Gibbons Law Alert

Gibbons Law Alert

Author: Caroline E. Oks

District of New Jersey Rejects Alter Ego Theory of Liability in Data Breach Class Action

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Posted in Class Action

On May 1, 2025

In In re U.S. Vision Data Breach Litigation, the District of New Jersey recently dismissed a putative class action related to a 2021 ransomware attack because the plaintiffs failed to adequately allege a direct relationship with the defendant, which was fatal to their claims. The plaintiffs were patients of Nationwide Optometry, a wholly owned subsidiary of defendants U.S. Vision, Inc. and USV Optical, Inc. (collectively, “USV”) until USV sold Nationwide in 2019. The plaintiffs alleged that after the sale, USV retained personally identifiable information (PII) and protected health information (PHI) of Nationwide’s patients and that Nationwide functioned as USV’s alter ego. Between April 20, 2021, and May 17, 2021, USV experienced a data breach compromising PII and PHI of more than 711,000 individuals. The plaintiffs claimed the data breach caused them to suffer identity theft risks, financial damages, and loss of privacy. The lawsuit asserted claims for negligence, breach of fiduciary duty, breach of contract, unjust enrichment, and violations of consumer protection laws. The defendants moved to dismiss, arguing that (1) merely storing the plaintiffs’ data does not create the direct relationship with them required for their fiduciary-duty, implied-contract, unjust-enrichment, consumer-fraud, and negligence claims; and (2) the plaintiffs failed to allege sufficient facts to plausibly suggest that USV and Nationwide are alter egos. The district...

California Courts Continue to Cool on CIPA Allegations

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Posted in Class Action

On April 16, 2025

As we have blogged about in the past, federal district courts have seen a tidal wave of putative class actions by website users claiming violations of the California Invasion of Privacy Act (CIPA), Cal. Penal Code § 630, et seq.  These lawsuits focus on the alleged unlawful use of website tracking technologies, such as cookies, pixels, tags, and beacons, to collect and use personal information of people who visit these websites without their consent. The deluge of lawsuits has prompted courts to scrutinize CIPA claims more rigorously. As a recent example, in Smith v. Yeti Coolers, LLC, the Northern District of California dismissed with prejudice a putative class action challenging Yeti’s use of technology supplied by third-party payment processor, Adyen, to process customer purchases on its website. The lawsuit claimed that Adyen incorporated Yeti customers’ financial information into its fraud-prevention system, which it then marketed to merchants without customers’ consent. The plaintiff brought claims for violations of CIPA § 631 (anti-wiretapping) and § 632 (anti-eavesdropping) and for invasion of privacy under California’s Constitution. The court initially dismissed the complaint without prejudice because it did not “‘sufficiently allege [Yeti’s] knowledge of Adyen’s allegedly wrongful conduct or Defendant’s intent to assist Adyen in that conduct.’” The plaintiff’s Second Amended Complaint (SAC) fared no better. First, the court...

New Jersey Appellate Division Confirms Parties May Review for Relevance Documents That Hit on ESI Search Terms

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Posted in General Litigation

On April 11, 2025

The New Jersey Appellate Division recently issued a rare opinion concerning review and production of Electronically Stored Information (ESI). In Atlantic ER Physicians Team Pediatric Associates, PA v. UnitedHealth Group, the Appellate Division held that the trial court erred in holding that all documents that hit on ESI search terms must be produced, regardless of their relevance. The plaintiffs (emergency medical service providers) alleged that the defendants (insurers and third-party administrators of health benefits plans) underpaid claims by leveraging the plaintiffs’ obligation to provide emergency care. The order that the trial court entered to “‘govern the discovery of [ESI] and any electronically stored or maintained information’ … require[d] the parties to collaborate to identify ‘custodians whose email[s] [were] reasonably believed to contain relevant ESI for collection’ and develop ‘search parameters, i.e., search terms’ to search the agreed-upon custodians’ records.” During a discovery hearing at which both sides raised relevance objections, the trial court stated that “‘relevance is not a reason to withhold documents.’” Thereafter, the parties negotiated search terms in a way that sought to minimize the number of irrelevant documents they would generate. Nevertheless, during a subsequent conference, the trial court directed the parties to produce all documents returned by the agreed-upon ESI search terms, regardless of whether they were responsive or relevant, and...

