The past year saw an unprecedented spike in data privacy litigation, driven not only by breaches but by inventive and super creative legal theories from plaintiffs’ attorneys. Our team of privacy superheroes can show you how to protect your business from private right of action privacy lawsuits. With the increasing scrutiny around consumer privacy, businesses are now confronting lawsuits even absent a data breach, as attorneys leverage older privacy statutes like California’s Invasion of Privacy Act (CIPA) and similar laws nationwide. What we will also examine in another piece is how judges are starting to amend CIPA legal claims but it all depends on the specific judge and court with no one size fits all ruling.
Novel Legal Theories Emerging in Data Privacy Litigation
The wave of privacy litigation has evolved significantly beyond straightforward data breach scenarios. Plaintiffs are increasingly invoking statutes such as the Video Privacy Protection Act & CIPA a law originally intended to prevent telephone wiretapping to challenge businesses using modern digital tools to interact with customers.
For instance, plaintiffs have argued successfully in some cases that:
- Session replay software recording customer interactions without clear upfront consent violates wiretapping laws. So if you’re using Hotjar or Microsoft Clarity you’ll want to ensure that you’re using a Captain Compliance cookie consent banner to give users the ability to toggle on and off cookies and pixel tracking.
- Third-party tracking tools integrated into websites and apps, which capture data such as search inputs or geolocation, may be interpreted as illegal “pen register” or “trap and trace” devices.
- AI-powered analytics of recorded customer conversations, especially when lacking transparent disclosures, could trigger violations under privacy statutes.
Prominent cases like Javier v. Assurance IQ and Greenley v. Kochava illustrate courts’ willingness to entertain these theories, underscoring significant exposure for businesses unprepared for these novel privacy claims. We have covered this in depth over and over again but we can not stress to our clients and prospective clients enough how important it is to protect yourself against litigation for such a nominal cost to save you millions of dollars.
Key Cases Signaling Risk Expansion
In Javier v. Assurance IQ, plaintiffs claimed violations of CIPA based on recordings initiated at the first keystroke, despite privacy policies disclosed later. Although initially dismissed, the Ninth Circuit reinstated the case, reinforcing the requirement of explicit prior consent before data collection begins.
Similarly, in Greenley v. Kochava, a software development kit that tracked user location without explicit opt-out mechanisms was classified potentially as a “pen register,” surviving a motion to dismiss and prompting settlement discussions. Another notable suit involved the unauthorized transmission of search queries entered by users, which courts have recognized as potential CIPA violations.
What These Privacy Lawsuits Implicate and Mean for Businesses
These cases highlight a broader trend in which plaintiffs’ firms strategically target businesses across all sectors, not just technology firms, using legacy statutes that carry substantial statutory damages. Given the increasing sophistication of plaintiffs who employ technical experts to identify and substantiate potential violations the threshold for surviving dismissal motions is becoming easier for plaintiffs to achieve.
Strategies to Mitigate Litigation Risk
Proactive measures to avoid becoming targets of privacy litigation are essential. Here’s how businesses can shield themselves effectively:
- Cookie Consent Banners: Implement comprehensive cookie consent mechanisms that transparently and clearly secure user consent before initiating any form of tracking or recording. Cookie consent should explicitly detail how customer data is collected, used, and potentially shared.
- Updated and Clear Privacy Notices: Ensure your privacy policy explicitly communicates data collection methods, usage purposes, and sharing practices. This transparency helps establish that consumers have provided informed consent.
- Explicit Opt-in Mechanisms: Wherever sensitive data collection occurs, consider deploying explicit opt-in prompts instead of relying on implied consent. This significantly reduces litigation risk.
- Regular Audits and Compliance Checks: Regularly audit your digital tools, third-party data analytics, and customer interaction technologies to ensure alignment with stated privacy policies and consent mechanisms.
- Review Data-Sharing Agreements: Confirm third-party vendors and service providers adhere strictly to agreed-upon data handling practices and that contractual agreements explicitly cover liability and compliance expectations.
Anticipating Future Privacy Litigation
According to privacy litigation expert Kristin Madigan, “This surge in claims under older privacy statutes is just the beginning. With the rapid adoption of artificial intelligence technologies, new avenues for plaintiffs to challenge data privacy practices will emerge. Businesses must not only adapt their current practices but anticipate future legal challenges by continuously updating consent and transparency mechanisms.”
The Future of Privacy Litigation
Businesses today operate in a landscape where privacy litigation is increasingly inventive and potentially costly. By proactively implementing robust consent frameworks, clear privacy disclosures, and rigorous internal audits, companies can significantly reduce their litigation exposure. Staying ahead in this evolving landscape requires vigilance and adaptability in privacy governance practices.
