On April 24, 2023, a judge in the Southern District of New York dismissed a putative class action alleging that Scripps Network LLP (“HGTV”) disclosed plaintiffs’ identities and streaming activities on hgtv.com in violation of the Video Privacy Protection Act (“VPPA”). See Carter v. Scripps Networks, LLC, No. 22-CV-2031 (PKC), 2023 WL 3061858, at *1 (S.D.N.Y. Apr. 24, 2023).
AI Face-Swap App Spawns New Class Action
Last month, a new class action lawsuit was filed in California federal district court against the maker of the app “Reface,” which allegedly allows users to swap their face onto that of a celebrity in images and videos. The plaintiff in the case, Kyland Young, was a finalist on the reality TV show Big Brother. He alleges that Reface allows users to “become” him and to recreate his scenes from the show with their face in place of his. Young alleges that in doing so, the defendant is commercially exploiting his likeness without his permission in violation of California’s right of publicity statute. Young asserts the claim on behalf of a putative class of “[a]ll California residents whose name, voice, signature, photograph, or likeness was displayed on [the] Reface application . . .” Young does not allege how many likenesses were available for use on Reface, but he does allege they are enough to satisfy Rule 23’s numerosity requirement. See Young v. NeoCortext, Inc., Case No. 2:23-cv-02496 (C.D. Cal.).
A Closer Look: Federal Court Concludes that Certain NFTs May Be Securities: Preliminary Determination in Ongoing NBA Top Shot Litigation
On February 22, 2023, a federal judge in the Southern District of New York issued a first-of-its-kind order allowing a securities class action lawsuit to proceed against the issuer of non-fungible tokens (“NFTs”) on the grounds that the NFTs are securities for purposes of federal securities laws. Friel v. Dapper Labs, Inc. et. al., Case No. 1:21-cv-05837-VM (S.D.N.Y). NFTs are digital tokens, frequently associated with digital content, for which ownership of the tokens is recorded on a blockchain. The order was issued in the context of a lawsuit against Dapper Labs, the creator and issuer of NBA Top Shot “Moments.” Moments are digital video clips of NBA game highlights and their associated NFTs minted by Dapper Labs. Moments are offered and sold on Dapper Labs’ proprietary digital platform, validated on Dapper Labs’ private blockchain (the “Flow Blockchain”) and trade on a secondary marketplace controlled by Dapper Labs. The lawsuit claims that Moments are securities and Dapper Labs offered and sold those securities in violation of the registration requirements of the federal securities laws. Dapper Labs filed a motion to dismiss the lawsuit, and the court rejected the motion, concluding that Moments are securities.
New BIPA Claims Accrue “With Every Scan or Transmission” of Biometric Information, Says the Illinois Supreme Court
The Illinois Supreme Court has ruled that separate claims under the state’s Biometric Information Privacy Act (BIPA) accrue “with every scan or transmission” of a person’s biometric information—rejecting the idea that only a single claim accrues at the start of a series of similar scans or disclosures.
The decision, Cothron v. White Castle, substantially increases potential damages exposure for BIPA defendants. The potential for large monetary awards is likely to spur more BIPA lawsuits in Illinois—and potentially beyond, as several other States have similar privacy laws taking effect in 2023. At the same time, however, Cothron establishes that trial courts have discretion to determine the appropriate amount of statutory damages (subject to a $5,000-per-violation cap), and suggests that it would be an abuse of discretion for a trial court to permit such a sizeable award that a company’s financial viability would be threatened.
Dior’s Virtual Try-On Tool Fits in BIPA Healthcare Exemption, Illinois Court Says
Dior recently defeated an Illinois Biometric Information Privacy Act (“BIPA”) putative class action on the pleadings by arguing that BIPA’s exemption for patient data captured in a health care setting covered the plaintiff’s use of Dior’s virtual try-on tool while shopping for non-prescription sunglasses. See Warmack-Stillwell v. Christian Dior, Inc., No. 1:22-CV-04633 (N.D. Ill. Feb. 10, 2023).
Continue Reading Dior’s Virtual Try-On Tool Fits in BIPA Healthcare Exemption, Illinois Court Says
Court Dismisses Class Action Seeking to Hold Cryptocurrency Exchange Coinbase Liable for Sale of Unregistered Securities
A federal district court recently dismissed with prejudice a putative class action against the cryptocurrency exchange Coinbase, where the plaintiffs sought to hold the exchange liable for the sale of unregistered securities on behalf a nationwide class. The court held that Coinbase neither directly sold the accused tokens to plaintiffs nor actively solicited their sale, and thus plaintiffs’ federal claims must be dismissed. This decision has important implications for digital asset exchanges, which have faced a significant increase in class actions alleging the exchanges are themselves liable for the sale of unregistered securities.
Illinois Supreme Court Holds Five-Year Statute of Limitations Applies to All Claims under BIPA
The Illinois Supreme Court recently held that all claims brought under the Biometric Information Privacy Act (“BIPA”) are subject to a five-year statute of limitations, partly overturning a lower court decision that had applied a one-year limitations period to some claims brought under the law. See Tims v. Black Horse Carriers, Inc., 2023 IL 127801 (Feb. 2, 2023).
The plaintiff, Jorome Tims, filed a putative class action against his former employer, alleging that the trucking and logistics company violated BIPA by requiring its employees to use a time clock with a fingerprint scanner without (i) implementing a publicly available data retention and destruction policy; (ii) notifying employees and obtaining their consent when collecting their biometrics; and (iii) obtaining employee consent before disclosing their biometric information to third parties. The defendant moved to dismiss the complaint, arguing that the plaintiff’s claims were barred by the one-year statute of limitations under the Illinois Code of Civil Procedure that governs actions for the “publication of matter[s] violating the right of privacy.”
New York Court Denies Class Certification in Copyright Infringement Action
A group of musicians has lost its bid in Waite v. UMG Recordings, No. 1:19-cv-01091-LAK (S.D.N.Y. 2019), to assert copyright infringement claims on a classwide basis against the record labels holding copyrights in the musicians’ sound recordings.
Seeking to reclaim the copyrights, the plaintiffs had issued notices of termination pursuant to Section 203 of
Class Action Suit Brought Under CIPA Section 637.7 for Alleged Location-Based Tracking of Vehicles Is Dismissed
A U.S. District Court Judge in California dismissed a putative class action asserting claims under section 637.7 of the California Invasion of Privacy Act (CIPA) in a case that could have useful implications for automotive and other device manufacturers whose products have the ability to track location. Plaintiff claimed that a third-party company, Otonomo Inc., partnered with automobile manufacturers to use the telematics control units (TCUs) installed in their vehicles to track a driver’s location via GPS without the driver’s knowledge. The Court rejected the claim, holding that because the TCU devices were built-in, rather than devices added to a vehicle, they were not “attached” to the car and thus did not fall within the statute’s definition of “electronic tracking device.”
Ninth Circuit Holds COPPA Does Not Preempt Consistent State Law Claims Premised on COPPA Violations
The Ninth Circuit recently held that the Children’s Online Privacy Protection Act, which gives the Federal Trade Commission authority to regulate the online collection of personal information from children under the age of 13, does not preempt consistent state law, potentially increasing the risk of class action litigation based on alleged COPPA violations. See Jones