Antitrust Law Daily Wrap Up, STATE UNFAIR TRADE PRACTICES—N.D. Cal.: Individual lacked standing to sue Symantec over software claims, (Aug 27, 2013)

By Peter Reap, J.D., LL.M.

Kathleen Haskins lacked standing to assert claims for violation of the California Unfair Competition Law and Consumers Legal Remedies Act against software maker Symantec, Corporation, in connection with its alleged misrepresentations about its pcAnywhere, Norton SystemWorks, Norton Antivirus Corporate Edition, and Norton Internet Security products (the “Compromised Symantec Products”) because she failed to allege that she purchased any of those four products, the federal district court in San Francisco has determined (Haskins v. Symantec Corporation, August 23, 2013, Tigar, J.).

Background. In 2006, hackers infiltrated Symantec’s network and stole the source code for the 2006 versions of the Compromised Symantec Products, as Haskins identified them in her complaint, the court noted. According to the complaint, “Symantec suspected in 2006 its network had been breached and its source code stolen,” and did not disclose the breach or source code theft until the hackers revealed the breach in January 2012. By not disclosing the breach and presenting the Compromised Symantec Products as if no such breach occurred, Haskins alleged that she and members of a proposed class were “[led] to believe the Compromised Symantec Products were secure and completely functional as advertised.” Therefore, Haskins alleged that the “Compromised Symantec Products” were not fully secure and functional as advertised.

Haskins asserted that she purchased Symantec’s Norton Antivirus software online directly from Symantec during late 2007 or early 2008 and renewed the software annually. She claimed that her version of Norton Antivirus “contained all or a portion of the compromised 2006 source code.” She alleged that she purchased Norton Antivirus “for the reasons advertised” and pointed to two statements on Symantec’s website that allegedly advertised a fully functional Symantec product. She claimed that as a result, she did not receive the fully functional data and system security software for which she paid.

Haskins asserted five claims against Symantec for herself and a proposed class: (1) violations of the Consumers Legal Remedies Act; (2) unfair competition, California Business and Professions Code §17200, et seq.; (3) breach of contract; (4) breach of warranty; and (5) money had and received. Symantec moved to dismiss on the grounds that Haskins lacked Article III standing.

Article III standing. To establish Article III standing, plaintiffs must satisfy three elements: (1) injury in fact—an invasion of a legally protected interest which is (a) concrete and particularized and (b) actual or imminent, not conjectural or hypothetical; (2) causation—there must be a causal connection between the injury and the conduct complained of—the injury has to be fairly traceable to the challenged action of the defendant, and not the result of the independent action of some third party not before the court; and (3) redressability—it must be likely, as opposed to merely speculative, that the injury will be redressed by a favorable decision.

The complaint stated that hackers “stole the source code for the 2006 versions of pcAnywhere, Norton SystemWorks (Norton Utilities and Norton GoBack), Norton Antivirus Corporate Edition and Norton Internet Security,” and the Proposed Class was comprised of persons and entities that purchased those four products. However, Haskins purchased a different product: Norton Antivirus, the court noted.

The complaint failed to make clear the relationship between Norton Antivirus and the Compromised Symantec Products. Haskins alleged that Norton Antivirus “contained all or a portion of the compromised 2006 source code.” Later, the complaint stated that the hacker group “posted . . . confidential documentation pertaining to Norton Antivirus source code,” “posted what they claimed was the complete source code tree file for Norton Antivirus—although it was later taken down,” and “published . . . a detailed technical overview of Norton Anti-Virus.” These were the only allegations in the complaint that related to Norton Antivirus. The gravamen of the complaint was that the products forming the basis of Haskins’ causes of action were the four specifically identified Compromised Symantec Products. And Haskins did not allege that she purchased any of those four products, the court observed.

The court did not suggest that there was any standing-related problem with Haskins seeking to represent a class whose members purchased different products than she did. But Haskins could not assert standing on her own behalf without clearly alleging that the product she purchased was among those that formed the basis of her claim. Haskins’ complaint was dismissed without prejudice, with leave to file an amended complaint within 21 days.

The case is No. 13-cv-01834-JST.

Attorneys: Timothy G. Blood (Blood Hurst & O'Rearden, LLC) for Kathleen Haskins. Laurence F. Pulgram (Fenwick & West LLP) for Symantec Corporation.

Companies: Symantec Corporation

Cases: StateUnfairTradePractices Advertising CaliforniaNews