CIPA Litigation and the “Technological Capability” to Violate California’s Privacy Laws

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Posted in Class Action

On March 7, 2025

In Ambriz v. Google, LLC,  a court in the Northern District of California refused to grant Google’s motion to dismiss the plaintiffs’ claims under Section 631(a) of the California Invasion of Privacy Act (CIPA) for (i) “intentional wiretapping,” and (ii) “willfully attempting to learn the contents or meaning of a communication in transit.”  The lawsuit challenges Google’s AI-powered product, Google Cloud Contact Center AI (“GCCCAI”), which is used to support the customer service centers of other businesses by providing a virtual agent with whom callers can interact. The plaintiffs alleged that they placed customer service calls to businesses that use the GCCCAI service – specifically, Verizon, Hulu, GoDaddy, and Home Depot – and spoke with a “virtual agent” and human representative but did not know that Google would be listening in on and transcribing the call. Nor did the plaintiffs consent to Google’s alleged eavesdropping. Google moved to dismiss the CIPA claims on the ground, among others, that it simply provides a software tool to its business clients and was not “an unauthorized third-party listener to the communications between the named Plaintiffs and the customer service centers they called.” In denying Google’s motion to dismiss, the court began its analysis by explaining the split that has emerged in cases interpreting CIPA 631(a): Some courts require...

Fourth Circuit Rockets Certified Class Due to Lack of Article III Standing

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Posted in Class Action

On February 7, 2025

In a 2-1 recent published decision, the Fourth Circuit decertified a class, holding that every class member must be concretely harmed by an alleged statutory violation under the Supreme Court’s seminal holding on Article III standing in TransUnion v. Ramirez. Alig v. Rocket Mortgage, LLC involved statutory and common law claims under West Virginia law by a proposed class of consumers against Quicken Loans, Inc. (now Rocket Mortgage, LLC), alleging that, in refinancing their home-mortgage loans, the consumers paid for “independent appraisals” that were not “independent” at all. In fact, the defendants provided to the appraisers the homeowners’ own estimates of their homes’ values, which they had provided in their loan application. The plaintiffs claimed that the inclusion of the borrowers’ own estimates inflated the appraisals and so compromised the integrity of the appraisal process as to render their appraisals unreliable and worthless. The District Court certified a class of “‘[a]ll West Virginia citizens who refinanced mortgage loans with Quicken, and for whom Quicken obtained appraisals through an appraisal request form that included an estimate of value of the subject property,’” which amounted to 2,769 loans. The court then granted summary judgment to the plaintiffs and class members and awarded them more than $10.6 million in statutory damages, among other relief. On the first appeal, the...

ChatBot or Not: California Federal Courts Limit CIPA Applicability

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Posted in Class Action Defense

On September 3, 2024

The Northern District of California recently issued a decision further constraining plaintiffs’ ability to assert claims under the California Invasion of Privacy Act (CIPA). In Ambriz v. Google, LLC, the plaintiff filed a putative class action alleging that Google violated CIPA § 631(a) because its Cloud Contact Center AI software-as-a-service, a virtual customer service tool, wiretapped, eavesdropped on, and recorded his call to Verizon’s customer service center.

New Jersey Supreme Court Confirms the Enforceability of Class Action Waivers

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Posted in Class Action Defense

On July 25, 2024

The New Jersey Supreme Court issued a unanimous opinion on July 10, 2024, holding that class action waivers in consumer contracts are not per se contrary to public policy. While such waivers may be unenforceable if they are unconscionable or violate other tenets of state contract law, the opinion confirms that there is no blanket prohibition on them – a positive development for businesses in New Jersey. Pace v. Hamilton Cove concerned a putative class action filed by residential tenants of Hamilton Cove Apartments, a luxury apartment complex in a high crime area. In its advertisements, brochures, and oral statements to prospective tenants during tours, Hamilton Cove Apartments promised that the complex would have “elevated, 24/7 security,” with security personnel stationed round-the-clock near each building’s entrance. The plaintiffs alleged that the promises were knowingly false when made, and that they relied on those representations in deciding to sign the lease. The lease contained a “Class Action Waiver” Addendum, by which the lessee “expressly waive[d] any right and/or ability to bring, represent, join, or otherwise maintain a Class Action.” The defendants moved to dismiss the plaintiffs’ Consumer Fraud Act (CFA) claim, arguing in pertinent part that a class action was not necessary to vindicate the plaintiffs’ interests and, in any event, that the leases contained class...

