Class Cert Granted|in Yahoo Privacy Case

SAN JOSE, Calif. (CN) - A federal judge granted class certification in a case alleging Yahoo scans emails sent by nonsubscribers for financial gain - but more narrowly than the plaintiffs would have liked.

Four people who do not use Yahoo but have sent emails to Yahoo subscribers since October 2011 filed suit last year, claiming that the company violates federal and state wiretapping laws - and privacy rights - by scanning their emails to better target advertising at its own subscribers.

After Yahoo countered that its terms of service and privacy policy are crystal clear - it scans, analyzes and collects emails and its subscribers are responsible for warning nonsubscribers they communicate with - U.S. District Judge Lucy Koh whittled the now-consolidated class action down to a single alleged violation of the federal Stored Communications Act and a claim under the California Invasion of Privacy Act.

The plaintiffs in the case sought nationwide class certification on the two remaining actions earlier this year.

Koh granted class certification on the federal claim on Tuesday, finding the plaintiffs met the numerosity and commonality requirements of injury from Yahoo's alleged sharing of stored data with third parties in violation of the federal law.

But although the plaintiffs had also lobbied for nationwide class certification for their California privacy claim, Koh found that "material differences" in the privacy laws of the other 49 states prevented her from granting the plaintiffs' request.

"The court finds that other states' interests would be most impaired by applying California law to non-Californian class members," Koh wrote.

"The home states of non-California class members have a significant interest in applying their own wiretapping laws to their residents. The 50 states' variations in degrees of protection, requirements for consent, and available remedies reflect the states' 'valid interest in shielding out-of-state businesses from what the state may consider to be excessive litigation,' because 'in our federal system, states may permissibly differ on the extent to which they will tolerate a degree of lessened protection for consumers to create a more favorable business climate for the companies that the state seeks to attract to do business in the state,'" Koh wrote, citing the 9th Circuit's 2012 decision in Mazza v. American Honda Motor Co.

"The individual states also have valid interests in balancing the privacy interests of their residents with free speech considerations," she continued, "and the court may not second-guess the decisions of other states that choose to strike a different balance in deciding how to best protect the privacy of their residents while balancing the desire to attract businesses that provide valuable services to their residents."

Koh designated the nationwide class on the Stored Communications Act claim as all U.S. residents who are not Yahoo subscribers but have sent an email to a Yahoo subscriber from Oct. 2, 2011, or will do so in the future.

On the CIPA claim, Koh designated an identical sub-class, but of California residents only.

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