EU Top Court OKs Consumer Privacy Suit Against Facebook in Austria

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By Stephen Gardner

Austrian privacy activist Max Schrems can pursue data protection claims against Facebook Inc. in his home country’s courts despite Facebook’s EU headquarters being in Ireland, the European Court of Justice ruled Jan. 25.

However, other potential claimants who had allied with Schrems against Facebook cannot assign their claims to him as part of a class action, the European Union’s top court said in its opinion.

The ruling is a “huge blow” for Facebook, which will now have to contend in Austria with issues of “whether its business model is in line with stringent European privacy laws,” Schrems said in a statement. Schrems’ lawsuit against Facebook in Austria has been on hold since 2016 when the Austrian Supreme Court referred it to the EU Court of Justice for clarification on whether it could go ahead under EU rules on jurisdiction of civil courts.

Schrems’ complaint against Facebook in Austria is wide-ranging and seeks redress over a range of alleged privacy failures by the company, including that it tracks users via social media plug-ins, shares data with external apps in violation of EU law, and improperly assists U.S. National Security Agency surveillance programs.

The EU Court of Justice ruling that a class action can’t be filed in Austria backed up the findings of lower courts, a Facebook spokesperson, who asked not to be named citing company policy, said in a statement emailed to Bloomberg Law. Facebook “looks forward to resolving this matter,” the spokesperson said.

Schrems told Bloomberg Law Jan. 25 that his case now will be referred by the Austrian Supreme Court to a local court in Vienna for a first hearing. He didn’t say when that hearing might take place. Schrems originally filed the case in Austria in 2014.

Consumer Status

The issue before the court was whether a 2001 EU regulation that permits EU consumers to bring lawsuits in their home countries against parties based in other jurisdictions applied to the privacy rights complaint in the present case. Facebook contended that Schrems shouldn’t be considered a consumer because he uses Facebook as a platform to campaign against the social media giant and to raise funds for that campaign.

The EU Court of Justice said such activities “do not entail the loss of a private Facebook account user’s status as a ‘consumer.’”

Allowing the case to proceed in Austria is a welcome development because it will allow the examination of certain practices of Facebook and other social networks, such as how they combine data from different sources to “infer things about people who don’t want to give their data,” David Garcia, a social media researcher at the Complexity Science Hub Vienna research institute, told Bloomberg Law Jan. 25.

The court’s holding that the 2001 EU regulation doesn’t allow for cross-border class actions was decried by a leading European consumer rights group.

The ruling “exposes a missing and vital piece of the consumer protection jigsaw,” with multiple consumers harmed by the same trader unable to jointly pursue compensation, the European Consumers Organization said in a Jan. 25 statement.

To contact the reporter on this story: Stephen Gardner in Brussels at correspondents@bloomberlaw.com

To contact the editor responsible for this story: Donald Aplin at daplin@bloomberglaw.com

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