Antitrust Law Daily Wrap Up, PRIVACY—NDCal: Pandora User Lacked Standing to Challenge Collection of His Personal Information , (Mar 28, 2013)

By Jody Coultas, J.D.

A Pandora app user could not state California Unfair Comeptition Law (UCL) or Consumers Legal Remedies Act (CLRA) claims against Pandora Media, Inc. for allegedly misrepresenting its privacy policies and gathering users’ personal information, the federal district court in San Francisco has held (Yunker v. Pandora Media, Inc., March 26, 2013, White, J.). The court noted that the user could state an unfair practices claim under the UCL if the user could establish an injury-in-fact.

Pandora developed an App for mobile devices that allows users to access, stream, and download digital music files. When a user downloads the App, Pandora gathers personally identifiable information about the user, including their age, gender, location and a universally unique device identifier. A Pandora user alleged that Pandora misrepresented that it would de-identify users’ information and anonymize that data, and that Pandora exceeded the scope of users’ consent when it permitted advertising libraries access to users’ information. Pandora countered that the user lacked standing to assert the UCL and CLRA claims.

Article III Standing. In order to have standing, a plaintiff must allege an “injury in fact” that is concrete and particularized and actual or imminent, not conjectural or hypothetical; that the injury is fairly traceable to the challenged action of the defendant; and that it is likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

Even if the court held that the personal information was a form of personal property, the user lacked standing to assert claims based on the purported devaluation of his personal information. District courts have been reluctant to find a plaintiff has standing based solely on a theory that the value of their information was diminished. The user did not allege he that attempted to sell the information or would do so in the future, and there was no evidence that he was foreclosed from entering into a value for value transaction relating to his personal information as a result of Pandora’s conduct. The user did not allege that had he known how Pandora would use his personal information, he would not have downloaded or used the App.

Although dimunition in the performance of an electronic device may constitute an injury in fact, the court found that the user failed to allege facts showing that Pandora’s actions led to a decrease in space on his mobile device. The user argued that he paid for the exclusive use of the memory on his mobile device and that the advertising libraries in the Pandora App included code that used up memory. However, the complaint failed to allege a performance problem because of the diminished memory space. The user also failed to name an app manufacturer as a defendant, he did not pay for the Pandora App, and did not allege that he would not have downloaded the Pandora App had he known it would consume the memory space at issue.

Allegations of possible future harm cannot form the basis of standing, according to the court. The user argued that he could be harmed because Pandora did not anonymize users’ personal information. However, there was no evidence that users had disclosed sensitive financial information or that anyone had breached Pandora’s servers.

The user had standing to assert a theory of injury based on alleged violations of his constitutional privacy rights, according to the court.

The court also found that the user lacked standing to assert UCL and CLRA claims against Pandora because he could not show he lost money or property as a result of Pandora’s conduct.

UCL Claims. If the user could establish standing, the court held that he could establish a UCL claim under the unfair prong. Allegations regarding collection and dissemination of personal information are sufficient to state a claim under the unfair prong.

CLRA Claims. The court held that the user failed to state a CLRA claim against Pandora because the user was not a consumer and the app was not a good under the statute. Under the CLRA, consumer “means an individual who seeks or acquires, by purchase or lease, any goods or services for personal, family, or household purposes.” Goods are tangible chattels bought or leased for use primarily for personal, family, or household purposes. The user’s argument that he was a consumer because he purchased the app with his personal information was not persuasive. Also, software does not fall within this statutory definition of a good.

The case is No. 11-CV-03113 JSW.

Attorneys: Betsy Carol Manifold (Wolf Haldenstein Adler Freeman & Herz) for Troy Yunker. Laurence F. Pulgram (Fenwick & West LLP) for Pandora Media, Inc.

Company: Pandora Media, Inc.

Cases: Advertising ConsumerProtection Privacy StateUnfairTradePractices CaliforniaNews