New Jersey Supreme Court Holds “Illusory Discounts” Do Not Support a Claim of Ascertainable Loss Under the Consumer Fraud Act

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Posted in Class Action Defense

On April 25, 2024

In a 4-3 opinion, the New Jersey Supreme Court held that the mere purchase of a product falsely represented as “discounted” does not, without more, satisfy the “ascertainable loss” element under the New Jersey Consumer Fraud Act (NJCFA). In Robey v. SPARC Group LLC, the plaintiffs – a proposed class of shoppers at the retail clothing store Aéropostale – alleged that the store advertised clothing as being discounted when, in fact, the items had never been offered or sold at the higher prices off of which the “discount” was taken. The plaintiffs contend that this practice of so-called “illusory discounts” violated the NJCFA, the Truth in Consumer-Contract, Warranty and Notice Act (TCCWNA), and various common law contract rights. The trial court dismissed the complaint for failure to state a claim, determining that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed, noting some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The Supreme Court granted certification and reversed, finding that the plaintiffs’ NJCFA claim failed because they could show neither of the two recognized types of “ascertainable loss” for a claim based on a seller’s alleged deception: an out-of-pocket loss or a loss of the benefit-of-the-bargain. First, the plaintiffs...

Appellate Division Holds Plaintiffs Can State a Claim Under New Jersey’s CFA and TCCWNA Statutes Where an Advertised Discount Is Alleged to Be Illusory

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Posted in Class Action Defense

On March 22, 2023

A recent split decision from the New Jersey Appellate Division called into question whether the “ascertainable loss” requirement for pleading a claim under the New Jersey Consumer Fraud Act (NJCFA) is the same as the “aggrieved consumers” requirement under the Truth in Consumer Contract, Warranty and Notice Act (TCCWNA). Without deciding that question, the court found that the pleading sufficiently alleged both in asserting that the defendant inflated its prices to offer an illusory discount. The plaintiffs alleged that the defendant, SPARC Group LLC, falsely advertised clothing at two of its Aeropostale stores as being discounted from a higher price when the clothing allegedly had never been sold in those stores at the higher price. The plaintiffs asserted that this “markup to markdown” practice violates both the NJCFA, the TCCWNA, and the common law. The trial judge dismissed the complaint for failure to state a claim and largely rested her decision on a determination that the plaintiffs failed to allege an “ascertainable loss.” The Appellate Division majority disagreed and reversed. The majority noted some confusion as to whether the NJCFA’s “ascertainable loss” requirement was the same as the TCCWNA’s “aggrieved consumer” requirement. The New Jersey Supreme Court has held that an “ascertainable loss” must be “quantifiable and measurable” and not “hypothetical or illusory,” while the...

Second Circuit Holds Monetary Compensation for Survey Participation Not an “Unsolicited Advertisement” Under the TCPA; Disagrees with Third Circuit

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Posted in Class Action Defense

On January 20, 2022

The Second Circuit recently held, in Bruce Katz, M.D., P.C. v. Focus Forward, LLC, that an unsolicited faxed invitation offering $150 to participate in a market research survey does not constitute an “unsolicited advertisement” under the Telephone Consumer Protection Act of 1991 (the “TCPA”). The TCPA defines “unsolicited advertisement” as “any material advertising the commercial availability or quality of any property, goods, or services which is transmitted to any person without that person’s prior express invitation or permission.” The Second Circuit reasoned that the subject fax transmissions “plainly do not advertise the availability of any property, goods, or services” and therefore “cannot reasonably be construed” as unlawful advertisements. The panel did note, however, that its holding may not necessarily extend to all “communications, including faxed surveys, offering the recipient both money and services,” as some such communications could incur liability under the TCPA depending on the specific content of the communication. The Second Circuit’s holding in Katz departed from the reasoning in the Third Circuit’s divided opinion in Fischbein v. Olson Research Group, Inc. The faxes at issue in Fischbein consisted of requests to doctors to participate in market research surveys in exchange for monetary compensation. The Third Circuit held that such faxes are advertisements, reasoning that “an offer of payment in exchange for participation...

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