Last week, the Northern District of California denied a motion for class certification in a multidistrict litigation brought against Google over its alleged practice of scanning Gmail messages in order to serve content-based advertising. In re: Google Inc. Gmail Litigation, 5:13-md-02430 (N.D. Cal.). In sum, the court found that questions relating to whether class members had consented to the practice were too highly individualized to satisfy the predominance requirement based on the myriad disclosures available to class members.
The original complaint in this case dates back to 2010. Six class actions were eventually centralized in the Northern District of California where a consolidated complaint was filed. The complaint sought damages on behalf of individuals who either used Gmail or exchanged messages with those who used Gmail and had their messages intercepted by Google. The causes of action were brought under California’s Invasion of Privacy Act as well as federal and state wiretapping laws (California, Maryland, Pennsylvania and Florida).
In general, the federal Wiretap Act prohibits the unauthorized interception of wire, oral or electronic communications. Under the Wiretap Act, there are several exceptions to this general prohibition, one of which is if the intercepting company has obtained “prior consent.” So, the issue of whether the class members had consented to the interception, either expressly or impliedly, was a central issue in the case.
What proved fatal for plaintiffs on this go-around was their inability to demonstrate that the proposed classes satisfied the predominance requirement under FRCP 23. There were several proposed classes and subclasses. Members in each of the classes were potentially subject to a different set of disclosures and registration processes. For instance, one of the classes represented users who signed up for Google’s free web-based Gmail service. These users were required to check a box indicating that they agree to be bound by the Terms of Service. Another class was comprised of users of an internet service provider (ISP), Cable One, which had contracted withGoogle to provide e-mail service under the Cable One domain name. Another class consisted of users from educational institutions, such as the University of Hawaii; similar to Cable One, the educational institutions had contracted with Google for e-mail services. For businesses such as the ISPs and the educational institutions, the contract required that the contracting business, not Google, ensure that end users agreed to Google’s Terms of Service.
Ironically, the fact that the court considered Google’s Terms to be vague or misleading and the fact that the Terms were not presented uniformly to end users appeared to actually help Google avoid certification—it led to more individualized inquiries as to whether the users had given their express consent.
In addition to Google’s Terms, the court noted that there was also a “panoply of sources” where users could have impliedly consented to Google’s practices, such as Google’s Help pages; Google’s Privacy Center; Google’s Ad Preference Manager, which included a webpage on “Ads on Search and Gmail”; Gmail’s interface itself; the Official Gmail Blog; Google’s SEC filings, which includes the statement, “we serve small text ads that are relevant to the messages in Gmail,” and even media reports in such publications as The New York Times, The Washington Post, NBC News and PC World.
The breadth of these sources helped to further convince the court that determining whether class members impliedly consented to Google’s interception was a highly individualized determination and not one based on common questions. Whether each individual knew about or consented to the interception would depend on the sources to which he or she had been exposed. The plaintiffs contended that relying on extrinsic evidence outside of Google’s Terms would violate the parol evidence rule. The court was quick to point out that while that argument might work for a breach of contract case, the parol evidence rule was not applicable under the Wiretap Act, which requires the fact finder to consider all surrounding circumstances in relation to the issue of consent.
The fact that these cases were brought under wiretapping laws adds another interesting wrinkle. The federal Wiretap Act comes with $100 in statutory damages per day, which could lead to billions of dollars in penalties. Various other web companies have recently faced privacy class actions pursuant to the Wiretap Act over the alleged data mining of user communications, including Yahoo, LinkedIn and Facebook. We’ll continue to monitor this area closely to see how the recent Google decision might affect this wave of cases.