Tagged: Motions to Dismiss

Sixth Circuit Vacates Certification of a Sprawling Multistate Class of GM Vehicle Owners Alleging Transmission Defects

In Speerly v. GM, LLC , the Sixth Circuit en banc reversed a district court’s order certifying a class and multiple subclasses to assert various state law claims alleging defects in GM’s Hydra-Matic 8-Speed Transmission in vehicle models sold between 2015 and 2019 — in all, 26 state-wide subclasses with a total of 59 state-law claims on behalf of roughly 800,000 individual car buyers. The class had identified two problems with the transmission: (i) the transmission fluid absorbed moisture, changing its viscosity and causing gear shift slippage; and (ii) the transmission control module caused vehicles to lunge forward or “shudder.” Before addressing the substantive elements of each cause of action, the court explained that the district court must “answer merits questions that bear on Rule 23’s demands.” The Rule 23 analysis “will inevitably address issues that overlap with the merits inquiry” because the “element-by-element, claim-by-claim inquiry” required for the commonality and predominance inquiry “implicates the merits of each claim.” Therefore, the Panel noted that the “district court, as a result, must not defer merits questions bearing on commonality and predominance until summary judgment.” Regarding the commonality requirement, the Sixth Circuit explained that under Wal-Mart Stores, Inc. v. Dukes, a common question must resolve an issue that is “central” to the validity of each claim, and...

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

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...

“Tester” Beware: California Wiretap and Pen Register Claims Challenging Website’s Third-Party Tracking Software Doomed by No Expectation of Privacy

In Rodriguez v. Autotrader.com, Inc., the District Court for the Central District of California dismissed, with prejudice, a class action lawsuit claiming that Autotrader.com violated the California Invasion of Privacy Act (CIPA) by allowing third-party tracking software to be installed on a website visitor’s browser before the visitor had any opportunity to consent to or decline the website’s privacy policy. The plaintiff’s complaint alleged that she was a “tester” – i.e., someone who seeks out legal violations and files lawsuits to ensure compliance – who visited the Autotrader.com website and made a search query purportedly containing confidential and private information. The complaint alleged that once a query is entered in the search bar, it is routed to unknown third parties and shared with other third parties like Google, Facebook, Pinterest, and various other advertising services. The complaint asserted that the use of the tracking technology violated California’s wiretapping and eavesdropping statute, CIPA § 631(a), as well as CIPA § 638.51, which prohibits the use of pen registers and trace devices. In January 2025, the district court dismissed the plaintiff’s CIPA § 631 claims without prejudice for lack of standing because the complaint merely alleged that the plaintiff made a search query containing confidential and private information but “fail[ed] to describe the contents of her query.”...

Consent to Website’s Terms of Use Defeats Website Pixel Tracking Class Action Claims under Federal Wiretap Act, VPPA, and CIPA

In Lakes v. Ubisoft, Inc., the District Court for the Northern District of California dismissed with prejudice a class action lawsuit claiming that Ubisoft, Inc., a video game distribution company, violated the Federal Wiretap Act, Video Privacy Protection Act (VPPA), and California Invasion of Privacy Act (CIPA) by placing a Meta Pixel tracking tool on its website that allegedly intercepted users’ communications and transmitted their information, including video request data, to Meta (Facebook). The complaint sought a nationwide class and California subclass of users of the website that had their personally identifiable information (PII), search terms, and detailed webpage information improperly intercepted by and disclosed to Facebook through the use of the Pixel. Ubisoft moved to dismiss all claims on the ground, among others, that all of the plaintiffs’ claims failed because an essential element of each claim is lack of consent, despite the fact that the plaintiffs repeatedly consented to, and were informed of, the use of cookies and pixels on the website. First, the plaintiffs had to consent to the use of cookies prior to using the website. Users were presented with a cookie banner when they first arrived at the website, which notified them that cookies would be used and gave them the option to change cookie consent preferences. Second, users had...

California Courts Continue to Cool on CIPA Allegations

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...

Strike Three – Lack of Scienter Dooms CIPA Class Action Claiming Website Owner Aided and Abetted Chat Bot Software Provider’s Alleged Eavesdropping

In Valenzuela v. The Kroger Co., the District Court for the Central District of California granted, for the third and last time, defendant’s motion to dismiss a class action lawsuit claiming that The Kroger Co. violated  section 631(a) of the California Invasion of Privacy Act (CIPA) by allowing third-party software (provided by Emplifi) to be embedded on its website to record consumers’ communications with the website’s chat function. The only issue before the court was whether the amended complaint plausibly alleged liability under prong four of CIPA 631(a)—“that Kroger aided and abetted Emplifi’s eavesdropping on Kroger’s website users’ chats.” In its previous ruling, the court held that merely using embedded software to archive communications, like with a tape recorder, would not give rise to a statutory violation.  Instead, to state a claim under prong four of CIPA 631(a) there must be plausible allegations explaining how Kroger knew that Emplifi engaged in conduct constituting a breach of duty, e.g. by sharing users’ data with third parties, or how Kroger itself engaged in conduct that constituted a breach of duty. Because prong four of CIPA 631(a) does not contain an explicit scienter requirement, the court applied California common law of aiding and abetting, under which aiding and abetting liability for an intentional tort can be imposed only...

