Google Defeats Wallet Users' Claims Of Disclosing Information to Third Parties

Aug. 13 - A Google Wallet user failed to allege sufficient facts to support her putative class claims that Google disclosed user information to third-party developers without consent when they purchased mobile applications in the Google Play store using the wallet virtual payment service, a federal court held Aug. 12.

The plaintiff has Article III standing to sue Google Inc. and Google Payment Corp. because she is suing under a statute that grants the right to judicial relief, Judge Beth Labson Freeman of the U.S. District Court for the Northern District of California ruled. But the court dismissed the lawsuit because the plaintiff failed to sufficiently state claims for breach of contract, breach of the implied covenant of good faith and fair dealing and violations of the Stored Communications Act and California's Unfair Competition Law (UCL).

Consistent with the legal reasoning employed by other courts that have ruled in the digital privacy area, the court here said the absence of actual damages undermined the plaintiff's claims.

Standing to Sue

After the defendants process a payment for an app in Google Play using payment card information stored in Google Wallet, they remit funds to a third-party vendor, according to the court. The plaintiff alleged in a putative class action that the defendants also disclose without the user's authorization his or her contact information to the vendor, including the user's name, e-mail, Google account name, home city and state, ZIP code and sometimes a telephone number.

Both Google defendants moved to dismiss the complaint for lack of Article III standing and for failure to state a claim.

The court denied the motion to dismiss for lack of standing. The U.S. Court of Appeals for the Ninth Circuit concluded that a plaintiff suing under the SCA has Article III standing because the statute grants the right to judicial relief to those in the plaintiff's position, the court said, citing In re Zynga Privacy Litig. , 750 F.3d 1098 (9th Cir. 2014).

Conclusory Damages Allegations

The court, however, granted the motion to dismiss for failure to state a claim.

It found the plaintiff's allegations of damages conclusory and insufficient to support her breach of contract claim. Both Gmail and Google Wallet accounts are free, and "all of the contractual privacy provisions upon which Plaintiff relies are contained in agreements that were entered into in connection with creation of those free accounts," the court said. And the plaintiff didn't agree to any new terms or pay additional consideration when she purchased the app, it added.

In addition, the plaintiff failed to allege a market for her contact information in support of her allegation that the defendants' actions diminished the economic value of her information, and an allegation of an increased risk of identity theft is too speculative, the court concluded.

The absence of economic injury also defeated the claim under the California UCL, Cal. Bus. & Prof. Code § 17200, and the breach of implied covenant claim was duplicative of the breach of contract claim.

Stored Communications Act Claims Falter

The court dismissed without leave to amend a claim under the SCA, 18 U.S.C. § 2701, which permits a private right of action against those who intentionally access without authorization, or exceed authorization to access, "a facility through which an electronic communication service is provided."

The defendants couldn't have accessed their own servers without authorization, and the statute contains an exemption for conduct by those that provide an electronic communications service, the court said.

It also dismissed a separate claim under Section 2702 of the SCA without prejudice. Section 2702, while prohibiting a provider of an electronic communication service or a remote computing service from divulging the contents of communications, allows such providers to divulge record information concerning a subscriber or customer, the court explained. It said "the facts alleged in the complaint establish the disclosure of record information rather than contents of a communication."

Diemer Whitman & Cardosi LLP and Progressive Law Group LLC represented the named plaintiff. Perkins Coie LLP represented the defendants.

Full text of the court's opinion is available at http://www.bloomberglaw.com/public/document/Svenson_v_Google_Inc_et_al_Docket_No_513cv04080_ND_Cal_Sept_03_20 .