Google, Ebay, Facebook and Yahoo! Team Up to Gut Consumer and Privacy Laws

04/27/2015 12:42 pm ET | Updated Jun 27, 2015

Consumer and financial protection laws are wonderful when passed, but the key is to get them enforced.  Government agencies have limited budgets for enforcement and political pressure often prevents government agencies from targeting lawbreaking companies.   The solution for many laws has been to give private actors the right under those consumer, environmental and labor laws to sue companies in civil court.  Whether those private actors have suffered direct harm is less the point than to have them act as "private attorneys general" enforcing the law on behalf of the public.

But there has been a large effort by corporate litigators to get the courts to declare that such laws are invalid if a plaintiff can't prove direct economic harm.  A current example is efforts to limit the ability of plaintiffs to sue under the Fair Credit Reporting Act (FCRA). In a case that the U.S. Supreme Court agreed to hear just today, the web company Spokeo published inaccurate information about Thomas Robins.  Robins sued Spokeo under FCRA saying publishing such inaccurate information for its corporate clients had injured his employment prospects.  The District Court ruled that Robins had failed to show specific economic harm -- hard to do in a world where you never know what information corporations are using for internal decision-making.  However, on appeal the Ninth Circuit Court of Appeals declared that since Congress had specifically granted private actors the right to sue based on violations of the FCRA, no specific demonstration of harm was needed to go to court, as Robins was "among the injured" meant to be protected by the statute, so Robins therefore has the right to stop violations of the law, whatever specific economic harm may or may not have occurred.

The bottom line is that Ninth Circuit said corporations have to follow the law and consumers protected by FCRA have the ability to enforce the law in court, without corproate defendants throwing up additional procedural barriers.

Proving economic harm in areas like reputation and the spread of false information is always challenging, so the Ninth Circuit decision was an important victory for consumer rights in the online world.

Unsurprisingly, the corporate world immediately began seeking to overturn the decision by appealing to the Supreme Court.  One notable example was erstwhile competitors Google, eBay, Facebook and Yahoo! finding common cause in a joint amicus brief to the Supreme Court asking them to take the case.  (See here for their brief.)

The companies complain that they process so much data about so many people that the decision opens them up to liability from too many people if they violate the law-- as if their control of so much personal data in the first place is not part of the problem.  The brief is fascinating since it details the large number of lawsuits the companies are already facing that they hope a favorable Supreme Court decision could just make go away. Just a few cited include:

  • In In re Facebook Privacy Litigation, Facebook is facing statutory damages for transmitting user information in violation of the Wiretap Act
  • In Gaos v. Google Inc., Google is facing a lawsuit for violating the  Stored Communications Act (SCA)
  • In In re Hulu Privacy Litigation. Hulu faces litigation for violating  the Video Privacy Protection Act (VPPA)

Despite the fact that Congress made it clear in these laws that private actors could enforce the law when those laws were violated, whether concrete economic harm was demonstrated or not, the companies are arguing that the Constitution under Artice III bars such lawsuits unless the plaintiff can demonstrate specific economic harm-- essentially gutting most private enforcement of statutes especially in the privacy arena.  While violating privacy laws no doubt causes harm to consumers, the effect is often diffuse and hard to prove, but if the companies have their way, the laws will be effectively unenforceable except by underfunded public agencies -- who corporate forces seek to further underfund during budgetary proceeedings in Congress.

This case is a quiet blockbuster.  If conservative Justices on the Supreme Court overturn the Ninth Circuit, critical laws meant to protect user privacy as well as a range of other consumer and financial protection laws will in effect become nearly unenforceable.  

Note: The initial post included Amazon in the group of amicus companies, which has been corrected here.