Apple Must Face Privacy Class Action, Judge Rules

By CHRIS MARSHALL

SAN JOSE, Calif. (CN) - Apple may be liable for sending unauthorized iPhone user information to the third parties behind applications, but the application developers are in the clear, a federal judge ruled.

The plaintiffs in the consolidated class action have sufficiently showed that Apple was responsible for transmitting the personal information of iPhone, iPad and iPod Touch users to the application companies, U.S. District Judge Lucy Koh found.

Apple and the developers faced claims of having violated consumers' privacy rights by letting third-party applications that run on Apple devices collect and profit from users' personal information without their knowledge. The class alleges computer fraud, invasion of privacy, conversion and many other statutory violations.

Apple and the developers had tried to dismiss on the basis of standing, but Koh said that the "Wiretap Act provides that any person whose electronic communication is 'intercepted, disclosed, or intentionally used' in violation of the act may in a civil action recover from the entity which engaged in that violation."

The judge pointed to claims that Apple designed its products to allow personal information to be transmitted to third parties.

"This transfer has led to the consumption of bandwidth and storage space on their iDevices and has led them to overpay for their devices," Koh said, summarizing the complaint. "Thus, as a matter of pleading Article III standing, plaintiffs have sufficiently articulated the alleged injury is fairly traceable to the conduct of both defendants."

While Apple claims that the Consumers Legal Remedies Act allegations arise from the consumers' own actions - downloading the apps - Koh agreed with the class that the claims arise out of the sale of a good.

Apple users say that the availability of programs in the Apps Store is a large reason they chose to buy their respective Apple product. Their choice to buy the product also relied on Apple's promises to safeguard personal information against unauthorized access and disclosure.

The class says it did not then expect or consent to the tracking and collecting of their app use or other personal information. It also claims that Apple's failure to disclose its practices regarding the supposedly free apps makes their devices overpriced.

"Had Apple disclosed the true cost of the purportedly free Apps ... the value of the iPhones would have been materially less than Plaintiffs paid," Koh wrote, summarizing the Consumers Legal Remedies Act allegations.

The judge also refused to dismiss allegations of unfair competition at this stage.
According to the ruling, plaintiffs have "alleged breaches of Apple's representations that it would not track consumer's whereabouts."

But Koh pointed out that "it is possible that Apple's conduct might be useful to society, and that this benefit outweighs the harm to plaintiffs."

"However, at this juncture the court cannot say that Apple's practices are not injurious to consumers, or that any benefit to consumers outweighs the harm," the decision states.

The court also found that the class has sufficiently alleged that Apple tracked and disclosed user information despite representations to Congress, and in its Terms and Conditions, that consumers could opt out of the geo-tracking feature of their device by turning off the Location Services setting on their devices.

Koh dismissed all allegations against the third-party application companies, finding that Apple's devices are not facilities through which an electronic communication service can be provided. She also found that plaintiffs could not show the developers had accessed data that was in "electronic storage," as required under the Stored Communications Act. The third-party application companies named in the complaint were Google, Admob Inc., Flurry Inc., AdMarval Inc. and Medialets Inc.

Koh similarly dismissed allegations under the Wiretap Act against Apple, noting that "personally identifiable information that is automatically generated by the communication but that does not comprise the substance, purport, or meaning of that communication is not covered by the Wiretap Act."

"Because plaintiffs allege the interception only of automatically generated geolocation data, plaintiffs have not stated a claim under the Wiretap Act," the ruling states.

Koh also tossed claims against Apple for Stored Communications Act violations, invasion of privacy, negligence, computer fraud, trespass, conversion and unjust enrichment.

Source: Courthouse News Service

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