Duane Morris Takeaway: This week’s episode of the Class Action Weekly Wire features Duane Morris partner Jerry Maatman, special counsel Justin Donoho, and associate Ryan Garippo with their analysis of a recent ruling issued by the Supreme Judicial Court of Massachusetts dismissing plaintiffs’ wiretap claim in an advertising technology (“adtech”) class action, providing corporate defendants with a welcome beacon in the recent influx of adtech class action litigation.
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Our previous episode, the Digital Frontier Survival Guide For Corporate Counsel, discusses best practices and risk mitigation in wake of litigation targeting website advertising technologies. Earlier this year we published the Duane Morris Privacy Class Action Review – 2024, analyzing key developments in this space.
Episode Transcript
Jerry Maatman: Thank you everyone for being here for the next episode of our weekly podcast series, the Class Action Weekly Wire. I’m Jerry Maatman of Duane Morris and joining me today are Justin and Ryan, my colleagues, to discuss all things class action. Thanks so much for being on the podcast this week.
Justin Donoho: Thanks, Jerry. Great to be here.
Ryan Garippo: Thanks for having me, Jerry.
Jerry: Today we wanted to talk about a recent ruling that’s been making the rounds in the legal media in the wake of exploding advertising technology, or something known as “adtech”, class actions. These are cases being filed across the country in both federal and state court, and invoking both criminal and civil, federal and state wiretap laws and provisions, and seeking millions, if not billions, of dollars in damages of civil remedies in class actions. Plaintiffs nationwide are filing these types of lawsuits, alleging that Meta Pixel, Google Analytics, and other similar software embedded in defendants’ websites secretly capture a browser’s data and send it to Meta, Google, or other online advertising agencies. Justin, I know that you’re focused very much on adtech and litigation in this space – tell us a little bit about the boom in this sort of legal claim.
Justin: Yeah, this adtech software is a common feature on millions of corporate, governmental, and other websites today – over 10 million. In adtech class actions, the main event is often a claim brought under a federal or state wiretap act, a consumer fraud act, or the Video Privacy Protection Act, because that is what enables plaintiffs to seek millions and billions of dollars in statutory damages, even for midsize companies, on the theory that hundreds of thousands of website visitors, times $10,000 per claimant in statutory damages under the Federal Wiretap Act, for example, equals billions. Plaintiffs have filed the bulk of these types of lawsuits to date against healthcare providers, but they have filed suits against companies that span nearly every industry – including retailers, consumer products, and universities. Several of these cases have resulted in multi-million dollar settlements, several have been dismissed, and the vast majority remain undecided.
Jerry: Well, it seems to follow that mantra of the plaintiff’s bar to file the case, certify the case, and then monetize it, and haul down millions of dollars in damages in across-the-board massive settlements. But today we wanted to talk about what seems to be a ray of light, a helpful decision from the state of Massachusetts, in a case called Vita, et al. v. New England Baptist Hospital. Ryan, could you share with our listeners and readers the background on the Vita case?
Ryan: Absolutely, Jerry. So in Vita, the plaintiff brought suit against the hospital. According to the plaintiff, the hospital installed Meta Pixel and Google Analytics on its public-facing website, and the installation of that technology transmitted information to Meta and Google allegedly without the plaintiff’s consent, including the title and URL of the hospital pages that the plaintiffs visited, any hospital department that she selected, any search terms she entered, filtering criteria – particularly where she used the “Find a Doctor” webpage and whether or not she navigated to the hospital’s patient portal. Although, just to be clear, the contents of the records or the communications within that portal were not alleged in the complaint. Based on these allegations, the plaintiff claimed that the hospital aided Meta and Google to intercept her communications in violation of the Massachusetts Wiretap Act. The hospital moved to dismiss, arguing that the interactions with the hospital’s website did not fall within the meaning of “wire communication[s]” protected by the Massachusetts statute. The trial court denied that motion and sent it directly to the Massachusetts Supreme Judicial Court, which accepted the direct appeal.
Jerry: What were the stakes before the Massachusetts High Court – in terms of if the trial court’s ruling in favor of the plaintiff stood – what could the plaintiffs hope to gain in a case like this?
Ryan: Well, the Massachusetts Wiretap Act makes it a crime to commit an interception, meaning secretly here record or aid another in secretly hearing or record the contents of any oral or wire communication. And because violators are punishable by a fine of up to $10,000, imprisonment for up to 5 years, or a combination of fines and imprisonment, the Massachusetts Wiretap Act gave plaintiffs a private right of action for any aggrieved person. Pretty substantial damages – each civil claimant is entitled to statutory damages of “$100 per day for each violation or $1,000, whichever is higher.”
Jerry: Seems like the stakes were very high. What did the highest court of Massachusetts ultimately rule in terms of this cause of action and whether or not it was viable in a class action setting?
Justin: The Supreme Judicial Court ultimately agreed with the hospital, and ordered dismissal of the plaintiffs’ wiretap claim. The plaintiff contended that the meaning of “communication” under that statute is broad enough to encompass all interactions with the hospital’s websites when those websites were visited by her, and an alleged class of other website visitors. The Supreme Judicial Court held that “the statutory term ‘communication’ is ambiguous as applies to the web browsing activities allegedly intercepted” and neither the plain text of the statute, nor dictionary definitions make clear whether “communication” includes that, rather the legislative history, they said, was concerned with a different type of surveillance. Namely, one to one telephone lines trying to intercept – back in 1968, when the statute was created. So, the court ultimately applied the rule of lenity, finding that the statutory term was ambiguous – it emphasized that throughout its entire opinion, and ultimately that was the basis for its decision, the rule of lenity, because this is a criminal statute, and so the tie basically goes to the person who’s going to be punished with these severe penalties.
Jerry: Seems like this is a very powerful precedent for the defense bar in terms of the antidote, and a viable argument to try and take down these adtech class actions. What do you see as the future here, Ryan, in this particular space?
Ryan: I think that’s right, Jerry. Right now, there are hundreds of adtech class actions featuring claims under the Federal Wiretap Act, the Video Privacy Protection Act, and other similar state laws, that seek millions and billions of dollars in statutory damages under this theory. We’ve talked about some of these rulings on our blog, the Duane Morris Class Action Defense Blog, and courts have dismissed some of these claims, but some of them not, and have allowed them to proceed. But this new ruling will be very helpful for corporate defendants in this space.
Justin: Yes, those differing rulings that you’re talking about, Ryan, exactly show the point that these different courts are giving different interpretations to the same statutory terms that suggest that these terms are ambiguous, too, similar to the ones found in a different statute in Vita. And so the ruling here in Vita, though, is important because it instructs that under similar circumstances the rule of lenity also applies to these ambiguous terms, too, thereby entitling defendants to the benefit of any rational doubt in the construction of the statute, and accordingly defeating plaintiffs’ mammoth statutory damages claims.
Jerry: Well, thank you. It certainly seems like a beacon of light for companies in this space attempting to defend themselves in adtech class action litigation. Thank you, Ryan, and thank you, Justin, for lending your expertise and thought leadership in this area and for breaking this down for our readers and listeners.
Justin: Thanks for having me, Jerry, and thanks listeners.
Ryan: Thanks a lot everyone. Great to be here as always.