A House Divided: Federal Judges Take Conflicting Positions on Wiretap Act Claims Against Google in California's Northern District

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Last week, the U.S. District Court for the Northern District of California dismissed a class action claim that Google’s modifications to its customer privacy policies and subsequent sharing of customer data across Google products violate the Wiretap Act and other laws. The decision by Magistrate Judge Grewal in Google, Inc. Privacy Policy Litigation underscores the gap between his broad application of an exception to the Wiretap Act’s prohibitions and the far narrower view of that same exception taken by Judge Koh of the same court in allowing the Google, Inc. Gmail Litigation to proceed, which we discussed here and here.

Both cases challenge, among other things, Google’s practice of sharing data collected from its customers with advertising partners. In both cases, Google asked the court to dismiss claims that this sharing violates the Wiretap Act, on the basis of the Act’s exception that allows a provider of electronic communications services to intercept customer data “in the ordinary course of business.” Yet the cases reach opposite decisions on the applicability of that exception to very similar claims.

In the decision last week in Google, Inc. Privacy Policy Litigation, Magistrate Judge Grewal rejected the plaintiffs’ argument that, to come under the Wiretap Act’s “ordinary course of business” exception, Google would have to demonstrate that its interception was “necessary to the delivery of Gmail.” Instead, Magistrate Judge Grewal reasoned that limiting the exception only to “action taken to deliver the electronic communication, does not square with the plain meaning of the statutory text at issue.” He thus dismissed the Wiretap Act claims – for the second time – on grounds that Google’s interception and use of customer information for advertising purposes is squarely within the ordinary course of its business. The plaintiffs have until January 16, 2014 to file an amended complaint that cures this defect.

In the same courthouse, as we recently explained in this post, Judge Koh rejected Google’s similar arguments in the Google, Inc. Gmail Litigation. In that case, the court found that to qualify for the “ordinary course of business” exception, an interception must either “facilitate” the transmission of the communication at issue, or be “incidental” to it. The court found that Google’s alleged provision of targeted advertising and creation of user profiles did not “facilitate” the transmission of the emails, that Google’s alleged interception was not “incidental” to that transmission, and thus that the interception and sharing were not in the “ordinary course of [Google’s] business.” Accordingly, Judge Koh let the case proceed. Although the parties have been briefing class certification issues in that case, Google has asked Judge Koh to certify her order so that the 9th Circuit could consider an interlocutory review. Google has now submitted Judge Grewal’s decision to Judge Koh to support its certification request, noting, among other things, that “conflicting decisions on the same issue in the same District are ideal candidates for interlocutory review.”

In each of these decisions, the judges took pains to note the differences in their respective approaches, but suggested the outcomes were ultimately consistent. While the facts and claims in the two cases are not the same, to be sure, the decisions are simply not consistent in their application of the Wiretap Act’s “ordinary course of business” exception. In fact, the two opinions each cite two separate decisions of other courts (Hall v. Earthlink Network, Inc. and Kirch v Embarq Management Co.) as support for their respective narrow or expansive interpretations of the “‘ordinary course of business’” exception. Consequently, something does not compute here.

If Judge Koh and then the 9th Circuit grant Google’s request for an interlocutory appeal of the decision in the Google, Inc. Gmail Litigation that narrowly interprets the “ordinary course of business” exception, there eventually could be a uniform standard in the 9th Circuit. Until then, judges appear willing to make their own decisions based on the language of the statute and their interpretations of related precedent.