Flawed Theory: District Court Refuses to Dismiss Video Privacy Claim Challenging Use of Meta Pixel Web Tracking Technology

In Lee v. Springer Nature America, Inc., Judge Lewis J. Liman in the Southern District of New York held that a longtime subscriber to Scientific American plausibly alleged, on behalf of a putative class, that the website violated the Video Privacy Protection Act of 1988 (VPPA) based on its use of website tracking technology. The plaintiff, a 10-year subscriber, filed a complaint alleging that Scientific American unlawfully installed a code known as “Meta Pixel” on its website. The Meta Pixel supposedly transmitted information to Meta (formerly known as Facebook) about the subscriber’s use of the site (including Facebook ID, URLs accessed, and titles of videos viewed) in exchange for Meta providing advertising capabilities to Scientific American. Scientific American moved to dismiss the complaint on two grounds: first, that the plaintiff lacked standing because he had not suffered an injury, and second, that the plaintiff did not plead the elements required to state a claim under the VPPA. Judge Liman rejected both arguments. Citing the Second Circuit’s recent decision in Salazar v. National Basketball Association, Judge Liman held that the plaintiff’s allegations that he was a subscriber to Scientific American, that Scientific American disclosed to Meta the plaintiff’s personal information (Facebook ID, URLs accessed, and titles of videos viewed), and that Meta used this information without...

Recent Construction Law Decision Holds That Contract Payment Terms Control Over New Jersey’s Prompt Payment Act

In JJD Electric, LLC v. SunPower Corporation, Systems, et al., the District Court of New Jersey dismissed multiple counts of plaintiff JJD Electric’s amended complaint, holding that the terms of the plaintiff’s subcontract control over its ancillary theories of liability. However, the court allowed the plaintiff’s fraudulent misrepresentation and unjust enrichment claims to proceed insofar as they challenged the very validity of the subcontract, as the Magistrate Judge held previously in granting the plaintiff leave to file the amended complaint. Defendant SunPower subcontracted JJD Electric to provide electrical contracting services in connection with the installation of power equipment at various project locations. JJD Electric asserted claims against SunPower for breach of contract, fraudulent misrepresentation, and unjust enrichment, as well as a claim under New Jersey’s Prompt Payment Act (PPA), seeking approximately $2 million for the alleged unpaid balance of work performed and another approximately $4 million for alleged delay damages. Importantly, as to the PPA claim, the court recognized the scarcity of case law addressing the elements of an action under subsection (b) of the PPA dealing with timing of payments between prime contractors and subcontractors. Based on the plain language of the PPA and guidance from other courts, the court adopted the following elements: The subcontractor has performed contractual work for the prime contractor....

Refusal to Wear a Face Mask May Leave You Constitutionally Unprotected

Is there a constitutional free speech right to refuse to wear a face mask in public indoor spaces during a recognized public health emergency? The Third Circuit Court of Appeals recently determined there is not, as part of a precedential decision in the consolidated cases of Falcone v. Dickstein, et al. and Murray-Nolan v. Rubin, et al. The Third Circuit addressed the First Amendment issue in the Murray-Nolan case. Specifically, the issue the court confronted was whether, during the COVID-19 pandemic, plaintiff Gwyneth Murray-Nolan, an “advocate for parental choice in masking children at school,” was protected under the First Amendment in her refusal to wear a mask during a Board of Education (“BOE”) meeting, despite the BOE’s mask requirement and the Governor’s Executive Order mandating that New Jersey schools require the use of face masks. (The Falcone case, though likewise arising from an individual’s opposition to a mandatory masking policy, was decided on different grounds.) The plaintiff’s refusal to wear a mask was intended by her as a silent protest against the BOE’s masking policy and its lack of action to unmask children in schools. While the court recognized that the First Amendment protects some conduct in some settings, the court held that the refusal to wear a mask failed to satisfy the constitutional standard...

New Jersey Enacts Anti-SLAPP Legislation

Lawsuits filed to intimidate or punish those who are engaged in constitutionally protected activity by, in effect, suing them into submission or silence through the prospect of expensive and time-consuming litigation are commonly referred to as strategic lawsuits against public participation (SLAPP). On September 7, 2023, Governor Murphy signed New Jersey’s first anti-SLAPP legislation, which is designed to thwart such lawsuits by providing a process for early dismissal of these suits and an award of costs and counsel fees to a prevailing moving party. New Jersey now joins 32 other states that have enacted some form of anti-SLAPP legislation. The legislation applies to a civil cause of action against a person based on the person’s: (1) communications during a legislative, executive, judicial, administrative, or other governmental proceeding; (2) communications on an issue under consideration or review by such a body; or (3) engagement in any other activity that is protected by the First Amendment freedoms guaranteed by the United States Constitution or New Jersey Constitution and that relates to a matter of public concern. Modeled after the Uniform Public Expression Protection Act (UPEPA), the New Jersey legislation: permits a SLAPP defendant to file an early application for an order to show cause to dismiss the cause of action in whole or in part establishes a...