HOPE AFTER JAVIER? ACTIVE PROSPECT WINS ITS MOTION TO DISMISS: California Court Rules TrustedForm Functions As A Recorder Not An Eavesdropper Under CIPA

Hi TCPAWorld! Hope y’all had a wonderful Christmas! The Dame here to report a great CIPA victory out of the Northern District of California for our friends over at ActiveProspect especially after Javier.

ActiveProspect and What If Holdings, LLC, recently won their motion to dismiss Plaintiff’s complaint for violations of the wiretapping provision of CIPA, California’s Unfair Competition Law, and right to privacy under the California Constitution and their motion to dismiss to compel arbitration based on the following findings:

  • Plaintiff made “no allegation that ActiveProspect used her information in any way”;
  • “Section 631(a) concerns telephonic wiretapping specifically, which does not apply to the context of the internet”; and
  • Plaintiff’s allegations that “What If deployed ActiveProspect’s TrustedForm recording software only on What If’s websites and that the recordings were stored and accessed on Active Prospect’s servers” were not sufficient to show “that ActiveProspect was a third-party eavesdropped as contemplated by Section 631(a)”.

The case is Williams v. What If Holdings, LLC, & ActiveProspect, Inc., No. C 22-03780 WHA, 2022 WL 17869275 (N.D. Cal. Dec. 22, 2022).

Here is how the Court got to its ruling:

First, the Court found that What If’s liability hinged on whether ActiveProspect violated Section 631(a) as the fourth clause of Section 6331(a) targets one who “aids, agrees with, employs, or conspires with” another party that violates and of the prior three clauses. “As the website owner, What If was the intended recipient of plaintiff’s communication. Parties to a conversation cannot eavesdrop on their own conversation, so no other part of Section 631(a) is applicable to What If.”

The first and third clause of Section 631(a) were found inapplicable because the first clause concerns telephonic wiretapping which does not apply to the context of the internet and the third clause was inapplicable because Plaintiff made no allegation that ActiveProspect used her information in any way.

Next the court addressed the second clause of Section 631(a):

“Because a party to the communication is exempt from liability under CIPA, our dispositive question is whether ActiveProspect constitutes a third-party eavesdropper. See Davis v. Facebook, Inc. (In re Facebook Inc. Internet Tracking Litig.), 956 F.3d 589, 607 (9th Cir. 2020). Put differently, the question boils down to whether ActiveProspect was an independent third party hired to eavesdrop on What If’s communications, or whether ActiveProspect’s software was merely a tool that What If used to record its own communications with plaintiff.”

The Court found that using TrustedForm was to be completely different than hiring a third party to eavesdrop. As used here, it is merely recordation software that is used in a clerical manner since it only records one page of the website relating to opt-in/consent for telemarketing purposes. Also, there were no facts alleged claiming ActiveProspect used the gathered date itself in any manner.

As to why the other two claims failed:

  1. The California Unfair Competition claim requires either an economic injury or an underlying violation. Plaintiff conceded that she did not have any economic loss here, and since the CIPA claim is dismissed, there is no more underlying violation.
  2. The California Constitution claim regarding invasion of privacy also failed because “plaintiff did not plausibly plead wiretapping” or “plead a protected privacy interest under the California Constitution.”

Now, we will see how this plays out in the long run in light of Javier. The Court didn’t really address Javier here reasoning that “Javier was expressly cabined to the question of consent.” Which is true, Javier’s argument was regarding retroactive consent.

We will certainly be keeping an eye on this one!

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