Light, (Camera), Class Action! After Seven Years of Dormancy Since Inception, Businesses See Class Action Lawsuits for Alleged Violations of California's "Shine the Light" Act

by Proskauer - Privacy & Data Security

The past month has seen a new pattern of class action lawsuits filed in California courts against businesses for allegedly violating California’s Shine the Light privacy law (the “Act”). For seven years since the Act became effective, well-intentioned businesses have understandably had the sense that their compliance approach has been sound, and we have seen no challenges to that notion. Recent class actions have alleged non-compliance on technical grounds as frivolous as the title of the privacy policy being “Privacy Policy” instead of “Your Privacy Rights.” Why should that cost a business $500 - $3,000 per California customer? We would have to ask the plaintiffs’ lawyer that question.

Under the Act, Cal. Civ. Code §1798.83, California residents have the right to request from a business with twenty or more employees, with whom they have an established business relationship, certain information about the business’s disclosure of personal information to third parties for direct marketing purposes. Specifically, such California residents may ask for details about what personal information the business shares with third parties for those third parties’ direct marketing purposes during the immediately preceding calendar year. 

There are several compliance options available to businesses under the Act. One option is for the business to adopt and disclose to the public in its privacy policy a procedure that allows its California customers to opt-out of the business’s sharing of their personal information for third parties’ direct marketing purposes. Alternatively, a business can inform its California customers of the business’s designated contact point to which a request under the Act should be directed in any of the three following ways: (A) by instructing its agents or employees to inform the customers of such information; (B) by including such information in the business’s web site privacy policy with the required emphasis and conspicuousness; or (C) by making such information available to customers at the business’s physical locations. 

To date, despite being effective since 2005, there are no published decisions under the Act. But that may change with this month’s wave of class action lawsuits. The complaints in the recently filed class action lawsuits share the same allegation (in addition to sharing the same plaintiff’s lawyer): that each respective business failed to comply with its obligations by not providing its California customers with the information necessary for them to make requests under the Act.

According to Cal. Civ. Code §1798.84(c), violating the Act can result in a civil penalty of up to $500 per violation, unless the violation is willful, intentional or reckless, in which case the business can be on the hook for as much as $3,000 per violation. However, businesses are given a ninety day cure period before they can be held in violation of the law, as long as their violation was not willful, intentional or reckless.  Many companies who have been challenged may be able to avail themselves of this safe harbor to avoid costly settlements and class notification expenses. 

Although these cases are still in their early stages and it is not clear how things will be resolved, it is important to note that while complying with the Shine the Light privacy law may be burdensome, noncompliance may result in a business’s lights being dimmed, or, given the possibility of statutory damages, turned off for good.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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