffs. Such was the case for the plaintiffs in In re Google Street View, No. 10-MD-02184 JW (N.D. Cal.). There, the court dismissed plaintiffs' claims under California's consumer protection statute, Business & Professional Code § 17200 ("Section 17200"), because plaintiffs failed to plead facts showing that Google's alleged collection of their Wi-Fi usage data caused plaintiffs to lose or expend money.

A similar inability to allege actual damages resulted in the dismissal of federal statutory claims asserted in Bose v. Interclick, No. 10 Civ. 9183 (DAB) (S.D.N.Y.). Although absence of monetary losses did not bar claims in Bose that were asserted under New York's deceptive trade practices statute, General Business Law § 349 ("Section 349"), statutes or causes of action that permit claims to go forward in the absence of actual damages are the exception, not the rule. The fact that lead plaintiffs in privacy class actions typically have not sustained any damages has frustrated most attempts to bring privacy class actions, and probably affords defendants their strongest line of defense.

Privacy class actions generally involve either commercial monitoring or use of private information (like the Google Street View and Bose cases), or the loss or theft of private information as the result of a data breach (as alleged in the cases concerning the Sony PlayStation Network data breach). Such occurrences would appear, at first glance, to be tailor-made for class action litigation.

The conduct at issue often affects large numbers of individuals, and is usually widely publicized. At the same time, alarmist commentators stoke consumers' fears about the omnipresent risk of identity theft, or decry efforts of online advertisers and marketers to use personalized user information to target online advertising and content. The felicitous combination of consumer angst, widespread publicity and large potential classes would seem to promise lucrative paydays for enterprising class action attorneys.

And yet, the 15 years of privacy class actions since the dawn of the Internet era have yet to produce a landmark plaintiffs' verdict. The common denominator has been damages or, more precisely, the lack of damages. For all of the pundit-driven frenzy about the potential for...