On April 9, the Ninth Circuit reversed a district court’s dismissal of several privacy claims advanced in a putative class action alleging that Facebook improperly tracked its users’ browsing histories—and sold them to third-party advertisers—even after the users logged out of their social media accounts.

• The named plaintiffs alleged that Facebook surreptitiously used “tracking cookies” to record its users’ browsing histories even after they logged out of their accounts, despite contrary representations made in Facebook’s governing materials.
• The complaint alleged violations of several federal and state privacy statutes, including the Wiretap Act, the Stored Communications Act, and the California Invasion of Privacy Act, as well as a variety of common law claims premised on harm to the named plaintiffs’ privacy interests (such as intrusion upon seclusion). The named plaintiffs sought to represent a putative class of people who had active Facebook accounts between May 27, 2010 and September 26, 2011.
  • The Northern District of California granted Facebook’s motion to dismiss, holding that the named plaintiffs lacked standing to advance their privacy claims and otherwise did not adequately plead the remaining claims. Plaintiffs appealed.
• The Ninth Circuit reversed in part, holding that the named plaintiffs had standing to pursue their privacy claims.
  • The court explained that the named plaintiffs had pled the invasion of a legally protected interest, as violations of the right to privacy—which encompassed an individual’s control of information concerning his or her person—were long actionable at common law.
  • As the court explained, the plaintiffs “adequately alleged that Facebook’s tracking and collection practices would cause harm or a material risk of harm to their interest in controlling their personal information…. [which] would allegedly reveal an individual’s likes, dislikes, interests, and habits over a significant amount of time, without affording users a meaningful opportunity to control or prevent the unauthorized exploration of their private lives.”
  • The court determined that Facebook’s alleged actions would constitute a clear invasion of the user’s right to privacy protected by these statutes.
• The Ninth Circuit also found that plaintiffs sufficiently alleged economic injury to bring claims for a violation of California’s Computer Data Access and Fraud Act and common law claims including trespass to chattels and fraud. Plaintiffs alleged that Facebook was unjustly enriched through the use of plaintiffs’ data, which was enough to confer standing. Facebook disagreed, asserting that plaintiffs had to demonstrate that they planned to sell their data or that Facebook made their data less valuable, and, in any event, that plaintiffs’ claimed entitlement to damages was not an injury for standing purposes.
  • The court agreed with the plaintiffs. Relying on the rule that state law can create interests to support standing in federal court, the court pointed to California law recognizing a right to disgorgement of profits resulting from unjust enrichment, regardless of whether a defendant’s actions made the plaintiff’s property less valuable or forced the plaintiff to spend money.
  • Because California recognized a legal interest in unjustly earned profits, plaintiffs’ allegations that their browsing histories were worth $52 a year to Facebook and that Facebook profited from plaintiffs’ data were sufficient to demonstrate standing.
• The Ninth Circuit, however, affirmed the dismissal of plaintiffs’ claims for violation of the Stored Communications Act, holding that the plaintiffs’ data was not in “electronic storage” as required by the statute. The court also affirmed the dismissal of plaintiffs’ breach of contract and implied covenant claims, holding that they failed to adequately allege the existence of a contract that was subject to breach.
• The Ninth Circuit’s decision may embolden plaintiffs who claim damages based on alleged violations of privacy laws, and may also motivate them to search for state law claims that will allow them to allege standing based on broad theories of financial injury.

Read the full opinion here.